2016 (12) TMI 1826 - SC - Indian Laws

Foreign Court Order Executable in India under Section 44A CPC. Costs Decree Enforceable, Interest Allowed.

The Court held that the order of the Foreign Court was conclusive and executable under Section 44A of the CPC. The decree for costs was deemed executable ... Infringement of patent vested in the respondents - jurisdiction of the English Court - Executability of order/decree of English Court - Explanation 2 of Section 44A (3) of CPC. Whether the order passed by the Foreign Court falls within the Exceptions to Section 13 of the CPC? - HELD THAT:- The order passed by the English Court is an order on merits. The appellant who has submitted itself to the jurisdiction of the Court and on its own requested the Court to assess the costs summarily. While passing a reasoned order by dismissing the application filed by the appellant, English Court granted the costs against the appellant. Had it been the case where appellant’s application was allowed and costs were awarded to it, it would have as well filed a petition for the execution of the order - It cannot be permitted to blow hot and cold at the same time. In our opinion, it is a pure abuse of process of law and the Courts should be very cautious in entertaining such petitions. The principles of comity of nation demand us to respect the order of English Court. Even in regard to an interlocutory order, Indian Courts have to give due weight to such order unless it falls under any of the exceptions under Section 13 of the CPC. Hence we feel that the order in the present case passed by the English Court does not fall under any of the exceptions to Section 13 of the CPC and it is a conclusive one. The contention of the appellant that the order is the one not on merits deserves no consideration and therefore liable to be rejected. Whether the order passed by the Foreign Court amounts to a “decree” and the same is executable? - HELD THAT:- As per the plain reading of the definition ‘Judgment’ means the statement given by the Judge on the grounds of decree or order and order is a formal expression of a Court. Thus “decree” includes judgment and “judgment” includes “order”. On conjoint reading of ‘decree’, ‘judgment’ and ‘order’ from any angle, the order passed by the English Court falls within the definition of ‘Order’ and therefore, it is a judgment and thus becomes a “decree” as per Explanation to Section 44A(3) of CPC. In this case, the Court at England, after following the principles of natural justice, by recording reasons and very importantly basing on the application of the appellant itself, has conclusively decided the issue with regard to jurisdiction and passed the order coupled with costs - the order passed by the Foreign Court is conclusive in that respect and on merits. Hence executable as a decree and accordingly the issue is answered. Whether the decree for costs would fall within the ambit of Explanation 2 of Section 44A (3) of CPC and makes it inexecutable? - Whether interest on costs would fall within the ambit of Explanation 2 of Section 44A of CPC? - HELD THAT:- The appellant has advanced an argument that as per Section 35A of the CPC, no Court should pass any order for the payment of compensatory costs exceeding ₹ 3,000/- or exceeding the limits of its pecuniary jurisdiction of the said Court whichever amount is less. It is thus argued by the appellant that in the present case, since the costs imposed exceed the bar imposed by Section 35A, therefore, the order of the English Court is not executable in the present case - In the present case, no claim has been advanced by the appellant that the claim filed by the respondents is false or vexatious, therefore, the bar in Section 35A is not applicable. Accordingly the issue is answered. In re Issue No. 5 - It is the case of the appellant that the claim for interest on costs is not recognized in the Indian law. It is to be noted that matters of procedure are to be governed by the lex fori, whereas the matters of the substance are governed by lex causae. In this case, the question whether the interest on sum of decree of costs to be executed in India is a matter of substance as the interest on decree is a substantive right of the decree holder and does not concern itself with the procedural law of the forum. Whether the interest on costs can be executed in India in view of deletion of Section 35(3) of CPC? - HELD THAT:- It is to the reciprocal advantage of the Courts of all nations to enforce foreign rights as far as practicable. To this end, broad recognition of substantive rights should not be defeated by some vague assumed limitations of the Court. When substantive rights are so bound up in a foreign remedy, the refusal to adopt the remedy would substantially deprive parties of their rights. The necessity of maintaining the foreign rights outweighs the practical difficulties involved in applying the foreign remedy. In India, although the interest on costs are not available due to exclusion of Section 35(3), the same does not mean that Indian Courts are powerless to execute the decree for interest on costs. Indian Courts are very much entitled to address the issue for execution of the interest amount. The Execution Petition filed by the Respondents for execution of the order dated 19th October, 2006 passed by the English Court is maintainable under the relevant provisions - Appeal dismissed. Issues Involved:1. Whether the order passed by the Foreign Court falls within the Exceptions to Section 13 of the CPCRs.2. Whether the order passed by the Foreign Court amounts to a “decree” and the same is executableRs.3. If the answer to issue No. 2 is in the affirmative, whether the decree for costs would fall within the ambit of Explanation 2 of Section 44A (3) of CPC and makes it inexecutableRs.4. Whether interest on costs would fall within the ambit of Explanation 2 of Section 44A of CPCRs.5. Whether the interest on costs can be executed in India in view of the deletion of Section 35(3) of CPCRs.Issue-wise Detailed Analysis:Issue No. 1: Whether the order passed by the Foreign Court falls within the Exceptions to Section 13 of the CPCRs.The appellant argued that the order of the English Court is not conclusive under Section 13(b) of the CPC as it was not a judgment on the merits of the case. The Court held that the English Court's order dated 19th October 2006 was passed after giving both parties the opportunity to present their case, and it was a detailed order addressing the jurisdiction issue and awarding costs. The appellant had accepted the order and sought time to pay the costs without appealing it, which means the order attained finality. The Court concluded that the order was on merits and did not fall under any exceptions to Section 13 of the CPC, making it conclusive and executable.Issue No. 2: Whether the order passed by the Foreign Court amounts to a “decree” and the same is executableRs.The appellant contended that the order was interlocutory and did not constitute a 'decree'. The Court referred to Section 44A of the CPC, which allows for the execution of decrees from reciprocating territories like England. The definitions of 'decree', 'judgment', and 'order' under the CPC were examined, and it was concluded that the order passed by the English Court, which included a conclusive decision on jurisdiction and costs, qualifies as a 'decree' under Explanation 2 to Section 44A. Therefore, it is executable in India.Issue Nos. 3 & 4: Whether the decree for costs would fall within the ambit of Explanation 2 of Section 44A (3) of CPC and makes it inexecutableRs.The appellant argued that the decree for costs should be excluded under Explanation 2 of Section 44A, which pertains to taxes, fines, or penalties. The Court clarified that costs are not penalties or taxes but are compensation for litigation expenses. The Law Commission's 240th Report and various legal principles were cited to explain that costs are a reimbursement for litigation expenses and not punitive. Therefore, the decree for costs does not fall under the exclusions of Explanation 2 to Section 44A and is executable.Issue No. 5: Whether the interest on costs can be executed in India in view of the deletion of Section 35(3) of CPCRs.The appellant argued that interest on costs is not recognized under Indian law due to the deletion of Section 35(3) of the CPC. The Court noted that while Indian law does not currently provide for interest on costs, the substantive right to interest on costs as per the Judgments Act, 1838 of the UK should be recognized and enforced in India. The Court emphasized the principle of comity of nations and the necessity to enforce foreign rights, concluding that the execution of the interest on costs is maintainable.Conclusion:The Court held that the order of the English Court is conclusive and executable under Section 44A of the CPC. The decree for costs does not fall under the exclusions of Explanation 2 to Section 44A, and the interest on costs can be executed in India despite the deletion of Section 35(3) of the CPC. The appeal was dismissed with costs.