Limitations in CPC-Execution of Foreign Judgments in India

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Author : div.verma
Published on : March 03, 2016

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Limitations in The Civil Procedure Code With Respect to Execution of Foreign Judgments in India

Globalization and inter-connectivity in the world has brought with itself an increase in trans-national transactions between individuals and corporations belonging to different states. Often, it so happens that the court exercising jurisdiction over the case is different from the one where the relief granted is to be executed. Therefore, an increase in the number has led to a formidable question on the enforcement and execution of a judgment passed by a foreign court within the territory of India.

The Indian Civil Procedure Code provides for the execution of decrees and judgments passed by foreign courts. Although, at the time of adoption of the code no such need to execute foreign decrees was felt as India was under the dominion of the imperialistic state of Britain. However, later in the 20th century when the British colonists started withdrawing from India, changes were made to reciprocate the policy contained in the Foreign Judgments (Reciprocal Enforcement) Act, 1933 which allowed for the decrees passed in India to be executed in United Kingdom and vice-versa. Significant changes were brought in the Civil Procedure Code after India declared itself as a “Republic” by severing all its ties with the Crown.

This paper will advance certain arguments with respect to problems in the current system of recognition and execution of foreign decrees with respect to Section 13 of the Code. Further, it will move on to comment on the archaic definition of “decree” as mentioned under Explanation 2 of Section 44A in the light of tax evasion prevalent in modern times. Apart from this, it will try and ascertain the drawbacks in Section 29(c) which deals with service of foreign summons while taking into consideration the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial matters. It will also try to supplement all these shortcomings with a primitive solutions and to do so it will be relying on examples, logical deduction and case laws.

Recognition And Execution of Foreign Decrees

The Indian Civil Procedure Code has been dissected into two parts such that the sections contain the substantive provisions of law and the orders and rules contain the corresponding procedural provisions. The substantive provision which lays down the provision for the execution of decrees passed by foreign courts in reciprocating territories in the following manner:

44A. Execution of Decrees Passed By Courts In Reciprocating Territory-

1) Where a certified copy of decree of any of the superior Courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court.

2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.

3) The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in clauses (a) to (f) of section 13.

Reciprocity is a mechanism by way of which one country recognizes the rules and regulations of the other country and executes the other state’s decree as if it were passed by its own courts. Thus, instead of litigating in two countries, one can get an order passed by a court in one and then execute it in the courts of other. The words “of any reciprocating countries” present in Clause (1) of Section 44A dictates that the primary requirement for execution of a foreign court’s decree in India is that the foreign country must be notified by the Central Government as a reciprocating country in the Official Gazette.Following are the only countries which have been officially recognized as “reciprocating countries” by the Central Government of India –

1. Aden,
2. Bangladesh,
3. Federation of Malaya,
4. Fiji Colony,
5. Hong Kong,
6. New Zealand, Cook Islands and Western Samoa,
7. Papua New Guinea,
8. Republic of Singapore,
9. Trinidad and Tobago,
10. United Kingdom of Great Britain and Northern Ireland, and
11. Victoria

However, the provisions mentioned in Section 13 of the Code have laid down certain restriction upon foreign judgment, be it from a reciprocating country or not, to decide whether they are conclusive in nature or not. Using these state of affairs, a defendant against whom such foreign court’s decree is being executed in India can stop its enforcement through an application stating that the judgment suffers from gross defects.

The only question which can be raised against Section 44A in the light of Section 13 is that if there exists such stern conditions on whether or not a judgment is conclusion then why we have the concept of “reciprocating territories” percolating the Code. The concept of “reciprocating countries” is totally redundant as it a mere diplomatic tactic for the Government of India to get a favour in return. Rather than indulging in reciprocity, the District Courts in India should be allowed to execute a decree by any foreign court if it meets all the conditions set forth by Section 13 of the Code such that private parties cannot escape from their liabilities arising out of the rest 184 countries.

Illustration – If Mr. R (a citizen of Russia) gets a decree in his favour from a Russian court against Mr. I (a citizen of India), then the District Court in India should be allowed to execute the decree passed by the Russian court if and only if it meets all the conditions set forth by Section 13 of the code. This makes sure that Mr. I cannot escape his liabilities arising in Russia even if the Government of India has no reciprocity agreement with Russia.

If we reject the above stated argument also, the use of the phrase “decree may be executed in India” in Section 44A gives ample choice to the District Courts in India to execute a foreign court’s decree. Therefore, the courts in India, a jurisdictional court, may not recognize the decree or order of a competent foreign court to be binding in its jurisdiction. Though, the foreign competent court has passed a decree on merits, the jurisdiction court (i.e. District Courts in India) will hear the matter; and perhaps even re-try the matter as if it were a new case. This leads to uncertainty with respect to application of decree, extra cost for the second litigation and unwanted delay. Moreover, if the jurisdictional court (i.e. District Courts in India) decrees on the same matter, it swap roles with the competent court as there needs to be some form of complicity, since the judgment passed by the jurisdictional court may have substantial repercussions on the territory of the foreign court leading to further vagueness.

Illustration – If there exists a contract between Mr. M, a citizen of Mongolia and Mr. I, a citizen of India and the dispute is adjudged by a superior court of Mongolia, then the court in Mongolia becomes the “competent court” and courts in India become “jurisdictional courts” where the decree is supposed to be enforced. Conversely, if the courts in India do not recognize the decree passed by the Courts of Mongolia then it will retry the matter as if it were a fresh case. This fresh trial will purport that the courts in India have assumed the role of “competent court”. The decree will obviously have certain repercussions in Mongolia or the citizens of Mongolia and to enforce this decree passed by the Indian courts complicity of the jurisdictional court of Mongolia will be required. Only then will the court in Mongolia will assume the role of “jurisdictional court”.

Therefore, a more simplified and better approach to the problem of execution of foreign decree will be in removal of the whole concept of “reciprocating countries”. The courts in India in return should then be given the discretion to only check whether the decree passed by a foreign court conforms to all the requirement of Section 13 before ordering its execution.

Definition of Decree Under Section 44A

Owing to the non-normative status of the foreign decrees, a special definition has been given to the term ‘decree’ under Explanation 2 of Section 44A which is very restrictive in nature. The word ‘decree’ has been defined as follows –

"Decree" with reference to a superior Court means any decree or judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect to a fine or other penalty, but shall in no case include an arbitration award, even if such an award is enforceable as a decree or judgment.

By way of interpretation, the judiciary in the matter of Radhamani India Ltd. v. Imperial Garments Ltd has held that decree executable under Section 44A has to be a decree under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty or a sum payable under an award made in an arbitral proceeding. The strangulated definition must expand with the need of the hour as the number of international transactions and trade-commerce is expanding. The aftermath of such measly definition can be directly felt in cases involving cross-border tax evasion. Court in India do not aid foreign courts in enforcing arrears of tax evasions due to the foreign country's policies in which such a court is situated. If the definition of “decree” is expanded to include tax payments, then two countries sharing a bilateral agreement on double-taxation can help each other in collecting tax from citizens residing in the two states. Therefore, an amendment in the definition of the term “decree” primarily demands relaxation in the concept of ‘sovereignty’ such that people evading taxes and escaping liabilities in foreign countries can be caught in India and decrees passed by the foreign courts can be executed in India itself.

Illustration – If Mr. I, a citizen of India has certain business in Britain and a certain decree is passed against him in the courts of Britain regarding tax evasion, then according to the current provisions of Section 44A, the courts in India lack the jurisdiction to execute this decree. Nonetheless, if India relaxes the definition of ‘decree’ to include tax arrears then such evasions from liabilities can be avoided.

Service of Summons

Summons are necessary legal documents which are required to be served to the parties such that they can be notified about the status of proceedings against them. Generally, a duty is casted upon the court (even upon the foreign courts) to serve proper notices and summons upon the parties such that a fair chance is given to the parties to represent themselves. Under the Civil Procedure Code, a provision has been made to serve summons issued by foreign court. It states that –

29. Service of Foreign Summonses

Summons and other processes issued by-
(a) any Civil or Revenue Court established in any part of India to which the provisions of this Code do not extent, or
(b) any Civil or Revenue Court established or continued by the authority of the Central Government outside India, or
(c) any other Civil or Revenue Court outside India to which the Central Government has, by notification in the Official Gazette, declared the provisions of this section to apply,

may be sent to the Courts in the territories to which this Code extends, and served as if they were summonses issued by such Courts.

The inherent problem with respect to serving of summons issued by foreign courts is that the foreign country whose courts are issuing this summons must be recognized as “reciprocating countries” by the Central Government in the Official Gazette of India. Even if the Government of India has signed a reciprocating agreement with a foreign country, service of summons is totally dependent upon the terms and conditions of the reciprocating agreement. No pre-fixed rule has been put forth stipulating the time-period in which the summons are to be served. Therefore, the citizens of India are denied the opportunity to represent themselves in foreign court just because the Central Government failed to reciprocate with the foreign country.

However, the Government of India has extended the benefit of this provision only to the Civil Courts of the Kingdom of Bahrain and Mongolia. Nevertheless, for other countries against whom India does not have a reciprocating agreement, Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents applies as India has ratified it. Since India has made reservation with respect to Article 10, 15 and 16 of the Hague Convention also, no freedom has been granted to the foreign territories to send judicial documents, by postal channels directly to the person concerned. The current system mandates the courts in foreign territory to send the summons to a Processing body formed by the Central government in India. This indirectly hinders with the right of the citizens to make a proper representation causing them to suffer undue loss because of delay in running through the entire process. Write about court being intrusive.

The solution to the problem of serving summons issued by foreign can be resorted either by removing the condition of have a reciprocating agreement with the foreign country as mentioned under Section 29 or by withdrawing the reservations made by India in the Hague Convention. If either of the two methods are employed, the citizens of India will duly receive the summons issued by the foreign court without any delay or prejudice.

In this modern and globalized world, the concept of reciprocity has hindered the execution and enforcement of documents and decrees passed by the foreign courts in India. The regime of reciprocation has made things more complicated and inconclusive burdening both the foreign and Indian courts in executing and servicing decrees and other judicial documents. Diplomatic objectives of the Indian Government has choked the Code of Civil Procedure with unnecessary provision and requirements. Non-recognition of foreign territory as a reciprocating country has led to failure of appreciating the orders and judgments passed by its courts even if it meets the parameters of defined under Section 13. Constraints on the definition of the term “decree” has narrowed the subject matters on which the orders passed by foreign courts can be executed in India. Reservation from the Hague Convention and the policy of reciprocity has widely shown its impact on the service of judicial and extra-judicial document to the people residing in India. The scope of section 29 is so obliterated that only two countries have recognized and subscribed to it.

The Indian Government must ensure that certain amendments are made on these fronts such that execution and service of foreign decrees and documents can be smoother, more cost-effective and less time consuming.

# Explanation 1 of Section 44A.
# Official Gazette of India dated 18th January, 1956, SRO 183.
# Official Gazette of India dated 6th March, 1976, Part II, S. 3, page 613.
# Government of India, Ministry of Law, Notification No. S.R.O. 4, dated 3rd January, 1956.
# Official Gazette of India dated 27th March, 1954. See also Central Govt. Notification No. SRO 959.
# Official Gazette of India dated 23rd November, 1968, Part II, S.3 at page 611.
# Official Gazette of India dated 15th October, 1937, Part II, S.3, page 2505.
# Official Gazette of India dated 26th September, 1970, Part II, S. 3, page 731.
# Official Gazette of India dated 23rd November, 1968, S.3, page 355.
# Official Gazette of India dated 23rd November, 1968, Part II, S.3, page 464B.
# Official Gazette of India dated 23rd November, 1968, Part II S. 3, SRO 399.
# Official Gazette of India dated 15th October, 1957, SRO 3282.
# The conditions posed by Section 13 – The judgment should be pronounced: (a) by a Court of competent jurisdiction; (b) on the merits of the case; (c) on a correct view of international law or recognising the law of India in cases in which such law is applicable; (d) not opposed to natural justice; (e) not by way of fraud; (f) on a claim founded on a breach of any law in force in India.
# Radhamani India Ltd. v. Imperial Garments Ltd. AIR 2005 Cal 47
# G.S.R. 644(E), dated 22nd October, 2005
# G.S.R. 622(E), dated 1st October, 2005
# 20 U.S.T. 361, 658 U.N.T.S. 163
# Ratified on 23rd November, 2006


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