TaxTMI 
TaxTMI 
2020 (3) TMI 1472
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....bank to the said letter of credit. The Vysya Bank issued instructions to the London branch of the Appellant on 12.10.1992 to honour the letter of credit. Acting on this instruction the London branch of the Appellant discounted the letter of credit for a sum of US $ 1,742,376.41 and payment of this amount was made to M/s. Granada Worldwide Investment Company on 13.10.1992. 4. The Appellant Bank of Baroda filed a suit against the Vysya Bank for recovery of its dues on 19.04.1993 in London. This suit was decreed by the High Court of Justice, Queens Bench, Divisional Commercial Court of London (hereinafter referred to as the 'London Court') on 20.02.1995 and a decree for US $1,267,909.26 along with interest thereon was passed in favour of the Appellant bank and against Vysya Bank. The decree was not challenged and became final. 5. It appears that some talks went on between the two banks with regard to the satisfaction of the decree. On 28.08.1995, Vysya Bank placed an inter-bank deposit of US $ 1,400,000 with the main branch of the Bank of Baroda on rollover basis with a request that the decree passed by the London Court be not executed. However, later in 2003 ING Vysya B....
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....d to be an Indian decree. 8. On the other hand, Mr. V.V.S. Rao, learned senior Counsel appearing for the Respondent urged that the law of limitation of England would apply in this case. It is undisputed that the limitation period as per English law is 6 years for execution of a decree, and hence the Respondent's submission is that the decree having been passed on 20.02.1995, no petition for execution of that decree could be filed after 20.02.2001. The alternative argument of learned senior Counsel for the Respondent is that even if the Indian law of limitation were to apply, the limitation period for execution of a foreign decree would be determined as per Article 136 of the Act. Section 44A of the Code of Civil Procedure clearly provides that a decree passed in a reciprocating country should be treated as an Indian decree and, therefore, the same must be enforced within 12 years from the date of passing of the decree as provided by Article 136 of the Act. 9. To appreciate the rival contentions of the parties, it would be necessary to refer to Section 44A of the Code of Civil Procedure which reads as follows: 44A. Execution of decrees passed by Courts in reciproc....
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....owing issues arise for consideration: (i) Does Section 44A merely provide for manner of execution of foreign decrees or does it also indicate the period of limitation for filing execution proceedings for the same? (ii) What is the period of limitation for executing a decree passed by a foreign court (from a reciprocating country) in India? (iii) From which date the period of limitation will run in relation to a foreign decree (passed in a reciprocating country) sought to be executed in India? Question No. 1 12. A careful analysis of Section 44A hereinabove shows that a decree passed by any superior court of a reciprocating territory can be executed in India as if it had been passed by the District Court before whom it is filed. Sub-section (2) of Section 44A casts an obligation on the person filing such application to file a certified copy of the decree. Such person must also file a certificate from the superior court which passed the decree stating the extent, if any, to which the decree has been satisfied or adjusted. This certificate shall be conclusive proof of the extent of such satisfaction/adjustment. Sub-section (3) provides that from the da....
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....o a legal right enabling the Plaintiff to file a suit. On the other hand, a decree is a determination already made by a court on the basis of a reasoned judgment. In case of a decree it becomes enforceable the day it is passed. Therefore, we are clearly of the view that filing of an application Under Section 44A will not create a fresh period for enforcing the decree. 16. We clarify that for the purpose of this judgment we have used the expressions, "cause country" which will mean the country in which the decree was issued (in this case England), and "forum country" which would mean the country in which the decree is sought to be executed (in this case India). 17. If we accept the view urged by Shri K.K. Venugopal, that the date from which the limitation will be considered, will be the date of filing of certified copy of the decree it would lead to ludicrous results. Taking the example of the present case, the limitation to execute a decree in United Kingdom is 6 years. However, in India it is 12 years. The decree becomes enforceable on the date it was passed and, therefore, if the law of the cause country is to apply, the limitation would be 6 years and if the law of forum c....
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....of the decree and no step-in-aid for such an execution is taken in an Indian court on or before the limitation prescribed, then the execution petition has to be dismissed on the ground that it is time barred. It rejected the contention that the application for certificate of non-satisfaction given to the foreign court should be treated to be a step-in-aid and excluded while calculating the period of limitation. 19. Does Section 44A create a fresh period of limitation by extension of the deeming provision?. In our view, Section 44A is only an enabling provision which enables the District Court to execute the decree as if the decree had been passed by an Indian court and it does not deal with the period of limitation. A plain reading of Section 44A clearly indicates that it only empowers the District Court to execute the foreign decree as if it had been passed by the said District Court. It also provides that Section 47 of the Act shall, from the date of filing of certified copy of the decree, apply. Section 47 deals with the questions to be determined by the court executing a decree. Execution of a decree is governed Under Order 21 of Code of Civil Procedure and, therefore, the p....
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....ion. Three years When the right to apply accrues. 23. If we hold that Article 136 is to apply then the period of limitation in case of any foreign decree would be 12 years regardless of the limitation which may be prevalent in the country where the decree was passed, i.e., the cause country. If the decree is to be executed in another jurisdiction, i.e., the forum country, which law should apply? Whether the law of limitation as applicable in the cause country or the forum country would apply? 24. There is also the issue of conflict of laws between the cause country and the forum country. As far as the present case is concerned, it is not disputed that the limitation for executing a decree in England is 6 years in terms of Section 24 of the Limitation Act of 1980 of the United Kingdom. Rule 40.7 of the Code of Civil Procedure Rules of England provides that a judgment or order takes effect from the date it is given or made or such later date as the court may specify. The decree therefore becomes enforceable on the date when it was passed and as far as this case is concerned, the date of passing of the decree is 20.02.1995. If the limitation is 6 years then obviously the e....
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....ced. xxx xxx xxx Similar view was relied upon by the Division Bench of the Madras High Court in the case of Uthamram v. K.M. Abdul Kasim Co. AIR 1964 Mad 221, which held that the law of limitation of the forum country would apply. 27. Indian Courts have normally taken the view that the law of limitation is a procedural law. We may point out that in Dicey's 'Conflict of Laws' 14th Edition Sir Lawrence Collins et. al., "Dicey, Morris, & Collins on The Conflict of Laws", 14th Edn., Sweet & Maxwell pp. 198-199 (2006), the view taken is entirely different. The present thinking appears to be that law of limitation is not procedural, especially when it leads to extinguishment of rights or remedies. Hence, it cannot be termed as a procedural law. 28. At this stage we may refer to Dicey's Conflict of Laws 14th Edn. which has summarised this change in view in the following words: The traditional approach has been thrown into some doubt by decisions in Australia and Canada. In John Pfeiffer Pty Ltd. v. Rogerson, the High Court of Australia indicated (obiter) that, at common law, statutes of limitation are substantive, rather than procedural. In Tolof....
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....set in motion within a certain fixed time after the cause of action arose. In the result, therefore, any relevant statute of limitation that obtains in the lex fori may be pleaded, while a statute of some foreign law, even though it belongs to the proper law of the transaction, must be disregarded. xxx xxx xxx The Rules of English private international law upon this matter, however, pay little attention to the proper law of the transaction that is in issue. Thus in a report of a judgment by ROCHE, J., it is said: "Foreign courts might have decided that the laws of limitation were part of the substantive law, but he was unable to apply them as such." The result of this attitude is twofold. Firstly, an English statute of limitation is a good idea plea to an action brought in England, notwithstanding that the action is still maintainable according to the proper law of the transaction. xxx xxx xxx Secondly, the extinction of the right of action by the proper law of the transaction is not a bar to an action in England. In other words, if the permissible period is longer in England than in the foreign country the Plaintiff is at liberty to sus....
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....e law of the place of the tort. The corollary of the main Rule is that English law is no longer automatically to be applied. There is, of course, a significant difference between a Rule under which a claim is to be held to be statute barred in England if statute barred under the governing law, a reform which seems widely to be welcomed, and a further Rule that, if the claim is not statute barred abroad, it must be allowed to proceed in England. 31. The old position under common law was that limitation was treated as a procedural law. In countries following civil jurisdiction, the law of limitation has never been treated as a procedural law but as a substantive law. In recent years, almost all the common law countries have either brought a new legislation or by judicial decisions have now taken the view that the law of limitation cannot be treated as a purely procedural law. We may make reference to the law in the United Kingdom and the United States of America. 32. Section 1 of the Foreign Limitation Periods Act, 1984 as applicable to the United Kingdom reads as follows: Application of foreign limitation law. 1. - (1) Subject to the following provisions of t....
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....all other claims. Section 3: If the statute of limitations of another state applies to the assertion of a claim in this State, the other States' relevant statutes and other Rules of law governing tolling and accrual apply in computing the limitation period, but its statutes and other Rules of law governing conflict of laws do not apply. 33. The view worldwide appears to be that the limitation law of the cause country should be applied even in the forum country. Furthermore, we are of the view that in those cases where the remedy stands extinguished in the cause country it virtually extinguishes the right of the decree-holder to execute the decree and creates a corresponding right in the judgment debtor to challenge the execution of the decree. These are substantive rights and cannot be termed to be procedural. As India becomes a global player in the international business arena, it cannot be one of the few countries where the law of limitation is considered entirely procedural. 34. We have already clearly indicated that if the law of a forum country is silent with regard to the limitation prescribed for execution of a foreign decree then the limitation of the cau....
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....hich the decree has been satisfied or adjusted. These are the twin requirements and no foreign decree can be executed unless both the requirements are met. It is essential to file not only a certified copy of the decree but also the certificate in terms of Sub-section (2). That, however, does not mean that nothing else has to be filed. The only inference is that the decree can be executed only once these documents are filed. The executing court cannot execute this decree and certificate unless the decree holder also provides various details of the judgment debtor that is, his address, etc. in India and the details of the property of the judgment debtor. These particulars will have to be provided by a written application filed in terms of Clause (2) of Rule 11 of Order 21 of the Code of Civil Procedure which reads as follows: (2) Written application. - Save as otherwise provided by Sub-rule (1), every application for the execution of a decree shall be in writing, signed and verified by the applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case, and shall contain in a tabular form the following particulars, namel....
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....e decree in the cause country is permitted to execute the decree in a forum country. This would be against the principle which we have accepted, that the law of limitation is not merely a procedural law. This would mean that a person who has lost his/her right or remedy to execute the foreign decree in the court where the decree was passed could take benefit of the provisions of the Indian law for extending the period of limitation. In the facts of the present case, the limitation in India is 12 years for executing a money decree whereas in England it is 6 years. There may be countries where the limitation for executing such a decree may be more than 12 years. The right of the litigant in the latter situation would not come to an end at 12 years and it would abide by the law of limitation of the cause country which passed the decree. Hence, limitation would start running from the date the decree was passed in the cause country and the period of limitation prescribed in the forum country would not apply. In case the decree holder does not take any steps to execute the decree in the cause country within the period of limitation prescribed in the country of the cause, it cannot come t....