Limitation for filing an application for execution of a foreign decree of a reciprocating country in India

Kosha Doshi | Symbiosis Law School, Pune | 20th March 2020

Bank of Baroda v. Kotak Mahindra Bank Ltd. [Civil appeal no. 2175 of 2020; Supreme Court]

Facts:

            Kotak Mahindra Bank Ltd. Had executed a Letter of Credit (LOC) for US on behalf of M/s Aditya Steel Industries Ltd. In favor of M/s Granada Worldwide Investment Company, London. Bank of Baroda was the confirming bank to the said Letter of Credit (LOC). Vysya Bank directed the London Branch on 12^th October, 1992 to honor the Letter of Credit (LOC) who discounted the same. 

            Bank of Baroda instituted a suit against Vysya Bank for recovery of the dues. The suit decree was passed by the High Court of Justice, London on the 20^th of February, 2020. The decision imparted being the final and not challenged. In accordance to Section 44 A, the execution of decrees passed in reciprocator territory was sought.

Issue:

            Whether Section 44A provides merely for manner of execution of foreign decrees or does it further indicate period of limitation for filing of an execution proceeding for the same?

            What is the period of limitation for the execution of a decree passed by a foreign court that is a reciprocator country; in India?

            Which date does the limitation period run from in relation to a foreign decree which is sought to be executed in India?

Judgment:

            The bench which gave the judgment comprised of Justice Deepak Gupta and Justice Aniruddha Bose who stated that period of limitation starts when the decree is passed. But in cases where the decree holder takes steps in aid which is executed in the cause country and not satisfied then when the petition is filed in India must be done so within a time period of 3 years. 

            The Limitation Act does not prescribe any limitation period for foreign decree in a reciprocator country. If the date from which the limitation is considered is the date of filing of certified copy of decree, it would lead to ludicrous results. Section 44 A enables only District courts to execute the decree along with following of the same procedures while executing Indian decrees. But it does not lay down the period of limitation for filing the execution petition. 

            Article 136 which only deals with decrees passed by the Indian civil court was referred while passing the verdict. Laws of Limitation are not merely procedural laws but a matter of substantive rights. The court further made a note that a written application is a must in terms of Order 21 Rule 11(2), without the same it would be impossible to execute the decree. Application for executing foreign decree is not mentioned under the Limitations Act but under Article 137 wherein time period of 3 years is stated. 

            The court put forth 2 situations for determination of the same. Situation 1 wherein the decree holders has taken no step for execution of the same in the cause country. If the individual has lost his right it would be travesty of injustice if he would be allowed in the other nation to execute the same. Situation 2 whereby the decree holder takes steps in his cause country. Under this, they can apply under Section 44 A but only after the execution proceeding in the cause country has finalized and the duration therein is 3 years. 

            The period of limitation starts when the decree is passed but in cases where the decree holder takes steps in aid which is executed in the cause country and not satisfied then when the petition is filed in India must be done so within a time period of 3 years.