Foreign summary judgment refusing leave to defend despite triable issues is unenforceable under Section 13 CPC.

The dispute arose from a 1995 Share Purchase and Co-operation Agreement (SPCA) between the Appellant (a German company) and the Respondent (an Indian company) for an industrial gas joint venture

To finance the venture, the Respondent obtained an External Commercial Borrowing (ECB) of USD 7 million from Citibank UK, which the Appellant guaranteed

The RBI granted approval for the guarantee under the Foreign Exchange Regulation Act (FERA), 1973, subject to the condition that if the guarantee were invoked, "no liability whatsoever will extend to the Indian Company"

Following Respondent’s default, the Appellant paid the lender in 2001 and sought reimbursement through subrogation

The Appellant initiated proceedings in the High Court of Justice, England, obtaining a default judgment in 2003, which was later set aside at the Appellant's request to seek a "summary judgment"

Despite the Respondent raising defenses regarding oral set-off agreements and financial statements signed by the Appellant's nominee directors, the English Court refused leave to defend and granted summary judgment in 2006

The Appellant sought execution of this decree in India under Section 44A of the CPC. The Delhi High Court’s Division Bench refused enforcement, leading to this appeal

Whether the summary judgment of the English Court was given "on the merits" of the case and in accordance with natural justice, as required by Section 13 of the CPC for conclusiveness and enforceability in India.

Whether the judgment is unenforceable in India due to the restrictive conditions imposed by the RBI under FERA.

Section 13 of the CPC, which stipulates that a foreign judgment is not conclusive if it is not pronounced by a court of competent jurisdiction, not given on the merits, founded on an incorrect view of international law or refusal to recognize Indian law, opposed to natural justice, obtained by fraud, or sustains a claim founded on a breach of Indian law

Section 44A of the CPC regarding the execution of foreign decrees

Section 47 of FERA, 1973 (now FEMA), which distinguishes between the right to bring legal proceedings and the necessity of RBI/Government permission before taking steps to enforce a judgment

Precedential reliance was placed on Alcon Electronics (P) Ltd. v. Celem S.A. regarding "judgment on merits"

Precedential reliance was placed on IDBI Trusteeship Services Ltd. v. Hubtown Ltd. regarding the principles for granting leave to defend in summary proceedings

The Court noted that the Respondent had raised "triable issues" based on contemporaneous documents, such as Balance Sheets and Board Minutes signed by the Appellant’s own nominee director, which recorded that the loan repayment was an adjustment against the Respondent's claims

The Court held that by deciding the matter in a summary jurisdiction and denying the Respondent a full trial (including cross-examination) despite these realistic defenses, the English Court failed to conduct an investigation into the merits

The Court clarified that while Section 47(3) of FERA does not bar the initiation of legal proceedings to determine liability, it creates a mandatory statutory embargo on the enforcement of such a decree without prior RBI permission

The Court found that while the English Court had jurisdiction (Section 13(a)), the judgment was ultimately unenforceable as it bypassed triable issues, ignored applicable Indian law (RBI conditions), and denied a fair trial

The Court held that the judgment fell foul of Section 13(b), (c), (d), and (f) because: (i) it was not rendered on the merits as triable issues were summarily dismissed; (ii) it denied the Respondent a meaningful opportunity to establish its case (violating natural justice); and (iii) it sustained a claim that disregarded binding statutory conditions imposed by the RBI under Indian law

While the Court rejected the Respondent's argument that the RBI condition was an absolute bar to filing a suit, it affirmed that RBI permission is a sine qua non for the execution of such a decree in India