Research and Articles

• Section 44A of the Code of Civil Procedure 1908 (“CPC”) is an enabling provision and does not lay down or indicate the limitation period for filing such an execution petition.
• Internationally, the law of limitation has undergone a transition from being purely procedural to substantive. Therefore, the limitation law of the country where the decree was rendered (“Cause Country”), would be applied even in the country where the decree is sought to be executed (“Forum Country”).
• If a decree holder does not take any steps to execute the foreign decree in the Cause Country, he may file an execution petition in India as per the law of limitation of the Cause Country.
• If a decree holder takes steps-­in-­aid to execute a foreign decree in the Cause Country, and the decree is not fully satisfied, he may file an execution petition in India within 3 years from the ‘finalization’ of the execution proceedings in such Cause Country.

With the ever-increasing cross-border transactions and consequent dispute resolution, obtaining an arbitral award or a court’s decree is half the battle. What remains is the execution of the resultant award or decree – each laden with myriad issues – both substantive and procedural. One of the many concerns which may haunt the disputing parties is the limitation period for executing such award or decree.

Recently, in the case of Bank of Baroda (“Appellant”) v. Kotak Mahindra Bank Ltd (“Respondent”)¹, the Supreme Court of India (“Supreme Court”) had the opportunity to ascertain the limitation period, applicable to execution of foreign judgments in India.

A judgment (“Foreign Judgment”) was rendered by the High Court of Justice, Queen’s Bench, Divisional Commercial Court of London (“Foreign Court”) on 20 February 1995. The said judgment was a money decree in favour of the Appellant against Vysya Bank, predecessor of the Respondent bank.

After a lapse of almost 14 years,the Appellant, i.e., decree holder, filed for execution proceedings in India, i.e., Forum Country on 5 August 2009 under Section 44A² of the Code of Civil Procedure 1908 (“CPC”). Certain objections were raised against the said execution proceedings as being time-barred. Aggrieved by the decisions of the district court and High Court, the Appellant approached the Supreme Court for a determination on the following issue:

“What is the limitation for filing an application for execution of a foreign decree of a reciprocating country in India?”

Section 44A of the CPC is an enabling provision, which requires the District Court to follow the same procedure as it follows while executing an Indian decree, and does not deal with any limitation period. However, referring to Section 3³ of the Limitation Act, the Supreme Court held that applications filed for execution proceedings under Section 44A of the CPC would also be subject to limitation.

Law of limitation applicable to execution of foreign decrees

The Supreme Court observed that the law of limitation was previously considered ‘procedural’ in nature. Accordingly, the law of limitation of the Forum Country was applicable to execution of foreign decrees. However, the law of limitation has recently undergone a transition from being ‘purely procedural’ to ‘substantive’ - especially when it leads to extinguishment of rights or remedies.

In this regard, the Supreme Court referred to international jurisprudence to conclude that almost all the common law countries (including UK⁴ and several states in the USA⁵) have incorporated this transition by way of legislations or judicial pronouncements. The Supreme Court observed that the worldwide view appears to be that the limitation law of the Cause Country should be applied even in the Forum Country. The Supreme Court thereafter noted that as a global player, India could not be an exception in holding that the law of limitation is purely ‘procedural’.

In any event, in cases where the law of an Forum Country is silent on the limitation period for execution of a decree, the limitation period prescribed in the Cause Country would apply.

In this regard, the Supreme Court considered the following situations: -

Situation 1: When the decree holder does not take steps for execution of the decree in the Cause Country

In case the decree holder does not avail the remedy to execute the decree in the Cause Country within the limitation period, it stands extinguished in the Cause Country. Consequently, the right to execute in any other country is virtually extinguished. This would also create a corresponding right in the judgment debtor to challenge the execution of the decree. In such a scenario, the decree holder would be prevented from coming the Forum Country, and pleading a new cause of action in the Forum Country or that the limitation of the Forum Country would apply.

Hence, limitation would commence from the date on which the decree was passed in the Cause Country and the period of limitation prescribed in the Cause Country would apply.

Therefore, in the given case, the limitation would commence from the date when the Foreign Judgment was passed in the UK, and the period of limitation prescribed in the UK would be applicable, i.e., 6 years⁶ from 20 February 1995.

Situation 2: When a decree holder takes steps­in-aid to execute the decree in the Cause Country

In the event that execution proceedings were initiated in the Cause Country but the decree remained unsatisfied, the decree holder may consider initiating execution proceedings in the Forum Country. In this regard, the Supreme Court observed that Article 136⁷ of the Limitation Act is applicable to decrees or orders of civil courts, and not courts of foreign jurisdictions. Therefore, applications for executing a foreign decree, which are not covered under any other provision of the Limitation Act, would be covered under the residuary provisions of the Limitation Act, i.e., a limitation period of 3 years.⁸

Thus, the period of limitation applicable to applications for execution proceedings in India would be 3 years after the “finalization of the execution proceedings in the Cause Country”.

Undoubtedly, this judgment is a welcome change and clarifies the misassumptions on the law of limitation for execution of foreign decrees. The Supreme Court has also gone a step further, by acknowledging the elements of substantive law within the law of limitation, thereby keeping up with international jurisprudence and previous recommendations⁹ of the Law Commission of India.

However, the judgment lacks clarity on situations where a decree holder seeks to file parallel or concurrent proceedings in a foreign jurisdiction along with the execution proceedings in the Cause Country. In this regard, the Supreme Court has held that the right to file execution proceedings in India would accrue “only after finalization of execution proceedings in the Cause Country”. However, the connotation of “finalization of the execution proceedings” remains unanswered.

Applicability of the present judgment

This judgment is applicable to decrees from ‘reciprocating territories’ only. The limitation period for judgments from non-reciprocating territories would significantly vary, considering that the procedure for execution of such judgments would also be different.

While determining the limitation period for execution of foreign decrees, the Supreme Court has diverted from the law of limitation governing enforcement of foreign awards in India .Considering that foreign awards are executable as decrees of Indian courts,¹⁰ courts have previously held that the limitation period applicable to domestic decrees would also be applicable to such foreign awards, i.e., 12 years as per Article 136 of the Limitation Act.¹¹ However, in light of the interpretation of the Supreme Court that Article 136 of the Limitation Act is applicable only to decrees of civil courts of India, the limitation period applicable to enforcement of foreign awards may have to be re-examined.