Notice of Motion No. 1580 of 2013,Suit No. 2519 of 2010

9th December, 2013

Petitioner Counsel: Mr. ZAL ANDHYARUJINA, Mr. SHARAN JAGTIANI, Mr. GIRISH DAVE, Ms. MONIKA NAIK, Mr. HUSSAIN SOMJI, DAVE
Respondent Counsel: Mr. PRADEEP SANCHETI, Mr. RAM KAKKAR, Mr. SHANTANU SINGH & Mr. ADHIRAJ MALHOTRA, DUTT MENON

Cases Cited:
Ephrayim H. Ephrayim Vs. Turner, Morrison & Co., 1930 The Bom.Law Rept. 1178 [Para 16,23]
Keymer Vs. Visvanatham Reddi, 1916 ILR 40 Mad. 112 : AIR 1916 Privy Council 121 [Para 16,19]
G.S.C. Cole Vs. C.A. Harpen, 1919 ILR 41 All 521 [Para 16]
Janoo Hassan Vs. Mahamad Ohuthu, 1924 ILR 47 Mad. 877 [Para 16]
East India Trading Co., New York Vs. Badat & Co., AIR 1959 Bombay 414 (V 46 C 122) [Para 19,23]
K.M. Abdul Jabbar Vs. Indo Singapore Traders, AIR 1981 Madras 118 [Para 21]
Algemene Bank Nederland NV Vs. Satish Dayalal Choksi, AIR 1990 Bombay 170 [Para 23,25]
M/s. Rushabh Precision Bearings Ltd. Vs. M/s. Marine Container Services (India) Pvt. Ltd., 1999(3) ALL MR 248=1999(3) Bom. C.R. 760 [Para 29]
State of Kerala & Ors. Vs. Kalliyanikutty, AIR 1999 SC 1305 [Para 30]

JUDGMENT

JUDGMENT :- The above suit is filed for declaration that the suit property forms a part of the estate of one Captain M.R. Khajotia, since deceased for appointment of the plaintiff as the administrator on behalf of the General Body of Creditors for taking possession of the properties and the title deeds of the properties forming the estate of the deceased, for disclosing the entire estate of the deceased and for the incidental acts of giving public notice, selling off the properties and utilising the proceeds to satisfy the claims of the creditors and to handover possession as per the claims of the creditors.

2. The plaintiff was the creditor of the deceased under certain loans and advances. The deceased had acknowledged his liabilities to repay the loans and credits. The plaintiff had sued in the Queens Bench Division of the Royal Courts of Justice in London, England, U.K. A moratorium was granted to the deceased. The plaintiff refrained from prosecuting the suit upon the deceased agreeing to repay the debts as agreed by the parties. The deceased failed to perform his obligations under such agreement. The plaintiff sought to pursue the suit to lift the stay granted. In the meantime Captain Khajotia expired on 2nd March, 2006. Defendant Nos. 1 and 2 who are the wife and son of the deceased sought control of the estate of the deceased. The plaintiff sought to pursue his claim against the defendants through his Solicitor's notice. The plaintiff sought to join all the heirs of deceased in the application to lift the stay of the suit and to proceed against the estate of the deceased under the special provision in that behalf contained in the Civil Procedure Rules 19.8.

3. The application was resisted by the defendants on the ground that the estate of the deceased was worthless and that there were no assets and there were no cash sums which passed to the family of the deceased.

4. The defendants filed their affidavits in the English Court. The defendants claimed that there was no genuine purpose which would be achieved by allowing the claim to proceed against such estate. The Court considered the position in England as well as in India of small estates where "there is no point in incurring costs of appointing personal representatives". The defendants' contention was raised on the ground that there were no assets as also on the ground that the defendants were resident and domiciled in India and did not live in England. The English Court, after setting out the entire history of the litigation did not join the defendants as parties to the proceedings, but allowed the plaintiff to proceed in the absence of persons representing the estate of the deceased.

5. The defendants herein, as the respondents therein, led evidence and the Court considered the evidence as is manifest from para 10 of the order dated 2nd June, 2009. The Court considered in para 11 the desire of the plaintiff to join the defendants as representatives of the estate of the deceased. In para 15 of the order the Court considered that it would not be appropriate to appoint the plaintiff as personal representative of the estate of the deceased with the defendants against their will. However in para 15 of that order the Court considered it appropriate to make an order under CPR 19.8(1)(a) allowing the claim to proceed in the absence of a person representing the estate of the deceased so that the plaintiff could proceed to judgment and attempt to enforce the judgment in India. The Court recorded in para 15 of the judgment that the respondents therein (the defendants herein) did not oppose such an order being made. Hence the defendants, as the respondents therein, allowed the plaintiff to proceed against the estate of the deceased and attempt to enforce the judgment in India.

6. The Court considered the witness statements filed by the defendants to come to its conclusion which is reflected in para 17 of the judgment/order dated 2nd June, 2009. The defendants, therefore, did not challenge the plaintiff's right to sue and proceed with the suit against the estate of the deceased.

7. The Court, therefore, had to pass a judgment against the estate of the deceased. Such a judgment would be passed because the respondents in the case who were the legal representatives of the deceased did not defend the plaintiff's action on merits, but stated that the estate of the deceased was worthless and that no assets have come to the family. They lived far away in India, hence they need not have been joined in the suit, but allowed the plaintiff to proceed in their absence against the estate of the deceased under CPR 19.8(1)(a). The defendants, accordingly allowed the plaintiff's claim to be decided ex-parte and allowed the plaintiff to proceed and to obtain a judgment which the plaintiff could attempt to enforce in India.

8. The plaintiff applied for summary judgment under CPR 24.2 of the CPR Rules 2000 as there was no real prospect of success for the defendants in the suit and there was no other compelling reason for the trial. This was because the defendants had opposed being sued at all, and that was on the aforesaid grounds.

9. On 11th December, 2009 the English Court passed the judgment under the application for summary judgment supported by the witness statement of the representative of the plaintiff. It was recorded that the defendant had not attended and was not represented at the hearing and had not filed any evidence in response. The Court saw the background of the "long pending matter" set out fully in the witness statement of the Manager of the plaintiff. The Court considered the claim issued in 1998 and the letter of the deceased admitting the liability as also the acknowledgment of service of the suit and the statement that he did not intend to contest the plaintiff's claim. The Court also observed that on the death of the deceased the indebtedness remained outstanding. The Court also considered the dismissal of the plaintiff's application for joining the defendants herein as representatives of the estate of the deceased which was dismissed (on the grounds stated above) so that the plaintiff could only proceed against the estate of the deceased under CPR 19.8(1)(a). The Court considered the two guarantees executed by the deceased which were exhibited more specially clauses 1, 4, 15 and 21 thereof. The Court considered the admission of liability and the part amount which was repaid as per the witness statement and the plaintiff's representative. The Court also considered the agreement of the deceased in respect of the interest payable upon the guarantees for which the suit was filed. The Court calculated the sums due up to 31st December, 2008 from the estate of the deceased. The Court concluded that the evidence of the plaintiff's representative showed that there was no basis upon which the plaintiff's claim could be defended by the defendant and no reason to dispose it off on trial. The Court saw that no evidence was filed on behalf of the estate of the deceased to dispute the plaintiff's evidence. The Court, therefore, expressed its satisfaction that the plaintiff's evidence supported the application and that the defendants could not have real prospects of success in defending that claim. Consequently the Court passed the summary judgment and granted costs.

10. The defendants herein were as the respondents in the application made before the English Court, did not defend the plaintiff's claim on merits. They sought not to defend the claim at all. They sought not to be sued. This was on their specific representation that the estate was worthless and no estate had come to their hands. They, therefore, made the Court believe that there was no point in making them defendants because the decree obtained by the plaintiff could not have been satisfied by them. However they allowed the plaintiff to proceed against the estate. That was to proceed against whatever was the estate of the deceased. They also allowed the plaintiff to execute the judgment that it obtained in India. Hence the defendants knew of the plaintiff's claim. The defendants could have defended the claim on merits. The defendants chose not to do so. The defendants made a specific representation to Court. The plaintiff proved its claim through its independent evidence. The defendants did not contest that claim on merits. The claim, so uncontested, came to be disposed off on merits. In a detailed judgment spanning 18 paragraphs, the Court considered the merits of the plaintiff's claim. The Court naturally did not consider the merits of any defence because there was none. There was no defence though the defendants were put to notice of the plaintiff's claim and in fact were sought to be sued to represent the estate of the deceased. Because the defendants did not want to be sued and were allowed not to be sued on their own representation the plaintiff's claim alone had to be considered on merits which was done.

11. The defendants intermeddled with the estate of the deceased in India. The plaintiff ascertained the estate of the deceased. A large estate is shown as properties owned by the deceased in India containing four immovable properties and other movable estate including bank accounts, shares, securities etc. The plaintiff sued setting out the aforesaid judgment obtained by the plaintiff. The plaintiff has not applied for execution of the foreign judgment. Of course, the plaintiff may do so in an independent proceeding. That has been specifically allowed by the defendants. In this suit the plaintiff has sought to be appointed administrator as a creditor of the estate of the deceased on behalf of the other creditors also. The plaintiff would go to trial in this suit.

12. The defendants have taken out this application to reject the plaint under Order 7 Rule 11 of the CPC as being barred under Section 13 of the CPC being a foreign judgment which the plaintiff seeks to enforce.

13. Section 13 of the CPC shows foreign judgment which are not conclusive. It runs thus:

"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]".

14. The Section is in positive terms. It shows that all foreign judgments would be conclusive upon adjudicated matters between the parties except under the six circumstances mentioned therein. A judgment not given on the merits of the case would not be conclusive under Section 13(b) of the CPC. The defendants claim that the judgment of the English Court dated 11th December, 2009 is not given on merits of the case. The main argument is that that is because the defendants in this suit were not represented at the time of the passing of the judgment.

15. The defendants were sought to be sued to represent the estate of the deceased upon the death of the deceased against whom the suit was initially filed in the English Court. The estate of the deceased was sought to be got represented by the heirs and legal representatives of the deceased who are the wife and children of the deceased. They resisted that application successfully. They successfully resisted because of their representation to the Court as shown above. Consequently the defendants chose not to be sued and to agitate the plaintiff's claim on merits. The plaintiff's claim alone was considered on merits.

16. The Judge made law relied upon by both the parties would settle the issue whether such a suit can be taken to be the one decided on merits or not decided on merits.

In the case of Ephrayim H. Ephrayim Vs. Turner, Morrison & Co. 1930 The Bombay Law Reporter 1178 this Court considered that the summons was served and the defendant had notice of the plaintiff's suit. The defendant appointed a constituted attorney under a power of attorney. The constituted attorney was instructed to apply only for an adjournment. The adjournment was refused by the Court. A decree came to be passed. The Court considered the earlier Privy Council case of Keymer Vs. Visvanatham Reddi 1916 ILR 40 Mad. 112 = AIR 1916 Privy Council 121 in which the defendant refused to answer interrogatories. His defence was struck off by the King's Bench in London. The Privy Council held that the judgment which followed was not one on merits. The judgment was by way of penalty. It did not consider the plaintiff's case on merits. Merely because the defendants' defence was struck off the plaintiff's suit came to be decreed. The Court had to consider the plaintiff's case on merits. Of course, the plaintiff's statements of facts would remain uncontroverted as they could not have been controverted after the defence was struck off.

In the case of G.S.C. Cole Vs. C.A. Harpen 1919 ILR 41 All 521 which was also considered in the judgment in the case of Turner, Morrison (supra) the Court distinguished those cases, because in that case the evidence of the plaintiff was led. The Court, therefore, considered the plaintiff's evidence. It was held that that was the judgment given on merits. This would be considering the merits of the plaintiff's claim even if the defendants' claim was not considered since it was not made.

The Court further considered the case of Janoo Hassan Vs. Mahamad Ohuthu 1924 ILR 47 Mad. 877. In that case also despite notice served upon the defendant and a power of attorney executed by the defendant the agent did not put in an appearance. The case was allowed to proceed ex-parte. It was held that the defendant was seen to have submitted himself to the jurisdiction of the foreign Court by the execution of the power of attorney for defending the suit. It was further held that ordinarily a judgment delivered ex-parte is deemed to be on the merits and only when a defence is raised and not adjudicated upon that the decision can be said to be not upon the merits. Hence it was concluded that if the defendant did not at all appear and allowed the ex-parte judgment to be passed that would be only upon merits because it would consider the merits of the plaintiff's case, albeit only the plaintiff's case.

In the case of Turner, Morrison (supra) also the Court saw that the defendant was represented. Despite the representation he had not received instructions to proceed with the case on merits. The Court held, that that cannot prevent the decision from being the one on merits. The Court held that only if the defendant raised the defence and that defence was not adjudicated upon the decision would be not on the merits of the case. That would be so because the merits of the defendants' case considered from the defence would not be adjudicated upon.

17. Hence the irresistible conclusion is that if the plaintiff's case is served upon the defendant, but not defended by the defendant the Court can only consider the merits of the plaintiff's case. If the defendants raise a defence, the Court must adjudicate upon the said defence and hence must consider the merits of the plaintiff's case as also the merits of the defendant's case. If the Court does not consider even one of the cases, being the defence, the entire merits of the case brought before the Court cannot be stated to have been considered and hence the decision which considers the merits only of the plaintiff's case or is passed simplicitor upon the absence of the defendant albeit after a defence is raised is not the consideration on the merits of the case. Indeed the Court can consider the merits of what is brought before it. The Court cannot consider any other merit. Hence if the defendant is served and does not bring up before the Court any case on merits and does not raise any defence, there is none for the Court to consider. The Court would then have to consider only the merits of the plaintiff's case. Of course, the Court must consider that much in all cases - even cases in which the defence is struck off and hence the defence cannot be considered. Upon considering such merits the Court may either dismiss the suit or decree it for eg., if the Court finds that the suit is barred by the law of limitation it would dismiss the suit though no defence is raised in that behalf. Likewise, if there is a bar under any other law which is apparent from a reading of the plaint the Court will dismiss the plaintiff's case. If the Court finds any admission of the defendant, the Court would have considered the plaintiff's claim based upon such admission. For want of any defence or denial or a dispute being raised the Court would adjudicate upon the merits of the plaintiff's claim left un-controvorted by the defendant at his own volition. Such adjudication, though ex-parte (without the defendant as a party) would be a decision on the merits of the plaintiff's claim.

18. It is important to note that it is not all ex-parte judgments which are made non-conclusive under Section 13. An ex-parte judgment or decree passed on the merits of the plaintiff's case would not be covered under Section 13(b) of the CPC.

19. In the case of East India Trading Co., New York Vs. Badat & Co., AIR 1959 Bombay 414 (V 46 C 122) instead of a foreign judgment a foreign award was sought to be challenged claiming that it must be considered on the same parameters. We are not concerned with an award and hence the Division Bench judgment relating to foreign judgments would bind this Court. In para 20 of the judgment the Division Bench considered the aforesaid case of Keymer (supra) of the Privy Council. It held that the expression "considering the merits of the matter" does not mean that any decision given ex-parte is necessarily a decision not on merits. Because in the Privy Council case the merits were never investigated the decision was held to be not given on merits, but the mere fact that the decision was ex-parte as the defendant upon being served did not choose to appear does not make the ex-parte decision a decision not on merits. This must seal the present argument.

20. However the defendants have relied upon further judgments which also lay down the law similarly.

21. In the case of K.M. Abdul Jabbar Vs. Indo Singapore Traders AIR 1981 Madras 118 a decree was passed by the Court in Singapore for Singapore $ 30,000/in a suit upon an arrangement contained in a deed executed between the parties. The judgment passed was sought to be executed. It was contended that it was in-executable as it fell under the mischief of Section 13(b) of the CPC. In that case the summons was served. The defendant appeared through his Counsel. Affidavits were filed on behalf of the defendants for leave to defend. Leave to defend was not granted. A decree was straightway passed. The Court considered various earlier judgments and contentions including the Division Bench judgment of the Rajasthan High Court and observed as in para 7:

"7. .. in order that a judgment of a foreign Court may successfully pass the test of having been given on the merits, such a judgment must not have been given either as a matter of penalty or as a matter of mere form based on special or summary procedure inasmuch as such a trial do not offer any real or substantial opportunity to the defendant to contest the suit as a matter of right as he receives it under a regular procedure. This is, however, not to say that an ex-parte judgment per se may not be a judgment on the merits. It may very well be. It is not the presence or the absence of defendant which can really condition the quality of a judgment as to its having been given on the merits or not. What really matters is whether the procedure according to which the suit has been decreed requires the Court to determine the truth or falsity of the contention raised or which may be raised. It seems to us that where it is so required and the Court applies its mind to the contentions raised on either side, there cannot but be a judgment on merits. Where the procedure, however, does not so far require and decree can be entered in favour of plaintiff merely because the defendant has failed to appear and the judgment is given in default, or where he has failed to apply for leave to defend, or where he has applied for leave to defend and such leave is refused, then we are disposed to hold the view that such a judgment cannot be held to have been given on the merits within the meaning of Section 13(b) CPC."

22. Thus it may be concluded that if the defendant shows any defence to the plaintiff's claim it will have to be considered. If none is shown it may not be considered. Yet the judgment may consider the plaintiff's case on merits and be a judgment on merits. The Court would require to apply its mind to the contentions raised on either side (or, of, course both the sides if both sides raised contentions). Mere default of appearances is no bar to the decision on merits.

23. In the case of Algemene Bank Nederland NV Vs. Satish Dayalal Choksi AIR 1990 Bombay 170 again the Court considered the various earlier rulings starting from the case of Turner Morrison (supra) and East India Trading (supra). In that case the Hong Kong Court passed the decree. The defence before it questioned the execution of the guarantee to repay the debts upon which the suit was filed. The entry in the register of guarantees was itself questioned by the defendant. The defendant remained absent though the aforesaid defences were raised. The defendant's contentions could not have been considered. The judgment did not show any evidence led before the Court and whether it went into the merits of the case. The judgment merely stated the defendant's failure to appear and the proof of the plaintiff's claim upon the guarantee which came to be exhibited. It was not shown how the plaintiff's claim was proved or that anybody on behalf of the plaintiff gave evidence to establish the plaintiff's claim. The Court observed that that became relevant because the defendant's contention was that the guarantee was blank and undated and misused by the plaintiff relying upon certain alterations and erasures in the plaintiff bank's register of guarantees, the nature of which was questioned. It was observed that the plaintiff imperatively required to examine a witness which was not shown to have been done by the foreign Court. This Court observed that the foreign Court proceeded to pronounce the judgment in view of the defendants' failure to appear and defend its claim on merits. The Court held that such a judgment could not be a judgment on merits.

That was a case in which the defendant's defence on merits was raised. The defendant's claim was on merits of the cause of action of the plaintiff. That had to be gone into by the Court to render a judgment on merits. Of course, a judgment could be passed in the absence of the defendant and the defendant's claim relating to the blank or undated guarantee or the misuse by the plaintiff had to be proved only by the defendant and if not proved the Court would require to proceed only upon plaintiff's claim. An Indian judgment would not be inconclusive because the defendant's claim raised in the defence, but not proved by the defendant, is not considered by the Court. But foreign judgment is different. It is conclusive only if it does not fall within the six exceptions to Section 13 of the CPC. Hence if it does not consider the claim of any party on merits being the claim of the defendant, if any, on merits it is not a judgment on merits. How would this analogy apply to the defendant who does not raise a claim at all when the Court has none to consider ?

24. A reading of Section 13(b) and the aforesaid judgments enunciating a clear law distinguish cases which show the plaintiff's case and the defendant's case and cases which show only the plaintiff's case. The judgment dated 11th December, 2009 considering the plaintiff's case in 18 paragraphs, detailed as well as succinct as it is, cannot be taken to be a judgment not on merits. It is a judgment on merits of the plaintiff's claim for want of any defence thereto raised by the defendants and upon the specific express admission of liability and acknowledgment of debt of the deceased which, unchallengeable as it is, was not challenged by the defendants.

25. It may be mentioned that Section 13 of the CPC does not create any bar to the filing of the suit. Section 13, calved as it is in positive terms, only shows which foreign judgments are not conclusive. Since it pertains only to judgments, it comes into play only during the execution of such judgments. Even in the case of Algemene Bank (supra) the consideration before the Court was in execution of the foreign judgment. Upon seeing that the Hong Kong Court had not rendered it on merits, leave under Order 21 Rule 22 of the CPC in the execution application was refused.

26. Section 13 cannot permit a suit, which would otherwise go to trial to be concluded by rejection of the plaint itself as a bar created by law under Order 7 Rule 11(d) of the CPC.

27. An application specifically under this provision has not been made in the above notice of motion. However being a question of law it is considered on merits. It is seen to be unmerited. Hence on merits it is rejected.

28. It is contended that the claim of the plaintiff is barred by the law of limitation and hence again the application lies under Order 7 Rule 11 (d) of the CPC. This contention is frivolous and misconceived. The claim has been considered as a preliminary issue under Section 9A of the CPC. The suit is seen not to be barred by the law of limitation. That issue cannot be adjudicated in and by way of application under Order 7 Rule 11(d) of the CPC. It is again argued that the cause of action raised in favour of the plaintiff as the creditor upon the death of the deceased and the suit is filed outside the three year period of limitation therefrom. This issue cannot be re-decided.

29. Two judgments on entirely extraneous matters are relied upon. In the judgment in the case of M/s. Rushabh Precision Bearings Ltd. Vs. M/s. Marine Container Services (India) Pvt. Ltd. 1999(3) Bom. C.R. 760 : [1999(3) ALL MR 248] the Court held that the debt which was not legally recoverable would not require to be agitated.

30. The case of State of Kerala & Ors. Vs. Kalliyanikutty AIR 1999 SC 1305 is filed under Kerala Revenue Recovery Act (1968) pertained to agricultural loans which were time barred and hence could not be recovered thereunder. This is upon a similar analogy. That aspect has been once agitated.

31. The application under Order 7 Rule 11(d) made after an application under Section 9A is heard and decided, or even vise versa would stand barred under the principles of constructive of resjudicata as they relate to the same subject matter being a bar created under the law which is a jurisdictional issue.

32. The Notice of Motion also shows that the suit is barred as being against the public policy of India under the principles of Islamic banking under which the plaintiff would not be entitled to enforce the recovery of loan. That issue has not been pressed.

33. The Notice of Motion is, therefore, dismissed with costs fixed at Rs.50,000/condition precedent.

34. The Suit shall proceed to trial.

Notice of motion dismissed.