Lawrence Graham vs Kaleidoscope Entertainment Pvt. ...
2012 Latest Caselaw 4191 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+                        EX. P. 203/2010

LAWRENCE GRAHAM                             ..... Petitioner/Decree Holder
            Through:                Mr. Akhil Sibal with Mr. Salim
                                    Inamdar and Mr. Jaspreet Singh
                                    Kapur, Advocates
                versus

KALEIDOSCOPE ENTERTAINMENT
PVT. LTD.                 ..... Respondent/Judgment Debtor
             Through: Mr. Sudhir Nandrajog, Sr. Advocate
                      with Mr. Nakul Sachdeva and
                      Mr. Shantanu Agarwal, Advocates

%                             Date of Decision : July 16, 2012
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
                              ORDER

: REVA KHETRAPAL, J.

1. The aforesaid execution petition has been filed by the Decree

Holder above-named (hereinafter referred to as "the petitioner")

praying, inter alia, for the execution of the judgment and decree dated

07.12.2009 passed by the High Court of Justice, Queen‟s Bench

Division in Claim No.HQ09X 02705 for GBP 75,631.95 along with

pendente lite and future interest @ 8% per annum; and to order the

Judgment Debtor (hereinafter referred to as "the respondent

company") to disclose on oath all their assets both movable and

immovable, and upon such disclosure being made to order immediate

attachment and sale of the said assets. In the alternative to the prayer

above, to direct the sale of the respondent Company as a going

concern and appropriate the sale proceeds towards the repayment of

the decretal amount. Further, to appoint a Receiver for preserving the

assets of the respondent Company to secure the decretal amount.

2. The facts leading to the filing of the present petition are that on

25.06.2009, the petitioner filed a suit before the High Court of

Justice, Queen‟s Bench Division, being Claim No.HQ09X 02705,

copy whereof is placed on record. The said suit along with the

documents was served upon the respondent Company on 11.07.2009

as evidenced from the receipt of summons. The respondent Company

acknowledged receipt of the same through its Company Secretary and

the claim was admitted in the form itself, which is dated 31 st July,

2009, to the extent of GBP 30,000 by stating: "I admit the amount of

pounds sterling 30,000." Further, in Column 11 titled "Offer of

Payment", the respondent Company stated that it "can pay monthly

instalments of £5,000" as "the Company has incurred huge losses

and proposed IPO was shelved because of economic downturn so

we do not have adequate funds." A copy of the said

acknowledgment of service containing the offer to pay the sum of

Pounds Sterling 30,000 in monthly instalments of Pounds Sterling

5,000 is placed on record.

3. On 07.10.2009, the petitioner filed an application before the

High Court of Justice, Queen‟s Bench Division for summary

judgment on the basis that the respondent had admitted a sum of GBP

30,000 as due to the petitioner. On the same day, i.e. on 07.10.2009,

the petitioner filed a written statement before the High Court of

Justice Queen‟s Bench Division. A certified copy of the entire High

Court of Justice, Queen‟s Bench Division record in claim No.HQ09X

02705 is part of the Court Record lodged with the Court.

4. On 12.10.2009, the High Court of Justice ordered hearing in

the matter filed by the petitioner against the respondent Company on

07.12.2009 at 10.30 a.m. for 30 minutes.

5. On 07.12.2009, the High Court of Justice after recording that

no one had appeared on behalf of the respondent Company decreed

the suit in terms of the prayer of the petitioner.

6. Since the respondent Company is a Company registered in

India, the petitioner applied for a certificate from the High Court of

Justice Queen‟s Bench Division under Section 10 of the Foreign

Reciprocal Enforcement Act, 1933. The said certificate was issued

on 01.02.2010 in favour of the petitioner stating that the petitioner is

entitled to recover GBP 75,631.95 from the respondent Company. A

copy of the said certificate is part of the Court Record lodged with the

Court.

7. In the aforesaid backdrop, the petitioner submits that the

respondent Company is liable to pay the amount already decreed to

the petitioner in GBP 75,631.95 along with future interest @ 8% per

annum. The petitioner further submits that the procedure established

by law was complied with. Summons were admittedly received by

the respondent Company. The claim of the petitioner was admitted

by the respondent Company to the extent of GBP 30,000 without any

other defence on merits. The principles of natural justice were met

with at the time of the passing of the judgment and decree by the

High Court of Justice Queen‟s Bench Division. The judgment and

decree of the Queen‟s Bench Division is on merits of the case after

seeing the evidence produced by the petitioner to substantiate its

claim. The judgment is, therefore, liable to be enforced and executed

as against the respondent Company and the respondent Company

liable to pay the decretal amount. In case the respondent Company

does not pay the said amount, its assets movable and immovable, are

liable to be sold off for the purpose of payment to the petitioner till

the petitioner gets its payment. The decree in the hand of the

petitioner, it is submitted, cannot be defeated by the respondent

Company in any circumstances. It is also submitted that this Court

has the territorial jurisdiction to deal with the present execution since

the respondent is a Company incorporated and having its registered

office within the territory of this Court.

8. Objections to the execution petition were filed on behalf of the

respondent Company along with affidavit on 27th October, 2010. At

the outset, it may be stated that the jurisdiction of this Court to

entertain the present execution petition has not been questioned nor

any objection raised to the same. The respondent Company in the

objections filed by it has submitted that in view of the legal

provisions contained in Section 44-A read with Section 13(b) of the

Code of Civil Procedure, read with the judicial interpretations

accorded to these specific legal provisions, the decree sought to be

executed by the petitioner is not executable as it does not fulfill the

criteria laid down in the said Sections. Before elaborating upon the

said objection raised by the respondent Company, it is, however,

proposed to set out briefly the version of the respondent Company, as

set out by it in the Objections/ Reply filed by it, which is as follows.

9. The respondent Company M/s. Kaleidoscope Entertainment

Pvt. Ltd. is a Private Limited Company, limited by shares, duly

incorporated under the Indian Companies Act, 1956, having its

registered office at 204, Golf Apartments, Maharishi Ramanna Marg,

New Delhi-110003. It is a production house engaged in the business

of production and distribution of films and other allied entertainment

services. In 2007, the respondent Company was desirous of raising

capital, in order to diversify and expand its business. In August,

2007, the respondent Company was advised by Grant Thornton, India

that they could raise investment/capital by floating an Alternative

Investment Market (hereinafter referred to as „AIM‟) listing. AIM is

the London Stock Exchange‟s junior international market and

provides one of the best platforms for expanding companies seeking

international investment. The process of overseeing suitability for

admission of companies to AIM has been entrusted to a „nominated

advisor‟ (hereinafter referred to as „NOMAD‟). All companies

looking to list on the AIM need a NOMAD from an approved register

who is responsible to the London Stock Exchange. The role of

NOMAD is critical to the Initial Public Offer ("IPO") process as it is

for the NOMAD to determine the company‟s suitability for an AIM

admission. The respondent Company in order to float an AIM

admission as per the requirements of the AIM Rules, for the purpose

of carrying out the due diligence entered into an agreement with the

petitioner on 24.06.2008. The respondent Company‟s NOMAD

Grant Thornton, UK introduced the parties and on its

recommendation the respondent Company entered into the

aforementioned agreement with the petitioner. On 03.09.2008, the

petitioner raised an invoice for a two month period ending on

28.08.2008 for £ 20,000 (Twenty Thousand), copy whereof is placed

on record.

10. On 23.10.2008, the NOMAD appointed by the respondent

Company suddenly stated by e-mail that in the light of the prevailing

market conditions, the IPO was being put on hold. Till this date,

Grant Thornton, UK had maintained and represented to the

respondent Company that the AIM market had not been hit by

recession and that the fears expressed by the brokers with regard to

the prevailing market condition were without any basis. On

10.11.2008, Grant Thornton, UK informed the respondent Company

that investor‟s reaction was slow and finally on 23.12.2008, Grant

Thornton, UK informed the respondent Company that they "did not

know, when they would restart the process of floating KEPL AIM

listing." On 28.01.2009, after the petitioner was aware that the

Floatation was not going to take place, the petitioner raised an

invoice of Pounds Sterling 35,743. The grievance of the respondent

is that the petitioner raised an invoice knowing as early as October,

2008 that the respondent Company‟s Floatation was not going to

proceed.

11. The respondent Company further submits that on 25.06.2009,

the petitioner filed a suit before the High Court of Justice Queen‟s

Bench Division, being Claim No. HQ09X 02705,which was served

on the respondent Company on 11.07.2009 on behalf of the petitioner

by Naik & Company. It was the Company Secretary of the

respondent Company who acknowledged receipt of the same and

"admitted the amount of pounds sterling 30,000", stating that the

respondent Company "can pay monthly instalments of pounds

sterling 5,000 as the Company has incurred huge losses and

proposed IPO was shelved because of economic downturn so we do

not have adequate funds." It is submitted that the Company

Secretary was not authorized to either acknowledge receipt of the

claim filed by the petitioner or acknowledge the debt of Pounds

Sterling 30,000. The respondent Company had not designated the

Company Secretary as an authorized signatory, as required by law,

therefore the Company Secretary was not competent to either

acknowledge receipt or to state a proposed course of legal action by

or on behalf of the Company. Hence, the respondent Company is not

bound by the admission or acknowledgment of debt by its Company

Secretary.

12. Without prejudice to the aforesaid, it is submitted by the

respondent Company that the acknowledgment of service by its

Company Secretary was returned on 10.08.2009 by a letter from Her

Majesty‟s Court Service (for short "HMCS") stating that the

respondent Company‟s acknowledgment of service was being

returned as they had no address for service of documents within

England and Wales Jurisdiction. The respondent Company claims to

have again written a letter dated 26.08.2009 to HMCS stating that the

Company does not have a local branch or contact point in England

and Wales Jurisdiction and the same was returned on 03.09.2009 by

HMCS. Copies of the said letters are placed on record by the

respondent Company.

13. It is asserted by the respondent Company that finally on

22.09.2009, it wrote to Naik & Company, who served Lawrence

Graham notice stating that their replies had been returned by Court

and they were sending a copy of the papers to them. A copy of the

said letter is also placed on record by the respondent.

14. On 22.09.2009, the petitioner wrote to the respondent

Company and stated:

"We also note that you allege you have had no information to justify the amount of the final invoice for pounds sterling 33,000. Whilst we are of the view that the information as to the work to be carried out was clearly set out in the letter of engagement and also to you subsequently. We set out details of the work carried out below and confirm that the final invoice has been calculated as set out in the letter of engagement on the basis of time spent.

 Drafting the back end of the Admission document and commenting substantially on the front end of the Admission document.

 Negotiating the company's engagement letter with Kaupthing and Elara (its brokers).

 Organizing the incorporation of a new company in Jersey and in Singapore including providing drafting for a new Jersey company article of association (this was made a more lengthy procedure by us having to chase for instructions).  Providing ancillary documents normal for any AIM admission e.g. memorandum of directors' responsibilities, responsibility statement, committee terms of reference, share dealing code etc. These documents were commented on by Olswamg - the NOMAD's lawyer which created further work as we needed to incorporate the comments.

 Reviewing a business transfer agreement in relation to the proposed transfer...... As we are sure you realize a substantial amount of wok was carried out and time spent on this." The said letter is annexed hereto and marked as ANNEXURE-K."

15. It is submitted by the respondent Company that the petitioner

did not give a breakup of the number of hours spent on the work as

the fees was to be calculated on an hourly rate, either in the invoices

raised or in the letter dated 22.09.2009. The rate was further

dependent primarily on the experience of the person carrying out the

work. Neither the invoices raised nor the letter dated 22.09.2009

gave a breakup as to the experience of the person carrying on the

work and the hours put in by the said Advocate. Even the said letter

was not filed before the HMCS.

16. Adverting now to the objection of the respondent Company

premised on the provisions of Section 44A read with Clause (b) of

Section 13, it is proposed to first reproduce the aforesaid provisions

for the facility of reference.

Section 44-A 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 section 13.

Explanation 1 - "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 purposes of this section; and "superior Courts", with reference to any such territory, means such Courts as may be specified in the said notification.

Explanation II - "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."

Section 13 of the Code of Civil Procedure "13. When foreign judgment not conclusive.

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 an incorrect view of international law or a refusal to recognize 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 on force in India."

17. Referring to the provisions of Section 13(b), it is submitted by

Mr.Nandrajog on behalf of the respondent Company that the decree in

the instant case not having been given on the merits of the case, the

foreign judgment is not conclusive between the parties and the same

cannot be executed in India. It is further submitted that the

expression "on the merits" though has not been defined by the Code

of Civil Procedure, 1908, the Courts have interpreted the term "merits

of the case" in a catena of judgments, and the foreign judgment in the

present case falls foul of the said decisions. No oral or documentary

evidence was produced before the suit was decreed. Even the

invoices forming the substratum of the claim of the petitioner and

giving a breakup as to the experience of the person carrying on the

work and the number of hours put in by the said Advocate were not

filed by way of documentary evidence in the suit. An adjudication

without evidence of any kind being led, based only on pleadings,

cannot be held to be a decision "on the merits".

18. It is also submitted that apart from the fact that the petitioner

had suppressed material facts and relevant documents and did not file

before the Court copies of the invoices on the basis of which it had

based its claim, the petitioner while filing its application for

summary judgment suppressed and withheld its letter dated

22.09.2009 sent to the respondent Company, trying to justify the

amount raised by it as due under the letter of engagement.

19. Without prejudice to the aforesaid, it is submitted by the

respondent Company that even if the Court passed the decree based

on the alleged admission of liability of GBP 30,000 by the Company

Secretary of the respondent Company, it does not absolve the Court

from considering if the remaining amount claimed as allegedly due to

the petitioner was, on the basis of documentary evidence, actually

due to the petitioner .

20. This Court has heard Mr. Akhil Sibal, the learned counsel for

the petitioner and Mr. Sudhir Nandrajog, the learned senior counsel

for the respondent Company at length and scrutinized the entire

record of the High Court of Justice, Queen‟s Bench Division in Claim

No.HQ09X 02705. The Court has also gone through the precedents

relied upon by the learned senior counsel for the respondent Company

to substantiate his principal contention that the decree sought to be

executed, by the petitioner cannot be executed in that it falls within

the exception culled out by Clause (b) of Section 13 of the Code of

Civil Procedure, 1908, which provides that if it 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

said decisions may be catalogued as under:-

(i) M/s. International Woollen Mills vs. M/s. Standard

Wool (U.K.) Ltd., AIR 2001 SC 2134.

(ii) Shri Raj Kumar Gupta vs. Barnes Investments Limited

and Ors., 2007 (99) DRJ 629.

(iii) Middle East Bank Ltd. vs. Rajendra Singh Sethia, AIR

1991 CALCUTTA 335.

(iv) O.P. Verma vs. Lala Gehrilal and Anr., AIR 1962

RAJASTHAN 231 (V 49 C 53).

(v) Gurdas Mann and Others vs. Mohinder Singh Brar,

AIR 1993 Punjab and Haryana 92.

(vi) R.E. Mahomed Kassim and Co. vs. Seeni Pakir Bin

Ahmed and Others, AIR 1927 MAD 265.

21. The question which arises for the consideration of this Court

thus is: Whether the decree passed by the High Court of Justice,

Queen‟s Bench Division in the Claim Petition filed by the petitioner

could be said to be a decree on merits? Before proceeding to consider

the aforesaid question, however, it deserves to be noted that Courts in

England have been treated as Courts in reciprocating territory within

the meaning of Explanation 1 to Section 44A of the Code of Civil

Procedure. Now a look at the decree which has been passed in the

following terms:-

"An Application was made on the 7 December 2009 by the solicitors for the Claimant under Part 24 for judgment and was attended by the

Claimant's solicitors and there was no appearance by the Defendant.

The Master read the written evidence filed. AND THE COURT having found that the Defendant has no real prospect of successfully defending the claim and that there is no other reason why the claim should be disposed of at a trial.

IT IS ORDERED that

1. There be summary judgment for the Claimant in the sum of £65,743.08 together with interest to the date hereof (at the Judgment rate of 8%) of £4,888.87 making a total of £70,631.95.

2. The Claimant's costs of the claim and this application be summarily assessed at £5,000.

3. The Claimant shall have permission to serve this Order on the Defendant outside the jurisdiction at the address shown on the Defence and Counterclaim 204 Golf Apartment, Maharishi Ramanna Marg, New Delhi 110003 India or elsewhere in India.

Dated this 7th day of December 2009"

22. As already noted, the petitioner along with the aforesaid decree

has filed before this Court the complete record of the High Court of

Justice, Queen‟s Bench Division, which, inter alia, contains the

Claim Form dated 25th June, 2009; Particulars of Claim dated 25th

June, 2009; Acknowledgment of Service dated 31.07.2009,

Admission and Defence dated 31st July, 2009; Application Notice for

Summary Judgment dated 7th October, 2009; Second Witness

Statement of Andrew Charles Dobson dated 7th October, 2009;

Exhibit ACD2 dated 7th October, 2009 and Order dated 7th December,

2009.

23. From the aforesaid documents on record, it clearly emerges that

the respondent Company did in fact enter appearance before the

English Court and in its Defence before the English Court dated 31st

July, 2009 stated as follows:-

"We, (Kaleidoscope Entertainment Private Limited) engaged the claimant (Lawrence Graham LLP) for the proposed floatation on AIM. As per clause 3 of the main engagement letter, dated 24 June, 2008, the fee for the services of claimant were to be based on the time spent by their partners/associates which was to be calculated on hourly basis rate. For convenience it was suggested that the billing be done at a flat of £10,000 per month as an advance. On the basis of above clauses, two invoices totaling £30,000 were raised till end of September 2008. By early October 2008 it was clear that the market was taking a downturn and the Floatation would need to be suspended. There is enough correspondence from the Nominated Advisors to support that and a formal mail on 23rd August for suspension was sent to everyone including claimant. For some time there was no billing and then suddenly an invoice for over £33,000 was sent. It is important to note there is absolutely no correspondence or detail that either supports the calculation of these amounts and or the

work done. We have dealt with law firms for years and it is the first time that we have received unsupported and unsubstantiated invoices. If the expenses were not in line with the billing we should have been informed. Had we received any indication of this we would have changed our agreement. The last bill was disproportionately high and still unsupported and unsubstantiated.

We also expressed our concerns and Claimant offered to reduce the bills but by very small amounts. We believe that the final billing should be well within the advance amounts billed as work had slowed down and consequently feel that the £30,000 figure we have offered is fair. Therefore we hereby refuse to pay the last invoice amounting to £35,743.08.

Finally, as the impact of the suspended AIM floatation, and overall economic scenario and the consequences thereof on our cash revenues have made it impossible to make a onetime payment. We have had to cut back expenses, lay off people and reduce salaries to tide over this difficult time. Our cash flows have been transparently shared with the claimant as part of the process and they are fully aware of this situation. As professionals who would like to honor fair commitments we have offered to pay the £30,000 in instalments of £5,000 per month and agree to pay interest thereon as proposed by claimant. We are surprised that the Claimant has gone to court as they have offered to reduce the amounts invoiced in the past."

24. It is the contention of the petitioner‟s counsel that the

respondent Company having entered appearance before the English

Court and having made the aforesaid defence, which in fact amounts

to an admission of its liability, cannot now retract from the same by

invoking the provisions of Section 13(b) of the Code of Civil

Procedure. In the reply filed by the respondent Company before this

Court, it has sought to resile from its admission of liability on the

basis that its Company Secretary had not been authorised to admit the

claim. The petitioner‟s counsel contends, and in the opinion of the

Court rightly so, that it is not open to the respondent Company to

resile from its admission of liability for the reason that under Section

54 of the Companies Act, 1956, the Company Secretary is the

statutory representative of the Company and is entitled to make

statements on behalf of the Company. Further, no grievance was

raised before the English Courts as regards the authority of the

Company Secretary of the respondent Company to sign the Defence

Form before the English Courts. What is even more surprising is that

the respondent Company relies upon the minutes of its Board of

Directors filed along with the objections before this Court, which are

executed by the same Company Secretary who had signed and

executed the Defence Form on 31.07.2009.

25. It is also crystal clear that the respondent Company was duly

served on its India office and provided an opportunity to defend the

proceedings before the English Court, which opportunity was not

availed of by it for reasons best known to it. It is also clear from the

record that the respondent Company at no point of time requested the

petitioner to supply a break-up of the number of hours spent on the

work or details of the professionals involved and the fees billed by

them. Had the respondent Company requested the petitioner for the

same, there is no reason to pre-suppose why the petitioner would not

have provided the details of the number of hours spent and the

professional fees involved, for, a detailed chart thereof has been

furnished by the petitioner along with its rejoinder filed in this Court

as Ex.A. Even otherwise, it is clear from the record that the English

Courts like all other Courts of Justice and Equity considered the

evidence placed before it and the documents filed along with the said

evidence, which clearly showed that invoices had been tendered by

the petitioner to the respondent Company. In this situation and in

view of the fact that the respondent Company had not disputed the

tendering of any of those invoices, there was no occasion for the

English Courts or need to see the copies of the invoices as regards

which there was no dispute between the parties. The grievance of the

respondent Company that the letter dated 22.09.2009 was not filed by

the petitioner Company before the English Courts is also misplaced in

view of the fact that the original of the said letter was with the

respondent Company and it could have placed the same on the record

along with its defence and/or at the time of adducing its evidence.

26. It may be noted at this juncture that it is clear from the record

of the High Court of Justice, Queen‟s Bench Division that the English

Court had seen the contract between the respondent Company and the

petitioner whereunder the respondent Company had agreed to pay the

petitioner‟s fees. The Court had also seen the evidence that the fees

was outstanding (including the admission made in the defence of the

respondent Company), and as no evidence had been put in to dispute

the tendering of invoices or the fees claimed by the petitioner, the

Court awarded the judgment. To put it differently, the Court

determined on the evidence before it that there was a valid claim to

which there was no valid defence. In these circumstances, for the

respondent Company to contend that the judgment is a penalty and

not based on the merits of the matter would, in the opinion of this

Court, be wholly unjustified.

27. It may also be noted at this juncture that the Second Witness

Statement of Andrew Charles Dobson before the English Court,

certified copy whereof is placed on the record of this Court, wholly

substantiates the claim of the petitioner. The said witness proved on

record the contract between the parties in the form of "the Letter of

Engagement dated 24th June, 2008", and categorically stated on oath

that the petitioner had rendered services as detailed in the said Letter

of Engagement and continued to do so until 23rd October, 2008 when

the petitioner was instructed by the office of Grant Thornton UK

LLP, the nominated advisors, "to cease work in light of current

market conditions". A copy of the said communication is also proved

on record by the witness. The witness further stated that under

Paragraph 3 of the Letter of Engagement the petitioner was entitled to

calculate its fee on the basis of the time spent dealing with the matters

on which they were engaged. He stated that in accordance with

Paragraph 6 of the Engagement, interim invoices, on account, were

issued on 29th August, 2008 and 30th September, 2008 and the balance

outstanding was invoiced on 27th January, 2009. The witness further

stated in his statement that the respondent Company had admitted

£30,000 of the debt in its Defence dated 31st July, 2009 and offered to

pay this sum by instalments of £5,000 per month, but till date no

payment had been made. A copy of the defence was also enclosed by

the witness with his statement. Thus, the evidence of the witness was

accompanied by (i) particulars of the claim, (ii) acknowledgment of

service, admission and defence dated 31st July, 2009, (iii) terms of

engagement, and (iv) the letter dated 23rd October, 2008 whereunder

the petitioner was advised to cease work on account of the prevailing

market conditions. All the aforesaid documents were exhibited

collectively as Ex.ACD2 dated 7th October, 2009 and are not in

dispute, except insofar as it is the contention of the respondent

Company that its Company Secretary was not authorised to file the

defence before the English Court, who, as noted above, is the same

Company Secretary who has signed the minutes of Board of Directors

filed by the respondent company in the present case.

28. As regards the controversy sought to be raised at this stage by

the respondent Company with regard to the invoices raised by the

petitioner, there is no substance in the aforesaid contention as well,

for the reason that apart from the fact that the receipt of the said

invoices has been admitted in the defence filed by the respondent

Company before the English Courts, each of the invoices raised by

the petitioner at the bottom clearly mentions that it may be

challenged/disputed under the Solicitors (Non-Contentious Business)

Remuneration Order 1994 within one month of the receipt of the

invoices or got independently reviewed by an Officer of the Court

under the Solicitors Act, 1974, and no such challenge has ever been

raised by the respondent Company. The endorsement at the bottom

of each of the invoices reads as follows:-

"This constitutes notice in writing of your right under the Solicitors (Non-Contentious Business) Remuneration Order 1994 to require us within one month of the receipt of this bill to obtain a certificate from the Law Society stating either that our bill is fair and reasonable or that a lower amount should be paid. To exercise this right you must first (unless you have already done) now pay us an amount sufficient to cover half the fee and all other disbursements and VAT as shown above, or if applicable the difference between what you have already paid us and this amount. This requirement may be waived if you can satisfy the Law Society at 8 Dormer Place, Royal Leamington Spa, Warwickshire CV32 5AE that

exceptional circumstances exist. Alternatively, you have the right under Sections 70 to 72 of the Solicitors Act 1974 to have our bill independently reviewed by an Officer of the Court. We are entitled to claim statutory interest (currently 8% per annum) on the unpaid bill or the amount certified, whichever is the lower running from one month after delivery."

29. It is clear from the aforesaid that the judgment and decree

returned against the respondent Company cannot be said to be

returned on the sole ground of the respondent Company not having

entered appearance. The learned senior counsel for the respondent

Company in the course of his submissions was not able to point out as

to what further documentary or oral evidence could be expected to be

produced by the petitioner Company to enable it to claim that the

judgment was a judgment on merits. He was also unable to dispute

that service had been effected properly on the respondent Company at

its India office. This being so, if the respondent Company chose not

to appear, is it now open to it to term the judgment of the English

Court as "not conclusive", not in accordance with the mandate laid

down in Clause (b) of Section 13 of the Code and therefore "not

executable".

30. The decisions relied upon by Mr. Sudhir Nandrajog, the

learned senior counsel for the respondent Company are also wholly

distinguishable on facts. Thus, in the case of M/s. International

Woollen Mills (supra), it was clearly noted by the Hon‟ble Supreme

Court that all that was read by the English Court before recording its

order was the affidavit filed in the English Court by the Solicitor for

the respondent at the time of effecting service upon the petitioner, to

which affidavit had been annexed copies of the invoice and other

relevant documents. Thereafter, no documents were tendered nor any

evidence led. The English Court then pronounced the judgment and

decree, in which it did not even say that it had read the second

affidavit filed by an employee of the appellant upon whom the

solicitor of the respondent had effected service. Thus, clearly no

evidence was led by the petitioner/respondent in the said case. The

judgment and decree of the English Court in the said case, which is

reproduced in the judgment of the Supreme Court, also does not

indicate whether any documents were looked into and/or whether the

merits of the case were at all considered.

31. The decision rendered in the case of Shri Raj Kumar Gupta

(supra) by this Court is also clearly distinguishable on facts. As

noted in the said case, a bare perusal of the foreign decree showed

that the judgment had been returned against the plaintiff/Judgment

Debtor on the sole ground of his not having entered appearance

before the High Court of Justice, Queens Bench Division. It was in

these circumstances that a learned Single Judge of this Court

(Hon‟ble Mr. Justice Sanjay Kishan Kaul) held that the execution

petition for enforcement of the decree was liable to be dismissed on

account of the decree not meeting the parameters as set out in Clause

(b) of Section 13 of the Code.

32. Likewise, the decision in the case of Middle East Bank Ltd.

(supra) is of no avail to the respondent Company. In the said case

also, a bare look at the foreign decree reproduced in the judgment was

sufficient for the Court to hold that in the context of Section 13 the

judgment and decree given by default under a summary procedure in

the absence of appearance by the defendant and filing of any defence

by him, and without any consideration of the plaintiff's evidence is

not a judgment given on the merits of the case.

33. The Division Bench judgment in the case of O.P. Verma

(supra) also does not further the case of the respondent Company in

any manner. On the contrary, it is clearly laid down in the said case

that it is not the presence or the absence of the defendant which can

really condition the quality of a judgment as to its having been given

on the merits or not. What really matters is whether the procedure

according to which the suit had been decreed requires the Court to

determine the truth or falsity of the contentions raised or which may

be raised. Thus, an ex parte judgment per se may very well be a

judgment on the merits. Where, however, a decree can be entered

in favour of the plaintiff merely because the defendant has failed to

appear and the judgment is given in default, or where he has failed to

apply for leave to defend, or where he has applied for leave to defend

and such leave is refused, then such a judgment cannot be held to

have been given on the merits within the meaning of Section 13(b) of

the CPC. Significantly, in the said case it was noted that the

application for leave to defend the case had been dismissed as the

defendant had not appeared and the decree passed without

entering into the merits of the case. The ratio laid down in the

aforesaid case, therefore, has no application to the present case, where

cogent evidence has been adduced by the petitioner and the same has

been scrutinized by the English Court.

34. The decision of the Punjab and Haryana High Court in the case

of Gurdas Mann (supra) relied upon by the respondent Company is

on similar lines in that the decree in the said case was passed by the

foreign Court, being the Supreme Court of Ontario, ex parte merely

on the pleadings of the plaintiff and because the defendant chose not

to appear. While considering the aspect of whether the decree was

not on merits, the Court specifically noted that "on persistent asking,

the learned counsel for the respondent was unable to point out any

evidence, oral or documentary, which was produced before the

Supreme Court of Ontario, before the said Court passed the decree."

In the penultimate paragraph of the judgment, it was recorded that

the judgment of the English Court did not show that any evidence

oral or documentary was produced before the suit was decreed.

35. In the Full Bench decision of the Madras High Court in the

case of R.E. Mahomed Kassim and Co. (supra) , the question which

was referred to the Full Bench was:-

"Does a suit lie in this country on a foreign judgment given on default of appearance of the defendant on the plaint allegations without any trial on evidence?"

36. The Court ruled relying upon the judgment of the Privy

Council in Keymer vs. Visvanathan, AIR 1916 Privy Council 121

that where the decision is given without any evidence at all, but under

the rules governing the foreign Court under which, where the

defendant does not appear, a decree is given as a matter of course

without any trial or evidence, it must be held not to have been given

on the merits of the case. Thus, the facts before the Full Bench were

entirely different from the present case where the petitioner has

admittedly filed evidence by way of an affidavit supported by

documents which clearly prove the case of the petitioner.

37. In view of the aforesaid discussion, the inevitable conclusion is

that though the law is well settled that by virtue of Sub-Section (3) to

Section 44A of the Code, the Court shall refuse execution of a decree

if it is satisfied that the decree falls within the exception culled out by

Clause (b) of Section 13, merely because a decree is ex parte may not

in itself be sufficient to arrive at a conclusion that it is not "on

merits". Indubitably, an ex parte decree may be passed in a

summary manner without going into the merits of the case and

without taking any evidence. Where however a decree is passed in

the absence of the defendant but the Court nevertheless has gone

through the case and taken the evidence of the witnesses put up by the

plaintiff, it cannot be said that the decree is not on merits merely

because the defendant has chosen not to appear before the Court. Had

that been the intention of the legislature, there was no difficulty in the

legislature spelling out the fact that an ex parte foreign judgment

shall not be conclusive as to any matter thereby adjudicated upon

between the parties. In that event, Clause (b) of Section 13 would

have been drafted by the legislature to read as "where it has been

given ex parte" instead of "where it has not been given on the

merits of the case". The Legislature having chosen not to do so, the

only inference which can be drawn is that where a judgment is

rendered ex parte by a Foreign Court, it is for this Court to satisfy

itself before executing the judgment whether the said judgment is "on

merits" or whether under the procedure of the Foreign Court it has

been rendered merely on account of the absence of the defendant.

The ultimate test would be for the Court to examine whether upon the

evidence led by the plaintiff, oral and documentary, it could

reasonably be said that the plaintiff was entitled to a decree in his

favour and against the defendant.

38. Applying the aforesaid test to the facts of the present case, this

Court is of the opinion that it cannot be said in the instant case that

the judgment and decree of the foreign Court was entered into in

favour of the plaintiff merely on account of the absence of the

defendant and without any evidence on the record. The English Court

being a Court covered by the provisions of Section 44A of the Code

of Civil Procedure, the decree passed by it must be executed. It is,

therefore, ordered that the respondent Company/Judgment Debtor

shall immediately disclose on affidavit all their assets both movable

and immovable, including tangible and intangible assets within a

period of four weeks.

39. List on 03.09.2012 for further proceedings.

REVA KHETRAPAL JUDGE July 16, 2012 km