Bombay High Court
Ms.Gopika Nina Pillai vs Madhubhai Z. Patel on 21 December, 2013
Bench: S.J. Vazifdar, G.S. Patel
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vai
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.461 OF 2013
IN
CHAMBER SUMMONS NO.923 OF 2010
IN
EXECUTION APPLICATION NO.204 OF 1997
IN
COURT OF APPEAL NO.2065 OF 1995
WITH
APPEAL NO.462 OF 2013
ig IN
CHAMBER SUMMONS NO.922 OF 2010
IN
EXECUTION APPLICATION NO.205 OF 1997
IN
COURT OF APPEAL NO.2065 OF 1995
WITH
APPEAL NO.463 OF 2013
IN
EXECUTION APPLICATIONNO.206 OF 1997
IN
COURT OF APPEAL NO.2065 OF 1995
1. Ms.Gopika Nina Pillai,
residing at Row House, 2 Madhuli
Apartments, Shivsagar Estate,
Dr.Annie Besant Road, Worli,
Bombay - 400 018.
2. Krishna Rajan Pillai,
residing at Row House, 2 Madhuli
Apartments, Shivsagar Estate,
Dr.Annie Besant Road, Worli,
Bombay - 400 018.
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3. Shiv Rajan Pillai,
residing at Row House, 2 Madhuli
Apartments, Shivsagar Estate,
Dr.Annie Besant Road, Worli,
Bombay - 400 018. ...Appellants
...(Ori.Plaintiff
Nos.1A, 1B,
1C and 2)
Versus.
1. Madhubhai Z. Patel
2. Urmilaben M. Patel,
Both Off. 52 Tytherton Road,
London N 19, 40 A
3. Ananda Bazar Patrika Limited
Having branch office at 145 Atlanta,
Nariman Point, Bombay - 400 021.
4. Aveek Sarkar,
having office at 6, Prafulla Sarkar
Street,Calcutta - 700 001.
5. Vir Sanghvi,
having office at 6, Prafulla Sarkar
Street,Calcutta - 700 001.
6. Gautam Banerjee,
having office at Tata Iron & Steel
Co. Limited, Tata Centre,
43, Chowringhee Road, Calcutta.
7. Bijit Kumar Basu,
having office at 6, Prafulla Sarkar
Street, Calcutta - 700 001. ...Respondents
...Original
Defendants
Mr.J.P. Sen with Mr.Gaurang R. Mehta for the Appellants.
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Dr.Virendra Tulzapurkar, Senior Counsel with Mr.Sanjay Kothari,
Mr.H.N. Vakil and Mr.Sunil Chavan i/b Mulla & Mulla & C. B. & C. for
Respondent Nos.3 and 4.
CORAM : S.J. VAZIFDAR &
G.S. PATEL, JJ.
DATE : 21ST DECEMBER, 2013.
JUDGMENT (PER S.J. VAZIFDAR, J.) :-
1. These appeals are against the common order and
judgment of a learned Single Judge dated 13.08.2013 in Chamber
Summons No.888 of 2010, Execution Application No.206 of 1997,
Chamber Summons No.922 of 2010 and Chamber Summons No.923
of 2010. The issues, legal and on merits, are common. The appeals
are therefore, disposed of by a common judgment.
2. These proceedings require the determination of the date
on which the amount decreed in foreign currency by a Superior Court
of a reciprocating territory is to be converted to Indian currency. The
learned Judge determined the date to be 10.06.2008, which was the
first time when the respondents were entitled to execute the foreign
costs certificates / decrees on account of certain orders passed in the
execution applications filed by respondent Nos.3 and 4. We have
however, held that the relevant date is the date of the foreign decree.
3(A). In 1993, appellant No.1 and her late husband - Janardhan
Mohandas Rajan Pillai had filed a suit for damages in the High Court
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of England, Queen's Bench Division for defamation against
respondent Nos.3 and 4 - Ananda Bazar Patrika Limited and one
Aveek Sarkar. The defamation was said to be contained in an article
that appeared in the third respondent's magazine "Sunday".
(B). On 28.03.1994, respondent No.4 filed an application for a
stay of the suit on the ground that the Court had no jurisdiction. The
application was dismissed by the Master. The Chamber Judge by an
order dated 10.06.1994 allowed the appeal filed by respondent No.4
and stayed the suit as against respondent No.4. Appellant No.1 and
her late husband filed an appeal against this order. On the fourth
respondent's application, they, as required, deposited a sum of UK £
20,850 as security of the costs of the appeal.
(C). By an order dated 27.10.1994, the Chamber Judge
allowed the application of respondent No.3 for a stay of the suit and
costs were reserved to the Court of Appeals. Appellant No.1 and her
late husband filed an appeal against this order.
(D). By an order dated 08.06.1995, the Court of Appeals
dismissed the appeals against the orders of the Chamber Judge with
costs to be paid to respondent Nos.3 and 4.
(E). On 28.06.1996, the Taxing Master quantified the costs
and issued the costs certificates. The costs of the third respondent
were taxed in two costs certificates in the sum of UK £ 26,835.38 and
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£ 7583.33. The costs of the fourth respondent were taxed in two
costs certificates in the sums of UK £ 32,594.67 and £ 64,125. Thus
four costs certificates were issued, two in favour of the third
respondent and two in favour of respondent No.4.
We have upheld Mr.J.P. Sen's submission on behalf of the
appellants that the rupee equivalent of the costs certificates / decrees
issued in sterling must be determined on the basis of the exchange
rate prevailing on the date of the costs certificates / decrees i.e.
28.06.1996.
4. In the meantime in July, 1995, the said Janardhan
Mohandas Rajan Pillai expired and was survived by the appellants as
his only legal heirs and representatives. Appellant No.1 is his widow
and appellant Nos.2 and 3 are his daughter and son.
5. Respondent Nos.3 and 4 commenced execution
proceedings in respect of the costs certificates / decrees.
(A). Respondent No.3 filed Execution Application No.204 of
1997 for recovery of the aggregate sum of UK £ 34,418 in respect of
both the decrees / costs certificates issued in its favour. Respondent
No.4 filed Execution application No.205 of 1997 for recovery of UK £
11,744 under one decree / costs certificate. As we noted earlier,
pursuant to the order dated 06.07.1994 of the Court of Appeal, the
appellants had deposited a sum of UK £ 20,850. Execution
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Application filed by respondent No.4 for recovery of UK £ 11,744
was presumably after giving credit for the said sum. Respondent
No.4 also filed Execution Application No.206 of 1997 for recovery of
UK £ 64,175 i.e. the value of the fourth costs certificates.
(B). Respondent No.3 filed Notice Nos.1774 of 1997 and 1775
of 1997 in Execution Application No.204 of 1997 and respondent
No.4 filed Notice No.1772 of 1997 in Execution Application No.205 of
1997 and Notice No.1773 of 1997 in Execution Application No.206 of
1997.
One of the questions that was raised before the learned
Judge on behalf of the appellants was whether by an order dated
08.08.2003, the notice filed by respondent No.4 was filed in
Execution Application No.206 of 1997 and whether it was made
absolute or not. The learned Judge held that the notices were made
absolute in all three execution applications including Execution
Application No.206 of 1997. The finding in this regard was not
challenged before us by Mr.Sen.
(C). In December, 1997, this Court issued notices under Order
21 Rule 22 of the Code of Civil Procedure in the execution
applications to the appellants, who were shown as the judgment
debtors in the execution applications. The notice under Order 21
Rule 22 of the CP was necessary. The costs certificates being the
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decrees of a Superior Court of a reciprocating territory viz. United
Kingdom, could be executed as if they were decrees passed by the
District Courts under Section 44-A of the Code of Civil Procedure.
However, Order 21 Rule 22 (1)(b) of the CPC provides that where the
application for execution is made of a decree filed under the
provisions of section 44-A, the Court executing the decree shall issue
a notice to the person against whom the execution is applied for
requiring him to show cause on a day to be fixed why the decree
should not be executed against him.
6. It would be appropriate here to refer to the provisions of
Section 44-A and Order 21 Rule 22 of the Code of Civil Procedure .
"44-A. Execution of decrees passed by Courts in
reciprocating territory :- (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
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section 13.
22. Notice to show cause against execution in
certain cases.-- (1) Where an application for
execution is made--
(a) more than [two years] after the date of the decree,
or
(b) against the legal representative of a party to the
decree or where an application is made for execution
of a decree filed under the provisions of Section 44-A,
or
[(c) against the assignee or receiver in insolvency,
where the party to the decree has been adjudged to
be an insolvent,]
the Court executing the decree shall issue a notice to
the person against whom execution is applied for
requiring him to show cause, on a date to be fixed,
why the decree should not be executed against him:
Provided that no such notice shall be necessary in
consequence of more than [two years] having elapsed
between the date of the decree and the application for
execution if the application is made within [two years]
from the date of the last order against the party
against whom execution is applied for, made on any
previous application for execution, or in consequence
of the application being made against the legal
representative of the judgment-debtor, if upon a
previous application for execution against the same
person the Court has ordered execution to issue
against him.
(2) Nothing in the foregoing sub-rule shall be deemed
to preclude the Court from issuing any process in
execution of a decree without issuing the notice
thereby prescribed, if, for reasons to be recorded, it
considers that the issue of such notice would cause
unreasonable delay or would defeat the ends of
justice."
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7(A). By an order dated 08.02.2003, this Court rejected the
appellants' objections to the decrees and made the notices under
Order 21 Rule 22 absolute thereby allowing the execution of the said
decrees.
(B). In August, 2003, the appellants challenged this order by
filing Appeal Nos.1123 of 2003 and 1124 of 2004 in Execution
Application No.204 of 1997 and Appeal Nos.1121 of 2003 and 1122
of 2003 in Execution Application No.205 of 1997.
(C)(i).
On 23.09.2003, the appellants filed notices of motion for
stay of the execution of the decrees. By interim orders dated
13.04.2004, passed in the four appeals, the Division Bench of this
Court stayed the execution of the decrees pending the hearing of the
appeals.
(ii). Respondent Nos.3 and 4 filed a petition for Special Leave
to appeal to the Supreme Court, challenging these orders, which
were disposed of by an order dated 21.04.2008. The Supreme Court
interfered only to the extent of directing this Court to make the order
absolute subject to the appellants furnishing security to the
satisfaction of this Court.
(iii). Pursuant thereto, this Court, by an order dated
29.04.2008, modified the interim orders dated 13.04.2004 by staying
the execution of the decrees subject to the appellants furnishing bank
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guarantees to the extent of the amount payable under the decree in
each of the appeals within six weeks i.e. by 10.06.2008.
(iv). The appellants' Special Leave Petition challenging the
order dated 29.04.2008 was dismissed on 07.08.2009 on the ground
of delay.
8. The bank guarantee was not furnished by 10.06.2008 i.e.
six weeks from the date of the order dated 29.04.2008. The decrees
therefore became executable with effect from 10.06.2008.
9(A).
Respondent No.3 filed Chamber Summons No.892 of
2008 in Execution Application No.204 of 1997 for disclosure of the
appellants' assets. By an order dated 26.02.2009, the appellants
were directed to disclose their assets. The appellants filed Appeal
(Lodging) No.362 of 2009 against the order dated 26.02.2009 which
was dismissed by an order and judgment dated 27.01.2010. On
29.03.2010, the appellants filed petitions for Special Leave against
the order dated 27.01.2010.
(B). The appellants also filed Notice of Motion Nos.3586 of
2009 and 3587 of 2009 in Appeal Nos.1123 of 2003 and 1124 of
2003 for recall / modification of the order dated 29.04.2008 by
permitting them to give the immovable property of appellant No.1 as
security in lieu of the bank guarantee. These notices of motion were
directed to be heard along with the appeals.
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(C). By a common order and judgment dated 30.03.2010, the
Division Bench dismissed Appeal Nos.1121 of 2003 to 1124 of 2003
thereby confirming the order and judgment dated 08.08.2003 of the
learned single Judge making the notices under Order 21 Rule 22
absolute and thereby allowing the execution of the decrees. Notice of
Motion Nos.3586 of 2009 and 3587 of 2009 were accordingly
dismissed, as infructuous.
(D). The Supreme Court by its order and judgment dated
13.10.2010 dismissed the appellants' Petition for Special Leave
against the order dated 30.03.2010. The Supreme Court however,
directed the Executing Court to decide the matter as expeditiously as
possible and further directed the appellants to pay the amounts
determined by the Executing Court within two months.
10. The appellants thereafter filed the above Chamber
Summons No.922 of 2010 in Execution Application No.205 of 1997
and Chamber Summons No.923 of 2010 in Execution Application
No.204 of 1997 to determine the decretal amount in Indian rupees
payable under the said decrees / costs certificates. The appellants
also sought an order setting aside the said order dated 26.02.2009
directing the appellants to disclose their assets. The impugned order
is passed in these chamber summonses.
Respondent No.3 filed Chamber Summons No.888 of
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2010 seeking the appellants arrest. By the impugned orders, this
chamber summons was dismissed and no appeal against the same
has been filed.
11. On 03.08.2010, appellant No.1 deposited the rupee
equivalent of the costs. The conversion from sterling to Indian rupees
was on the basis of the foreign exchange rate as on the date of the
costs certificates / decrees. Execution Application No.206 of 1997
filed by respondent No.4 in respect of the costs certificates for £
64,157 was tagged to be heard along with Chamber Summons
Nos.888 of 2010, 922 of 2010 and 923 of 2010.
12. The order impugned in this appeal is a common order in
Chamber Summon Nos.888 of 2010, 922 of 2010 and 923 of 2010
and in Execution Application No.206 of 1997.
13. By the order dated 29.04.2008, this Court granted the
appellants a stay of the execution of the decrees subject to their
furnishing a bank guarantee to the extent of the amount payable
under the decrees within six weeks. The period expired on
10.06.2008. The learned Judge therefore, took the date of
conversion of foreign exchange for determining the Indian rupees
equivalent of the amount of the costs certificates / decrees to be
10.06.2008.
14. The relevant date for converting into Indian rupees the
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amounts awarded in pounds sterling by the decrees / costs
certificates is to be determined. Mr.Sen, the learned counsel
appearing on behalf of the appellants submitted that the relevant
date is the date of the decree. Dr.Tulzapurkar, the learned senior
counsel appearing on behalf of the respondents on the other hand
submitted that the relevant date is 10.06.2008 which was the first
occasion when the respondents / decree holders were entitled in law
to execute the decrees / costs certificates. Mr.Sen and
Dr.Tulzapurkar relied upon the judgment of the Supreme Court in
Forasol vs. Oil & Natural Gas Commission, 1984 Supp. SCC 265 =
AIR 1984 SC 241.
15. Before we refer to the judgment in Forasol vs. O.N.G.C., it
is necessary to note that under section 44-A of the C.P.C., a decree
of a superior Court of a reciprocating territory may be executed in
India as if it has been passed by the District Court. What is
executable therefore is the foreign decree itself. Under order 21 Rule
22, where an application is made for execution of a decree filed
under section 44-A, the Court executing the decree is required to
issue a notice to the person against whom execution is applied
requiring him to show cause why the decree should not be executed
against him. An order is undoubtedly passed on the notice issued
under Order 21 Rule 22, but what is executable is the decree and not
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the order on the notice under Order 21 Rule 22. The order on the
notice under Order 21 Rule 22 only removes any impediment in the
way of the Court executing a decree of a Court in India in certain
circumstances or a decree of a foreign Court of a reciprocating
territory.
16. This brings us to the judgment of the Supreme Court in
Forasol vs. O.N.G.C. An award was made under the Arbitration Act,
1940. On 07.05.1975, a decree in terms of the award was passed.
Neither party challenged the award under which certain amounts
were directed by the Umpire to be paid to Forasol by the ONGC in
French Francs and certain amounts in Indian rupees. The question
that was considered was the date to be selected for converting into
Indian rupees the French Francs part of the award in respect of
which no rate of exchange was fixed either by the contract entered
into between the parties, or in the award. One of the questions that
arose was the date which Court should select for converting the
foreign currency component of the award into Indian rupees.
The Supreme Court held that the relevant date cannot be
the date when the amount became due and payable or the date of
the commencement of the action or suit. The Supreme Court held the
date of the decree to be the relevant date. The Supreme Court also
ruled out the taking of the date when the Court grants an application
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for execution as the date of conversion. The Supreme Court also
ruled out the date of the payment to be the proper date for
conversion.
The Supreme Court held the date of the decree in terms of
the award to be the relevant date. It also held that on principle there
can and should be no difference between an award made by the
Arbitrator or an Umpire and a decree of a Court. These observations
were made in the context of the Arbitration and Conciliation Act,
1940. Under the 1940 Act, an award was not itself executable. Under
Section 17 of the 1940 Act, it was necessary first for the Court to
proceed to pronounce the judgment according to the award and upon
the judgment so pronounced, a decree would follow. It is that decree
and not the award that was enforceable. In contrast under section
44-A, it is the foreign decree itself that is enforceable. It is not
necessary for the decree-holder to obtain a judgment according to
the decree or a decree upon the judgment so pronounced.
Paragraphs 43, 53, 66, 69, 70 and 71 of the judgment read as
under :-
"43. We will now consider the feasibility of selecting
the third date, namely, the date of the decree. A
decree crystallizes the amount payable by the
defendant to the plaintiff and it is the decree which
entitles the judgment-creditor to recover the judgment
debt through the processes of law. An objection
which can, however, be taken to selecting this date is
that the decree of the trial court is not the final decree
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for there may be appeals or other proceedings
against it in superior courts and by the time the
matter is finally determined, the rate of exchange
prevailing on that date may be nowhere near that
which prevailed at the date of the decree of the trial
court. To select the date of the decree of the trial
court as the conversion date would, therefore, be to
adopt as unrealistic a standard as the "breach date".
This difficulty is, however, easily overcome by
selecting the date when the action is finally disposed
of, in the sense that the decree becomes final and
binding between the parties after all remedies against
it are exhausted. This can be achieved by the court
which hears the appeal providing that the date of its
decree or other proceedings in which the decree is
challenged would be the date for conversion of the
foreign currency sum into Indian rupees in cases
where the decree has not been executed in the mean
time. The real objection to selecting this date,
however, is that a money decree and the payment by
the judgment debtor of the judgment debt under it are
two vastly different matters widely separated by
successive execution applications and objections
thereto unless the judgment-debtor chooses to pay
up the judgment debt of his own accord which is
generally not the case. In the vast majority of cases a
money decree is required to be enforced by
execution.
53. This then leaves us with only three dates
from which to make our selection, namely, the date
when the amount became payable, the date of the
filing of the suit and the date of the judgment, that is,
the date of passing the decree. It would be fairer to
both the parties for the Court to take the latest of
these dates, namely, the date of passing the decree,
that is, the date of the judgment.
66. Under Section 17 of our Arbitration Act,
judgment is to be pronounced "according to the
award". The marginal note to the section speaks of
"judgment in terms of award". Under Section 26(1) of
the English Act, once leave is given, an award
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becomes enforceable in the same manner as a
judgment or order "to the same effect". The words "to
the same effect" were interpreted in the
Jugoslavenska case not as meaning "in the same
terms" but as meaning having "the same effect", that
is, as having the same effect as a judgment or order
given in an action brought on the award. Granting
leave under Section 26(1) of the English Act and
pronouncing judgment according to the award and
passing a decree under Section 17 of our Act,
therefore, mean different things and have different
results. A judgment according to the award under
Section 17 of our Act will speak only from the date of
the judgment which will not be the case under
Section 26(1), for while in the first case what will be
enforceable by the processes of law, namely,
execution, will be the decree passed in terms of the
award, in the second case it will be the award itself,
unless the applicant desires to have judgment en-
tered in terms of the award which he is not required
to do as pointed out above.
69. For the reasons set out above, we are of
the opinion that the rule in the Jugoslavenska case
cannot be applied to this country and the fact that a
decree is in terms of an award for a sum of money
expressed in a foreign currency makes no difference
to the date to be taken by the court for converting into
Indian currency the foreign currency sum directed to
be paid under the award and that such date should
also be the date of the decree.
70. It would be convenient if we now set out
the practice, which according to us, ought to be
followed in suits in which a sum of money expressed
in a foreign currency can legitimately be claimed by
the plaintiff and decreed by the court. It is
unnecessary for us to categorize the cases in which
such a claim can be made and decreed. They have
been sufficiently indicated in the English decisions
referred to by us above. Such instances can,
however, never, be exhausted because the law
cannot afford to be static but must constantly develop
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and progress as the society to which it applies,
changes its complexion and old ideologies and
concepts are discarded and replaced by new. Suffice
it to say that the case with which we are concerned
was one which fell in this category. In such a suit, the
plaintiff, who has not received the amount due to him
in a foreign currency, and, therefore, desires to seek
the assistance of the court to recover that amount,
has two courses open to him. He can either claim the
amount due to him in Indian currency or in the foreign
currency in which it was payable. If he chooses the
first alternative, he can only sue for that amount as
converted into Indian rupees and his prayer in the
plaint can only be for a sum in Indian currency. For
this purpose, the plaintiff would have to convert the
foreign currency amount due to him into Indian
rupees. He can do so either at the rate of
exchange prevailing on the date when the amount
became payable for he was entitled to receive the
amount on that date or, at his option, at the rate of
exchange prevailing on the date of the filing of the
suit because that is the date on which he is seeking
the assistance of the court for recovering the amount
due to him. In either event, the valuation of the suit
for the purposes of court fees and the pecuniary limit
of me jurisdiction of the court will be the amount in
Indian currency claimed in the suit. The plaintiff may,
however, choose the second course open to him and
claim in foreign currency the amount due to him. In
such a suit, the proper prayer for the plaintiff to make
in his plaint would be for a decree that the defendant
do pay to him the foreign currency sum claimed in the
plaint subject to the permission of the concerned
authorities under the Foreign Exchange Regulation
Act, 1973, being granted and that in the event of the
foreign exchange authorities not granting the
requisite permission or the defendant not wanting to
make payment in foreign currency even though such
permission has been granted or the defendant not
making payment in foreign currency or in Indian
rupees, whether such permission has been granted
or not, the defendant do pay to the plaintiff the rupee
equivalent of the foreign currency sum claimed at the
rate of exchange prevailing on the date of the
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judgment. For the purposes of court fees and
jurisdiction the plaintiff should, however, value his
claim in the suit by converting the foreign currency
sum claimed by him into Indian rupees at the rate of
exchange prevailing on the date of the filing of the
suit or the date nearest or most nearly preceding
such date, stating in his plaint what such rate of
exchange is. He should further give an undertaking in
the plaint that he would make good the deficiency in
the court-fees, if any, if at the date of the judgment, at
the rate of exchange then prevailing, the rupee
equivalent of the foreign currency sum decreed is
higher than that mentioned in the plaint for the
purposes of court-fees and jurisdiction. At the hearing
of such a suit, before passing the decree, the court
should call upon the plaintiff to prove the rate of
exchange prevailing on the date of the judgment or
on the date nearest or most nearly preceding the date
of the judgment. If necessary, after delivering
judgment on all other issues, the court may stand
over the rest of the judgment and the passing of the
decree and adjourn the matter to enable the plaintiff
to prove such rate of exchange. The decree to be
passed by the court should be one which orders the
defendant to pay to the plaintiff the foreign
currency sum adjudged by the court subject to the
requisite permission of the concerned authorities
under the Foreign Exchange Regulation Act, 1973,
being granted, and in the event of the foreign
exchange authorities not granting the requisite
permission or the defendant not wanting to make
payment in foreign currency even though such
permission has been granted or the defendant not
making payment in foreign currency or in Indian
rupees, whether such permission has been granted
or not, the equivalent of such foreign currency sum
converted into Indian rupees at the rate of exchange
proved before the court as aforesaid. In the event of
the decree being challenged in appeal or other
proceedings and such appeal or other proceedings
being decided in whole or in part in favour of the
plaintiff, the appellate court or the court hearing the
application in the other proceedings challenging the
decree should follow the same procedure as the trial
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court for the purpose of ascertaining the rate of
exchange prevailing on the date of its appellate
decree or of its order on such application or on the
date nearest or most nearly preceding the date of
such decree or order. If such rate of exchange is
different from the rate in the decree which has been
challenged, the court should make the necessary
modification with respect to the rate of exchange by
its appellate decree or final order. In all such cases,
execution can only issue for the rupee equivalent
specified in the decree, appellate decree or final
order, as the case may be. These questions, of
course, would not arise if pending appeal or other
proceedings adopted by the defendant the decree
has been executed or the money thereunder received
by the plaintiff.
71. Turning now to arbitrations, on principle
there can be and should be no difference between an
award made by arbitrators or an umpire and a decree
of a court. In the type of cases we are concerned with
here just as the courts have power to make a decree
for a sum of money expressed in a foreign currency
subject to the limitations and conditions we have set
out above, the arbitrators or umpire have the power
to make an award for a sum of money expressed in a
foreign currency. The arbitrators or umpire should,
however, provide in the award for the rate of
exchange at which the sum awarded in a foreign
currency should be converted in the events
mentioned above. This may be done by the
arbitrators or umpire taking either the rate of
exchange prevailing on the date of the award or the
date nearest or most nearly preceding the date of the
award or by directing that the rate of exchange at
which conversion is to be made would be the date
when the court pronounces judgment according to
the award and passes the decree in terms thereof or
the date nearest or most nearly preceding the date of
the judgment as the court may determine. If the
arbitrators or umpire omit to provide for the rate of
conversion, this would not by itself be sufficient to
invalidate the award. The court may either remit the
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award under Section 16 of the Arbitration Act, 1940,
for the purpose of fixing the date of conversion or
may do so itself taking the date of conversion as the
date of its judgment or the date nearest or most
nearly preceding it, following the procedure outlined
above for the purpose of proof of the rate of
exchange prevailing on such date. If, however, the
person liable under such an award desires to make
payment of the sum in foreign currency awarded by
the arbitrators or umpire without the award being
made a rule of the court, he would be at liberty to do
so after obtaining the requisite permission of the
concerned authorities under the Foreign Exchange
Regulation Act, 1973."
A Division Bench of this Court in O.N.G.C. vs. Mccelland
Engineers SA (2007) Bom.C.R. 66 (Para 19) observed that in
Forasol the Supreme Court held that the date of the passing the
decree i.e. the date of the judgment is fairer to both the parties as a
proper date for fixing the rate of foreign exchange at which the
foreign currency amount should be converted.
17. The question is whether the judgment in Forasol vs.
O.N.G.C. would also apply to a decree of a superior Court of a
reciprocating territory sought to be executed under section 44-A of
the Code of Civil Procedure. In our view, it does.
18. The observations of the Supreme Court referred to above
clearly establish that whether a decree is passed in a suit or a
judgment is pronounced and a decree follows according to an award
under section 17 of the 1940 Act, the relevant date for conversion
would be the date of the decree. In the case of an award, this is
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subject to the award itself providing a date for conversion. An
"award" under the 1940 Act does not operate as a decree and cannot
be executed on its own terms. What is executable is the decree
passed according to the award under section 17 of the Arbitration
Act, 1940. Under Section 44-A of the Code of Civil Procedure, a
decree of a superior Court of a reciprocating territory may be
executed in India as if it had been passed by the District Court. Thus
what is executable is the foreign decree itself. There is no provision
for a judgment being pronounced and a decree following upon the
judgment so pronounced in respect of the foreign decree in cases
that fall under section 44-A of the Code of Civil Procedure.
19. Dr.Tulzapurkar however, submitted that the observations
of the Supreme Court in Forasol vs. O.N.G.C. would not apply to a
foreign decree sought to be executed under Section 44-A of the
Code of Civil Procedure as a foreign decree is not executable unless
and until the provisions of Order 21 Rule 22 are complied with. He
submitted that whereas a decree of an Indian Court is final, the
decree of a foreign Court even of a reciprocating territory is not final.
It is subject to the decision of the Courts in India in view of Order 21
Rule 22(1)(b) read with section 44-A of the Code of Civil Procedure.
In the present case, for instance, the costs certificates / foreign
decrees could not be executed till the decision of the Court on the
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notice under Order 21 Rule 22 was finally disposed of. In this case,
the notices under Order 21 Rule 22 were made absolute on
08.08.2003. The same were however, not executable immediately
thereafter on account of the stay granted pursuant to the orders of
the Court including the order of the Supreme Court dated 21.04.2008
and of this Court dated 29.04.2008. By the order dated 29.04.2008,
the appellants were granted six weeks to furnish a bank guarantee
as a condition for the stay of the execution of the decree. The
appellants failed to deposit the amount within the period of six weeks
i.e. by 10.06.2008. The respondents were entitled to execute the
decree for the first time only with effect from 10.06.2008.
20. Had we come to the conclusion that the date of the
decision in the notice issued under Order 21 Rule 22 is the relevant
date for conversion where the decrees are passed in a foreign
currency of a foreign Court of reciprocating territory, it may well have
followed that the date of conversion would be postponed to the date
of the order of the Appeal Court where an appeal is filed against the
order making the notice under Order 21 Rule 22 absolute. In our
view, however, the relevant date for conversion would be the date of
the foreign decree itself which in this case 28.06.1996. The date of
the order of the appellate court therefore would be irrelevant in such
cases.
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21. The Supreme Court in Forasol vs. O.N.G.C. expressly
rejected the date of the execution application to be the date on which
the conversion ought to take place. This is clear from paragraphs 44,
45, 46, 48, and 51 of the judgment which read as under :-
"44. Would the proper date of conversion then
be the date when the court orders execution to issue?
This date appears to have found favour with all the
Law Lords who decided the Miliangos case except
Lord Simon of Glaisdale. We, however, find the
selection of this date equally beset with difficulties.
Execution of a decree is not a simple matter. In
execution of a money decree, first the judgment-
debtor's property has to be attached. Pending
attachment a third party, at times set up by the
judgment-debtor, may prefer a claim to the attached
property. Such claim will have to be investigated and
determined by the executing court. Even where no
claim is preferred, the attached property cannot be
brought to sale immediately. A proclamation giving
the prescribed particulars has to be first made. Even
after such proclamation, the property cannot be put
up for sale until after the expiry of the period
prescribed by Order 21 Rule 68 of the Code of Civil
Procedure, 1908 (5 of 1908), unless it is subject to
speedy and natural decay or when the expense of
keeping it in custody is likely to exceed its value.
Even after the sale has taken place the judgment-
debtor may further hold up the receipt of the sale
proceeds by the decree-holder by raising objection to
the conduct of the sale. Even otherwise, at times, a
fresh auction-sale may have to be held if the auction-
purchaser commits default in paying the balance of
the purchase price. A considerable time would thus
elapse between the date when the court orders
execution to issue and the date of the receipt of the
sale proceeds by the decree-holder. This passage of
time would as much expose the decree-holder to the
hazards of fluctuations in the rate of exchange as
selection of any of the three dates we have discussed
above. Yet another difficulty in selecting the date
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when the court orders execution to issue is that at
times the judgment debt is not recovered in full when
the attached property is sold in execution. This
necessitates a second application in execution for
attaching other properties of the judgment-debtor and
even the sale of these properties may not cover the
deficit, thus necessitating yet another execution
application. This would lead to an anomalous position
for the court would have to fix the rate of exchange for
the entire decretal debt at the time of granting the first
application for execution and then, if the rate of
exchange has varied in the mean time, to fix a
different rate of exchange for the unrealized balance
of the decretal amount at the time of granting the
second application for execution, and equally so with
respect to successive applications for execution.
Thus, with respect to portions of the same decretal
debt different rates of exchange would come to be
fixed at different times.
45. A further difficulty in selecting the date of
granting an execution application is that execution
can only issue for a sum expressed in Indian
currency. What is being executed is the decree and
the sum for which execution is to issue in a money
decree must, therefore, be for the particular sum
specified in the decree, that is, the judgment debt. It
cannot be for a sum which would be determined and
fixed by the executing court at the time of granting the
execution application, for under Order 21 Rule 11(2)
(g) of the Code of Civil Procedure, 1908, an
application for execution has to state "the amount with
interest (if any) due upon the decree".
46. The above difficulties would rule out the
taking of the date when the court grants an
application for execution as the date of conversion
and would make inapplicable to our courts the Rule
laid down in the Miliangos case.
48. So far as court fees are concerned, we
have a Central Act, namely, the Court fees Act, 1870
(7 of 1870), which applies, either with or without
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amendments, to those States and Union Territories
which have not repealed and replaced it by their own
legislation. The States and Union Territories which
have their own legislation on the subject are Andhra
Pradesh, Gujarat, Himachal Pradesh, Jammu and
Kashmir, Karnataka, Kerala, Maharashtra,
Pondicherry, Rajasthan, Tamil Nadu and West
Bengal. Under all Court fees Acts, no plaint can be
filed in any court without payment of Court fees. The
plaintiff, therefore, has to value his claim in the suit
and pay the Court fees thereon computed in the
manner provided in the relevant Court fees Act. So far
as money suits are concerned, the Court fees
payable are ad valorem Court fees according to the
amount claimed which may or may not be subject to a
ceiling depending upon which Court fees Act applies.
A suit for a sum of money expressed in a foreign
currency is also a money suit and the plaintiff in such
a suit will have to pay Court fees according to the
amount claimed. As, however, a court in India cannot,
as we have pointed out above, pass a decree
simpliciter for payment of a sum in a foreign currency
in such a suit, the plaintiff will have to make an
alternative claim in his plaint for the rupee equivalent
of the foreign currency sum claimed. He will,
therefore, have to pay Court fees on the amount of
the rupee equivalent. Such rupee equivalent as at the
date of the institution of the suit can only be at the
rate of exchange prevailing on that date. If, therefore,
a plaintiff were to make the alternative claim on the
basis of the rupee equivalent at the time of payment,
the value of the suit for the purposes of Court fees
would be incapable of computation for it would not be
possible to say what the rate of exchange on that
date would be. It may be argued on the analogy of a
suit for accounts or for partition or for administration
or for winding up and accounts of a partnership that
the plaintiff can put a tentative valuation in his plaint
computed according to the rate of exchange
prevailing on the date of the institution of the suit and
give an undertaking to pay the deficit Court fees if at
the time of payment of the amount decreed, the rate
of exchange has fluctuated in his favour so that the
amount realized in rupee equivalent is more than the
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amount mentioned in the plaint. There is, however, a
basic difference between a money suit and a suit for
accounts, a partition suit, an administration suit or a
partnership suit. In these types of suits, a preliminary
decree is passed to ascertain the amount due to the
plaintiff and when such amount is ascertained, a final
decree for the ascertained sum is passed. In a money
suit, however, there can be only one decree. It is,
therefore, neither permissible in law nor feasible for
the plaintiff in a suit in which his claim is for a sum of
money in a foreign currency to give an undertaking to
make good the deficiency in court-fees when he
receives payment. In fact, a part or even the whole of
the judgment debt may not be recovered at all. Even
in the other types of suits mentioned above, it is not
when the ascertained amount is received by the
plaintiff that the deficit court-fees are to be paid by
him. They are to be paid when the amount due to the
plaintiff is ascertained. In the type of suits we are
concerned with in these appeals, the plaintiff can at
the highest give an undertaking to pay the deficit, if
any, in the court-fees if at the time when the judgment
is given and the decree passed, the rupee equivalent
is more than at the date of the suit by reason of the
fluctuation in the rate of exchange, but it would not be
permissible for him to give such an undertaking for
any date subsequent to the date of the passing of the
decree. An additional difficulty would be that it is the
court in which a suit is instituted which has to ensure
at the time of the institution of the suit that the proper
court-fees have been paid. The deficit, court-fees,
therefore, cannot be calculated and the balance
thereof recovered by the executing court. These
difficulties would rule out both the date when the court
orders execution to issue and the date of payment of
the decretal debt to be taken as the date of
conversion.
51. The difficulty with respect to execution
which would arise if the court were to select the date
of payment as the date of conversion is that execution
must issue for a specific sum expressed in Indian
currency "due upon the decree". It cannot issue for a
sum which would become ascertainable only when
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realized or paid as would be the case were execution
to issue for the rupee equivalent at the time of
payment in rupees of a foreign currency sum. Further,
as pointed out earlier, execution can issue only with
respect to the amount due upon the decree."
(emphasis supplied)
22. In our view, these observations would also apply to a
foreign decree of a superior Court of a reciprocating territory. For the
purpose of determining the date of conversion into Indian Rupees,
the foreign currency amount decreed by a superior Court of a
reciprocating territory, there is no difference between a decree
passed by a Court in India and a decree passed by the foreign Court
in a reciprocating territory. In both the cases, it is the decree itself
that is executable. The requirement of the holder of a decree of a
foreign Court of a reciprocating territory to follow the provisions of
Order 21 Rule 22 makes no difference. In both the cases, it is the
decree that is executable. In the latter case, it is not the decision of
the court on the notice under Order 21 Rule 22 but the decree itself
that is executable.
23. Dr.Tulzapurkar submitted that the judgment in Forasol's
case would not apply in this case as a foreign decree cannot be
executed unless and until the procedure under Order 21 Rule 22 is
followed.
24. Even in the case of a decree of a Court in India, the
provisions of Order 21 Rule 22 are required to be complied with in
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certain cases. Where the application for execution is made against a
legal representative of the party to the decree or it is made more than
two years after the date of the decree or where it is made against
the assignee or receiver in insolvency where the party to the decree
has been adjudged to be an insolvent, a notice under order 21 Rule
22 is required to be served to the person against whom the execution
is applied for. There is nothing in Forasol's judgment that suggests
that the relevant date for conversion in case of a decree of an Indian
court where the provisions of Rule 21 Rule 22 apply, would be the
date of the decision of the Court on the notice under order 21 Rule
22. There is no reason why it should be any different in the case of
an application for execution of a decree under section 44-A.
25. We are unable to distinguish the judgment of the
Supreme Court in Forasol's case on the basis suggested by
Dr.Tulzapurkar. The same is also the case with respect to certain
decrees of Courts in India mentioned in Order 21 Rule 22. Such
decrees are also not executable except after following the provisions
of Order 21 Rule 22.
26. Dr.Tulzapurkar submitted that a decree of an Indian Court
attains finality, whereas the remedy against the decree of a foreign
Court is not exhausted on the date of the decree itself. It is only if the
remedy gets exhausted that it becomes final.
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27. The fallacy in this submission is that even the execution of
a decree passed by a Court in India can be opposed on certain
grounds. Section 47 of the Code of Civil Procedure which recognizes
the same reads as under :-
47. Questions to be determined by the
Court executing decree.--(1) All questions arising
between the parties to the suit in which the decree
was passed, or their representatives, and relating to
the execution, discharge or satisfaction of the decree,
shall be determined by the Court executing the
decree and not by a separate suit.
(2) [* * *]
(3) Where a question arises as to whether any
person is or is not the representative of a party, such
question shall, for the purposes of this section, be
determined by the Court.
[Explanation I.--For the purposes of this section, a
plaintiff whose suit has been dismissed and a
defendant against whom a suit has been dismissed
are parties to the suit.
Explanation II.--(a) For the purposes of this section, a
purchaser of property at a sale in execution of a
decree shall be deemed to be a party to the suit in
which the decree is passed; and
(b) all questions relating to the delivery of
possession of such property to such purchaser or his
representative shall be deemed to be questions
relating to the execution, discharge or satisfaction of
the decree within the meaning of this section.]"
28. The learned single Judge however, was impressed by the
fact that the appellants had contested the notices issued under Order
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21 Rule 22 and had also failed to issue the bank guarantee within the
time stipulated in the order dated 08.08.2003 i.e. by 10.06.2008 and
that respondent Nos.3 and 4 were unable to obtain the benefits of the
costs certificates / decrees till 10.06.2008 on account of the
pendency of the proceedings and therefore, declined to accept the
submissions. The approach, with respect, is incorrect. This is a pure
question of law. That the appellants contested the execution
proceedings is not relevant while deciding the question of law. It is
necessary to remind ourselves of the obvious - that the rate of
foreign exchange constantly fluctuates. In a given case it may
fluctuate in favour of a decree-holder and in another, it may fluctuate
against the interest of the decree-holder. The question of law cannot
depend upon the manner in which the currency fluctuates in a given
case.
29. The learned single Judge also held as under :-
" In my view para 70 of the Supreme Court Judgment
is clear on the issue that if the rate of conversion on
the date of passing decree or when such decree
became final is different, Court should make
necessary modification with respect to the rate of
exchange. In my view, judgment-debtor having taken
advantage of the stay order for a period of five years
by filing one or the other application and thereafter
not complying with the conditional order of stay,
cannot be allowed to take advantage of the
proceedings filed by themselves obstructing the
decree on one or the other ground."
It is only a decree which has become final that can be
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executed under section 44-A of the C.P.C. In the present case, the
costs certificates / decrees had become final. It is that date which is
relevant for the conversion into Indian rupees the decretal amount
stipulated in the foreign currency. A foreign decree does not become
final upon the order of the Court in the notices issued under Order 21
Rule 22. Such decrees are final in the jurisdiction in which they are
passed. They merely become executable after the procedure
prescribed under Order 21 Rule 22 is complied with.
30.
Nor do we agree with the learned Judge's reasons for
distinguishing the judgment of the Supreme Court. The learned
Judge held that the Supreme Court was not dealing with a situation
where a show cause notice under Order 21 Rule 22 was mandatory
and to be given to the judgment-debtors before passing an order of
execution of the decree against the judgment-debtors. The learned
Judge held that the Supreme Court had not considered such a
situation where a decree passed by a foreign Court could be
executed only in the Indian Court. As we noted earlier, section 44-A
entitles the holder of a decree of a superior Court of a reciprocating
territory to execute the decree, as if it had been passed by the
District Court. It is not permissible for us therefore, to take a different
view merely because an identical situation had not arisen before the
Supreme Court.
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31. In the circumstances, it is held that the relevant date for
conversion of the currency of the foreign costs certificates into Indian
Rupees shall be the date of the decree viz. 28.06.1996.
32. The appeals are therefore allowed in the following terms :-
i). In the execution proceedings, the amount due shall be
determined in accordance with this order and judgment viz. that the
foreign currency in the costs certificates / decrees shall be converted
into Indian rupees as on the date of the decrees / costs certificates
dated 28.06.1996 i.e. at the rate of Rs.54.30 to the pound sterling.
ii). The respondents shall redeposit in Court any excess
amount that they may have withdrawn, within four weeks of the
determination under sub-paragraph (i) above or by 31.03.2014,
whichever is later. Thereupon the appellants shall be entitled to
withdraw the amounts lying in Court without further orders of the
Court.
iii). The respondents shall on or before 01.04.2014 mark the
decrees / costs certificates as satisfied and in any event they shall
with effect from 01.04.2014 be deemed to have been satisfied by
virtue of this order.
iv). This order shall remain stayed upto and including
31.03.2014. However, in the meantime the execution proceedings
shall continue upto the stage of computation / determination of the
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amounts as directed above.
v). The appellants had paid the costs ordered by the learned
single Judge. The same shall be repaid to the appellants by
01.04.2014.
vi). It will not be necessary for the appellants to disclose their
assets.
vii). There shall be no order as to costs.
(G.S. PATEL, J.)
ig (S.J. VAZIFDAR, J.)
