Enforcement of Foreign Judgments in India: Two Practical Considerations

The enforcement of foreign judgments in India is governed by Section 44-A of the Code of Civil Procedure 1908 (“the Code”). Section 44-A provides that money judgments passed by the superior courts of reciprocating territories may be enforced in India as though they were decrees of Indian courts – subject, however, to compliance with the Code’s other requirements. Effectively, therefore, the Code ensures that a foreign judgment passed by a superior court in a reciprocating territory is not subject to a review on merits.

All other judgments by foreign courts, however, only give the successful plaintiff the right to institute a fresh suit in India if the foreign judgment is the cause of action for – and evidence in aid of – the relief sought. Such an action is treated as though it were any other suit filed before an Indian court, with parties having the right to lead evidence and advance arguments on the merits of the claim.

It is obvious that the latter proceeding will be a more time-consuming affair. In addition, any judgment passed by an Indian court in the latter court will also be subject to appellate remedies, which are not available in cases governed by Section 44-A of the Code.

When drafting contracts, therefore, it becomes extremely important to be aware of which territories have been notified by India as reciprocating territories.

To date, India has only notified 13 reciprocating territories under Section 44-A of the Code. These are the United Kingdom, Singapore, Bangladesh, Malaysia, Trinidad & Tobago, New Zealand, the Cook Islands (including Niue), Western Samoa, Hong Kong, Papua New Guinea, Fiji, Aden and, most recently, the United Arab Emirates. A judgment passed by any other court in any other territory, therefore, only acts as a cause of action for filing a fresh suit in India.

In view of this, those drafting contracts involving an Indian party and a foreign party need to be mindful of the court on which they are conferring jurisdiction. Given that India has ratified the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), it may be preferable to provide for arbitration at a neutral venue in the event of a dispute with the Indian party.

Parties need to be aware of the timeframe within which Indian law permits the enforcement of a foreign decree. Prior to 2020, there was no authoritative ruling in this regard by the Supreme Court of India. Two state High Courts had, however, taken contrasting views on this issue.

The Madras High Court held in Sheik Ali v Sheik Mohamed (AIR 1967 Mad 45) that the limitation period for the execution of an Indian decree would not apply to foreign decrees. It went on to hold that if enforcement of the foreign decree was barred by limitation in the reciprocating territory whose court passed the decree, then enforcement could not be sought in India.

In Lakhpat Rai Sharma v Atma Singh (AIR 1971 P&H 476), however, the Punjab and Haryana High Court proceeded to hold that “the foreign decree must be executed in India as if it had been passed by the District Court (Indian District Court)” and that “it is settled law that the legal fiction envisaged by a deeming provision must be extended to its logical end”. On this basis, it was held that the Indian law of limitation for the execution of a decree would be applicable even in respect of foreign judgments.

This issue was finally put to rest by the Supreme Court of India nearly 50 years later in Bank of Baroda v Kotak Mahindra Bank (2020 SCC Online 324), where it was held that the Indian courts’ traditional view that the law of limitation is procedural could no longer be considered good law, given the changing global scenario. The limitation period for enforcement must, therefore, be that of the “cause country” – ie, the reciprocating territory whose judgment is sought to be enforced.

In light of this finding, the Supreme Court of India proceeded to hold that there could be two scenarios vis-à-vis enforcement of foreign judgments passed by superior courts in reciprocating territories.

All other judgments, apart from those covered by Section 44-A of the Code, may be enforced by filing a new suit in an Indian court – for which the Limitation Act 1963 specifies a limitation period of three years commencing from the date on which the judgment was passed by the foreign court.