In our earlier article, we have discussed the Notification dated 17.01.2020 ('Notification') passed by the Government of India which has recognised certain federal and local courts of UAE as "superior courts" for the purposes of Section 44A of the Code of Civil Procedure, 1908 ('CPC') and by virtue of which Decrees passed by such "superior courts" may, subject to Section 13 of the CPC, be executed in India as if same has been passed by an Indian Court. Apart from focusing on the Notification which concerns UAE and its Decrees, the article also focused on execution of Foreign Decrees passed by "superior courts" of any "reciprocating territories" in light of Section 44A and Section 13 of the CPC.
Taking it forward, in this article the authors outline a step-wise insight into the whole exercise, detailing the process of getting a Foreign Decree from a 'reciprocating territory' executed in India. The major steps involved are depicted below in a flow chart for a better understanding.
STEP-WISE PROCESS OF EXECUTION OF A FOREIGN DECREE
A. Application for Execution
The Decree Holder shall proceed by filing of a certified copy of the Foreign Decree before the Court in India having jurisdiction over the properties owned by the Judgment Debtor or where the Judgement Debtor voluntarily resides, or carries on business or works for gain. Therefore, it is imperative that a preliminary tracing of assets of Judgment Debtor is done prior to filing the Application. Strategically also, this step is important to ascertain whether the Judgment Debtor has any assets in India or not. If there is no asset then the Decree Holder has the option to initiating process of arrest and detention of the Judgment Debtor1. This remedy is in alternative to other reliefs.
An Application for execution of decree may be filed by anyone or all of the following; (i) by the Decree Holder2; (ii) if the Decree Holder is dead, by his/her Legal Representatives3; (iii) any Representative of the Decree Holder4; (iv) any person claiming under the Decree Holder5; (v) Transferee of the Decree Holder6; (vi) one or more of the joint decree holders7.
Execution of decree may be filed against; (i) Judgment Debtor; (ii) Legal Representative of the Judgment Debtor8 (who can be made liable only to the extent of the ancestral property which might come in his hand); (iii) Representative of or the person claiming under the Judgment Debtor9; (iv) against the garnishee of Judgment Debtor10.
To initiate proceeding after ascertaining as to against whom the execution has to be filed, a written Application in a proper format as prescribed under Form No. 6 of Appendix E to the First Schedule of CPC with the following details shall be filed before a competent court; (i) the number of the suit; (ii) the name of the parties; (iii) the date of the Decree; (iv) whether any costs are awarded; (v) whether any appeal is preferred from the Decree; (vi) whether any amount is adjusted subsequent to passing of Decree; (vii)the name of the persons against whom the Decree is to be executed.11
Section 51 of CPC provides an option to the Decree Holder of enforcing a decree by several modes available under the Code. The CPC allows more than one mode of execution. There is no statutory restriction on simultaneous execution petition under the Code. The Hon'ble Supreme Court of India has observed as follows:
"Section 51 of the Code gives an option to the creditor, of enforcing the decree either against the person or the property of the debtor; and nowhere it has been laid down that execution against the person of the debtor shall not be allowed unless and until the decree-holder has exhausted his remedy against the property. Order 21, Rule 30 of the Code provides that "every decree for the payment of money, including a decree for the payment of money as the alternative to some other relief, may be executed by the detention in the civil prison of the judgment-debtor, or by the attachment and sale of his property, or by both".12
On an Application being filed by the Decree Holder, the Court first ascertains whether all particulars of Execution Application are in order. The following particulars are ascertained by the Court -
- The number of the suit;
- The names of the parties;
- The date of the decree;
- Whether any, appeal has been preferred from the decree;
- The amount with interest, due upon the decree, or other relief granted thereby;
- Amount of the costs (if any) awarded.
B. Issuance of Notice
If the Court is satisfied with the aforementioned information provided by the Decree Holder while filing of the Execution Application, the Court shall issue notice against the Judgment Debtor. The Court may also do away with the issuance of notice and can straightaway issue process in execution of a Decree, if it considers that the issuance of notice may cause unreasonable delay or would defeat the ends of justice.13
On the date so fixed if the Applicant is not present, the Court may dismiss the Application and if the Judgment Debtor is not present it may proceed to hear the matter ex-parte.14 However, if the Application is dismissed on default or an Order is passed ex-parte, the same may be set-aside if sufficient cause is shown.15
After service of notice on the Judgment Debtor, the Judgment Debtor is entitled to raise objections to execution of the Decree. Upon such objection, the Court is bound to consider and decide the same. The repercussions of not raising any objections to the Application on the issuance of Notice, has been laid down in clear terms by the Hon'ble Supreme Court of India in Barkat Ali & Anr. v Badrinarain (Dead) by LRs16 , wherein it was held as follows-
"9. Order 21 Rule 22 CPC culminates in end of one stage before attachment of the property can take place in furtherance of execution of decree. The proceedings under Order 21 Rule 23 can only be taken if the executing court either finds that after issuing notice under Order 21 Rule 21 (sic Rule 22) the judgment-debtor has not raised any objection or if such objection has been raised, the same has been decided by the executing court. Sub-rule (1) as well as sub-rule (2) under Order 21 Rule 22, operate simultaneously in the same field. Sub-rule (1) operates when no objection is filed. Then the court proceeds and clears the way for going to the next stage of the proceedings, namely, attachment of the property and if the court finds objections on record then it decides the objections in the first instance and thereafter clears the way for taking up the matter for attachment of the property if the objections have been overruled.
10. Whether the order is made under sub-rule (1) or sub-rule (2), it has the effect of determining the preliminary stage before the attachment process is set in motion. In this background, the order of the court to proceed with attachment on finding that no objection has been raised also operates as an order deciding the preliminary stage of the execution proceedings and operates as if the judgment-debtor has no objection to file. If thereafter, the judgment-debtor wants to raise an objection in the same proceedings in the absence of any modification of order passed under Order 21 Rule 22 sub-rule (1) or (2), he has to take recourse to get rid of the order by way of appeal.
. . .
12. In this background, where a judgment-debtor has an opportunity to raise an objection which he could have raised but failed to take and allowed the preliminary stage to come to an end for taking up the matter to the next stage for attachment of property and sale of the property under Order 21 Rule 23 which fell within the above principle, the judgment-debtor thereafter cannot raise such objections subsequently and revert back to earlier stage of proceedings unless the order resulting in termination of preliminary stage which amounts to a decree is appealed against and order is set aside or modified."
C. Process of Execution
Attachment of Property
The Court may examine the Judgment Debtor so as to enquire about the debts being owed to the Judgment Debtor and if there are any other properties that the Judgment Debtor holds.17 If the Decree is in the nature of enquiry to be made regarding calculation of mesne profits or rent, then the Court, before ascertaining such amount may attach the property.18 Where a Decree for the payment of money has remained unsatisfied for a period of thirty days, the Court may direct the Judgment Debtor to disclose his assets on an Affidavit before the Court.19 If the Judgment Debtor disobeys the Order passed he may be detained in civil prison which may extend for a period of three months.20
It is pertinent to clarify here that an Application under Order XXI Rule 41 is not for execution, rather it is meant for obtaining information about Judgment Debtor's properties. The Bombay High Court in United Phosphorus Limited v A.K. Kanoria21 held as follows-
"12. .Therefore, an application under Order XXI, Rule 41 is not an application for execution of the decree but, merely an aid to the decree holder to enable him to execute the decree by obtaining information which is within the special knowledge of the judgement debtor. If this be so, the application under Order XXI, Rule 41 would ordinary precede the filing of an execution petition, though it can also be filed in the pending execution petition itself."
If the attachment is of a movable property other than agricultural produce, then such attachment will be by way of actual seizure and the attaching officer shall keep the property in his own custody or sell it if the property can decay.22 Same procedure of seizure is adopted for attachment of a negotiable instrument which is neither deposited in the Court nor is in the custody of a public officer.23 If such instrument is with the Court or any public officer, then the executing Court can issue notice to attach such negotiable instrument along with interest dividend payable on such instrument.24
If the attachment sought is of live-stock or agricultural produce which cannot be conveniently removed from the place, then a local custodian can be appointed to take care of such attached property who will be required to produce it before the Court as and when Court directs.25 The attachment of agricultural produce is done by way of affixing a copy of the warrant of attachment in the place where such agricultural produce is situated.26
The Court may also attach (a) unsecured debt, (b) share in capital of a corporation, or (c) other movable property by prohibiting, in case of debt, from recovering the same and directing the debtor to pay the same before the Court; in case of share, from transferring; and in case of other movable property, the transfer of the same to the Judgment Debtor.27 Similar procedure is adopted by the Court wherein the debt belongs to some third person or that third person has a lien or charge on such debt.28
Court has the power to even attach the salary of a servant of the Government or railway company or local authority as well as private employees.29
In case of attachment of property belonging to a partnership, the Court cannot attach or sell the property of a partnership until or unless such Decree is passed against the firm or partners in such firm. On an application for attachment against a partner, the Court may attach such portion of the property of the partnership that belongs to the partner and can also attach the profit share of such partner.30 The Court can also attach the Decrees which are in the nature of payment of money or for sale in enforcement of a mortgage.31
For attachment of Immovable Property, the attachment is made by prohibiting the Judgment Debtor from transferring or charging the property in any manner and the Judgment Debtor is also required to attend the Court for settling the date and terms of the proclamation of sale of such immovable property.32
If the property is already attached and the same is alienated after the order of attachment has been passed, such alienation would be void as against claims enforceable under the attachment.33 If the decree amount has been paid or the decree is set aside, the attachment of property is deemed to be withdrawn.34 If the property has been attached and the Court, for any reason dismisses the execution application, then the Court shall either continue or cease the attachment. If the Court omits to give any specific direction the attachment shall be deemed to have been ceased35
Objections to Attachment of Property
On objections or claims being filed before the Court, it may, after examining such objections/claims, release the property from attachment and such adjudication on such claims/objections shall be in the same nature as if it was a Decree and shall be subject to the conditions of an appeal as well.36 While adjudicating on the claims/objections, the Court may also put a stay on the sale of the movable or immovable property, as the case may be.37 However, in such a case Decree Holder will have a right to appeal such order in a higher forum.
Sale of Property
After attachment of a property, the Court may direct sale of whole or part of the attached property in order to realise the Decree amount to be paid to the Decree Holder.38 Such sale is done by way of public auction which is conducted by an Officer of the Court or by such other person which the Court may appoint.39 However, the Decree Holder40 and mortgagee41 of the attached property can with express permission of the Court participate in the said auction proceedings. The officer in charge entrusted with the auction proceeding cannot take part in the said auction.42
After the property is attached and ordered to be sold by public auction a proclamation is issued in the language of the Court43 which shall be drawn up after notice to the Judgment Debtor and the Decree Holder and shall state the following; (a) time and place of sale; (b) property or part thereof to be sold; (c)revenue if any assessed on the property; (d) encumbrances to which the property is liable; (e)amount to be recovered; (f) such other particulars which the court considers material.44
No property can be sold without the consent of the Judgment Debtor until the expiration of fifteen days, in the case of an immovable property and seven days, in the case of a movable property, which is calculated from the date of proclamation of sale.45 Court can also adjourn the sale of such property by its discretion while recording its reason thereof.46
For sale of agricultural goods, the sale shall happen near the land where such crop has grown. Where the estimate price of the crop has not been ascertained or the owner of the agricultural produce has applied to have the sale postponed, then the sale shall be postponed accordingly and shall be sold at whatever price that may be offered for sale.47
For sale of immovable property, the declared purchaser shall deposit twenty-five percent of the total purchase amount right after such declaration to the person conducting the auction and if such purchaser defaults in paying the amount, the immovable property shall be re-sold.48 The full amount of the purchase money shall be paid by the purchaser within 15 days of the sale.49 If the purchaser fails to pay the amount within the specified time limit, then the Court, may forfeit the deposit and shall again put forth the immovable property on sale and a fresh notification shall be proclaimed for such re-sale.50 The sale of immovable property is concluded when the Court grants a certificate in favour of the purchaser. Once the sale has become absolute, the property is deemed to be vested in the purchaser from the date when it is sold and not from the date it becomes absolute.51 The sale of immovable property can be set aside, if the Court, on an application, finds that sale involves material irregularity or fraud.52
Arrest and Detention of the Judgment Debtor
Where an Application is made for the arrest and detention of the Judgment Debtor, it is mandatory to file an Application along with an Affidavit stating the grounds on which arrest is applied for.53 The mandatory nature of such an Application accompanied with a supporting Affidavit has been highlighted by Delhi High Court in the case of Satish Mehta v Sasken Communication54 wherein it was held as follows-
"21. An executing court contemplating confining of a judgment debtor to civil imprisonment impacting his violatable rights in Article 21 of the Constitution of India must necessarily strictly abide by the letter of the law. Undoubtedly, the requirement of Rule 11A of Order XXI requiring a written application for arrest of the judgment debtor, setting out the grounds on which the prayer is made coupled with an affidavit also setting out the grounds for which the prayer for arrest is made, is mandatory."
Where the Decree Holder has filed for execution of a Decree by way of arrest and detention of the Judgment Debtor, the Court at first, issues Notice to the Judgment Debtor to appear before the Court. However, issuance of Notice is not necessary, if the Court is satisfied by Affidavit or otherwise that with the object or effect of delaying the execution of the Decree ,the Judgment Debtor is likely to abscond or leave the territorial jurisdiction of the Court.55 If the Judgment Debtor, does not appear on issuance of such Notice, then the Court may issue warrant for the arrest of the Judgment-Debtor.56
If the Judgment Debtor appears on the Notice issued by the Court, then the Court shall give an opportunity to the Judgment Debtor to give reasons for not detaining him/her in prison. In case of execution of money decree before issuing warrant of arrest the court must be satisfied that (i)the Judgment Debtor with the object or effect of obstructing or delaying the execution petition; (a) he is likely to abscond or leave the local limits of the jurisdiction of the Court or (b) has after the institution of suit in which decree was passed, has dishonestly, transferred, concealed, or removed any part of his property, or committed any other act of bad faith in relation to the property, (ii) that the Judgment Debtor has or has had from the date of Decree the means to pay the amount or any substantial part thereof, (iii) Judgment Debtor was bound in the fiduciary capacity to pay.57 The Court may also give the Judgment Debtor 15 days' time in order to satisfy the decree amount or if the Judgment Debtor is detained, the Court can release him/her on furnishing security.58
In one of the landmark cases while interpreting the terms "sufficient means to pay", Hon'ble Justice V.R. Krishna Iyer in the case of Jolly George Varghese & Anr. v The Bank of Cochin59 held as follows:-
"10. .It is too obvious to need elaboration that to cast a person in prison because of his poverty and consequent inability to meet his contractual liability is appalling. To be poor, in this land of daridra narayana, is no crime and to recover debts by the procedure of putting one in prison is too flagrantly violative of Article 21 unless there is proof of the minimal fairness of his wilful failure to pay in spite of his sufficient means and absence of more terribly pressing claims on his means such as medical bills to treat cancer or other grave illness. Unreasonableness and unfairness in such a procedure is inferrable from Article 11 of the Covenant. But this is precisely the interpretation we have put on the proviso to Section 51 CPC and the lethal blow of Article 21 cannot strike down the provision, as now interpreted.
11. The words which hurt are "or has had since the date of the decree, the means to pay the amount of the decree". This implies, superficially read, that if at any time after the passing of an old decree the judgment-debtor had come by some resources and had not discharged the decree, he could be detained in prison even though at that later point of time he was found to be penniless. This is not a sound position apart from being inhuman going by the standards of Article 11 (of the Covenant) and Article 21 (of the Constitution). The simple default to discharge is not enough. There must be some element of bad faith beyond mere indifference to pay, some deliberate or recusant disposition in the past or, alternatively, current means to pay the decree or a substantial part of it. The provision emphasises the need to establish not mere omission to pay but an attitude of refusal on demand verging on dishonest disowning of the obligation under the decree. Here considerations of the debtor's other pressing needs and straitened circumstances will play prominently. We would have, by this construction, sauced law with justice, harmonised Section 51 with the Covenant and the Constitution."
The Judgment Debtor shall once be released if he pays the amount of decree and costs of arrest to the arresting officer.60 Once the Judgment Debtor is released after completing his tenure as above he cannot be re-arrested.61
The period of detention of the Judgement Debtor is as follows:
|Where the decretal amount:||Term of civil imprisonment.|
|Does not exceed Rs 2000/-||Imprisonment cannot be ordered.|
|Exceeds Rs 2000/- but do not exceeds Rs 5000/-||Upto six weeks|
|Exceeds Rs 5000/-||Upto three months.|
The Judgment Debtor shall not be arrested until the Decree Holder pays before the Court, an amount as specified by the Court, for the subsistence of the Judgment Debtor from the time of his arrest until he is brought back to the Court and such amount shall be paid in advance before the first day of each month.62
The CPC prescribes certain limitations as to the persons who cannot be arrested as a mode of execution of a Decree. The following persons cannot be arrested namely; (a) a woman63; (b) judicial officers while going to, presiding in or returning from courts64; (c) parties, pleaders or there recognised agents and there witnesses acting in obedience of summons when going to attend to returning from courts65; (d) members of legislative bodies66; and (e) any person whose arrest may cause danger or inconvenience to the public67.
Appointment of Receiver
Appointment of Receiver as a mode of execution is a general exception to the rule that the Decree Holder has the right to choose the mode of execution. Appointment of Receiver is for safeguarding the interests of the parties to the proceedings; which is also a recognised mode of execution68. It is also referred as equitable execution and entirely lies on the discretion of the Court.69 This mode of execution has to be read with Order XL Rule 1 of CPC which deals with appointment and powers of receivers.
Stay of Execution Proceedings
Under Order XXI Rule 26 of CPC, if sufficient cause is shown, the Court to which the Decree has been sent for execution can stay the execution of the said Decree for a reasonable time so as to enable the Judgment Debtor to apply to the Court which passed the decree or an Appellate Court for an order staying the execution proceedings. Before granting stay, the Court shall require security from, or impose such conditions on the Judgment Debtor, as it thinks fit. This rule only relates to granting of limited stay of execution by execution Court and for only specific purposes so as to enable the Judgment Debtor to apply to get a stay either from a Court which passed a decree, or from an Appellate Court.70
If a suit filed against the Decree Holder by the Judgment Debtor is pending in any Court , the executing Court may stay the execution proceedings on such terms and security till the suit is adjudicated.71 It becomes imperative to highlight the decision of Hon'ble Supreme Court in the case of Shaukat Hussain v. Bhuneshwari Devi72, wherein the Court interpreted the language of Order XXI Rule 29 and held that for application of this rules, it is not enough that there is a suit pending by the Judgment Debtor. Such suit must be against the Decree Holder in such court and the suit must be pending in the same court. The relevant excerpt of the judgment reads as follows -
"6. .It is obvious from a mere perusal of the rule that there should be simultaneously two proceedings in one court. One is the proceeding in execution at the instance of the decree-holder against the judgment-debtor and the other a suit at the instance of the judgment-debtor against the decree-holder. That is a condition under which the court in which the suit is pending may stay the execution before it. If that was the only condition, Mr Chagla would be right in his contention, because admittedly there was a proceeding in execution by the decree-holder against the judgment-debtor in the Court of Munsif 1st, Gaya and there was also a suit at the instance of the judgment-debtor against the decree-holder in that court. But there is a snag in that rule. It is not enough that there is a suit pending by the judgment-debtor, it is further necessary that the suit must be against the holder of a decree of such court. The words "such court" are important. "Such court" means in the context of that rule the court in which the suit is pending. In other words, the suit must be one not only pending in that court but also one against the holder of a decree of that court. That appears to be the plain meaning of the rule."
Continuing from the earlier article in the Execution of Foreign Decrees series, this article highlights and discusses in detail the process of execution of Foreign Decrees in India. The article has endeavoured to cover and discuss the legal issues that arise, starting from the stage of filing of Application to the ways in which a Decree can be executed be it by attachment of property or civil arrest of the Judgment Debtor. It is important to clarify at this juncture that a Foreign Decree cannot be taken directly to National Company Law Tribunal ('NCLT') to institute proceedings under the Insolvency and Bankruptcy Code, 2016 ('IBC'). The National Company Law Appellate Tribunal in Usha Holdings LL.C. & Anr v Francorp Advisors Pvt. Ltd.73 has categorically held that NCLT has no authority to determine the legality of the Foreign Decree while admitting or rejecting a claim as a debt under the IBC.
The provisions of CPC with respect to the execution of Foreign Decrees are aptly detailed and the jurisprudence is much developed. That being said, the procedural matrix laid down by the CPC being so detailed and complex usually results into procedural hassles, which can be avoided.
1. Order XXI Rule 30 of CPC
2. Order XXI Rule 10 of CPC.
3. Order XXI Rule 16.
4. Section 146 of CPC.
6. If the conditions under Section 49 and Order XXI Rule 16 are fulfilled.
7. Order XXI Rule 15.
8. Section 53 of CPC.
9. Section 146 of CPC.
10. (Order XXI Rule 46A - 46I).
11. Order XXI Rule 11.
12. Shyam Singh v. Collector, Distt. Hamirpur, 1993 Supp (1) SCC 693
13. Order XXI Rule 22 of CPC
14. Order XXI Rule 105.
15. Order XXI Rule 106.
16. (2008) 4 SCC 615.
17. Order XXI Rule 41 of CPC
18. Order XXI Rule 42 of CPC
19. Order XXI Rule 41 (2) of CPC.
20. Order XXI Rule 41 (3) of CPC.
21. 2002 SCCOnLine Bom 503
22. Order XXI Rule 43 of CPC
23. Order XXI Rule 51 of CPC
24. Order XXI Rule 52 of CPC
25. Order XXI Rule 43A of CPC
26. Order XXI Rule 44 of CPC
27. Order XXI Rule 46 of CPC
28. Order XXI Rule 46D of CPC
29. Order XXI Rule 48 and 48A of CPC
30. Order XXI Rule 49 of CPC
31. Order XXI Rule 53 of CPC
32. Order XXI Rule 54 of CPC
33. Section 64 of CPC.
34. Order XXI Rule 55 of CPC
35. Order XXI Rule 57 of CPC
36. Order XXI Rule 58 of CPC
37. Order XXI Rule 59 of CPC
38. Order XXI Rule 64 of CPC
39. Order XXI Rule 65 of CPC
40. Order XXI Rule 72
41. Order XXI Rule 72A
42. Order XXI Rule 73 of CPC.
43. Order XXI Rule 66.
44. Order XXI Rule 66(2) of CPC.
45. Order XXI Rule 68 of CPC
46. Order XXI Rule 69 of CPC
47. Order XXI Rule 74 and 75 of CPC
48. Order XXI Rule 84 of CPC
49. Order XXI Rule 85 of CPC
50. Order XXI Rule 86 of CPC
51. Section 65 of CPC.
52. Order XXI Rule 90 of CPC
53. Order XXI Rule 11A of CPC.
54. 2015 SCC OnLine Del 11709.
55. Order XXI Rule 37(1) of CPC.
56. Order XXI Rule 37(2) of CPC
57. Section 51 of CPC
58. Order XXI Rule 40(2) of CPC.
59. (1980) 2 SCC 360.
60. Proviso 4 to Section 55(1) of CPC.
61. Section 58(2) of CPC.
62. Order XXI Rule 39 of CPC
63. Section 56 of CPC.
64. Section 135 (1) of CPC.
65. Section 135 (1) of CPC.
66. Section 135A of CPC.
67. Section 55(2) of CPC.
68. P. Perraju & Ors. v Central Bank of India 1979 SCC OnLine AP 151.
69. Dhirendra Nath Sen & Ors. v Santasila Debi & Ors. 1968 SCC OnLine Cal 85.
70. R Komala v Mohd Iqbal 1999 SCC OnLine Kar 32.
71. Order XXI Rule 29 of CPC.
72. (1972) 2 SCC 731.
73. 2018 SCC OnLine NCLAT 792
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.