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TMI Blog2007 (5) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... ensuring the payment of the bank dues. The suit was filed under the provisions of Order 14 RSC. This is akin to Order 37 of the Indian Code of Civil Procedure and provides for summary procedure in such matters. After receiving the summons, the judgment debtor had engaged some attorneys and had also filed application for leave to defend setting out his defense. However, no affidavit in support thereof was filed nor anybody appeared on behalf of the defendant before the Queens Bench Division of High Court, after the participation in the proceedings at the initial stage. In the application for leave to defend, the judgment debtor had not disputed the amounts due from the company. He also did not deny that he had executed guarantee deed. His defense, however, was that he along with his brother Deepak Khilnani were running a group of companies. In the UK and other European countries business was being run and controlled by Deepak Khilnani, whereas the other companies of this group which were in the Middle East countries were managed by the defendant. He pleaded that Deepak Khilnani did not disclose the true position regarding financial conditions of the group of companies in Europe and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court. Together with the certified copy of the decree, a certificate from such superior courts is to be filed stating the extent, if any, to which the decree has been satisfied or adjusted. Such a certificate is as the conclusive proof of the extent of such satisfaction or adjustment. Sub-section 3 of Section 44A further lays down that provisions of Section 47 of the CPC shall apply to such execution proceedings and the Court can refuse execution of any such decree, if it is shown to the satisfaction of the Court that the decree falls within any of the exceptions specified in Clauses (a) to (f) in Section 13 CPC. 5. It is not in dispute that the decree passed by the Court in UK is of a Court in reciprocating territory. It is also not in dispute that the decree is of a superior court of that country. Therefore, it is executable by Indian Courts. The decree holder has also filed, along with certified copy of the decree, a certificate to the effect that no payment under this decree has been made so far and the decree has not been satisfied. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depict the thought process of the learned Single Judge: In the present case although neither the defendant nor his counsel appeared at the time of hearing of the application for leave to defend yet Hon'ble Judge examined the probability of the defense being truthful and then negated it. As already observed, the Judgment Debtor/objector did not dispute the Bank's claim regarding the dues nor did he dispute the execution of the guarantee deed dated 4.2.93. Thus on merits of the claim, there was no defense. His only plea was that he was misguided by his younger brother Deepak Khilnani regarding the financial conditions of the company and was persuaded to furnish the guarantee under the belief that the company was doing very well and the guarantee was merely a formality to seek more facilities from the Bank. Thus according to the defendant, bank guarantee has been obtained by exercising undue influence of which fact the Bank was aware and had constructive notice and Therefore, Bank cannot enforce the same against the defendant. Hon'ble Judge examined the plausibility of his defense and found it to be untenable. Leave to defend was eventually declined. Judgment was rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence. He argued that the judgment cited by the appellant were not properly appreciated and discussed in right perspective by the learned Single Judge. He also cited the judgments of the Supreme Court in the case of International Woollen Mills v. Standard Wool (U.K.) Ltd. [2001]3SCR166 . Learned Counsel for the decree holder maintained that since the defense of the judgment debtor as contained in application for leave to defend was duly considered; the Court also took in consideration various documents filed by the decree holder as well as the affidavits; the evidence on record was taken into consideration and analyzed, such a judgment would be a judgment on the merits of the case. 11. The impugned judgment is dated 9.11.2005. The judgment of the Supreme Court in the case of International Woollen Mills v. Standard Wool (U.K.) Ltd. (supra) which was pronounced in April 2001 was available. However, this judgment was not brought to the notice of the learned Single Judge and, Therefore, is not discussed in the impugned judgment. It would be apposite to discuss the ratio of this case in the first instance to find out as to whether any answer to the case at hand is provided by this ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till would not lead to the conclusion that it was passed on merits. 14. The Court further held that if an ex-parte decree is passed in a summary manner under a special procedure without going into the merits and without taking evidence then such a decree would not be executable in India. However, on the other hand, if the decree is ex-parte, it can still be judgment on merits in case the Court had gone through the case made out by the plaintiff and considered the same and taken evidence of the witnesses to be put by the plaintiff. The Court specifically approved the principle laid down in the case of Algemene Bank Nederland NV v. Satish Dayalal Choksi AIR1990Bom170 . That was a case where summary suit was filed in Hong Kong. Unconditional leave to defend was granted to the defendant to contest the suit. Thereafter, the defendant filed written statement. However, the defendant could not appear at the trial as he had applied to the RBI for foreign exchange in order to engage a lawyer in Hong Kong which was not granted by the RBI, an ex-parte decree came to be passed against the defendant. It was noted that Hong Kong Court had proceeded to pronounce the judgment in view of the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval by the Supreme Court: In construing Section 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 contradistinction 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. One 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 judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 favor. Such indifference on the part of the defendant cannot necessarily lead to the inference 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 Abdul Rahman v. Mohd. Ali Rowther AIR 1928 Rang 319 in the following terms: A decision on the merits 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 considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the written statement and the decree is passed under Order 8 Rule 10 CPC without directing the plaintiff to prove the case by leading evidence. 17. At the same time, even when the defendant is proceeded ex-parte or the defendant has failed to file the written statement but the Court directs the plaintiff to prove his claim and the plaintiff produces documentary and oral evidence and after perusal thereof claim of the plaintiff is accepted and the decree passed, such a judgment would be on the merits of the case notwithstanding the default on the part of the defendant in not appearing or in not filing the written statement. As aforesaid, counsel for the parties conceded this to be correct position in law. Thus, when in a summary suit, judgment is given by default, it is not a judgment on merits. However, if the application for leave to defend the suit is filed i.e. dismissed by detailed speaking order holding that no triable issue was raised and, Therefore, the plaintiff was entitled to judgment and decree straightaway and it was not a case where evidence was required in the absence of any triable issue, can it still be said that it is not a judgment on the merits of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment debtor in default and proceeded with the passing of the decree. It has discussed the various submissions made by the judgment debtor in his application but has not found favor with them and, Therefore, the decree is passed. Situation is like the one where the Court has opined that there are no triable issues and the plaintiff is entitled to the decree. At the same time, the decree is passed in a summary manner. The decree holder was not required to lead any evidence. Thus, on the one hand, while the decree is not passed without discussing the merits of the defense, on the other hand, the decree holder was not required to produce any evidence. The foreign judgment runs into 15 odd pages and i) sets out the facts i.e. the nature of the claim. ii) nature of the defense put in, though not pursued. iii) notices that in the defense no formal or substantive flaw in the documentation or the claim under the documentation was found. iv) finds that only defense was that the defendant in the foreign Court and the appellant before this Court was induced to enter into the guarantee, on the basis whereof the claim was made against him in the foreign Court. v) finds the said de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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