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1960 (8) TMI 111

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..... hat by an agreement dated October 2, 1947, the respondent had agreed to sell to the appellants certain property known as Nedous Hotel at Lahore for Rs. 52,75,000. In pursuance of the terms of the said agreement the appellants had paid the respondent Rs. 5,00,000 by way of earnest money. It, however, turned out that the respondent's title to the property in question was defective, and so the sale could not be completed. That is why the appellants had to file a suit in the court of the Senior Subordinate Judge at Lahore claiming to recover from the respondent a sum of Rs. 5,10,000; this amount included Rs. 5,00,000 paid by the appellants to the respondent as earnest money and interest accrued due thereon up to the date of the suit. In the said suit the trial judge passed a decree for Rs. 5,08,333-5-4 with future interest thereon at 5% per annum in favour of appellant 2. The claim made by appellant 1 was rejected. This decree was challenged by the respondent before the Lahore High Court. The High Court upheld the contentions raised by the respondent, allowed his appeal, set aside the decree passed in favour of appellant 2 and dismissed the appellants' suit with costs. This dec .....

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..... e said deposit (R.F.A. No. 31 of 1949). 5. Similarly appellant 2 filed a Civil Miscellaneous Application (No. 120 of 1954) praying that the amount of Rs. 3,00,000 deposited by his judgment-debtor should be transferred to India, or that, if it could not be so transferred, it should be held that the Custodian was not entitled to the said amount and so it should be paid to the decree-holder at Lahore, or that it should be paid to such person other than the Custodian as may be entitled to it. These two applications along with the original petition filed by the Custodian for a review of the High Court's original order allowing a refund to the respondent were heard together by the High Court. 6. The High Court noticed that both the judgment-debtor and appellation 2 agreed that the amount in question vested in the decree-holder and should either be transmitted to India or paid to him. The Custodian, however, resisted this prayer. Under s. 4 of the Pakistan Transfer of Evacuee Deposits Act, 1954, a deposit made in a civil proceeding to which an evacuee was entitled and in which no muslim was interested could be transferred to India provided that if the court was satisfied that if .....

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..... (hereafter called the Order), the decree passed in favour of appellant 2 by the Federal Court of Pakistan had become executable in India as if it had been passed by the Supreme Court of India. On this basis the provisions of O. 45, r. 15 of the Code were invoked and the High Court was requested to transmit to the Court of the Senior Sub-ordinate Judge, Simla, the proceedings between the parties for execution of the said decree in the manner and according on the provision applicable to the execution of the original decree passed by the said Judge. An alternative prayer was made for the same order under the High Court's inherent jurisdiction under s. 151 of the Code. 8. This application was resisted by the respondent on several grounds. It was urged that neither O. 45, r. 15 nor s. 151 of the Code was applicable, that the decree could not be executed, and the application made by the appellants in that behalf could not be entertained, in the absence of a certificate required by O. 21, r. 6(b), that the decree in fact did not attract the provisions of s. 4(3) of the Order and that appellant 2 was not entitled to execute it because the decree under execution had vested in the Cus .....

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..... appellant 2. Naturally in his opening Mr. Pritt assumed that the view taken by the Punjab High Court as to the applicability of Sections 4(1) and 4(3) of the Order was right and when the correctness of the said finding was challenged by the respondent in his reply Mr. Pritt supported the said finding on the merits. 11. On the other hand, the learned Solicitor-General has seriously disputed the correctness of the High Court's conclusion about the applicability of Sections 4(1) and 4(3) of the Order to the decree in question while he has supported the other findings of the High Court against the appellants. On these contentions the question which logically must first be considered is whether the decree under execution attracts the provisions of s. 4(3) of the Order. 12. The Order was made by the Governor-General on August 12, 1947, in exercise of the powers conferred on him by s. 9 of the Indian Independence Act, 1947, and all other powers enabling him in that behalf. Section 1 (2) of the Order provides that it shall come into force at once. Section 2 of the Order provides that the appointed day means the 15th of August, 1947. Section 3 makes provisions for proceedings pend .....

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..... onstrued s. 4(1) in favour of the appellants; and we have to consider whether the High Court was right in reaching the said conclusion. 15. Both the parties are agreed that in construing the provisions of s. 4(1) of the Order we should bear in mind the object with which the Order was made and should construe the provisions of the Order after reading them as a whole. Since the Order has been passed in exercise of the powers conferred on the Governor-General by s. 9 of the Indian Independence Act it would be useful to refer to the material provisions of the said section. Section 9(1)(d) provides that the Governor-General shall by order make such provision as appears to him necessary or expedient for removing difficulties arising in connection with the transition to the provisions of this Act. It was realised that as a result of the Act, in carving out two Dominions certain areas may have to be transferred from a Province in one Dominion to a province in another Dominion and such a transfer would inevitably create difficulties of jurisdiction of the civil courts to continue to try proceedings already pending before them. The Order was, therefore, made with the object of avoiding un .....

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..... sions in a fair and reasonable manner and to give full effect to them. Considerations based on the unilateral conduct adopted by the Pakistan Legislature in departing from the provisions of the Order cannot, in our opinion, have any bearing when we are dealing with the question of the construction of the Order itself. The Order is in force, and if the decree sought to be executed by the appellants falls under s. 4(1) it will attract the provisions of s. 4(3) and all relevant questions arising in working out the provisions of s. 4(3) would have to be judicially considered. It may be that there may not be a large number of decrees or orders which still remain executable and have not been executed and so occasions to invoke the provisions of this Order may not be too many; but that is another matter. 17. Let us then consider the provisions of s. 4(1) first. Mr. Pritt has urged that the appeal to the Federal Court in which the decree under execution was passed in favour of appellant 2 arose from proceedings which were pending at the material time in a court in the Punjab and as such it fell within the purview of s. 4(1). He emphasizes the fact that s. 4(1) refers to all proceedings .....

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..... e no doubt that its provisions were intended to safeguard the continuance of only such pending proceedings in respect of which questions of jurisdiction of the trial court would have arisen by the passing of the Act and the transfer of certain territories. If proceedings were pending before the specified courts validly at the material time, and if the jurisdiction of the said courts to continue with the trial of the said proceedings was not affected by the passing of the Act or the transfer of the territory, it was wholly unnecessary to authorities the continuance of the said proceedings in the said court and to provide that the said proceedings should be so continued as if the Act had not been passed. In regard to such proceedings the latter part of s. 4(1) would be wholly redundant. The only answer which Mr. Pritt attempted to give in facing this difficulty was that even in regard to proceedings which the specified court was competent to try even after the passing of the Act its jurisdiction to execute the decree would be impaired or affected and that was intended to be cured by s. 4(1). This argument is clearly far-fetched and untenable. The jurisdiction and powers which are sav .....

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..... of the Federal Court (Jurisdiction Enlargement) Act, 1 of 1950, the Federal Court must be deemed to have come into existence and must be deemed to have had powers to entertain appeals from the decrees of the High Courts as from the appointed day. 20. That takes us to s. 4(3). The Solicitor-General contends that the expression effect shall be given to in this clause does not mean that the decree shall be executed. It only means that the decree shall be recognised as a decree passed by a court of competent jurisdiction and nothing more. His argument is that s.4 wanted to make a very narrow and limited departure from the ordinary principles of private international law. It is well-known that except for cases falling under Sections 44 and 44A of the Code of Civil Procedure a foreign judgment has to be enforced by a suit and in such a suit the judgment-debtor is entitled to make certain pleas against the enforcement of the judgment. These pleas are specified by cls. (a) to (f) of s. 13 of the Code. According to the Solicitor-General, as a result of the fiction introduced by s. 4 (3), when a foreign judgment to which s. 4 (1) applies is sought to be enforced by a suit in an Indian c .....

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..... , because the competent jurisdiction of the court to deliver the said judgment has been already provided for by s. 4(1). It would, we think, be idle to make any distinction between the jurisdiction prescribed by s. 4(1) and the competent jurisdiction to which reference is made in s. 4(3). Thus s. 4(3) requires that in the Dominion where effect is being given to a judgment, the judgment should be treated as passed by a court of competent jurisdiction in that Dominion. If that be so it would be difficult to accept the plea that the only way in which effect should be given is to recognise the judgment as a foreign judgment as suggested by the learned Solicitor-General. If, for instance, in the present case the judgment of the Federal Court is treated by the statutory fiction as one passed by the court of competent jurisdiction in India the words effect shall be given used in the said clause must inevitably mean that the decree following upon that judgment should be executed in India on the basis that the judgment has been competently pronounced by an Indian court. Indeed it is clear that unless clause (3) intended to provide for the execution of the judgment covered by cls. (1) and .....

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..... specified States should fall under clause (1) and should be capable of immediate execution in either Dominion under clause (3). If that were so it is not easy to appreciate why the two other Provinces which formed part of Pakistan as well as the other Provinces in India should have been excluded from the scope of this Order. It seems to us that the main object of the Order was not to disturb or interrupt judicial proceedings pending in the respective courts in the Provinces specified where it was apprehended that the jurisdiction of the said courts would be affected by the passing of the Act. We have carefully considered the three clauses in question and we are satisfied that on a fair and reasonable construction s. 4(1) cannot be extended to pending proceedings in respect of which the trial court's jurisdiction was in no way affected by the passing of the Act or the transfer of any territories. 22. At this stage we may conveniently refer to three decisions of the Calcutta High Court on which Mr. Pritt relied and to which the High Court has referred in its judgment. In Protap Kumar Sen Anr. v. Nagendra Nath Mazumdar AIR1951Cal511 the Calcutta High Court was dealing with a .....

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..... within the scope of s. 4(1). There are some general observations made in the judgment on which reliance is placed by Mr. Pritt, but the said general observations must be read in the context of the facts in the case with which the court was concerned. Thus this decision also does not really assist the appellants. 24. In Naresh Chandra Bose v. Sachindra Nath Deb and Ors. AIR1956Cal222 the principal question which the court considered was the effect of the provisions of Art. 395 of the Constitution on the validity and the continuance of the Order. As we have already pointed out, with this aspect of the matter we are not concerned in the present appeal. 25. The next question which must be considered is whether the present suit falls within s. 4(1) at all. The answer to this question must obviously be in the negative. The material allegations made by the appellants in the plaint filed by them in the present suit clearly show that the whole cause of action had accrued within the jurisdiction of the Senior Sub-Judge at Lahore. The original contract had taken place at Lahore, the property agreed to be sold was situated at Lahore, the earnest amount of Rs. 5,00,000 was paid by the app .....

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..... t the scope and effect of the provisions of s. 4 we hold that the application made by the appellants before the High Court under O. 45, r. 15 was incompetent, and so the High Court was right in dismissing it. 28. The appeal accordingly fails and is dismissed with costs. J.L. Kapur, J. 29. I regret I am unable to agree with the majority judgment proposed which I have read with care and respect that it necessarily deserves and I now proceed to give my reasons for this dissent. 30. This is an appeal by a certificate under Art. 133(1)(a) and (c) against the judgment and order of the High Court of Punjab dismissing the appellants' application for execution. The appellants, the Associated Hotels of India Ltd. and R. B. Mohan Singh Oberoi, the petitioners in the High Court, by an agreement, dated October 2, 1946, agreed to purchase and the respondent agreed to sell certain properties situate at Lahore now in Pakistan for a sum of Rs. 52,75,000. In pursuance of the said agreement the appellants paid to the respondent a sum of Rs. 5 lacs by way of deposit or earnest money. The sale was not completed as the respondent could not make out a good title to the property agreed to .....

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..... enactment. In the alternative he submitted that the Custodian of Evacuee Property was not entitled to that money and prayed that it be paid to him at Lahore or that it be paid to a person other than the Custodian of Evacuee property but not to the respondent as the latter had no interest in the money. On January 30, 1956, the Lahore High Court which by then became the High Court of West Pakistan held (1) that the money could not be transferred to India; (2) allowed the petition for review; and (3) directed the Custodian to report what interest, if any, any evacuee had in the money. That matter, we were in formed, is under appeal in the Supreme Court of Pakistan. 32. On January 19, 1955, the appellants filed an application in the Punjab High Court at Chandigarh under Order 45, Rule 15, Civil Procedure Code and s. 151 of the Code for transmission of the decree of the Pakistan Federal Court to the Court of the Subordinate Judge at Simla and for directions to determine the decretal amount. In the alternative the appellants prayed for the decree being sent to the District Judge for execution. They alleged therein that under the provisions of Art. 4(3) of the Indian Independence (Leg .....

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..... Class at the place where the decree was sought to be executed and therefore the proper procedure was not to apply to the High Court but to apply for a transfer certificate and after obtaining a non-satisfaction certificate from the Federal Court of Pakistan or from any other competent court in Pakistan, to execute the decree in the court of the Senior Subordinate Judge, Simla; that the appellants had been divested of all rights in the decree by the Evacuee Law of Pakistan and they had no right to execute the decree. In this connection the High Court held that the situs of the decree was Pakistan where the decree was passed and that the amount of Rs. 3 lacs which was being claimed by the Custodian of Evacuee Property, Lahore, will be taken into account after the decision of that matter by the courts of Pakistan. Thus the petition of the appellants was dismissed. It is against this judgment and order that the appellants have come in appeal to this court. 35. The first question for decision is the construction of the fourth clause of the Order. The High Court did not accept the contention of the respondent that the Order was applicable only to proceedings over which the court had l .....

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..... all areas of the border tehsils of the border districts of Gurdaspur, Amritsar and Ferozepur in East Punjab and Sialkot, Lahore and Montgomery in West Punjab, i.e., tehsils along the rivers Ravi and Sutlej were affected by the Award and the territories exchanged were not numerous or large by any standard. 36. The setting up of the two Dominions and the division of the three provinces of Bengal, the Punjab and Assam gave rise to many problems relating to legislative, executive and judicial branches of the Government including the division of assets, liabilities and powers. Certain provisions were made in the Act itself, but in order to give effective operation to the purposes of the Act it became necessary to promulgate Orders which was provided for in s. 9 of the Act and which comprised all the three branches of governmental activity; executive, legislative and judicial. Section 9 provided and I quote the relevant provisions : 9(1) The Governor General shall by order make such provision as appears to him to be necessary or expedient - (a) for bringing the provisions of this Act into effective operation; (b) for dividing between the new Dominions, and betwee .....

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..... n regard to the High Court of Calcutta by the Federal Court in Midnapore Zemindary Co. Ltd. v. Province of Bengal and others (1949) F.C.R. 309 where Patanjali Sastri, J. (as he then was), said :- It will be seen that, by virtue of these provisions, notwithstanding the constitution of the new province of East Bengal as part of the Dominion of Pakistan, the decree now under appeal which was made by the High Court of Calcutta before the appointed day is to have effect in East Bengal as if it was an order made by the High Court of East Bengal, while any decision of this court as the appellate court confirming, varying or reversing that decree is to receive effect as if that decree were also a decree of the High Court of East Bengal. In other words, the judgment under appeal is to be regarded as a judgment of the High Court of East Bengal an quoad hoc this Court as the Court of appeal from that High Court . 41. For the purposes of defining the jurisdiction of the High Courts of Calcutta and Lahore, for the establishment of the High Courts for the five new provinces, for specifying their powers and the extent and limit of the effectiveness of their orders the Governor Genera .....

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..... edule to this Order shall lie to the High Court specified in the corresponding entry in column 3 of the said Schedule; and (3) effect shall be given within the territories of either of the two Dominions to any order or sentence of any such Special Tribunal as aforesaid and of any High Court in appeal or revision there from as if the order or sentence had been passed by a court of competent jurisdiction in that Dominion. (4) Notwithstanding the creation of certain new provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947, - (1) all proceedings pending immediately before the appointed day in any civil or criminal court (other than a High Court) in the Province of Bengal, the Punjab or Assam shall be continued in that court as if the said Act had not been passed, and that court shall continue to have for the purposes of the said proceedings all the jurisdiction and powers which it had immediately before the appointed day. (2) any appeal or application for revision in respect of any proceedings so pending in any such court shall lie in the court which would have appell .....

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..... place with all the consequential changes. There is no indication in the first part which limits, constricts or circumscribes the amplitude of the words of that clause. It contains no limitation either by express words or by implication. The words all proceedings and in any civil or criminal court are indicative of their comprehensiveness and negative the idea of a mere change based on the territorial jurisdiction of the court. The Act in its second schedule contemplated the division by whole districts and it is well-known that the Punjab Government, as other Governments to be affected by the Act, had made an extensive survey of the Punjab with a view to giving effect to the Cabinet formula for dividing the province; charts had been prepared, survey maps of revenue estates, maps of the canal irrigation system and distribution of population according to religious communities were prepared by the cleverest officers of the Government. It was on this basis that schedules in the Act were prepared. The Award of Sir Cyril Radcliffe (as he then was) shows that little change was required to be made in the dividing line prepared by the Punjab Government. The major change was of one dist .....

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..... cept that there is no mention of the transfer of territory from Assam to East Bengal in the non-obstante clause of art. 3 and the three provinces of Bengal, the Punjab and Assam are not mentioned in clause 1 of that article because in the context they were irrelevant. The words in art. 3 must necessarily have wide amplitude because the cases before the tribunals related to offences committed in various parts of India. Is there any reason to give a different and constricted meaning to those same words in art. 4 of the Order. The mention of the three provinces was necessitated by their ceasing to exist. But the words emphasised by the respondent in the second part of clause 1 of art. 4, i.e., for the purposes of the said proceedings are common. They only mean that qua the proceedings pending in the particular court the jurisdiction and powers were to remain the same as they were before the division. The use of these words only carries out the intention of the markers of the Order and subserves the objects of the Act, i.e., providing machinery for an orderly continuance of the normal functioning of the judicial system. 47. Under the Civil Procedure Code the jurisdiction of courts .....

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..... As between different provinces under one sovereignty (e.g., under the Roman Empire) the legislation of the sovereign may distribute and regulate jurisdiction; but no territorial legislation can give jurisdiction which any foreign court ought to recognise against foreigners, who owe no allegiance or obedience to the Power which so legislates . 48. Thus jurisdiction may be conferred by Statute as under the Code of Civil Procedure or it may be based on the two principles of English Law above stated. If the latter are the exclusive guides in the matter of competence then mere accrual of cause of action will not make the court competent. Obviously therefore arts. 3 4 are a recognition of the rule above stated which would remove any doubts created as a result of the division of the provinces and of difficulties resulting there from. We cannot lose sight of the fact that the people of the province of the Punjab divided into West and East Punjab and so also of Bengal were so intertwined both in regard to relationship, succession, property and business dealings that if no such provision had been made it would have led to uncertainty, hardships and chaotic conditions, which would equal .....

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..... ions in case where a person could, under the Criminal Procedure Code, be tried in different courts of the two Punjabs and the rules of International Law supervened. Instances could be multiplied in regard to criminal case where but for the wider meaning given to the article the legality of the proceedings would have seriously been jeopardized. 51. The third clause of art. 4 is couched in equally wide language and it had necessarily to be so and was meant to be so, the object being remedial and to effectuate the orders, decrees and sentences passed by courts. Without this clause the first clause would have been of little purpose because if the judgments, decrees and sentences passed by courts of one part of the Punjab were to be treated merely as foreign judgments then the whole object of the Order would have been defeated. It has to be emphasised that in the Orders relating to the Federal Court and to the High Courts of Calcutta and Lahore which have been discussed in a previous part of this judgment effect was given to the judgments and orders of one court as if they were the judgments of the other court also and this was recognised in the judgment of the Federal Court in Midna .....

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..... ade in regard to certain cases in the absence of the Order might no longer have been effective. As has already been stated it was to provide for these difficulties and for removing all doubts as to the jurisdiction of courts in the provinces which had cased to exist that art. 4 was promulgated and a consequential provision had to be made to give effect to these various decrees and orders. That decrees passed in courts of one new province of the Punjab were to be treated as if they were passed by the courts of competent jurisdiction in the other new Province of the Punjab is shown by the language used and particularly the words court of competent jurisdiction within that Dominion . The use of the words is very significant. Similar words were used in clause (3) of art. 3 where also effect was to be given to the orders passed by the Special Tribunal sitting in Calcutta or at Lahore in regard to offences which might have been committed anywhere in India. It has not been suggested that those words were of lesser amplitude and did not make the conviction good in any part of India or Pakistan or the conviction was ineffective anywhere in those two Dominions. It might be repetitive as an .....

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..... diction over the courts including the High Courts even though its jurisdiction fell under s. 205 of the Government of India Act, 1935. The meaning of the words appellate jurisdiction as used in clause (2) of art. 4 of the Order is not affected by the subsequent extension of restriction of the jurisdiction of the court because the scope of the appellate jurisdiction may vary from time to time but it still remains appellate jurisdiction. See Midnapore Zemindary Co. Ltd. v. Province of Bengal and Others (1949) F.C.R. 309 58. The next question for decision is whether as a consequence of evacuee legislation in Pakistan the appellant No. 2 lost his rights in the decree. The respondent contended that by s. 6 of the Pakistan Administration of Evacuee Property Ordinance, 1949 (Act XV of 1949), the decree must be taken to have vested an be deemed always to have vested in the Custodian with effect from March 1, 1947. The decree in dispute was passed by the Senior Subordinate Judge in 1949 and no claim was made by the Lahore Custodian of Evacuee Property in regard to it nor is there any proof that he has done so up to the present. Under s. 13 it was open to the Custodian to publish, by no .....

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..... eneral that the situs of the decree or judgment is where it was recorded and reliance was placed on Attorney-General v. Bouwen (1838) 4 M. W. 172; 150 E.R. 1390, 1398 According to Dicey's Conflict of Laws (7th Edition) p. 506, judgment debts are situate where the judgment is recorded and according to Cheshire's International Law p. 456 :- With regard to this theory there can, of course, be no doubt that a debt is deemed by English law to have a definite locality of its own for several different purposes, such as the exercise of jurisdiction, the payment of death duties, and the grant of probate or of letters of administration , 61. and again pp. 519-520 :- For the purpose of jurisdiction to make a grant of probate or administration, however, it has long been settled with respect to choses in action and titles to property that judgment debts are assets where the judgment is recorded; leases, where the land lies; specially debts, where the instrument happens to be; and simple contract debts, where the debtor resides at the time of the testator's death . 62. The authority for this is an observation of Lord Abinger, C. B., in Attorney-General v. Bouw .....

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..... dance with law. 64. To sum up I am of the opinion that (1) the amplitude of the language of art. 4 is not cut down by any words in the article or in the Order and therefore the decree of the courts of West Punjab passed in proceedings pending immediately before the appointed day are not foreign judgments in East Punjab and the limited interpretation contended for by the respondent is not sustainable. (2) The decree of the Federal Court of Pakistan is covered by the words appellate jurisdiction in clause 2 of art. 4 of the Order. (3) The word effect in clause 3 of art. 4 is of wide connotation and is not equivalent to 'being enforced' by suits on a foreign judgment. (4) Clause 3 of art. 4 is in the nature of a deeming clause and makes the decree of the Pakistan court (West Punjab) a decree of a court of competent jurisdiction in East Punjab (India). (5) Situs of the decree is not in Pakistan alone but the legal fiction applies to that also, and (6) the evacuee laws of Pakistan do not affect the effectiveness of the decree in India. 65. I would therefore allow this appeal and set aside the judgment and order of the High Court. The appellants will have their costs th .....

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