Enforcement of Judgments in India

In India, the Code of Civil Procedure, 1908 (“the Code”) governs the recognition and enforcement of foreign judgments.

Legal Framework

Under Section 44-A(1) of the Code, a money decree from any superior court of a reciprocating territory may be executed as if it had been passed by a District Court in India. Enforcement through execution proceeding is comparatively quicker as this is a summary procedure and does not entail review of the merits of the case. On the other hand, enforcement of a judgment from a non-reciprocating territory requires the institution of a suit in the competent court for a decree on the basis of the foreign judgment or the underlying cause of action, or both. The suit takes longer to conclude due to procedural impediments.

In all enforcements of foreign money judgments, the court must be satisfied that one or more of the conditions enumerated in Section 13 do not exist. These conditions include:

• it has not been pronounced by a court of competent jurisdiction;
• it has not been given on the merits of the case;
• it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases wherein such law is applicable;
• the proceedings in which the judgment was obtained are opposed to natural justice;
• it has been obtained by fraud; or
• it sustains a claim founded on a breach of any law in force in India.

Subject to the fulfilment of conditions for enforcement under Section 13, the court enforcing a judgment from a reciprocating territory is required to execute it as if it has been passed by that court. It is settled law that the court of execution in such a case has no power to go beyond the decree, except where it is found that the decree is a nullity.

With respect to foreign money judgments passed by courts in a non-reciprocating territory, the merits of the case itself are investigated by Indian courts, which may lead to delay.

The Supreme Court of India has approved the principle that the law of limitation of the cause country should be applied even in the forum country. It has held that the limitation prescribed in the reciprocating territory will be the limitation in India for filing an application for the execution of a foreign money judgment (Bank of Baroda v Kotak Mahinda Bank Limited, 2020 SCC Online 324). Conversely, if a claim is barred by law of limitation in India, it will not affect the validity or enforcement of the decree obtained in another jurisdiction.

The enactment of the Commercial Courts Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act”) has further eased the enforcement process, as it provides for speedy proceedings in relation to disputes that are of a "commercial" nature and a "specified value" by designated courts. If the foreign money judgment arises from an underlying commercial dispute, the new statute provides for a much more efficient process relating to enforcement of the judgment, such as streamlined and time-bound procedures, shorter periods for filing written pleadings, and specified time limits for the disposal of appeals.

Precedure to Enforce a Foreign Money Judgment

General summary of procedure

The general requirements for enforcing a foreign money judgment in India are as follows:

• the judgment creditor files an application for enforcement with a certified copy of the foreign money judgment in the relevant District Court, with a certificate from the court of origin stating the extent, if any, to which the judgment has been satisfied or adjusted;
• the court issues a notice to the person against whom execution is sought, requiring such person to show cause as to why the decree should not be executed; and
• if the person against whom the decree is to be executed does not appear or show sufficient cause, the court will order the decree to be executed.

As per Order XXI, Rule 30 of the Code, every decree for the payment of money may be executed by the detention of the judgment debtor in civil prison, or by the attachment and sale of their property, or both. The time limit for enforcement of the judgment or decree from a reciprocating territory is generally between one and two years.

The defendant is not powerless under Indian law: they may contend that the enforcement of the judgment is barred due to the existence of any of the conditions specified under Section 13 of the Code.

To enforce a money judgment from a non-reciprocating territory, a suit has to be instituted at the court of competent jurisdiction on the basis of said judgment or the underlying cause of action, or both (Marine Geo-Technics LLC v Coastal Marine Construction & Engineering Ltd. (2014) 183 Comp Cas 438 (Bom) citing Badat and Co. v East India Trading Co., AIR 1964 SC 538). The proceeding in the suit will be governed by the Code. However, the review of the merits of the case in such a proceeding may be limited if it is shown that the foreign judgment is binding under Section 13 and that none of the conditions against it as specified therein exists. Once the suit results in a decree, it can be executed as a domestic decree in terms of Order XXI of the Code. A suit can take three to four years to conclude in India.

Depending on the nature of the underlying dispute, such suit may be instituted before the Commercial Courts created by the Commercial Courts Act, as mentioned above.

As regards the documentation required for enforcement, a certified copy of the original foreign money judgment/decree must be filed in the competent District Court. Furthermore, a certificate from the court of origin stating the extent, if any, to which the judgment/decree has been satisfied or adjusted has to be filed simultaneously with the certified copy. However, failure to file such a certificate would not be a bar on the maintainability of such execution petition (Vitol S.A. v Deepak Fertilizers & Petrochemicals, AIR 2012 Bom 57).

Competent court

The Supreme Court has held that, under Section 44-A, the competent court to entertain execution proceedings to enforce foreign money judgments will be the District Court (Messer Griesheim GmbH (now called Air Liquide Deutschland GmbH) v Goyal MG Gases Pvt. Ltd., CA No. 521 of 2022). If the original jurisdiction has also been vested in the High Court in the state, the appropriate court will be determined on the basis of the pecuniary jurisdiction of the two courts, having regard to the amount involved.

In the case of a foreign money judgment from a non­-reciprocating territory, a civil suit on the foreign judgment must be filed before the competent court that has jurisdiction under the Code. Under the Code, jurisdiction is determined by:

• the defendant’s place of residence;
• where the cause of action has accrued; or
• where the property forming the subject matter of the dispute is situated; and
• the quantum of the claim.

Wherever Commercial Courts have been established, it is possible to institute a suit to enforce a foreign money decree if the dispute is of a commercial nature and of the specified value.

Jurisdiction over the judgment debtor only needs to be obtained by the competent District Court in the enforcement action if the enforcement action involves personal obedience by the judgment debtor. For foreign money judgments sought to be executed without the requirement of personal obedience by the judgment debtor, the availability of the assets of the judgment debtor within the territorial jurisdiction of the competent court would be sufficient to invoke its jurisdiction.

Form of relief

A landmark judgment of the Supreme Court has placed reliance on the contract between international parties to determine the currency in which damages are to be paid, in concurrence with the international principle of the conflict of laws. It was held that the plaintiff may claim damage either in Indian currency at the conversion rate prevailing on the date when the foreign decree or judgment is delivered, or in the foreign currency, subject to the necessary approval of the Foreign Exchange Department in this regard.

Notably, if the foreign money judgment was passed by a superior court of a reciprocating territory, the executing court in India cannot award interest on the original judgment amount unless the original judgment provides for the payment of interest.

If the judgment is from a non-reciprocating territory, then the Indian court would have power to award pendente lite interest on the original amount. However, in such cases, the award on interest would depend on the terms of the foreign judgment. In awarding pendente lite and future interest on the original judgment amount, the courts in India are guided by Section 34 of the Code.

The successful judgment creditor may also be entitled to recover attorney fees or court costs incurred in bringing the enforcement proceedings from the judgment debtor, as Section 35 of the Code empowers the courts to award costs incurred in initiating suits. With the enactment of the Commercial Courts Act, Section 35 of the Code has been amended so that courts can now determine the liability, quantum and time limit for costs to be paid by either party in respect of a commercial dispute of a specified value.

"Costs" have been defined to include the fees and expenses of witnesses, any legal fees and expenses incurred, and any other expenses incurred in connection with the proceedings. In one case, the Bombay High Court has directed the judgment-debtors to pay actual costs to the judgment-creditors for filing and defending the proceedings (Janardhan Mohandas Rajan Pillai v Madhubhai Z. Patel, 2013 (5) Bom CR 714).

There is no appeal provided for against an order under Section 44A in a proceeding. However, if the proceeding is brought in the first instance in the High Court that has original jurisdiction, remedy of appeal may be available under the special statute governing such High Court. If the proceeding for enforcement of the foreign judgment is a civil suit, certain orders passed therein and the judgment delivered by the court are appealable under the provisions of the Code.

There is no limitation on the grounds that can be taken in the first appeal, but the remedy of a second appeal against certain decisions is available only on questions of law.

Requirements for Enforcement of a Foreign Money Judgment

The Supreme Court has categorically held that a judgment of a foreign court must be pronounced by a court of competent jurisdiction in order to be conclusive between the parties, and that competence as contemplated by Section 13 of the Code is in an international sense, and not merely by the law of the foreign origin State (R. Vishwanathan v Rukn Ul Mulk Syed Abdul Wajid, AIR 1963 SC 1). All courts in India are bound by this ruling and, therefore, apply rules under private international law to determine the jurisdiction and competence of the court of origin. Defendants may, therefore, submit to jurisdiction or waive the right to protest jurisdiction as may be permissible under private international law.

In cases where the enforcement of the foreign judgment originating from a non-reciprocating territory is through a suit, the court will have the power to review the merits of the case as the original court of first instance. If the court is satisfied that the foreign judgment does not fall within one of the exceptions mentioned in Section 13, such review will be limited. In other words, the court will hold the party bound by the foreign judgment following the mandate of Section 13 unless one of the exceptions under Section 13 applies.

As stated above, Section 13 provides a comprehensive list of cases in which a foreign judgment will not be recognised as binding between the parties and will therefore not be enforced. Fraud in the original action is specifically covered in Section 13 (e), which prohibits the enforcement of a foreign judgment obtained by fraud. Regarding the prior inconsistent judgment, it will have to be seen whether it results in disregard of the principles of res judicata under Section 11 of the Code. If it does, the enforcement of such judgment may be objected to under Section 13 (f) on the grounds that it is in breach of law in force in India.