M/S.
International Woolen Mills Vs. M/S. Standard Wool (U.K.) Limited [2001] Insc 245 (25 April 2001)
V.N.
Khare & S.N. Variava S. N. Variava, J.
Appeal (civil) 3317 of 2001
L.I.T.J
Leave
granted.
Heard
parties.
Both
these Appeals are against a Judgment dated 9th December, 1999 and are being disposed of by this
common Judgment. The parties will be referred to in their capacity in Civil
Appeal arising out of SLP (Civil) No. 2250 of 2000. Briefly stated the facts
are as follows :
In
1996 the Appellant had placed an order with the Respondent for purchase of
greasy fleece wool. The goods were shipped to Mumbai on C.I.F. terms in
September 1996.
The
Appellant claimed the goods from Mumbai and took them to Ludhiana. The Appellant did not pay the
price of the goods on the ground that after taking delivery it was found that
the goods were of an inferior quality. The Respondent sent a Lawyer's notice
dated 18th October,
1997. The Appellant,
through his lawyer, sent a reply dated 8th November 1997.
On 19th January, 1998 the Respondent filed a case in Central London Country Court in United Kingdom. The Respondent claims that the Appellant was served with
the summons of that case. The Appellant claims that he had not been served in
that case. For our purposes we are not concerned with this controversy and
express no opinion thereon. On 20th April, 1998,
an ex-party decree came to be passed by the Central London County Court. The
decree reads as follows :
"IT
IS ORDERED that There be Judgment for the Plaintiff in the sum of US $49,178.50
plus interest of US $717 00 ANF court costs. A total of US $49,895.50 plus £
243.75." On 20th
August, 1998 the
Respondent filed an Execution Application in the Court of Civil Judge (Senior
Division), Ludhiana. Upon receipt of the summons in the
execution proceedings the Appellant filled an Application praying for dismissal
of the execution application as it was filed without following the procedure
prescribed under Sections 38, 39 and 40 of the Code of Civil Procedure. In
reply to this Application the Respondent contended that the execution was under
Section 44- A of the Code of Civil Procedure and as such there was no
requirement to observe the provisions of Sections 38, 39 and 40 of the Code of
Civil Procedure.
In
view of this stand the Appellants filed another Application stating that the
decree was not on merits and as per the provisions of Section 44(A) read with
Section 13(b) of the Code of Civil Procedure the Court had to refuse to execute
the decree. Both the Applications were heard by the Civil Judge (Junior
Division), Ludhiana. By two separate Orders dated 15th March, 1999, both the Applications were
dismissed.
The
Appellant then filed Civil Revision No. 2703 of 1999 against two Orders dated 15th March, 1999. This Civil Revision came to be
dismissed by the impugned Judgment dated 9th December, 1999. By this Judgment the High Court
found that the decree was not on merits but it still dismissed the Revision on
the ground that the second Application was barred by the principles of
constructive res-judicata. It is against this Judgment that these two Appeals
have been filed. The Appellant has filed the Appeal [arising out of SLP (Civil)
No. 2250 of 2000] against dismissal of their Revision. The Respondent has filed
Appeal [arising out of SLP (Civil) No. 5332 of 2000] against that portion of
the impugned Judgment which holds that the decree was not on merit.
One
further fact which must be mentioned is that the Appellant has now filed a Suit
in Ludhiana against the Respondent claiming
damages in a sum of Rs. 4 lacs for having supplied goods of an inferior quality
and for having committed a breach of the contract. That Suit is still pending.
The first question for consideration is whether the High Court was right in
holding that the second Application was barred on principles of constructive res-judicata.
It must be noted that the first Application was on the ground that the
provisions of Sections 38, 39 and 40 of the Code of Civil Procedure had not
been complied with. In that Application the defence taken was that the decree
was being executed under the provisions of Section 44-A of the Code of Civil
Procedure. In view of this stand, before any decision was given, the second
Application had been filed. Both the Applications were heard together. In other
words the second Application was filed and heard before any decision was given
in the first Application.
Both
the Applications were only decided on 15th March, 1999.
There
was thus no question of their being a decision finally deciding a right or
claim between the parties. Mr. Hingorani however submitted that this case would
be covered by Explanation IV to Section 11 of the Code of Civil Procedure. He
submitted that in the earlier Application the defence regarding non compliance
of Section 13(b) could have been taken but had not been taken. He submitted
that it was not open to the Appellants to take such a defence in a subsequent
Application. In our view there is no substance in this submission. Explanation
IV to Section 11 of the Code of Civil procedure would have come into play only
if some decision had been finally given before the second Application was
filed. In that event it could have been urged that all available points should
have been urged before that decision was given. In this case the second
Application was filed before any decision on the first Application was given.
The Appellants could have, instead of filing a second Application, amended
their first Application and taken these pleas in that Application itself. Had
they amended the first Application there would be no bar of res-judicata or
constructive res judicata. If that be so one fails to understand how the second
Application was barred by principles of res-judicata or constructive res- judicata.
To be remembered that the Orders were passed after hearing arguments on both
the Applications. Under such circumstances no question arises of their being
any res-judicata or constructive res-judicata.
At
this stage it must be mentioned that Mr. Hingorani relied upon cases of Janki Vallabh
v. Moolchand and others reported in AIR (1974) Rajasthan 168, Baijnath Prasad Sah
v. Ramphal Sahni and another reported in AIR (1962) Patna 72, P.K. Vijayan v. Kamalakshi Amma
reported in AIR 1994 SC 2145, Mohanlal Goenka v. Benoy krishna Mukherjee and
Ors. reported in (1953) SCR 377 in support of his submission that the
principles of res-judicata and/or constructive res-judicata also apply to
execution proceedings. It is not necessary to deal with these authorities as
there can be no dispute to the proposition that principles of res-judicata
and/or constructive res-judicata apply to execution proceedings. However, as
stated above, in this case there was no final decision which operated as res- judicata.
The
second question which arises is whether the above mentioned decree of the English Court could be executed in India. Section 44-A of the Code of Civil
Procedure reads as follows :
"44-A
(1) Where a certified copy of a decree of any of the superior Courts of any
reciprocating territory has been filed in a District Court, the decree may be
executed in India as if it had been passed by the District Court.
(2)
Together with the certified copy of the decree shall be filed a certificate
from such superior Court stating the extent, if any, to which the decree has
been satisfied or adjusted and such certificate shall, for the purposes of
proceedings under this section, be conclusive proof of the extent of such
satisfaction or adjustment.
(3)
The provisions of section 47 shall as from the filing of the certified copy of
the decree apply to the proceedings of a District Court executing a decree
under this section, and the District Court shall refuse execution of any such
decree, if it is shown to the satisfaction of the Court that the decree falls
within any of the exceptions specified in clauses (a) to (f) of section 13.
Explanation
I. -
"Reciprocating territory" means any country or territory outside
India which the Central Government may, by notification in the Official
Gazette, declare to be a reciprocating territory for the purpose of this
section, and "superior Courts', with reference; to any such territory,
means such Courts as may be specified in the said notification.
Explanation
2 - "Decree'
with reference to a superior Court means any decree or judgment of such Court
under which a sum of money is payable, not being a sum payable in respect of
taxes or other charges, of a like nature or in respect of a fine or other
penalty, but shall in no case include an arbitration award, even if such an
award is enforceable as a decree or judgment." By virtue of Sub-section
(3) the Court shall refuse execution if it is shown to the satisfaction of the
Court that the Decree falls within any of the Exceptions in clauses (a) to (f)
of Section 13.
Section
13 reads as follows :
"13.
A foreign judgment shall be conclusive as to any matter thereby directly
adjudicated upon between the same parties or between parties under whom they or
any of them claim litigating under the same title except –
(a) where
it has not been pronounced by a Court of competent jurisdiction;
(b) where
it has not been given on the merits of the case;
(c) where
it appears on the face of the proceedings to be founded on any incorrect view
of international law or a refusal to recognise the law of India in cases in which such law is
applicable;
(d) where
the proceedings in which the judgment was obtained are opposed to natural
justice;
(e) where
it has been obtained by fraud;
(f) where
it sustains a claim founded on a breach of any law in force in India.
Thus
under sub-clause (b) if the decree has not been given on the merits of the case
then the foreign judgment is not conclusive between the parties and the same
cannot be executed in India.
The
question which then arises is whether the Decree, set out herein, above can be
said to be a decree on merits.
Parties
have cited a large number of authorities of various High Courts on the question
as to when a decree can be said to be on merits. In support of the contention
that the above mentioned decree is on merits reliance has been placed upon the
case of Sheikh Abdul Rahim alias S.A. Rahim vs. Mohamed Din and another
reported in AIR (1943) Calcutta 42.
In
this case it has been held by the Calcutta High Court that a person asserting
that the judgment was not on merits because no evidence was given must prove
the same as there is a presumption in Section 114 of the Evidence Act that
judicial acts have been regularly performed. On this principle the Calcutta
High Court has held that even though a decree was given ex-parte the same must
be presumed to be on merits. In our view the law laid down in this case cannot
be said to be the correct law. Section 114 merely raises the presumption, under
illustration (e) thereof, that judicial acts have been regularly performed. To
say that a decree has been passed regularly is completely different from saying
that the decree has been passed on merits. An ex-parte decree passed without
consideration of merits may be decree passed regular if permitted by the rules
of that Court. Such a decree would be valid in that country in which it is
passed unless set aside by a Court of Appeal.
However,
even though it may be a valid and enforceable decree in that country, it would
not be enforceable in India if it has not been passed on
merits. Therefore for a decision on the question whether a decree has been
passed on merits or not, the presumption under Section 114 would be of no help
at all. It must be mentioned that in support of submission that it must be
presumed that all formalities were complied with and the decree passed
regularly reliance was also placed on cases of Krishna Kumar v. State of Haryana
reported in AIR 1999 SC 854 and The Commissioner of Income Tax, A.P. v. M.
Chandra Sekhar reported in AIR 1985 SC 114. In our view these authorities are
of no help in deciding the question under consideration. Even if we presume
that all formalities were complied with and Decree was passed regularly it
still would not lead to the conclusion that it was passed on merits.
In the
case of Middle East Bank Ltd. vs. Rajendra Singh Sethia reported in AIR 1991 Calcutta 335 a decree had been passed ex parte
and without service of notice on the judgment- debtor. A number of authorities
were cited before the Court including the case of Abdul Rahim (supra). The
Court held that even though a decree may be ex parte it may still be on merits
provided it could be shown that the Court had gone through the case made out by
the Plaintiff and considered the same and taken evidence of the witnesses put
up by the Plaintiff. It was held that if an ex parte decree was passed in a
summary manner under a special procedure without going into the merits and
without taking evidence then those decrees would not be executable in India. Based on this authority it was
submitted that a decree could be said to be not on merits only if it is passed
in a summary manner in any special or summary procedure. It was submitted that
such a decree i.e. a decree which has not been passed in a summary manner in a
summary proceeding would be a decree on merits. This authority itself makes it
clear that the decree would not be on merits if Court has not gone through and
considered the case of the Plaintiff and taken evidence of witnesses of the Plaintiff.
It must also be noted that in this case the Court ultimately held that the
concerned decree was not a decree on merits.
Reliance
was placed upon the case of Gustave Nouvion vs. Freeman and another reported in
15 Appeal Cases 1, wherein it was held that if a foreign judgment finally and
conclusively settles the existence of the debt so as to become res judicata
between the parties, then the action can be brought on such a judgment. Based
on this it was submitted that as the judgment and decree of the English Court would operate as res judicata
between the parties, it would be a decree on merits, which could be enforced in
India. It must be seen that this judgment
is based upon the English law. The law in India is different by virtue of Section 13 of the Code of Civil Procedure
which provides that if a decree is not on merits it cannot be enforced in India.
Reliance
was also placed upon the case of D.T. Keymer vs. P. Visvanathan reported in AIR
1916 Privy Council 121.
In
this case it has been held as follows :
"The
whole question in the present appeal is whether, in the circumstances narrated,
judgment was given on the
5th May 1913, between
the parties on the merits of the case.
Now if
the merits of the case are examined, there would appear to be, first, a denial
that there was a partnership between the defendant and the firm with whom the
plaintiff had entered into the arrangement; secondly, a denial that the
arrangement had been made; and, thirdly, a more general denial, that even if
the arrangement had been made the circumstances upon which the plaintiff
alleged that his right to the money arose had never transpired. No single one
of those matters, was ever considered or was ever the subject of adjudication
at all. In point of fact what happened was that, because the defendant refused
to answer the interrogatories which had been submitted to him, the merits of
the case were never investigated and his defence was struck out. He was treated
as though he had not defended and judgment was given upon that footing. It
appears to their Lordships that no such decision as that can be regarded as a
decision given on the merits of the case within the meaning of section 13,
sub-section (b). It is quite plain that that sub-section must refer to some
general class of case, and Sir Robert Finlay was asked to explain to what class
of case in his view it did refer. In answer he pointed out to their Lordships
that it would refer to a case where judgment had been given upon the question
of the Statutes of Limitation, and he may be well founded in that view But
there must be other matters to which the sub-section refers, and in their
Lordships' view it refers to those cases where, for one reason or another, the
controversy raised in the action has not, in fact, been the subject of direct
adjudication by the Court." It was submitted that this Judgment lays down
that decree is not on merits if defence of the defendant has been struck off.
It is submitted that as, in the present case, defence had not been struck off,
the present decree would be a decree on merits. In our view no such principle
can be drawn from this authority, if anything, this is an authority against the
proposition that the present decree was a decree on merits.
Reliance
was also placed upon the case of Ishri Prasad vs. Sri Ram reported in AIR 1927 Allahabad 510. In this case it was held that
the phrase 'the merits of the case' has to be understood in contradistinction
to a judgment by way of penalty. It was held that if a decree is passed by way
of penalty or on default then such a decree would not be a decree on merits but
if the decree is passed otherwise even though it is an ex-parte it will be a
decree on merits.
Reliance
was also placed upon the case of Ram Chand vs. John Bartlett reported in Vol.
III Indian Cases 523. In this case it has been held as follows :
"The
next contention that has been raised for the appellant to show that the
respondent's suit on the foreign judgment did not lie, is that the said
judgment was not passed on the merits, and that, therefore, it cannot be
enforced by the Indian Courts. In my opinion this contention has no force. The
writ of summons issued by the High Court in England was, it is admitted, duly served on the appellant in this country, but
the latter did not, within the time allowed for that purpose, enter an
appearance and deliver a defence. The respondent had (under the rules of
procedure that govern the Supreme Court) the right, at the expiration of the
prescribed period, to enter final judgment for the amount claimed, with costs.
The writ aforesaid was especially endorsed with the statement of claim,
containing all the necessary particulars, and there is nothing to show that the
application for leave to serve the writ was not supported by affidavit or other
evidence stating the several particulars required by Order XI, rule
4. In
short, the proceedings held in the high Court of England appear to have been
strictly in accordance with the existing rules of procedure, which are not
shown to be in any way contrary to the fundamental principles of justice and
fair play ; and the judgment passed against the defendant on the facts of the
case must be considered as one passed on the merits. It does not proceed on any
preliminary point, i.e., a point collateral to the merits of the case, but is
based on the merits as disclosed by the pleadings before the Court, if the
defendant did not, in spite of notice of action, choose to appear and defend
it, the judgment passed by the Court in plaintiff's favour was not the less a
judgment on the merits, because it was not founded upon detailed evidence which
the plaintiff might have produced had the defendant entered an appearance and
contested the claim. The position to my mind is the same as if the defendant
had appeared and confessed judgment. In support of his contention that the
judgment in question cannot be considered as one passed on the merits, the
appellant's counsel has relied on the following passage in Sir William Rattigan's
Private International Law (1895) at pages 234-235:
"It
would seem to be equally plain that, if, for instance, it should happen that by
the law of a foreign country, a plaintiff was entitled to judgment simply on
the non-appearance of a defendant who had been duly served, and without
adducing any evidence whatever in support of his claim, or if the
wrong-headedness of a foreign Judge should induce him to so decide, the
plaintiff would not be entitled in an English Court to sue upon a judgment so
obtained. If on no other ground, such a judgment of a foreign Court would, at
all events, be so contrary to the fundamental principles of the Law of England
as, for this reason alone, to be incapable of receiving any effect in a British Court." The above passage does not,
however, as I read it, support the present appellant's position, as it cannot,
in my opinion, be affirmed in this case that the plaintiff has obtained
judgment from the High Court in England "simply on the non-appearance of
the defendant without adducing any evidence whatever in support of his claim."
Under Order XI, rule 4, the plaintiff's application for leave to serve the writ
of summons out of the jurisdiction must be supported by affidavit or other
evidence stating that the plaintiff has a good cause of action * * * * and the
grounds upon which the application is made, and leave can only be granted if
the Court or Judge is satisfied that the case is a proper one for the service
prayed for. The necessary procedure must be presumed to have been followed in
this case, and it has not been shown by the appellant that it was not so
followed.
The
affidavit filed by the present plaintiffs- respondents in pursuance of the
above rule, would, in my opinion, constitute "evidence in support of the
claim" within the purview of the principle laid down in the passage quoted
above, and the judgment obtained after service of the writ on the defendant as
required by the rules of the Supreme Court would, I think, be a judgment on the
merits. If, however, the passage relied upon does not bear the construction I
have placed upon it, if, that is to say, it means that thee can be no judgment
on the merits, unless, after the service of the writ on the defendant in the
regular way the plaintiff has adduced some evidence, oral or documentary, in
support of his claim, such as he would have produced if the defendant had
appeared and contested the claim, then, with all possible respect for the
learned author of that passage, I venture to think that the rule laid down by
him is expressed in too wide language, and I should be reluctant to follow it
unless it were supported by clear authority. I can discover no such authority
either in Dicey's "Conflict of Laws" (p. 411), or in any other
standard text-book on the subject; and I do not think that the maxim enunciated
by Sir William Rattigan himself as the one applicable in such cases, viz., that
the judgment passed must not contravene the fundamental principles of a
rational system of law, supports the wide proposition, which it has been urged,
is laid down in the passage quoted above." In our view the passage in Sir
William Rattigan's Private International Law (1895) at pages 234-235,
reproduced above, states the correct law. With great respect to the learned
Judges concerned the restricted interpretation sought to be given cannot be
accepted. With greatest of respect to the learned Judges we are unable to
accept the broad proposition that any decree passed in absence of Defendant, is
a decree on merits as it would be the same as if Defendant had appeared and
confessed Judgment. We also cannot accept the proposition that the decree was
on merits as all documents and particulars had been endorsed with the statement
of claim. With the greatest of respect to the learned Judges they seem to have
forgotten at stage of issuance of writ of summons the Court only forms, if it
at all does, a prima-facie opinion.
Thereafter
Court has to be consider the case of merits by looking into evidence led and
documents proved before it, as per its rules. It is only if this is done that
the decree can be said to be on merits. It was also submitted that the burden
of proving that a decree was not on merits is entirely on the Appellants. It
was submitted that no evidence had been led by the Appellants to show that the
decree was not on merits and for that reason it must be presumed that the
decree is on merits. In support of this submission reliance was placed upon the
authority in the cases of R.M.V. Vellachi vs. R.M.A. Ramanathan reported in AIR
1973 Madras 141, R. Viswanathan vs. Rukn-ul-Mulk Syed Abdul Wajid reported in
1963 (3) S.C.R. 22.
Undoubtedly
the burden of proving that the decree is not on merits would be on the party
alleging it. However Courts never expect impossible proofs. It would never be
possible for a party to lead evidence about the state of mind of the judge who
passed the decree. Of course, amongst other things, the party must show that
the decree does not show that it is on merits, if necessary the rules of that
Court, the existence or lack of existence of material before the Court when the
decree was passed and the manner in which the decree is passed. All this has
been done in this case. It was also submitted that the Courts of law are not
concerned with the result and even though the result may be repugnant to the
Court, still the Court cannot relieve the party from the burden if the law
provides for a contingency. In support of this reliance was placed upon the
case of The Martin Burn Ltd. vs. Corporation of Calcutta reported in AIR 1966
S.C. 529 and Firm Amar Nath Basheshar Dass v. Tek Chand reported in AIR 1972
S.C. 1548. There can be no dispute to this proposition. However this
proposition cuts both ways. If the decree is not on merits then, even though
the Court may be reluctant to leave the Respondents remedy less, the Court
would still have to refuse to enforce the decree. In support of the proposition
that such a decree could not be a decree on merits. Reliance has been placed
upon the authority in the case of Algemene Bank Nederland NV v. Satish Dayalal Choksi
reported in AIR 1990 Bombay 170.
In
this case a summary suit had been filed in Hong Kong. In that suit leave to defend was granted to the defence. Thus the High
Court had prima facie considered the merits of the matter and had granted
unconditional leave. Thereafter the defendant filed a written statement. It
appears that the defendant applied to the Reserve Bank of India for foreign exchange in order to
engage lawyer in Hong
Kong and his
application was not granted by the Reserve Bank of India.
As a
result the defendant could not appear at the trial and an ex parte decree came
to be passed against the defendant.
The
question which arose before the Court was whether such a decree could be said
to be a decree on merits. A large number of authorities were cited before that
Court and it was ultimately held as follows :
"28.
In the light of these authorities I have to see whether in the present case the
Hong Kong court gave its decision on the
merits of the controversy. The Hong Kong Court
had before it the defence which was filed by the present defendant. The defence
questioned the execution of the guarantee to repay the debts of Madhusudan
& Co. Ltd.
The
entry of 7.4.85 in the Register of Guarantees was also questioned by the
defendant. In the absence of the defendant, these contentions raised by him
could not have been considered. The judgment which is before me does not
indicate whether actually any evidence was led before the Hong Kong Court and
whether the Court went into the merits of the case. The judgment merely sets
out that "on the defendant's failure to appear and upon proof of
plaintiff's claim," the judgment is entered for the plaintiff. The
plaintiff-Bank has emphasised the words "upon proof of plaintiff's
claim". They have also produced the original guarantee which bears in one
corner a sticker showing that it was exhibited before the Hong Kong Court. The
plaintiff-Bank has not said in its affidavit that the documents which were
tendered before the court were properly proved or that anybody on behalf of the
bank had given evidence to establish the plaintiff's claim. This becomes
relevant because it is the contention of the defendant that the guarantee which
he had given was a blank and undated guarantee. It had been misused by the
plaintiff-Bank in the present case. The defendant has also relied upon
alterations and erasures in the plaintiff-Bank's register of guarantees to show
that this undated guarantee was subsequently entered in the register by
altering another entry to indicate that it was given around 7th April 1985.
There
is no material to show that these aspects of the dispute were ever examined by
the Hong Kong Court. The Court seems to have proceeded to pronounce the
judgment in view of the defendant's failure to appear at the hearing of the
case to defend the claim on merits.
29. In
my view, in these circumstances, the case before me falls under the ratio laid
down by the Privy Council in Keymer's case (AIR 1916 P.C. 121). The decision of
the Hong Kong Court is not given on examination of the points at controversy
between the parties. It seems to have been given ex parte on the basis of the
plaintiff's pleadings and documents tendered by the plaintiff without going
into the controversy between the parties since the defendant did not appear at
the time of the hearing of the suit to defend the claim. The present judgment,
therefore, is not a judgment on the merits of the case. Hence this is not a fit
case where leave can be granted under Order 21 Rule 22 of the Code of Civil
Procedure for the purpose of executing the decree here." In our view this
authority lays down the correct proposition of law.
Reliance
was also placed upon the case of Chintamoni Padhan and others vs. Paika Samal
and ors. reported in AIR 1956 Orissa 136. In this case it has been held that a
judgment on the merits is one which is entered after a full trial of the issues
through pleadings, presentation of evidence, and arguments by both sides. It is
held that the expression 'judgment on the merits' implied that it must have
been passed after contest and after evidence had been let in by both sides. In
our view the authority also cannot be said to be laying down the correct law.
In a given case it is possible that even though Defendant has not entered
evidence the Plaintiff may prove its case through oral and documentary
evidence. If after consideration of oral and/or documentary evidence an ex parte
decree is passed, it would be a decree on merits.
In the
case of Trilochan Choudhury vs. Dayanidhi Patra reported in AIR 1961 Orissa
158, the above mentioned decision in Chintamoni Padhan's case has been
overruled. In this case it is held that under Section 13(6) even an ex parte
judgment in favour of the plaintiff may be deemed to be a judgment given on
merits if some evidence is adduced on behalf of the Plaintiffs and the
judgment, however brief, is based on a consideration of that evidence. Where
however no evidence is adduced on the plaintiff's side and his suit is decreed
merely because of the absence of the defendant either by way of penalty or in a
formal manner, the judgment may not be one based on the merits of the case. In
our view this authority lays down the correct law. In the case of Govindan Asari
Kesavan Asari vs. Sankaran Asari Balakrishnan Asari reported in AIR 1958 Kerala
203, it is held as follows :
"In
construing S. 13 of the Indian Civil Procedure Code we have to be guided by the
plain meaning of the words and expressions used in the section itself, and not
by other extraneous considerations. There is nothing in the section to suggest
that the expression judgment on the merits has been used in contradistinction
to a decision on a matter of form or by way of penalty.
The
section prescribes the conditions to be satisfied by a foreign judgment in
order that it may be accepted by an Indian Court as conclusive between the
parties thereto or between parties under whom they or any of them litigate
under the same title. One such condition is that the judgment must have been
given on the merits of the case.
Whether
the judgment is one on the merits, must be apparent from the judgment itself.
It is not enough if there is a decree or a decision by the foreign Court. In
fact, the word 'decree' does not find a place anywhere in the section.
What
is required is that there must have been a judgment.
What
the nature of that judgment should be is also indicated by the opening portion
of the section where it is stated that the judgment must have directly
adjudicated upon questions arising between the parties.
The
Court must have applied its mind to that matter and must have considered the
evidence made available to it in order that it may be said that there has been an
adjudication upon the merits of the case. It cannot be said that such a
decision on the merits is possible only in cases where the defendant enters
appearance and contests the plaintiff's claim. Even where the defendant chooses
to remain ex parte and to keep out, it is possible for the plaintiff to adduce
evidence in support of his claim (and such evidence is generally insisted on by
the Courts in India), so that the Court may give a decision on the merits of
his case after a due consideration of such evidence instead of dispensing with
such consideration and giving a decree merely on account of the default of
appearance of the defendant.
In the
former case the judgment will be one on the merits of the case, while in the
latter the judgment will be one not on the merits of the case. Thus it is
obvious that the non-appearance of the defendant will not by itself determine
the nature of the judgment one way or the other.
That
appears to be the reason why S. 13 does not refer to ex parte judgments falling
under a separate category by themselves. A foreign Court may have its own
special procedure enabling it to give a decision against the defendant who has
failed to appear in spite of the summons served on him and in favour of the
plaintiff, even without insisting on any evidence in support of his claim in
the suit.
Such a
judgment may be conclusive between the parties so far as that jurisdiction is
concerned, but for the purpose of S. 13 of the Indian Civil Procedure Code such
a judgment cannot be accepted as one given on the merits of the case, and to
that extent the law in India is different from the law in other jurisdictions
where foreign judgments given for default of appearance of defendants are also
accepted as final and conclusive between the parties thereto. This position was
noticed and recognised in AIR 1927 Mad 265 (D).
The
contention that the defendant who had chosen to remain ex parte, must be taken
to have admitted the plaint claim was also repelled in that case as unsound and
untenable.
His
non-appearance can only mean that he is not inclined to come forward and
contest the claim or even to admit it.
His
attitude may be one of indifference in that matter, leaving the responsibility
on the plaintiff to prove his claim if he wants to get a decree in his favour.
Such indifference on the part of the defendant cannot necessarily lead to the
inference that he has admitted the plaintiff's claim. Admission of the claim is
a positive act and it cannot be inferred from any negative or indifferent
attitude of the person concerned. To decree the plaint claim solely on account
of the default of the defendant and without considering the question whether
the claim is well-founded or not and whether there is any evidence to sustain
it, can only mean that such a decree is passed against the defendant by way of
penalty.
It
will not satisfy even the minimum requirements of a judgment on the merits of
the claim. What such requirements are, have been explained in Abdul Rehman v.
Md. Ali Rowther, AIR 1923 Rang 319 (J), in the following terms :
"A
decision on the merits involves the application of the mind of the Court to the
truth or falsity of the plaintiff's case and therefore though a judgment passed
after a judicial consideration of the matter by taking evidence may be a
decision on the merits even though passed ex parte, a decision passed without
evidence of any kind but passed only on his pleadings cannot be held to be a
decision on the merits." The same view was taken by the Patna high Court also in Wazir Sahu v. Munshi
Das, AIR 1941 Pat. 109 (K), where the question when an ex parte decision can be
said to be on the merits, was answered as follows :
"An
ex parte decision may or may not be on the merits.
The
mere fact of its being ex parte will not in itself justify a finding that the
decision was not on the merits.
That
is not the real test. The real test is not whether the decision was or was not
ex parte, but whether it was merely formally passed as a matter of course or by
way of penalty or it was based on the consideration of the truth or otherwise
of the plaintiff's claim." We are in respectful agreement with the view
taken in these two cases." In our view this authority lays down the
correct law.
In the
case of R.M.V. Vellachi v. R.M.A. Ramanathan Chettiar reported in AIR 1973 Madras 141, the facts were almost
identical to the present case. In that case also an ex parte decree had been
obtained. In this case it was held as follows : "The Law of Civil
Procedure governing the institution of suits, service of summons upon the
defendant, the liberty to the plaintiff to apply for a decree against the
defendant in case of the defendant's default of appearance, in the Supreme Courts
of Penang and Singapore, are all similar and identical and are on the same
pattern as the procedural laws in England, i.e., "The Rules of the Supreme
Court". The Full Bench decision of this Court referred to above in ILR 50
Mad 261 = (AIR 1927 Mad 265) (FB) which dealt with the enforceability of a
judgment obtained in the Supreme Court of Penang has been followed in almost
all the high Courts. This decision was rendered about 45 years back and had
been uniformally followed by this Court. (Vide: the Bench decision of Jagadisan,
J. and Kailasam, J., in Sivagaminatha v. Nataraja, AIR 1961 Mad 385. It is
unnecessary to refer to all the cases and it is sufficient to refer to the
latest Bench decision of this Court reported in Mohammad Sheriff and Co. V.
Abdul Jabbar ILR (1966) 1 Mad 18 in which a Bench of this Court had to deal
with a similar problem arising out of a foreign judgment rendered by the
Supreme Court of Singapore on default of appearance of the defendant. Veeraswami,
J., (as he then was), delivering the judgment on behalf of the Bench, after
referring to the relevant decisions, has followed and applied the principle
enunciated by the Full Bench.
The
learned Judge pointed out that the decree that followed as a matter of course
solely on account of the default of the defendant's appearance could not be a
judgment on merits, as no evidence was adduced and there was no judicial
consideration of the tenability or justness of the claim. In view of this
recent pronouncement of the Bench of this Court which is binding upon us, the
matter does not require further elaboration. It is true that under Section 44-A
sub-clause (3), the burden is upon the defendant who resists execution, to
establish, to the satisfaction of the Court which is called upon to execute the
decree, that the foreign decree suffers under any one of the infirmities
covered by any of the exceptions specified in clauses (a) to (f) of Section 13,
Civil Procedure Code.
We may
refer to the Bench decision of the Calcutta High Court in Abdul Rahim v.
Mohamed Din, AIR 1943 Cal 42. In the instant case, the respondent has
discharged his burden by placing ample materials that the foreign judgment
cannot be executed because the High Court of Singapore was not a "Court of
competent jurisdiction" within the meaning of Section 13 (a) and that the
defendant has not voluntarily submitted to the decision of the Tribunal and
also that the decree of the High Court of Singapore was not given on the merits
of the case within the meaning of Section 13 (a)." On the basis of this
law let us now see whether the present decree is a decree on merits. It is to
be seen that between the parties there is a controversy whether the
Appellant/defendant was at all served. As stated above it is not necessary for
us to resolve this controversy. For the purposes of this Order only we will
presume that the Appellant had been served. Facts on record disclose that
before service was effected an affidavit had been filed in the English Court by
one Kaashif Basit, Solicitor for the Respondent, to which affidavit had been
annexed copies of the the invoice and other relevant documents. On the basis of
this affidavit an order in the following terms came to be passed :
"UPON
reading the Affidavit of Kaashif Basit sworn 20 January 1998 IT IS ORDERED that
the Plaintiff be at liberty to serve the Summons in this action on the
Defendant at 31, Industrial Area-A, Ludhiana- 141003, Punjab, India, or
elsewhere in India, and that the time for acknowledging service shall be 23
days after service of the Summons on the Defendant." This shows that leave
to serve the Appellant was granted after reading the affidavit. Thus at this
stage the Court had presumably seen the documents annexed thereto. The Court
has been careful enough to note that it had read the affidavit. However, at
this stage, only a prima facie opinion was being formed. Thereafter the said
Mr. Kaashif Basit, Solicitor for the Respondent had filed an affidavit of
service stating that service had been effected on one Yash Paul, who is claimed
to be an employee of the Appellant. To this Affidavit also all relevant
documents were annexed. Thereafter no documents are tendered nor any evidence
led. The English Court then pronounces the judgment and
decree, which has been set out herein above.
It
does not even say that the second Affidavit had been read. This Judgment and
decree does not indicate whether any documents were looked into and/or whether
the merits of the case was at all considered. It merely grants to the
Respondent a decree for the amounts mentioned therein. To be noted that the
Appellant had, by his letter dated 8th November, 1997, replied to the Notice of the
Respondent dated 18th
October, 1997. In this
reply it had been mentioned that goods were of inferior quality and not as per
contract. Court has not applied its mind or dealt with this aspect. It has not
examined points at controversy between the parties. It is given ex-parte as
Appellant did not appear at hearing of Suit. It is not a judgment on merits.
On the
principles of law enunciated herein above, in our view, it is clear that such a
decree cannot be said to be a decree on merits. Such a decree cannot be
enforced in India. In this view of the matter Civil
Appeal No. of 2001 [arising out of SLP (Civil) No. 2250 of 2000] is allowed and
the Application of the Appellant that this decree cannot be enforced in India as it is not on merits is made
absolute. Civil Appeal No. . of 2001 [arising out of SLP (C) No. 5332 of 2000]
stands dismissed. There will be no order as to costs in both the Appeals.
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