BANK OF BARODA versus KOTAK MAHINDRA BANK LTD.

[2020] 5 S.C.R. 492

[2020] 5 S.C.R.

BANK OF BARODA

KOTAK MAHINDRA BANK LTD.

(Civil Appeal No. 2175 of 2020)

BMARCH 17, 2020

[DEEPAK GUPTA AND ANIRUDDHA BOSE, JJ.]

Limitation Act, 1963 – Arts. 136 and 137 – Executing decreepassed by foreign court (from reciprocating country) in India –Period of limitation for – Held: The limitation period for executingCa decree passed by foreign court (from reciprocating country)in India will be the limitation prescribed in the reciprocating foreigncountry – However, this will be subject to the decree being executablein terms of s.13 of the CPC.

Code of Civil Procedure, 1908 – s. 44A – Limitation Act, 1963D– s.44A indicates period of limitation to execute the foreign decreeor not – Held: s.44A only empowers the District Court to executethe foreign decree as if it had been passed by the said District Court– s.44A enables the District Court to execute the decree and furtherprovides that the District Court shall follow the same procedure asEit follows while executing an Indian decree, but it does not lay downor indicate the period of limitation for filing such an executionpetition.

Limitation Act, 1963 – Art. 137 – From which date the periodof limitation will run in relation to foreign decree (passed in aFreciprocating country) sought to be executed in India – Held: Theperiod of limitation would start running from the date the decreewas passed in the foreign Court of reciprocating country –However, if the decree-holder first takes steps-in-aid to execute thedecree in the cause country i.e. the country in which decree wasissued, and the decree is not fully satisfied, then he can then file aGpetition for execution in India within period of 3 years from thefinalisation of the execution proceedings in the cause country.

Dismissing the appeal, the Court

HELD: Does Section 44A merely provide for manner ofexecution of foreign decrees or does it also indicate the periodof limitation for filing execution proceedings for the same?

1. In view of this Court, Section 44A of Code of CivilProcedure, 1908 is only an enabling provision which enables theDistrict Court to execute the decree as if the decree had beenpassed by an Indian court and it does not deal with the period oflimitation. plain reading of Section 44A clearly indicates that itonly empowers the District Court to execute the foreign decreeas if it had been passed by the said District Court. It also providesthat Section 47 of the Act shall, from the date of filing of certifiedcopy of the decree, apply. Section 47 deals with the questions tobe determined by the court executing decree. Execution of adecree is governed under Order 21 of CPC and, therefore, theprovisions of Section 47 of the Act and Order 21 of CPC willapply. In view of this Court, Section 44A has nothing to do withlimitation. [Para 19][503-C-E]

2. Section 44-A clearly provides that it is only after the filingof the certified copy and the certificate, that the provision ofSection 47 CPC will become applicable. This clearly indicatesthat this section only lays down the procedure to be followed bythe District Court. [Para 20][503-F]

3. In view of this Court Section 44A only enables the DistrictCourt to execute the decree and further provides that the DistrictCourt shall follow the same procedure as it follows whileexecuting an Indian decree, but it does not lay down or indicatethe period of limitation for filing such an execution petition. [Para21][504-A-B]

What is the period of limitation for executing decreepassed by foreign court (from reciprocating country) in India?

4. The old position under common law was that limitationwas treated as procedural law. In countries following civiljurisdiction, the law of limitation has never been treated as aprocedural law but as substantive law. In recent years, almostall the common law countries have either brought new legislation

Aor by judicial decisions have now taken the view that the law oflimitation cannot be treated as purely procedural law. Referencemay be made to the law in the United Kingdom and the UnitedStates of America. [Para 31][509-E-F]

5. The view worldwide appears to be that the limitation lawBof the cause country should be applied even in the forum country.Furthermore, this Court is of the view that in those cases wherethe remedy stands extinguished in the cause country it virtuallyextinguishes the right of the decree-holder to execute the decreeand creates corresponding right in the judgment debtor tochallenge the execution of the decree. These are substantiveCrights and cannot be termed to be procedural. As India becomesa global player in the international business arena, it cannot beone of the few countries where the law of limitation is consideredentirely procedural. [Para 33][511-C]

6. It has been already clearly indicated that if the law of aDforum country is silent with regard to the limitation prescribedfor execution of foreign decree then the limitation of the causecountry would apply. [Para 34][511-D]

7. This Court answers the question by holding that thelimitation period for executing decree passed by foreign courtE(from reciprocating country) in India will be the limitationprescribed in the reciprocating foreign country. Obviously thiswill be subject to the decree being executable in terms of Section13 of the CPC. [Para 35][511-E]

From which date the period of limitation will run in relationFto foreign decree (passed in reciprocating country) sought tobe executed in India?

8. The question that then arises is that from which date thelimitation starts. This Court envisages of 2 situations only. Thefirst situation is one where the decree holder does not take anyGsteps for execution of the decree during the period of limitationprescribed in the cause country for execution of decrees in thatcountry. In such case he has lost his right to execute the decreein the country where the cause of action arose. It would be atravesty of justice if the person having lost his rights to executethe decree in the cause country is permitted to execute the decreeH

in forum country. This would be against the principle which wehave accepted, that the law of limitation is not merely procedurallaw. This would mean that person who has lost his/her right orremedy to execute the foreign decree in the court where thedecree was passed could take benefit of the provisions of theIndian law for extending the period of limitation. In the facts ofthe present case, the limitation in India is 12 years for executinga money decree whereas in England it is 6 years. There may becountries where the limitation for executing such decree maybe more than 12 years. The right of the litigant in the lattersituation would not come to an end at 12 years and it would abideby the law of limitation of the cause country which passed thedecree. Hence, limitation would start running from the date thedecree was passed in the cause country and the period of limitationprescribed in the forum country would not apply. In case thedecree holder does not take any steps to execute the decree inthe cause country within the period of limitation prescribed in thecountry of the cause, it cannot come to the forum country andplead new cause of action or plead that the limitation of theforum country should apply. [Para 40][513-H; 514-A-E]9. The second situation is when decree holder takes steps-in-aid to execute the decree in the cause country. The proceedingsin execution may go on for some time, and the decree may beexecuted, satisfied partly but not fully. The judgment debtor maynot have sufficient property or funds in the cause country to satisfythe decree etc. In such eventuality what would be done? In viewof this Court, in such circumstances the right to apply underSection 44A will accrue only after the execution proceedings inthe cause country are finalised and the application under Section44A of the CPC can be filed within 3 years of the finalisation ofthe execution proceedings in the cause country as prescribed byArticle 137 of the Act. The decree holder must approach theIndian court along with the certified copy of the decree and therequisite certificate within this period of 3 years. It is clarifiedthat applying in the cause country for certified copy of the decreeor the certificate of part-satisfaction, if any, of the decree, asrequired by Section 44A will not tantamount to step-in-aid toexecute the decree in the cause country. [Paras 41, 42][514-F-H;515-A]

A10. This Court answers the third question accordingly andhold that the period of limitation would start running from thedate the decree was passed in the foreign court of reciprocatingcountry. However, if the decree holder first takes steps-in-aid toexecute the decree in the cause country, and the decree is notfully satisfied, then he can then file petition for execution inBIndia within period of 3 years from the finalisation of theexecution proceedings in the cause country. [Para 43][515-B]

Income Tax Commissioner v. S. Teja Singh AIR 1959SC 352 : [1959] Suppl. SCR 394 – referred to.

CLakhpat Rai Sharma v. Atma Singh AIR (58) 1971P & 476; Uthamram v. K.M. Abdul Kasim Co. (AIR1964) (Mad 221) – referred to.

Sheik Ali v. Sheik Mohamed AIR 1967 Mad 45– not approved.

DEast End Dwellings Co. Ltd. v. Finsburry BroughCouncil 1951 (2) All E.R. 587 – referred to.

Sir Lawrence Collins et. al., “Dicey, Morris, & Collinson The Conflict of Laws , 14[th] Edn., Sweet & Maxwellpp. 198-199 (2006) – referred to.

Case Law Reference

[1959] Suppl. SCR 394referred to

Para 18

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2175of 2020.F

From the Judgment and Order dated 13.11.2014 of the High Courtof Karnataka at Bangalore in Civil Revision Petition No.433 of 2013.

K. K. Venugopal, A.G., Ms. Praveena Gautam, Deepak Tyagi,Pawan Shukla, Ankur Talwar, Raja Ram, Ms. Sweety Pandey, SaiAnukaran, Advs. for the Appellant.G

V. V. S. Rao, Sr. Adv., D. Bharat Kumar, Tadimalla BhaskarGowtham, Aman Shukla, Siddharth Sinha, Vishal Arun, RaghuVamsy D.V., Advs. for the Respondent.

The Judgment of the Court was delivered by

DEEPAK GUPTA, J.

1. Leave granted.

2. “What is the limitation for filing an application for execution ofa foreign decree of reciprocating country in India?” is the short butinteresting question which arises for decision in this case.

3. Vysya Bank, which is the predecessor of the respondent KotakMahindra Bank Ltd., issued letter of credit for US $1,794,258 on behalfof its customer M/s. Aditya Steel Industries Limited in favour ofM/s. Granada Worldwide Investment Company, London. The appellantBank of Baroda was the confirming bank to the said letter of credit.The Vysya Bank issued instructions to the London branch of the appellanton 12.10.1992 to honour the letter of credit. Acting on this instructionthe London branch of the appellant discounted the letter of credit for asum of US $ 1,742,376.41 and payment of this amount was made toM/s Granada Worldwide Investment Company on 13.10.1992.4. The appellant Bank of Baroda filed suit against the VysyaBank for recovery of its dues on 19.04.1993 in London. This suit wasdecreed by the High Court of Justice, Queens Bench, DivisionalCommercial Court of London (hereinafter referred to as the ‘LondonCourt’) on 20.02.1995 and decree for US $1,267,909.26 along withinterest thereon was passed in favour of the appellant bank and againstVysya Bank. The decree was not challenged and became final.

5. It appears that some talks went on between the two banks withregard to the satisfaction of the decree. On 28.08.1995, Vysya Bankplaced an inter-bank deposit of US $ 1,400,000 with the main branch ofthe Bank of Baroda on rollover basis with request that the decreepassed by the London Court be not executed. However, later in 2003ING Vysya Bank, filed petition before the Debt Recovery Tribunal(DRT) for recovery of US $1,400,000. Those proceedings are beingcontested by the Bank of Baroda and it appears that the proceedingsbefore the DRT are still pending and we make it clear that anything saidby us in this appeal will not affect those proceedings, since we are onlydealing with the issue of limitation for filing an execution petition of adecree passed by foreign court of reciprocating country.

A6. On 05.08.2009, the appellant bank filed an execution petitioni.e. almost 14 years after the decree was passed by the London Courtfor execution of the same in terms of Section 44A read with Order 21Rule 3 of the Code of Civil Procedure, 1908 (CPC) for recovery ofRs.16,43,88,187.86. This execution petition was contested mainly on theground that the same had not been filed within the period of limitation.BOn 20.07.2013 the Additional City Civil & Session Judge, Bangaloredismissed the execution petition as time barred holding that Article 136of the Limitation Act, 1963 (for short ‘the Act’) applies and the executionpetition should have been filed within 12 years of the decree being passedby the London Court. Aggrieved, the bank approached the High CourtCwhich vide judgment dated 13.11.2014 upheld the view of the trial court.

7. Sh. K. K. Venugopal, learned senior counsel appearing for theappellant urged that the Act does not prescribe any period of limitationfor execution of foreign decree passed in reciprocating country. Hesubmits that in such eventuality principles of delay and laches asDapplicable to writ proceedings may apply and, therefore, he has reliedupon long list of dates to show that the Bank of Baroda was pursuingthe matter and was trying its best to get the matter settled with VysyaBank and urges that there is no delay in filing the petition. His secondsubmission is that since no limitation is provided under the Act, the causeof action to file an execution petition arises only when petition is filedEunder Section 44A of the CPC which provides that decree passed bya court in reciprocating country should be treated as an Indian decreeand, therefore, the limitation for 12 years provided under Article 136 ofthe Act applies only from that date because that is the date when thecause of action arises and the decree is treated to be an Indian decree.F

8. On the other hand, Mr. V.V.S. Rao, learned senior counselappearing for the respondent urged that the law of limitation of Englandwould apply in this case. It is undisputed that the limitation period as perEnglish law is 6 years for execution of decree, and hence therespondent’s submission is that the decree having been passed onG20.02.1995, no petition for execution of that decree could be filed after20.02.2001. The alternative argument of learned senior counsel for therespondent is that even if the Indian law of limitation were to apply, thelimitation period for execution of foreign decree would be determinedas per Article 136 of the Act. Section 44A of the CPC clearly providesthat decree passed in reciprocating country should be treated as anHIndian decree and, therefore, the same must be enforced within 12 yearsfrom the date of passing of the decree as provided by Article 136 of theAct.

9. To appreciate the rival contentions of the parties, it would benecessary to refer to Section 44A of the CPC which reads as follows:

“44A. Execution of decrees passed by Courts inreciprocating territory.– (1) Where certified copy of decreeof any of the superior Courts of any reciprocating territory hasbeen filed in District Court, the decree may be executed in as ifit had been passed by the District Court.

(2) Together with the certified copy of the decree shall be filed acertificate from such superior court stating the extent, if any, towhich the decree has been satisfied or adjusted and such certificateshall, for the purposes of proceedings under this section, beconclusive proof of the extent of such satisfaction or adjustment.

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

Explanation 1.- “Reciprocating territory” means any country orterritory outside India which the Central Government may, bynotification in the Official Gazette, declare to be reciprocatingterritory for the purposes of this section; and “superior Courts”,with reference to any such territory, means such Courts as maybe specified in the said notification.

Explanation 2.- “Decree” with reference to superior Courtmeans any decree or judgment of such Court under which sumof money is payable, not being sum payable in respect of taxesor other charges of like nature or in respect of fine or otherpenalty, but shall in no case include an arbitration award, even ifsuch an award is enforceable as decree or judgment.”

10. At the outset, we may note that the aforesaid section wasinserted in the CPC in the year 1937. Prior to that, decree passed byany Court in foreign country could not be executed in India and only

Asuit could be filed on the basis of the judgment passed by foreign court.Section 44A brought about change in law in respect of reciprocatingcountries which agreed to respect the judgments and decrees passed ineach other’s courts. From bare reading of Section 44A CPC it is crystalclear that it applies only to money decrees and not to other decrees.B11. Considering the rival arguments before us, the following issuesarise for consideration:

(i)Does Section 44A merely provide for manner of executionof foreign decrees or does it also indicate the period oflimitation for filing execution proceedings for the same?

(ii)What is the period of limitation for executing decree passedby foreign court (from reciprocating country) in India?

(iii)From which date the period of limitation will run in relationto foreign decree (passed in reciprocating country)sought to be executed in India?

Question No. 1

12. careful analysis of Section 44A hereinabove shows that adecree passed by any superior court of reciprocating territory can beexecuted in India as if it had been passed by the District Court beforewhom it is filed. Sub-section (2) of Section 44A casts an obligation onEthe person filing such application to file certified copy of the decree.Such person must also file certificate from the superior court whichpassed the decree stating the extent, if any, to which the decree hasbeen satisfied or adjusted. This certificate shall be conclusive proof ofthe extent of such satisfaction/adjustment. Sub-section (3) provides thatFfrom the date of filing of certified copy of the decree, the provisions ofSection 47 of CPC shall apply to such proceedings. The District Courtcan refuse to execute any such decree if it falls within exceptions (a) to(f) of Section 13. The first Explanation provides the definition ofreciprocating territory and superior courts. Explanation 2 is importantwhich provides that decree must be decree under which sum ofGmoney is payable excluding certain sums such as those payable as taxes,fines, penalties etc. and also excludes arbitration awards by the foreigncourts.

13. At the outset, we may note that we are not at all in agreementwith the submission of Shri K.K. Venugopal that no limitation isH

applicable. These are not writ proceedings but execution proceedings.The Act is complete code in itself and Section 3 clearly sets out thatsubject to the provisions contained in Section 4 to Section 24 of the Act,every suit instituted, appeal preferred, and application made after theprescribed period shall be dismissed even if limitation has not been setup as defence. The word ‘application’ used is wide enough to includean application filed for execution of decree, even foreign decree.Therefore, the principles of delay and laches which may be applicable towrit proceedings cannot be applied to civil proceedings and are not at allattracted in proceedings filed under the CPC which, in our opinion, mustbe filed within the prescribed period of limitation.

14. The main argument of Shri K.K. Venugopal is that limitationwill start running only after the petition under Section 44A is filed.According to him, the cause of action for executing the decree in Indiaarises only after the application under Section 44A is filed. This viewhas also been taken by Full Bench of the Madras High Court in thecase of Sheik Ali vs. Sheik Mohamed[1]. This view is however contraryto the view taken by the Punjab & Haryana High Court in Lakhpat RaiSharma vs. Atma Singh[2].

15. We have carefully considered the matter and at the outset wemay note that there is no concept of cause of action in so far as anexecution petition is concerned. Cause of action is concept relating tocivil suits and not to execution petitions. Cause of action is nothing but abundle of facts which gives rise to legal right enabling the plaintiff tofile suit. On the other hand, decree is determination already madeby court on the basis of reasoned judgment. In case of decree itbecomes enforceable the day it is passed. Therefore, we are clearly ofthe view that filing of an application under Section 44A will not create afresh period for enforcing the decree.

16. We clarify that for the purpose of this judgment we have usedthe expressions, “cause country” which will mean the country in whichthe decree was issued (in this case England), and “forum country”which would mean the country in which the decree is sought to beexecuted (in this case India).

17. If we accept the view urged by Shri K.K. Venugopal, that thedate from which the limitation will be considered, will be the date of1 AIR 1967 Mad 452 AIR (58) 1971 P&H 476

Afiling of certified copy of the decree it would lead to ludicrous results.Taking the example of the present case, the limitation to execute decreein United Kingdom is 6 years. However, in India it is 12 years. Thedecree becomes enforceable on the date it was passed and, therefore, ifthe law of the cause country is to apply, the limitation would be 6 yearsand if the law of forum country were to apply, it would be 12 years. IfBthe view urged is accepted then the decree holder can keep silent for100 years and, thereafter, file certified copy of the decree and thecertificate and then claim that the decree can be executed. That wouldmake mockery of the legal process not only of the cause country butalso of the forum country. The clock of limitation cannot be kept inCabeyance for 100 years at the choice of the decree holder. We, therefore,reject this contention.

18. The main argument raised on behalf of the appellant is thatsub-section (1) of Section 44A is deeming provision which providesthat the decree shall be executed as if it had been passed by an IndianDcourt. It is urged that this deeming provision should be given its fullmeaning and when the statute directs an imaginary state of affairs to betaken as real, one should imagine also as real the consequences andincidents which flow from the same. Reference has been made to thejudgment in East End Dwellings Co. Ltd. vs. Finsbury BoroughCouncil[3] wherein it was held as follows:E

“…If one is bidden to treat an imaginary state of affairs as real,one must surely, unless prohibited from doing so, also imagine asreal the consequences and incidents which, if the putative state ofaffairs had in fact existed, must inevitably have flowed from oraccompanied it. One of these in this case is emancipation fromFthe 1939 level of rents. The statute says that one must imagine acertain state of affairs. It does not say that, having done so, onemust cause or permit one’s imagination to boggle when it comesto the inevitable corollaries of that state of affairs.”

The aforesaid observations by the House of Lords have beenGapproved by this Court in Income Tax Commissioner vs. S. Teja Singh[4].The Madras High Court[5] and the Punjab and Haryana High Court[6] have

3 1951 (2) All E.R. 587

4 AIR 1959 SC 3525 In Uthamram vs. K. M. Abdul Kasim Co., AIR 1964 Mad 221H6 In Lakhpat Rai Sharma vs. Atma Singh, AIR (58) 1971 P&H 476

taken the view that the foreign decree has to be executed in India as ifit had been passed by an Indian court and the legal fiction must beextended to its logical end. Therefore, the foreign decree must be treatedas an Indian decree as on the date it was passed. However, the Punjaband Haryana High Court held in Lakhpat Rai Sharma (supra) that ifno step for execution of the decree and no step-in-aid for such anexecution 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 istime barred. It rejected the contention that the application for certificateof non-satisfaction given to the foreign court should be treated to be astep-in-aid and excluded while calculating the period of limitation.19. Does Section 44A create fresh period of limitation byextension of the deeming provision?. In our view, Section 44A is only anenabling provision which enables the District Court to execute the decreeas if the decree had been passed by an Indian court and it does not dealwith the period of limitation. plain reading of Section 44A clearlyindicates that it only empowers the District Court to execute the foreigndecree as if it had been passed by the said District Court. It also providesthat Section 47 of the Act shall, from the date of filing of certified copyof the decree, apply. Section 47 deals with the questions to be determinedby the court executing decree. Execution of decree is governedunder Order 21 of CPC and, therefore, the provisions of Section 47 ofthe Act and Order 21 of CPC will apply. In our considered view, Section44A has nothing to do with limitation.

20. Section 44-A clearly provides that it is only after the filing ofthe certified copy and the certificate, that the provision of Section 47CPC will become applicable. This clearly indicates that this section onlylays down the procedure to be followed by the District Court. Thoughwe do not approve of the view taken by the Madras High Court in SheikAli (supra), that limitation will start running on filing of an applicationunder Section 44A, we only approve the following observations:

“(19) To sum up of our conclusions, we are of the view that S. 44-A(1) is confined to the powers and manner of execution and hasnothing to do with the law of limitation. The fiction created by thesub-section goes no further and is not for all purposes, but isdesigned to attract and apply to execution of foreign judgmentsby the District Court its own powers of execution and the mannerof it in relation to its decrees, without reference to limitation…”

21. In our view Section 44A only enables the District Court toexecute the decree and further provides that the District Court shallfollow the same procedure as it follows while executing an Indian decree,but it does not lay down or indicate the period of limitation for filing suchan execution petition. We answer question number 1 accordingly.

BQuestion No.2

22. Articles 136 and 137 of the Act read as follows:

Article 136, Limitation Act, 1963:

23. If we hold that Article 136 is to apply then the period of limitationin case of any foreign decree would be 12 years regardless of thelimitation which may be prevalent in the country where the decree wasHpassed, i.e., the cause country. If the decree is to be executed in another

jurisdiction, i.e., the forum country, which law should apply? Whetherthe law of limitation as applicable in the cause country or the forumcountry would apply?

24. There is also the issue of conflict of laws between the causecountry and the forum country. As far as the present case is concerned,it is not disputed that the limitation for executing decree in England is 6years in terms of Section 24 of the Limitation Act of 1980 of the UnitedKingdom. Rule 40.7 of the Civil Procedure Rules of England providesthat judgment or order takes effect from the date it is given or made orsuch later date as the court may specify. The decree therefore becomesenforceable on the date when it was passed and as far as this case isconcerned, the date of passing of the decree is 20.02.1995. If thelimitation is 6 years then obviously the execution petition should havebeen filed on or before 20.02.2001 and if the limitation was 12 years interms of Section 136 of the Act, the execution petition would still bebarred by limitation as the execution petition was filed in 2009.25. There is increasing interaction and interplay between the peopleacross the globe. There are more and more international business dealsbeing done. There is an increasing exchange of views in the fields of art,literature, sports, etc. Goods are sold across the world, online. All thesecould lead to litigation, which may have the cause in one country but thejudgment debtor may not have any property in that cause country andthe decree-holder would have to go to another country (forum country)to take benefit of the decree.

26. The earlier view was that the law of limitation being aprocedural law, the law of the forum country would govern the field.This is reflected in Dicey’s observations in ‘Conflict of Laws’, 6[th] Edition[7],where it has been said as follows:

“Whilst, however, it is certain that all matters which concernprocedure are in an English court governed by the law of England,it is equally clear that everything which goes to the substance of aparty’s rights and does not concern procedure is governed by thelaw appropriate to the case.

Our Rule is clear and well established. The difficulty of itsapplication to given case lies in discriminating between matters

7 J.H.C. Morris, et. al., (Eds.), “Dicey’s Conflict of Laws”, 6th Edn., Stevens & SonsLtd., Sweet & Maxwell, Ltd., pp.860-861 (1949).

Awhich belong to procedure and matters which affect thesubstantive rights of the parties. In the determination of this questiontwo considerations must be borne in mind:-(1) English lawyersgive the widest possible extension to the meaning of the term‘procedure’. The expression, as interpreted by our judges, includesall legal remedies, and everything connected with the enforcementBof right. It covers, therefore, the whole field of practice; itincludes the question of set-off and counter-claim, the whole lawof evidence, as well as every rule in respect of the limitation of anaction or of any other legal proceeding for the enforcement of aright, and hence it further includes the methods, e.g., seizure ofCgoods or arrest of person, by which judgment may be enforced.”

xxxxxx

Similar view was relied upon by the Division Bench of the MadrasHigh Court in the case of Uthamram vs. K. M. Abdul Kasim Co.[8],which held that the law of limitation of the forum country would apply.D

27. Indian Courts have normally taken the view that the law oflimitation is procedural law. We may point out that in Dicey’s ‘Conflictof Laws’ 14[th] Edition[9], the view taken is entirely different. The presentthinking appears to be that law of limitation is not procedural, especiallywhen it leads to extinguishment of rights or remedies. Hence, it cannotEbe termed as procedural law.

28. At this stage we may refer to Dicey’s Conflict of Laws 14[th]Edn. which has summarised this change in view in the following words:-

“The traditional approach has been thrown into some doubt byFdecisions in Australia and Canada. In John Pfeiffer Pty Ltd v.Rogerson, the High Court of Australia indicated (obiter) that, atcommon law, statutes of limitation are substantive, rather thanprocedural. In Tolofson v. Jensen the Supreme Court of Canadarejected the traditional common law classification of statutes oflimitation and the distinction between right and remedy on whichGit is based and held that statutes of limitation are to be classifiedas substantive. This approach was confirmed in Castillo v.Castillo. The Supreme Court applied one year limitation period

8 AIR 1964 Mad 221

9 Sir Lawrence Collins et. al., “Dicey, Morris, & Collins on The Conflict of Laws”, 14thHEdn., Sweet & Maxwell pp. 198-199 (2006).

under the law applicable to the tort, Californian law, despite aprovision of Alberta law which provided that Alberta limitationlaw (which had two year period) should apply “notwithstandingthat, in accordance with conflict of law rules, the claim will beadjudicated under the substantive law of another jurisdiction.” Amajority of the Supreme Court of Canada held that this provisionhad no application because the claim was already time-barredwhen the action was brought.”

Even in relation to England it was observed:-

“Under the Foreign Limitation Periods Act 1984. The Act wasbased on the recommendations of the Law Commission. It adoptsthe general principle, subject to an exception based on public policy,that the limitation rules of the lex causae are to be applied inactions in England, even if those rules do not lay down any limitationperiod for the claim. English limitation rules are not to be appliedunless English law is the lex causae or one of two leges causaegoverning the matter….”

29. This change in view can also be noted in the works of otherauthors. In Cheshire & North’s Private International Law (10[th] Edn.) itcan be seen that as per the older rules, the limitation of English lawwould apply. Hence claim would be allowed in England if it fell withinthe limitation period prescribed in its laws, even if the action was time-barred as per the foreign law applicable to the transaction/contract/disputein question. However, this raised various issues which were alsohighlighted. It would be apposite to refer to the following paragraphs:-

“(I)The time within which an action must be brought

English law is unfortunately committed to the view that statutesof limitation, if they merely specify certain time after whichrights cannot be enforced by action, affect procedure, notsubstance. They concern, it is said, not the merits of the cause,but the manner in which the remedy must be pursued. Theyordain that the procedure of the court is available only when set inmotion within certain fixed time after the cause of action arose.In the result, therefore, any relevant statute of limitation that obtainsin the lex fori may be pleaded, while statute of some foreignlaw, even though it belongs to the proper law of the transaction,must be disregarded.

xxx

The rules of English private international law upon this matter,however, pay little attention to the proper law of the transactionthat is in issue. Thus in report of judgment by ROCHE, J., it issaid: “Foreign courts might have decided that the laws of limitationwere part of the substantive law, but he was unable to apply themas such.” The result of this attitude is twofold.

Firstly, an English statute of limitation is good idea plea to anaction brought in England, notwithstanding that the action is stillmaintainable according to the proper law of the transaction.

xxxxxx

Secondly, the extinction of the right of action by the proper law ofthe transaction is not bar to an action in England. In otherwords, if the permissible period is longer in England than in theforeign country the plaintiff is at liberty to sustain his action here.

30. In Cheshire & North’s Private International Law (15[th] Edition)it is noted that this change of applying the law of limitation as applicablein the cause country whose law applies to the transaction/contract/dispute was welcome one. The following paragraphs are relevant:-

“(a) The time within which action must be broughtUntil 1984, English law was committed to the view that statutesof limitation, if they merely specified certain time after whichrights could not be enforced by actin, affected procedure and notsubstance. This meant that limitation was governed by Englishlaw, as the law of the forum, and any limitation provision of theapplicable law was ignored. Where, however, it could be shownthat the effect of statute of limitation of the foreign applicablelaw was not just to bar the plaintiff’s remedy, but also to extinguishhis cause of action, then the English courts would be prepared toregard the foreign rule as substantive and to be applied in England.

The common law rule, which has been criticised in number ofcommon law jurisdictions, tends to have no counterpart in civillaw countries which usually treat statutes of limitations assubstantive. Furthermore, the Contracts (Applicable Law) Act1990, implementing the European Community Convention on theLaw Applicable to Contractual Obligations (1980), provides thatthe law which governs the essential validity of contract is togovern “the various ways of extinguishing obligations, and

prescription and limitation of actions”. In 1982 the LawCommission concluded that “there is clear case for the reformof the present English rule” and their recommendations formedthe basis of the Foreign Limitation Periods Act 1984.

The general principle of the 1984 Act abandons the common lawapproach which favoured the application of the domestic law oflimitation. Instead, the English court is to apply the law whichgoverns the substantive issue according to English choice of lawrules, and this new approach is applied to both actions andarbitrations in England. In the case of those few tort claims, suchas defamation, to which the common law choice of law rules stillapply, English law, as the law of the forum, will remain relevantbecause of the choice of law rule which requires actionabilityboth by the law of the forum and by the law of the place of thetort. The corollary of the main rule is that English law is no longerautomatically to be applied. There is, of course, significantdifference between rule under which claim is to be held to bestatute barred in England if statute barred under the governinglaw, reform which seems widely to be welcomed, and furtherrule that, if the claim is not statute barred abroad, it must be allowedto proceed in England.”

31. The old position under common law was that limitation wastreated as procedural law. In countries following civil jurisdiction, thelaw of limitation has never been treated as procedural law but as asubstantive law. In recent years, almost all the common law countrieshave either brought new legislation or by judicial decisions have nowtaken the view that the law of limitation cannot be treated as purelyprocedural law. We may make reference to the law in the UnitedKingdom and the United States of America.

32. Section 1 of the Foreign Limitation Periods Act, 1984 asapplicable to the United Kingdom reads as follows:

“Application of foreign limitation law.

1. – (1) Subject to the following provisions of this Act, where inany action or proceedings in court in England and Wales the lawof any other country falls (in accordance with rules of privateinternational law applicable by any such court) to be taken intoaccount in the determination of any matter—

(a) the law of that other country relating to limitation shall applyin respect of that matter for the purposes of the action orproceedings, subject to sections 1A and 1B; and

(b) except where that matter falls within subsection (2) below,the law of England and Wales relating to limitation shall not soapply.

(2) matter falls within this subsection if it is matter in thedetermination of which both the law of England and Wales andthe law of some other country fall to be taken into account.

(3) The law of England and Wales shall determine for the purposesof any law applicable by virtue of subsection (1)(a) above whether,and the time at which, proceedings have been commenced inrespect of any matter; and, accordingly, section 35 of the LimitationAct 1980 (new claims in pending proceedings) shall apply in relationto time limits applicable by virtue of subsection (1)(a) above as itapplies in relation to time limits under that Act.

(4) court in England and Wales, in exercising in pursuance ofsubsection (1)(a) above any discretion conferred by the law ofany other country, shall so far as practicable exercise that discretionin the manner in which it is exercised in comparable cases by thecourts of that other country.

(5) In this section “law”, in relation to any country, shall not includerules of private international law applicable by the courts of thatcountry or, in the case of England and Wales, this Act.”

Several States in the United States of America have adopted theUniform Conflict of Laws Limitation Act, 1982 evolved by theNational Conference of Commissioners on Uniform State Laws.Sections 2 and 3 of this Act read as follows:

“Section 2: (a) Except as provided by sec 4, if claim issubstantively based:

(1) upon the law of one other state, the limitation period ofthat state applies; or

(2) upon the law of more than one state, the limitation periodof one of those states chosen by the law of conflicts oflaws of this State, applies.

(b) The limitation period of this State applies to all other claims.”

“Section 3: If the statute of limitations of another state appliesto the assertion of claim in this State, the other States’ relevantstatutes and other rules of law governing tolling and accrualapply in computing the limitation period, but its statutes andother rules of law governing conflict of laws do not apply.”

33. The view worldwide appears to be that the limitation law ofthe cause country should be applied even in the forum country.Furthermore, we are of the view that in those cases where the remedystands extinguished in the cause country it virtually extinguishes theright of the decree-holder to execute the decree and creates acorresponding right in the judgment debtor to challenge the execution ofthe decree. These are substantive rights and cannot be termed to beprocedural. As India becomes global player in the international businessarena, it cannot be one of the few countries where the law of limitationis considered entirely procedural.

34. We have already clearly indicated that if the law of forumcountry is silent with regard to the limitation prescribed for execution ofa foreign decree then the limitation of the cause country would apply.

35. We answer question no. 2 by holding that the limitation periodfor executing decree passed by foreign court (from reciprocatingcountry) in India will be the limitation prescribed in the reciprocatingforeign country. Obviously this will be subject to the decree beingexecutable in terms of Section 13 of the CPC.

Question No. 3

36. Coming to the third question, as far as Article 136 of the Actis concerned, we are of the view that the same only deals with decreespassed by Indian courts. The Limitation Act has been framed mainlykeeping in view the suits, appeals and applications to be filed in Indiancourts and wherever the need was felt to deal with something outsideIndia, the Limitation Act specifically deals with that situation. We mayrefer to Article 39 of the Act which specifically deals with dishonouredforeign bills. Article 101 of the Act deals with suits filed upon judgmentincluding foreign judgment. The framers of the Act specificallymentioned ‘including foreign judgment’ in Article 101 of this verySchedule which is part of the Act.

A37. When dealing with the applications for execution of decreesthe law makers could have easily said ‘including foreign decrees’. Thishaving not been said, it appears that the intention of the legislature wasthat Article 136 would be confined to decrees of Indian courts.Furthermore, Article 136 clearly states that the decree or order shouldbe of civil court. civil court, as defined in India, may not be the sameBas in foreign jurisdiction. We must also note the fact that the newLimitation Act was enacted in 1963 and presumably the law makerswere aware of the provisions of Section 44A of the CPC. When theykept silent on this aspect, the only inference that can be drawn is thatArticle 136 only deals with decrees passed by Indian civil courts.

38. Having said so, we are clearly of the view that someclarification needs to be given with regard to the period in which anapplication under Section 44A can be filed. In this regard, when weread sub-section (1) and sub-section (2) of Section 44A together it isobvious that what is required to be filed is certified copy of the decreeDin terms of sub-section (1) and also certificate from the court in thecause country stating the extent, if any, to which the decree has beensatisfied or adjusted. These are the twin requirements and no foreigndecree can be executed unless both the requirements are met. It isessential to file not only certified copy of the decree but also thecertificate in terms of sub-section (2). That, however, does not meanEthat nothing else has to be filed. The only inference is that the decreecan be executed only once these documents are filed. The executingcourt cannot execute this decree and certificate unless the decree holderalso provides various details of the judgment debtor that is, his address,etc. in India and the details of the property of the judgment debtor. TheseFparticulars will have to be provided by written application filed in termsof clause (2) of Rule 11 of Order 21 of the CPC which reads as follows:

(2)Written application. – Save as otherwise provided by sub-rule (1), every application for the execution of decree shall be inwriting, signed and verified by the applicant or by some otherGperson proved to the satisfaction of the Court to be acquaintedwith the facts of the case, and shall contain in tabular form thefollowing particulars, namely :-

(a) the number of the suit;

(b) the names of the parties;

(c) the date of the decree;

(d) whether any, appeal has been preferred from the decree;

(e) whether any, and (if any) what, payment or other adjustmentof the matter in controversy has been made between the partiessubsequently to the decree;

(f) whether any, and (if any) what, previous applications havebeen made for the execution of the decree, the dates of suchapplications and their results;

(g) the amount with interest (if any) due upon the decree, or otherrelief granted thereby, together with particulars of any cross-decree, whether passed before or after the date of the decreesought to be executed;

(h) the amount of the costs (if any) awarded;

(i) the name of the person against whom execution of the decreeis sought; and

(j) the mode in which the assistance of the Court is requiredwhether-

(i) by the delivery of any property specifically decreed;

(ii) by the attachment, or by the attachment and sale, or by thesale without attachment, of any property;

(iii) by the arrest and detention in prison of any person;

(iv) by the appointment of receiver;

(v) otherwise, as the nature of the relief granted may require.

39. Therefore, party filing petition for execution of foreigndecree must also necessarily file written application in terms of Order21 Rule 11 clause (2) quoted hereinabove. Without such an application itwill be impossible for the Court to execute the decree. In our opinion,therefore, this application for executing foreign decree will be anapplication not covered under any other article of the Limitation Act andwould thus be covered under Article 137 of the Limitation Act and theapplicable limitation would be 3 years.

40. The question that then arises is that from which date thelimitation starts. We can envisage of 2 situations only. The first situation

Ais one where the decree holder does not take any steps for execution ofthe decree during the period of limitation prescribed in the cause countryfor execution of decrees in that country. In such case he has lost hisright to execute the decree in the country where the cause of actionarose. It would be travesty of justice if the person having lost his rightsto execute the decree in the cause country is permitted to execute theBdecree in forum country. This would be against the principle whichwe have accepted, that the law of limitation is not merely procedurallaw. This would mean that person who has lost his/her right or remedyto execute the foreign decree in the court where the decree was passedcould take benefit of the provisions of the Indian law for extending theCperiod of limitation. In the facts of the present case, the limitation inIndia is 12 years for executing money decree whereas in England it is6 years. There may be countries where the limitation for executing sucha decree may be more than 12 years. The right of the litigant in the lattersituation 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,Dlimitation would start running from the date the decree was passed inthe cause country and the period of limitation prescribed in the forumcountry would not apply. In case the decree holder does not take anysteps to execute the decree in the cause country within the period oflimitation prescribed in the country of the cause, it cannot come to theEforum country and plead new cause of action or plead that the limitationof the forum country should apply.41. The second situation is when decree holder takes steps-in-aid to execute the decree in the cause country. The proceedings inexecution may go on for some time, and the decree may be executed,Fsatisfied partly but not fully. The judgment debtor may not have sufficientproperty or funds in the cause country to satisfy the decree etc. Insuch eventuality what would be done? In our considered view, in suchcircumstances the right to apply under Section 44A will accrue onlyafter the execution proceedings in the cause country are finalised andthe application under Section 44A of the CPC can be filed within 3 yearsGof the finalisation of the execution proceedings in the cause country asprescribed by Article 137 of the Act. The decree holder must approachthe Indian court along with the certified copy of the decree and therequisite certificate within this period of 3 years.

42. It is clarified that applying in the cause country for certifiedHcopy of the decree or the certificate of part-satisfaction, if any, of the

decree, as required by Section 44A will not tantamount to step-in-aid toexecute the decree in the cause country.

43. We answer the third question accordingly and hold that theperiod of limitation would start running from the date the decree waspassed in the foreign court of reciprocating country. However, if thedecree holder first takes steps-in-aid to execute the decree in the causecountry, and the decree is not fully satisfied, then he can then file apetition for execution in India within period of 3 years from thefinalisation of the execution proceedings in the cause country.

44. In view of the discussion above we dismiss the appeal anduphold the orders of both the Courts below, though for different reasons.No order as to costs. Pending applications(s), if any, shall stand(s) disposedof.

Ankit Gyan

Appeal dismissed.