Full Judgment Text
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO. 1450 OF 2003 CHAMBER SUMMONS NO. 1450 OF 2003 CHAMBER SUMMONS NO. 1450 OF 2003
IN IN IN
EXECUTION APPLICATION NO. 63 OF 2003 EXECUTION APPLICATION NO. 63 OF 2003 EXECUTION APPLICATION NO. 63 OF 2003
IN IN IN
QUEENS BENCH DIVISION QUEENS BENCH DIVISION QUEENS BENCH DIVISION
THE UNITED KINGDOM THE UNITED KINGDOM THE UNITED KINGDOM
SUIT NO. 1226 OF 2001 SUIT NO. 1226 OF 2001 SUIT NO. 1226 OF 2001
Islamic Investment company for the
Gulf (Bahamas) Ltd. ..... Plaintiff/
Intended Claimant/
Judg.Creditor
versus
Symphony Gems N.V. and Ors. .... Defendants
Intended Defendants/
Judg. Debtors
AND
Mr. vijay K. Mehta ..... Applicant
Mr. E.P. Barucha, Senior Counsl with Mr. J.B.
kamdia i/b. J. Sagar and Associates for the
plaintiff in chamber Summons no. 1633/2003.
ASPI Chinoi with F.E.D’vitre Senior Counsel with
M.S. Doctor, J.P. Seth i/b. Federal and Rashmikant
for the defendants in Chamber Summons no. 1633/2003
S. Purohit with H.K. Sudhakar and Thapliya for the
Applicant in Chamber summons no. 1450/2003.
CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J.
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DATE : 17TH FEBRUARY, 2005. DATE : 17TH FEBRUARY, 2005. DATE : 17TH FEBRUARY, 2005.
JUDGMENT : JUDGMENT : JUDGMENT :
1. The present application has been taken out by
the judgment debtor inter-alia seeking adjournment to
raise the attachment in respect of flat no. 91,
Maker Tower "L", Cuffe Parade, Mumbai. It has been
further contended that the execution application no.
63 of 2003 should be rejected and or dismissed as
against defendant no.3. Various other interim
reliefs are sought.
2. The decree which is sought to be executed in
the present proceedings is the decree dated 13.2.2002
passed by the High Court of Justice Queen’s Bench
Division, Commercial Court, United Kingdom. The said
decree has been passed in the sum of 10,060,354.28
U.S. ($) together with interest with a cost of
25,000 pound.
3. The present chamber summons raises a very
interesting question of law i.e. whether the
decree passed by the foreign court in its summary
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jurisdiction is executable or not in India keeping in
mind the provisions of section 13 and section 44(A)
of the Code of Civil Procedure, 1908. A connected
question which also arises for determination is
whether a summary judgment in exercise of part 24 of
the Civil Procedure Rules of the U.K. is a
judgment on merits so as to be executable under
section 13 of the Code of Civil Procedure, 1908.
4. Since for the reasons briefly enumerated
herein I propose to refer the matter to the Division
Bench for its determination thus, I do not propose to
go into the details of the present case. However,
few facts which are bare necessary for the purpose of
the present order are as under :
5. An agreement dated 27.1.2000 was executed
between the plaintiff/claimant and the defendant no.1
what is known as "Morabaha Financing Agreement". The
said agreement on face of it is in respect of sale of
certain goods but in essence is a transaction of
finance. In respect of the said agreement an action
was brought by the plaintiff/claimant in the U.K.
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court by way of a summary jurisdiction. The said
matter was heard by J. Tomlinson at the commercial
Court of the Queen’s Bench Division of the Royal
Courts of Justice in England. By its order and
judgement dated 13.2.2002 in 2001/Folio/1226 he
refused leave to defend to the defendants and has
passed a judgment and decree in the aforesaid amount.
An appeal was preferred therefrom which has been
rejected by the Court of Appeal (Civil Division). By
the said order of the appellate court the judgment of
the learned single judge has been upheld. The said
appeal court order is dated 26.2.2002. This judgment
and/or decree is sought to be enforced by filing the
present Execution application by the decree holder
for the recovery of the said amount and in
consequence thereof the aforesaid flat no.91,
situated at Maker Tower "L", Cuffe Parade, Bombay
belonging to the defendants judgment debtors has been
attached and has been sought to be put in for sale
for the purpose of recovery of the aforesaid amount.
In view of the aforesaid judgment the present chamber
summons has been taken out inter-alia contending that
the decree obtained by the plaintiff/decree holder is
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not legal, valid and executable decree under
international law by virtue of the provisions section
13 read with section 44(A) of the code of Civil
Procedure, 1908.
6. Mr. Chinoy the learned counsel for the
applicant judgment debtor has inter-alia contended
that for the purpose of legal, valid and executable
foreign decree a judgment has to be on merits of the
case. He has relied upon the provisions of section
13(1) (b) of the CPC and has inter-alia contended
that for executable decree or judgment it is a
condition precedent that such a judgment or decree
must be on merits. He has further contended that the
decree passed in summary jurisdiction by way of
summary judgment is not a judgment on merits and thus
unenforceable by virtue of section 13(1)(b) and
section 44(a) of the CPC. On the other hand the
learned counsel for the plaintiff decree holder has
contended that even if it is a summary judgment in a
summary jurisdiction still it is a decree or judgment
on merits as it considers the rival contention of the
parties on merits and decides the issues whether the
defendant has any case to grant a leave to defend or
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not and therefore the said judgment is a judgment on
merits and cannot be treated as an Ex-parte.
7. Before I deal with the rival submissions which
it is necessary that the provisions of section 13 and
44(A) is reproduced as here under :
"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 recognise the law of
[India] in cases in which such law is
applicable;
(d) where the proceedings in which
the judgment was obtained are opposed
to natural justice;
(e) where it has been obtained by
fraud;
(f) where it sustains a claim
founded on a breach of any law in
force in [India].
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"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 file din a district court,
the decree may be executed in [India] as if
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 o
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, it is
shown to the satisfaction of the court
that the decree falls within any of
the exceptions specified in clauses
(a) to (f) to 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 2.-"Decree" with reference
to a superior court means any decree
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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
judgement.]
8. The learned counsel for the appellant has in
support of the contention relied upon various
judgments and has contended that when a court refuses
to grant leave to defend and consequently passes a
decree it does not conduct any trial nor it decides
the issues which are involved in evidence, oral as
well as documentary and therefore a decree passed in
such a summary jurisdiction is not a decree on
merits. He has further contended that it is a
settled proposition of law by the judgment of various
courts that in a case of summary jurisdiction a trial
begins only after the issue is considered whether
leave to defend should be granted to the defendants
either conditionally or unconditionally or the same
should be all together refused and consequently an
ex-parte decree should be passed. In support of his
contentions that the said summary judgment is not a
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decree on merits the learned counsel has relied upon
the following judgements.
1. 1998 Mh..L.J. 956 D. Shanlal vs. Bank of
Mahrashtra.
2. AIR 2001 SCC 2134 - M/s. International Woollen
Mills v/s. M/s. Standard
Wool (U.K. )Ltd
3. [2003] EWHC 2399 Wyrill and Anr. v Ashleigh
(Ch) Homes and Anr.
4. [1999] Lloyd’s Society of Lloyd’s v Fraser
Rep IR 156 and Ors.
5. 37 Bom.L.R. 252 Ramanlal Shantilal v.
Chunilal Damodardas.
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6. AIR (35) 1948 Baldevdas Karsondas Patel v.
Bom. 232 Mohanlal Bapalal Bahia and
Ors.
7. [2004] EWHC 2323 Bhatia Shipping and Agencies
(COMM)[2004] All Pvt Ltd v Alcobex Metals Ltd.
ER (D) 265 (Oct)
8. AIR 9133 Madras 544 Isidore Fernando vs.
Thommai Antoni Michael
Fernando.
9. AIR 1981 Madras 118 K.M. Abdul v/ Indo
Singapore Traders P.Ltd.
10. AIR 1991 Calcutta 335 Middle East Bank Ltd vs.
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Rajendra Singh Sethi
11. AIR 1927 Madras 265 R.E. Mohamed Kassim vs.
Seeni Pakir-bin Ahmed and
Ors.
12. 1999(4) All MR 122 Dallah Alabaraka Investment
Co.Ltd vs. Ajitabh
Bachchan and Anr.
13. 2001(1) Bom.C.R.325 Bank of Baroda vs.
Manubhai Jehtabhai Patel
and Ors.
14. 1986(L)No.1567 and Libyan Arab Foreign Bank
1986(L) No.4048 v. Bankers Trust Co.
15. AIR 1952v Calcutta Indian and General
508 Investment Trust Ltd v.
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Sri Ramchandra Mardaraja
Deo, Raja of Khalikote.
16. 1990(1) Bom C.R.310 R.B. Rajput vs. Hiralal
Bhagwandas Rajput and Anr.
9. On the other hand the learned counsel for the
plaintiff/decree holder has relied upon the judgment
of the learned single judge of this court in the case
Janardan Mohandas Rajan Pillai and Anr. v.
of Janardan Mohandas Rajan Pillai and Anr. v. Janardan Mohandas Rajan Pillai and Anr. v.
Madhubhai Patel and Ors reported in AIR 2003 Bom.490. Madhubhai Patel and Ors reported in AIR 2003 Bom.490. Madhubhai Patel and Ors reported in AIR 2003 Bom.490.
10. After considering the rival submissions I am
of the opinion that in view of the judgment of the
learned single judge of this court in the case of
Janardan Mohandas Rajan Pillai (supra) which
inter-alia holds that a judgment in summary
jurisdiction is a decree on merits being directly
contrary to the Apex Court judgment in the case of
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M/s. International Wollen Mills (supra) matter
requires to be considered by the division bench. In
view of the fact that the learned Single judge has
considered the said judgment and has taken a
particular view which I am not in agreement with I am
required to refer this matter to the division bench
for its appropriate decision on the aforesaid issued.
The learned single judge has in the judgment of
Janardhan Mohandas Rajan Pillai (supra) in para-5
therein has held as under :
"5. the Apex court has enunciated the law
on the subject as to whether a decree of a
foreign court is executable in India the
circumstances in which a decision could be
considered to be on merits or a decision in
default. The proposition that Mr. Grover
sought to canvass that it is only if evidence
is led in a matter that the decision can be
considered to be on merit, is very wide. for
example, if there is a decree bon admission,
there would not be any need to lead evidence
in the matter, yet if the decree is not
satisfied it would always be open to the
parties to execute the same. Again, in a case
where a summary suit has been filed and leave
to defend has not been granted by the court,
the court can st,ill decide the suit without
any material on record, on the summons for
judgment being moved. A decree [passed in
such a suit can also be executed. Hence, it
is not that in every matter evidence must be
led for a judgment to be treated as a decision
on merits.
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11. Apart from the aforesaid judgment there are
two other judgments of the learned single judge of
this court namely of Rebello, J in the case of
reported in 2000(1) Bom.C.R.325 bank of Baroda v. 2000(1) Bom.C.R.325 bank of Baroda v. 2000(1) Bom.C.R.325 bank of Baroda v.
Manubhai Jethabhai Patel and Ors. Manubhai Jethabhai Patel and Ors. and in the case of Manubhai Jethabhai Patel and Ors.
case of Dallah Albaraka Investment Co.Ltd vs. Dallah Albaraka Investment Co.Ltd vs. Dallah Albaraka Investment Co.Ltd vs.
Ajitabh Bachchan and Anr. reported in 1999(4) Ajitabh Bachchan and Anr. reported in 1999(4) Ajitabh Bachchan and Anr. reported in 1999(4)
All.M.R. 122 All.M.R. 122 where the learned single judge has All.M.R. 122
taken a view that if the decree is passed in summary
jurisdiction in a foreign court then such a decree is
a decree on merits and therefore the same is
enforceable in law in India and the provisions of
section 13(1)(b) of the act has no application. On
the other hand the Calcutta High court has in the
case of Middle East Bank Ltd v/s. Rajendra Singh Middle East Bank Ltd v/s. Rajendra Singh Middle East Bank Ltd v/s. Rajendra Singh
Sethia reported in AIR 1991 Calcutta 335 Sethia reported in AIR 1991 Calcutta 335 has taken a Sethia reported in AIR 1991 Calcutta 335
totally contrary view and has held that a decree
which is passed in summary jurisdiction is not on
merits and has added that such a case does not go
into the trial of the suit but merely decides whether
a leave to defend should be granted or not to the
defendant in the said proceedings. According to the
view of the Calcutta High Court the summary judgment
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in a summary jurisdiction is not a judgment on merits
as neither the evidence is led nor the trial is
conducted at that stage. This view of the Calcutta
High court has been expressly affirmed by the Apex
court in the judgment of M/s. International Wollen M/s. International Wollen M/s. International Wollen
Mills Mills (supra) wherein in para-18 of the judgment the Mills
apex court has held as under.
"18. In the case of Middle east Bank Ltd v.
Rajendra Singh Sethia reported in AIR 1991 Cal
335 a decree has been passed exparte and
without service of notice on the
judgment-debor. A number of authorities were
cited before the court including the case of
Sheikh Abdul Rahim (AIR 1943 Cal 42) (supra).
The court has held that even though a decree
may be ex parte it may still be on merits
provided it could be shown that the court has
gone through the case made out by the
plaintiff and considered the same and taken
evidence of the witnesses put up by the
plaintiff. It was held that if an ex parte
decree was passed in a summary manner under a
special procedure without going into the
merits and without taking evidence then those
decrees would not be executable in India.
Based on this authority it was submitted that
a decree could be said to be not on merits
only if it is passed in a summary manner in
any special or summary procedure. It was
submitted that such a decree i.e. a decree
which has not been passed in a summary manner
in a summary proceeding would be a decree on
merits. This authority itself makes it clear
that the decree would not be on merits if the
court has not gone through and considered the
case of the plaintiff and taken evidence of
witnesses of the plaintiff. It must also be
noted that in this case the Court ultimately
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held that the concerned decree was not a
decree on merits."
12. The apex court has in the said judgment over
ruled the view taken by the Calcutta High Court in
the case of Shaikh Abdul Rahim AIR 1943 Calcutta 42
and affirmed the aforesaid view in the case of Middle
East Bank Ltd (supra). After considering the
judgment of the Calcutta High court, the court has
also approved the judgment of the Bombay High Court
in the case of Algemene Bank Nederal NV v. Satish
Dayalal Choksi reported in AIR 1990 Bom.170. In
para-29 and 30 of the judgment the court has approved
the judgment of the Kerala High court in the case of
Govindan Asari Kesavan Asari v. Sankaran Asari
Balakrishnan Asari reported in AIR, 1958 Kerala 203
and has inter-alia contended held that for the
purpose of deciding the decree on merits it must be
based on trial and evidence and cannot be in a
summary manner. In para-29 and 30 of the judgment
the apex court has held as under :
"29. In the case of Govindan Asari Kesavan
Asari v. Sankaran Asari Balakrishnan Asari
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reported in AIR 1958 Ker 203, it is held as
follows :
" In construing S. 13 of the
Indian Civil Procedure Code we have to
be guided by the plain meaning of the
words and expressions used in the
section, itself, and not by other
extraneous considerations. There is
nothing in the section to suggest that
the expression judgment on the merits
has been used in contradiction to a
decision on a matter of form or by way
of penalty.
. The section prescribes the
conditions to be satisfied by a
foreign judgment in order that it may
be accepted by an Indian Court as
conclusive between the parties thereto
or between parties under whom they or
any of them litigate under the same
title. On such condition is that the
judgment must have been given on the
merits of the case. Whether the
judgment is one on the merits, must be
apparent from the judgment itself. It
is not enough if there is a decree or
a decision by the foreign Court. In
fact, the word ‘decree’does not find a
place anywhere in the section. What
is required is that there must have
been a judgment. What the nature of
that judgment should be is also
indicated by the opening portion of
the section where it is stated that the
judgment must have directly
adjudicated upon questioning arising
between the parties.
. The court must have applied
its mind that matter and must have
considered the evidence made available
to it in order that it may be said
that there has been an adjudication
upon the merits of the case. It
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cannot be said that such a decision on
the merits is possible only in cases
where the defendant enters appearance
and contest the plaintiff’s claim.
Even where the defendant choosen to
remain ex parte and to keep out, it is
possible for the plaintiff to adduce
evidence in support of his claim (and
such evidence is generally insisted on
by the Courts in India), so that the
Court may give a decision on the
merits of his case after a due
consideration of such evidence instead
of dispensing with such consideration
and giving a decree merely on account
of the default of appearance of the
defendant.
. In the former case the
judgment will be one on the merits of
the case, while in the latter the
judgment will be one not on the merits
of the case. Thus it is obvious the
the non-appearance of the defendant
will not by itself determine the
nature of the judgment one way or the
other. That appears to be the reason
why S.13 does not refer to ex parte
judgments falling under a separate
category by themselves. A foreign
Court may have its own special
procedure enabling it to give a
decision against the defendant who has
failed to appear in spite of the
summons served him and in favour of
the plaintiff, even without insisting
on any evidence in support of his
claim in the suit.
. Such a judgment may be
conclusive between the parties so far
as that jurisdiction is concerned, but
for the purpose of S.13 of the Indian
Civil Procedure Code such a judgment
cannot be accepted as one given on the
merits of the case and to that extent
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the law in India is different from the
law in other jurisdictions where
foreign judgments given for default of
appearance of defendants are also
accepted as final and conclusive
between the parties thereto. This
position was noticed and recognised in
AIR 1927 Madras 265 (FB). The
contention that the defendant who had
chosen to remain ex parte must be
taken to have admitted the plaint
claim was also repelled in that case as
unsound and untenable. His
non-appearance can only mean that he is
no inclined to come forward and
contest the claim or even to admit it.
. His attitude may be one of
indifference in that matter, leaving
the responsibility on the plaintiff to
prove his claim if he wants to get a
decree in his favour. Such
indifference on the part of the
defendant cannot necessarily lead to
the interference that he has admitted
the plaintiff’s claim. Admission of
the claim is a positive act and it
cannot be inferred from any negative
or indifferent attitude of the person
concerned. To decree the plaint claim
solely on account of the default of
the defendant and without considering
the question whether the claim is well
founded or not and whether there is
any evidence to sustain it, can only
mean that such a decree is passed
against the defendant by way of
penalty.
. It will not satisfy even the
minimum requirements of a judgment on
the merits of the claim. What such
requirements are, have been explained
in Adbul Rehma v. Md. Ali Rowther,
AIR 1928 Rangoon 319, in the following
terms :
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. "A decision on the merit
involves the application of the mind
of the Court to the truth or falsity
of the plaintiff’s case and therefore
though a judgment passed after a
judicial consideration of the matter
by taking evidence may be a decision
on the merits even though passed ex
parte, a decision passed without
evidence of any kind but passed only
on his pleadings cannot be held to be
a decision on the merits."
. The same view was taken by the
Patna High court also in Wazir Sahu v.
Munshi Das, AIR 1941 Patna 109, where
the question when an ex parte decision
can be said to be on the merits, was
answered as follows :
. "An ex parte decision may or
may not be on the merits. The mere
fact of its being ex parte will not in
itself justify a finding that the
decision was not on the merits. that
is not the real test. The real test
is not whether the decision was or was
not ex parte, but whether it was
merely formally passed as a matter of
course or by way of penalty or it was
based on the consideration of the
truth or otherwise of the plaintiff’s
claim."
. We are in respectful agreement
with the view taken in these two
cases."
30. In our view this authority lays down
the correct law. "
13. The ratio of the judgment of the Kerala High
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court and the Calcutta High court in the cases cited
above has been expressly approved as a correct
position of law by the Apex Court.
14. However the learned single judge of this court
in the case of Janardan (supra) while considering the
issue that whether the order of granting of cost was
on merits or not has held in para-5 of the said
judgment that even if the judgment is delivered in a
summary jurisdiction under order 37 rule 2 or similar
procedure in a foreign court then the judgment
delivered will be treated as decision on merits.
This view of the learned single judge in my opinion
is directly contrary to the aforesaid paragraphs
quoted by me in the judgment of M/s.International
Wollen Mills (supra). The learned counsel for the
defendant/judgment debtor has also relied upon the
judgment of the apex court in the case of Indian Bank Indian Bank Indian Bank
v/s. Maharashtra State Co-operative Marketing v/s. Maharashtra State Co-operative Marketing v/s. Maharashtra State Co-operative Marketing
Federation Ltd reported in AIR 1998 SC 1952 Federation Ltd reported in AIR 1998 SC 1952 Federation Ltd reported in AIR 1998 SC 1952
particularly the following portion of para-9 as
under:
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"9. Thus in classes of suits where
adopting summary procedure for deciding them
is permissible the defendant has to file an
appearance within 10days of the service of
summons and apply for leave to defend the
suit. if the defendant does not enter his
appearance as required or fails to obtain
leave the allegations in the plaint are deemed
to be admitted and straightway a decree can be
passed in favour of the plaintiff. The stage
of determination of the matter in issue will
arise in a summary suit only after the
defendant obtains leave. The trial would
really begin only after leave is granted to
the defendant. This clearly appears to be the
scheme of summary procedure as provided by
Order 37 of the Code."
15. Since in my view the judgment of the learned
Janardan Mohandas Rajan
single judge in the case of Janardan Mohandas Rajan Janardan Mohandas Rajan
Pillai and Anr.(supra) Pillai and Anr.(supra) being not in confirmity with Pillai and Anr.(supra)
the judgment of the Apex Court in the case of M/s. M/s. M/s.
International Wollen Mills (supra) International Wollen Mills (supra) I find it International Wollen Mills (supra)
difficult to follow the judgment of of the learned
of
single judge and thus I refer the present matter to
the division bench of this court for the purpose of
appropriate pronouncement on the proposition of law
framed herein above.
16. I am also informed by the learned counsels for
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the parties that an appeal against the judgment of
the learned single judge in the case of Janardan
(supra) has been filed being appeal No. 1122 of
2002. The said appeal has been admitted by order
dated 13.4.2004 by the division bench of this court
and thus the issue in any event is directly pending
before the division bench and for that reason and
also in exercise of my power conferred under Rule 28
of the (O.S.) High Court Rules, I make the present
reference to the division bench for determining the
aforesaid issue in law.
17. The office of Prothonotary and Senior Master
is directed to place the paper and proceedings in the
present case before the Honourable Chief Justice for
appropriate directions in the matter.
18. In the meanwhile parties are directed to
maintain complete status-quo.
sd/-
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO. 1450 OF 2003 CHAMBER SUMMONS NO. 1450 OF 2003 CHAMBER SUMMONS NO. 1450 OF 2003
IN IN IN
EXECUTION APPLICATION NO. 63 OF 2003 EXECUTION APPLICATION NO. 63 OF 2003 EXECUTION APPLICATION NO. 63 OF 2003
IN IN IN
QUEENS BENCH DIVISION QUEENS BENCH DIVISION QUEENS BENCH DIVISION
THE UNITED KINGDOM THE UNITED KINGDOM THE UNITED KINGDOM
SUIT NO. 1226 OF 2001 SUIT NO. 1226 OF 2001 SUIT NO. 1226 OF 2001
Islamic Investment company for the
Gulf (Bahamas) Ltd. ..... Plaintiff/
Intended Claimant/
Judg.Creditor
versus
Symphony Gems N.V. and Ors. .... Defendants
Intended Defendants/
Judg. Debtors
AND
Mr. vijay K. Mehta ..... Applicant
Mr. E.P. Barucha, Senior Counsl with Mr. J.B.
kamdia i/b. J. Sagar and Associates for the
plaintiff in chamber Summons no. 1633/2003.
ASPI Chinoi with F.E.D’vitre Senior Counsel with
M.S. Doctor, J.P. Seth i/b. Federal and Rashmikant
for the defendants in Chamber Summons no. 1633/2003
S. Purohit with H.K. Sudhakar and Thapliya for the
Applicant in Chamber summons no. 1450/2003.
CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J. CORAM: S.U. KAMDAR, J.
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:2: :2: :2:
DATE : 17TH FEBRUARY, 2005. DATE : 17TH FEBRUARY, 2005. DATE : 17TH FEBRUARY, 2005.
JUDGMENT : JUDGMENT : JUDGMENT :
1. The present application has been taken out by
the judgment debtor inter-alia seeking adjournment to
raise the attachment in respect of flat no. 91,
Maker Tower "L", Cuffe Parade, Mumbai. It has been
further contended that the execution application no.
63 of 2003 should be rejected and or dismissed as
against defendant no.3. Various other interim
reliefs are sought.
2. The decree which is sought to be executed in
the present proceedings is the decree dated 13.2.2002
passed by the High Court of Justice Queen’s Bench
Division, Commercial Court, United Kingdom. The said
decree has been passed in the sum of 10,060,354.28
U.S. ($) together with interest with a cost of
25,000 pound.
3. The present chamber summons raises a very
interesting question of law i.e. whether the
decree passed by the foreign court in its summary
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jurisdiction is executable or not in India keeping in
mind the provisions of section 13 and section 44(A)
of the Code of Civil Procedure, 1908. A connected
question which also arises for determination is
whether a summary judgment in exercise of part 24 of
the Civil Procedure Rules of the U.K. is a
judgment on merits so as to be executable under
section 13 of the Code of Civil Procedure, 1908.
4. Since for the reasons briefly enumerated
herein I propose to refer the matter to the Division
Bench for its determination thus, I do not propose to
go into the details of the present case. However,
few facts which are bare necessary for the purpose of
the present order are as under :
5. An agreement dated 27.1.2000 was executed
between the plaintiff/claimant and the defendant no.1
what is known as "Morabaha Financing Agreement". The
said agreement on face of it is in respect of sale of
certain goods but in essence is a transaction of
finance. In respect of the said agreement an action
was brought by the plaintiff/claimant in the U.K.
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court by way of a summary jurisdiction. The said
matter was heard by J. Tomlinson at the commercial
Court of the Queen’s Bench Division of the Royal
Courts of Justice in England. By its order and
judgement dated 13.2.2002 in 2001/Folio/1226 he
refused leave to defend to the defendants and has
passed a judgment and decree in the aforesaid amount.
An appeal was preferred therefrom which has been
rejected by the Court of Appeal (Civil Division). By
the said order of the appellate court the judgment of
the learned single judge has been upheld. The said
appeal court order is dated 26.2.2002. This judgment
and/or decree is sought to be enforced by filing the
present Execution application by the decree holder
for the recovery of the said amount and in
consequence thereof the aforesaid flat no.91,
situated at Maker Tower "L", Cuffe Parade, Bombay
belonging to the defendants judgment debtors has been
attached and has been sought to be put in for sale
for the purpose of recovery of the aforesaid amount.
In view of the aforesaid judgment the present chamber
summons has been taken out inter-alia contending that
the decree obtained by the plaintiff/decree holder is
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not legal, valid and executable decree under
international law by virtue of the provisions section
13 read with section 44(A) of the code of Civil
Procedure, 1908.
6. Mr. Chinoy the learned counsel for the
applicant judgment debtor has inter-alia contended
that for the purpose of legal, valid and executable
foreign decree a judgment has to be on merits of the
case. He has relied upon the provisions of section
13(1) (b) of the CPC and has inter-alia contended
that for executable decree or judgment it is a
condition precedent that such a judgment or decree
must be on merits. He has further contended that the
decree passed in summary jurisdiction by way of
summary judgment is not a judgment on merits and thus
unenforceable by virtue of section 13(1)(b) and
section 44(a) of the CPC. On the other hand the
learned counsel for the plaintiff decree holder has
contended that even if it is a summary judgment in a
summary jurisdiction still it is a decree or judgment
on merits as it considers the rival contention of the
parties on merits and decides the issues whether the
defendant has any case to grant a leave to defend or
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not and therefore the said judgment is a judgment on
merits and cannot be treated as an Ex-parte.
7. Before I deal with the rival submissions which
it is necessary that the provisions of section 13 and
44(A) is reproduced as here under :
"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 recognise the law of
[India] in cases in which such law is
applicable;
(d) where the proceedings in which
the judgment was obtained are opposed
to natural justice;
(e) where it has been obtained by
fraud;
(f) where it sustains a claim
founded on a breach of any law in
force in [India].
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"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 file din a district court,
the decree may be executed in [India] as if
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 o
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, it is
shown to the satisfaction of the court
that the decree falls within any of
the exceptions specified in clauses
(a) to (f) to 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 2.-"Decree" with reference
to a superior court means any decree
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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
judgement.]
8. The learned counsel for the appellant has in
support of the contention relied upon various
judgments and has contended that when a court refuses
to grant leave to defend and consequently passes a
decree it does not conduct any trial nor it decides
the issues which are involved in evidence, oral as
well as documentary and therefore a decree passed in
such a summary jurisdiction is not a decree on
merits. He has further contended that it is a
settled proposition of law by the judgment of various
courts that in a case of summary jurisdiction a trial
begins only after the issue is considered whether
leave to defend should be granted to the defendants
either conditionally or unconditionally or the same
should be all together refused and consequently an
ex-parte decree should be passed. In support of his
contentions that the said summary judgment is not a
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decree on merits the learned counsel has relied upon
the following judgements.
1. 1998 Mh..L.J. 956 D. Shanlal vs. Bank of
Mahrashtra.
2. AIR 2001 SCC 2134 - M/s. International Woollen
Mills v/s. M/s. Standard
Wool (U.K. )Ltd
3. [2003] EWHC 2399 Wyrill and Anr. v Ashleigh
(Ch) Homes and Anr.
4. [1999] Lloyd’s Society of Lloyd’s v Fraser
Rep IR 156 and Ors.
5. 37 Bom.L.R. 252 Ramanlal Shantilal v.
Chunilal Damodardas.
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:10: :10: :10:
6. AIR (35) 1948 Baldevdas Karsondas Patel v.
Bom. 232 Mohanlal Bapalal Bahia and
Ors.
7. [2004] EWHC 2323 Bhatia Shipping and Agencies
(COMM)[2004] All Pvt Ltd v Alcobex Metals Ltd.
ER (D) 265 (Oct)
8. AIR 9133 Madras 544 Isidore Fernando vs.
Thommai Antoni Michael
Fernando.
9. AIR 1981 Madras 118 K.M. Abdul v/ Indo
Singapore Traders P.Ltd.
10. AIR 1991 Calcutta 335 Middle East Bank Ltd vs.
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:11: :11: :11:
Rajendra Singh Sethi
11. AIR 1927 Madras 265 R.E. Mohamed Kassim vs.
Seeni Pakir-bin Ahmed and
Ors.
12. 1999(4) All MR 122 Dallah Alabaraka Investment
Co.Ltd vs. Ajitabh
Bachchan and Anr.
13. 2001(1) Bom.C.R.325 Bank of Baroda vs.
Manubhai Jehtabhai Patel
and Ors.
14. 1986(L)No.1567 and Libyan Arab Foreign Bank
1986(L) No.4048 v. Bankers Trust Co.
15. AIR 1952v Calcutta Indian and General
508 Investment Trust Ltd v.
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Sri Ramchandra Mardaraja
Deo, Raja of Khalikote.
16. 1990(1) Bom C.R.310 R.B. Rajput vs. Hiralal
Bhagwandas Rajput and Anr.
9. On the other hand the learned counsel for the
plaintiff/decree holder has relied upon the judgment
of the learned single judge of this court in the case
Janardan Mohandas Rajan Pillai and Anr. v.
of Janardan Mohandas Rajan Pillai and Anr. v. Janardan Mohandas Rajan Pillai and Anr. v.
Madhubhai Patel and Ors reported in AIR 2003 Bom.490. Madhubhai Patel and Ors reported in AIR 2003 Bom.490. Madhubhai Patel and Ors reported in AIR 2003 Bom.490.
10. After considering the rival submissions I am
of the opinion that in view of the judgment of the
learned single judge of this court in the case of
Janardan Mohandas Rajan Pillai (supra) which
inter-alia holds that a judgment in summary
jurisdiction is a decree on merits being directly
contrary to the Apex Court judgment in the case of
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M/s. International Wollen Mills (supra) matter
requires to be considered by the division bench. In
view of the fact that the learned Single judge has
considered the said judgment and has taken a
particular view which I am not in agreement with I am
required to refer this matter to the division bench
for its appropriate decision on the aforesaid issued.
The learned single judge has in the judgment of
Janardhan Mohandas Rajan Pillai (supra) in para-5
therein has held as under :
"5. the Apex court has enunciated the law
on the subject as to whether a decree of a
foreign court is executable in India the
circumstances in which a decision could be
considered to be on merits or a decision in
default. The proposition that Mr. Grover
sought to canvass that it is only if evidence
is led in a matter that the decision can be
considered to be on merit, is very wide. for
example, if there is a decree bon admission,
there would not be any need to lead evidence
in the matter, yet if the decree is not
satisfied it would always be open to the
parties to execute the same. Again, in a case
where a summary suit has been filed and leave
to defend has not been granted by the court,
the court can st,ill decide the suit without
any material on record, on the summons for
judgment being moved. A decree [passed in
such a suit can also be executed. Hence, it
is not that in every matter evidence must be
led for a judgment to be treated as a decision
on merits.
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11. Apart from the aforesaid judgment there are
two other judgments of the learned single judge of
this court namely of Rebello, J in the case of
reported in 2000(1) Bom.C.R.325 bank of Baroda v. 2000(1) Bom.C.R.325 bank of Baroda v. 2000(1) Bom.C.R.325 bank of Baroda v.
Manubhai Jethabhai Patel and Ors. Manubhai Jethabhai Patel and Ors. and in the case of Manubhai Jethabhai Patel and Ors.
case of Dallah Albaraka Investment Co.Ltd vs. Dallah Albaraka Investment Co.Ltd vs. Dallah Albaraka Investment Co.Ltd vs.
Ajitabh Bachchan and Anr. reported in 1999(4) Ajitabh Bachchan and Anr. reported in 1999(4) Ajitabh Bachchan and Anr. reported in 1999(4)
All.M.R. 122 All.M.R. 122 where the learned single judge has All.M.R. 122
taken a view that if the decree is passed in summary
jurisdiction in a foreign court then such a decree is
a decree on merits and therefore the same is
enforceable in law in India and the provisions of
section 13(1)(b) of the act has no application. On
the other hand the Calcutta High court has in the
case of Middle East Bank Ltd v/s. Rajendra Singh Middle East Bank Ltd v/s. Rajendra Singh Middle East Bank Ltd v/s. Rajendra Singh
Sethia reported in AIR 1991 Calcutta 335 Sethia reported in AIR 1991 Calcutta 335 has taken a Sethia reported in AIR 1991 Calcutta 335
totally contrary view and has held that a decree
which is passed in summary jurisdiction is not on
merits and has added that such a case does not go
into the trial of the suit but merely decides whether
a leave to defend should be granted or not to the
defendant in the said proceedings. According to the
view of the Calcutta High Court the summary judgment
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in a summary jurisdiction is not a judgment on merits
as neither the evidence is led nor the trial is
conducted at that stage. This view of the Calcutta
High court has been expressly affirmed by the Apex
court in the judgment of M/s. International Wollen M/s. International Wollen M/s. International Wollen
Mills Mills (supra) wherein in para-18 of the judgment the Mills
apex court has held as under.
"18. In the case of Middle east Bank Ltd v.
Rajendra Singh Sethia reported in AIR 1991 Cal
335 a decree has been passed exparte and
without service of notice on the
judgment-debor. A number of authorities were
cited before the court including the case of
Sheikh Abdul Rahim (AIR 1943 Cal 42) (supra).
The court has held that even though a decree
may be ex parte it may still be on merits
provided it could be shown that the court has
gone through the case made out by the
plaintiff and considered the same and taken
evidence of the witnesses put up by the
plaintiff. It was held that if an ex parte
decree was passed in a summary manner under a
special procedure without going into the
merits and without taking evidence then those
decrees would not be executable in India.
Based on this authority it was submitted that
a decree could be said to be not on merits
only if it is passed in a summary manner in
any special or summary procedure. It was
submitted that such a decree i.e. a decree
which has not been passed in a summary manner
in a summary proceeding would be a decree on
merits. This authority itself makes it clear
that the decree would not be on merits if the
court has not gone through and considered the
case of the plaintiff and taken evidence of
witnesses of the plaintiff. It must also be
noted that in this case the Court ultimately
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held that the concerned decree was not a
decree on merits."
12. The apex court has in the said judgment over
ruled the view taken by the Calcutta High Court in
the case of Shaikh Abdul Rahim AIR 1943 Calcutta 42
and affirmed the aforesaid view in the case of Middle
East Bank Ltd (supra). After considering the
judgment of the Calcutta High court, the court has
also approved the judgment of the Bombay High Court
in the case of Algemene Bank Nederal NV v. Satish
Dayalal Choksi reported in AIR 1990 Bom.170. In
para-29 and 30 of the judgment the court has approved
the judgment of the Kerala High court in the case of
Govindan Asari Kesavan Asari v. Sankaran Asari
Balakrishnan Asari reported in AIR, 1958 Kerala 203
and has inter-alia contended held that for the
purpose of deciding the decree on merits it must be
based on trial and evidence and cannot be in a
summary manner. In para-29 and 30 of the judgment
the apex court has held as under :
"29. In the case of Govindan Asari Kesavan
Asari v. Sankaran Asari Balakrishnan Asari
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reported in AIR 1958 Ker 203, it is held as
follows :
" In construing S. 13 of the
Indian Civil Procedure Code we have to
be guided by the plain meaning of the
words and expressions used in the
section, itself, and not by other
extraneous considerations. There is
nothing in the section to suggest that
the expression judgment on the merits
has been used in contradiction to a
decision on a matter of form or by way
of penalty.
. The section prescribes the
conditions to be satisfied by a
foreign judgment in order that it may
be accepted by an Indian Court as
conclusive between the parties thereto
or between parties under whom they or
any of them litigate under the same
title. On such condition is that the
judgment must have been given on the
merits of the case. Whether the
judgment is one on the merits, must be
apparent from the judgment itself. It
is not enough if there is a decree or
a decision by the foreign Court. In
fact, the word ‘decree’does not find a
place anywhere in the section. What
is required is that there must have
been a judgment. What the nature of
that judgment should be is also
indicated by the opening portion of
the section where it is stated that the
judgment must have directly
adjudicated upon questioning arising
between the parties.
. The court must have applied
its mind that matter and must have
considered the evidence made available
to it in order that it may be said
that there has been an adjudication
upon the merits of the case. It
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cannot be said that such a decision on
the merits is possible only in cases
where the defendant enters appearance
and contest the plaintiff’s claim.
Even where the defendant choosen to
remain ex parte and to keep out, it is
possible for the plaintiff to adduce
evidence in support of his claim (and
such evidence is generally insisted on
by the Courts in India), so that the
Court may give a decision on the
merits of his case after a due
consideration of such evidence instead
of dispensing with such consideration
and giving a decree merely on account
of the default of appearance of the
defendant.
. In the former case the
judgment will be one on the merits of
the case, while in the latter the
judgment will be one not on the merits
of the case. Thus it is obvious the
the non-appearance of the defendant
will not by itself determine the
nature of the judgment one way or the
other. That appears to be the reason
why S.13 does not refer to ex parte
judgments falling under a separate
category by themselves. A foreign
Court may have its own special
procedure enabling it to give a
decision against the defendant who has
failed to appear in spite of the
summons served him and in favour of
the plaintiff, even without insisting
on any evidence in support of his
claim in the suit.
. Such a judgment may be
conclusive between the parties so far
as that jurisdiction is concerned, but
for the purpose of S.13 of the Indian
Civil Procedure Code such a judgment
cannot be accepted as one given on the
merits of the case and to that extent
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the law in India is different from the
law in other jurisdictions where
foreign judgments given for default of
appearance of defendants are also
accepted as final and conclusive
between the parties thereto. This
position was noticed and recognised in
AIR 1927 Madras 265 (FB). The
contention that the defendant who had
chosen to remain ex parte must be
taken to have admitted the plaint
claim was also repelled in that case as
unsound and untenable. His
non-appearance can only mean that he is
no inclined to come forward and
contest the claim or even to admit it.
. His attitude may be one of
indifference in that matter, leaving
the responsibility on the plaintiff to
prove his claim if he wants to get a
decree in his favour. Such
indifference on the part of the
defendant cannot necessarily lead to
the interference that he has admitted
the plaintiff’s claim. Admission of
the claim is a positive act and it
cannot be inferred from any negative
or indifferent attitude of the person
concerned. To decree the plaint claim
solely on account of the default of
the defendant and without considering
the question whether the claim is well
founded or not and whether there is
any evidence to sustain it, can only
mean that such a decree is passed
against the defendant by way of
penalty.
. It will not satisfy even the
minimum requirements of a judgment on
the merits of the claim. What such
requirements are, have been explained
in Adbul Rehma v. Md. Ali Rowther,
AIR 1928 Rangoon 319, in the following
terms :
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. "A decision on the merit
involves the application of the mind
of the Court to the truth or falsity
of the plaintiff’s case and therefore
though a judgment passed after a
judicial consideration of the matter
by taking evidence may be a decision
on the merits even though passed ex
parte, a decision passed without
evidence of any kind but passed only
on his pleadings cannot be held to be
a decision on the merits."
. The same view was taken by the
Patna High court also in Wazir Sahu v.
Munshi Das, AIR 1941 Patna 109, where
the question when an ex parte decision
can be said to be on the merits, was
answered as follows :
. "An ex parte decision may or
may not be on the merits. The mere
fact of its being ex parte will not in
itself justify a finding that the
decision was not on the merits. that
is not the real test. The real test
is not whether the decision was or was
not ex parte, but whether it was
merely formally passed as a matter of
course or by way of penalty or it was
based on the consideration of the
truth or otherwise of the plaintiff’s
claim."
. We are in respectful agreement
with the view taken in these two
cases."
30. In our view this authority lays down
the correct law. "
13. The ratio of the judgment of the Kerala High
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:21: :21: :21:
court and the Calcutta High court in the cases cited
above has been expressly approved as a correct
position of law by the Apex Court.
14. However the learned single judge of this court
in the case of Janardan (supra) while considering the
issue that whether the order of granting of cost was
on merits or not has held in para-5 of the said
judgment that even if the judgment is delivered in a
summary jurisdiction under order 37 rule 2 or similar
procedure in a foreign court then the judgment
delivered will be treated as decision on merits.
This view of the learned single judge in my opinion
is directly contrary to the aforesaid paragraphs
quoted by me in the judgment of M/s.International
Wollen Mills (supra). The learned counsel for the
defendant/judgment debtor has also relied upon the
judgment of the apex court in the case of Indian Bank Indian Bank Indian Bank
v/s. Maharashtra State Co-operative Marketing v/s. Maharashtra State Co-operative Marketing v/s. Maharashtra State Co-operative Marketing
Federation Ltd reported in AIR 1998 SC 1952 Federation Ltd reported in AIR 1998 SC 1952 Federation Ltd reported in AIR 1998 SC 1952
particularly the following portion of para-9 as
under:
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:22: :22: :22:
"9. Thus in classes of suits where
adopting summary procedure for deciding them
is permissible the defendant has to file an
appearance within 10days of the service of
summons and apply for leave to defend the
suit. if the defendant does not enter his
appearance as required or fails to obtain
leave the allegations in the plaint are deemed
to be admitted and straightway a decree can be
passed in favour of the plaintiff. The stage
of determination of the matter in issue will
arise in a summary suit only after the
defendant obtains leave. The trial would
really begin only after leave is granted to
the defendant. This clearly appears to be the
scheme of summary procedure as provided by
Order 37 of the Code."
15. Since in my view the judgment of the learned
Janardan Mohandas Rajan
single judge in the case of Janardan Mohandas Rajan Janardan Mohandas Rajan
Pillai and Anr.(supra) Pillai and Anr.(supra) being not in confirmity with Pillai and Anr.(supra)
the judgment of the Apex Court in the case of M/s. M/s. M/s.
International Wollen Mills (supra) International Wollen Mills (supra) I find it International Wollen Mills (supra)
difficult to follow the judgment of of the learned
of
single judge and thus I refer the present matter to
the division bench of this court for the purpose of
appropriate pronouncement on the proposition of law
framed herein above.
16. I am also informed by the learned counsels for
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the parties that an appeal against the judgment of
the learned single judge in the case of Janardan
(supra) has been filed being appeal No. 1122 of
2002. The said appeal has been admitted by order
dated 13.4.2004 by the division bench of this court
and thus the issue in any event is directly pending
before the division bench and for that reason and
also in exercise of my power conferred under Rule 28
of the (O.S.) High Court Rules, I make the present
reference to the division bench for determining the
aforesaid issue in law.
17. The office of Prothonotary and Senior Master
is directed to place the paper and proceedings in the
present case before the Honourable Chief Justice for
appropriate directions in the matter.
18. In the meanwhile parties are directed to
maintain complete status-quo.
sd/-
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