Enforcement of Foreign Decrees / Judgement in India

This Article aims to study in detail the enforceability of foreign Judgements/decrees passed by a foreign court and the scope of Sec. 13 of the Civil Procedure Code, 1908.

With the advent of globalization and with India poised as a major international and global player in the world economy, it is apposite to consider the law concerning enforcement of foreign judgments in India. In law, the enforcement of foreign judgments is the recognition and enforcement rendered in another (“foreign”) jurisdiction. Foreign judgments may be recognized based on bilateral or multilateral treaties or understandings, or unilaterally without an express international agreement. The “recognition” of a foreign judgment occurs when the court of one country or jurisdiction accepts a judicial decision made by the courts of another “foreign” country or jurisdiction, and issues a judgment in substantially identical terms without rehearing the substance of the original lawsuit.

Recognition will be generally denied if the judgment is substantively incompatible with basic legal principles in the recognizing country.

However, the Code of Civil Procedure, 1908 has defined Foreign Court and Foreign Judgements as :-

Section 2 of the CPC, 1908

(5) “foreign Court” means a Court situate outside India and not established or continued by the authority of the Central Government;

(6) “foreign judgment” means the judgment of a foreign Court;

In other words, a foreign judgment means an adjudication by a foreign court on a matter before it.

ENFORCING FOREIGN JUDGMENTS IN INDIA

A foreign judgment can be enforced in India in one of two ways:

  1. Firstly by filing an Execution Petition under Section 44A of the CPC (in case the conditions specified therein are fulfilled).

In other words – Judgments from Courts in “reciprocating territories” can be enforced directly by filing before an Indian Court an Execution Decree.

  1. Secondly by filing a suit upon the foreign judgment /decree

In other words – Judgments from “non-reciprocating territories,” such as the United States, can be enforced only by filing a law suit in an Indian Court for a Judgment based on the foreign judgment. The foreign judgment is considered evidentiary. The time limit to file such a law suit in India is within three years of the foreign judgment.

However, “reciprocating territory” is defined in explanation 1 to Section 44A of India’s Civil Procedure Code as:

Any country or territory outside India which the Central Government may, by notification in the Official Gazette, declare as a reciprocating territory.”

 

The List of the Reciprocating Territories as per the Provisions of Section 44 A of the Code of Civil Procedure, 1908, is as under :

  1. United Kingdom
  2. Singapore
  3. Bangladesh
  4. UAE
  5. Malaysia
  6. Trinidad & Tobago
  7. New Zealand
  8. The Cook Islands (including Niue)and The Trust Territories of Western Samoa
  9. Hong Kong
  10. Papua and New Guinea
  11. Fiji
  12. Aden.

 

44A. Execution of decrees passed by Courts in reciprocating territory.

(1) Where a certified copy of decree of any of the superior Courts of any 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.

(2) Together with the certified copy of the decree shall be filed a certificate from such superior Court stating the extent, if any, to which the decree has been satisfied or adjusted and such certificate shall, for the purposes of proceedings under this section, be conclusive proof of the extent of such satisfaction or adjustment.

(3) The provisions of section 47 shall as from the filing of the certified copy of the decree apply to the proceedings of a District Court executing a decree under this section, and the District Court shall 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) of section 13.

“The Supreme Court held in the case of Moloji Nar Singh Rao vs Shankar Saran AIR 1962 SC 1737 that a foreign judgment which does not arise from the order of a superior court of a reciprocating territory cannot be executed in India. It ruled that a fresh suit will have to be filed in India on the basis of the foreign judgement.”

Therefore Under S. 44A of the CPC, a decree of any of the Superior Courts of any reciprocating territory are executable as a decree passed by the domestic Court. In case the decree does not pertain to a reciprocating territory or a superior Court of a reciprocating territory, as notified by the Central Government in the Official Gazette, the decree is not directly executable in India and a fresh suit will have to be filed in India on the basis of such a decree or judgment, which may be construed as a cause of action for the said suit. In the fresh suit, the said decree will be treated as another piece of evidence against the defendant.
However in both cases the decree has to pass the test of S. 13 CPC which specifies certain exceptions under which the foreign judgment becomes inconclusive and is therefore not executable or enforceable in India.

Sections 13 and 14 enact a rule of res judicata in case of foreign judgments. These provisions embody the principle of private international law that a judgment delivered by a foreign court of competent jurisdiction can be enforced by an Indian court and will operate as res judicata between the parties thereto except in the cases mentioned in Section 13.

A foreign judgment may operate as res judicata except in the six cases specified in the section 13 and subject to the other conditions mentioned in Sec. 11 of C.P.C.

 

Sec. 13 of CPC, 1908:- 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 recognize the law of [India] in cases in which such law is applicable;

(d) Where the proceedings in which the judgment was obtained as 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].

The awards and decrees of the Indian courts are sacrosanct. However, Section 13 of the Code of Civil Procedure 1908 (CPC) lays down that a foreign judgment shall be conclusive as to any matter directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except in few cases.

The operation of section 13 would be better appreciated by the following illustration:

 

“A sues B in a foreign court. If the suit is dismissed, the decision will operate as a bar to a fresh suit by A in India on the original cause of action, unless the decision is inoperative by reason of one or more of the circumstances specified. If a decree is passed in favour of A in the foreign court and A sues B on the judgment in India, B will be precluded from putting in issue the same matters that were directly and substantially in issue in the suit in the foreign court, unless the decision is once again inoperative for the said exceptions.”

 

  1. NOT PRONOUNCED BY A COURT OF COMPETENT JURISDICTION

 

In the case of R.M.V. Vellachi Achi v. R.M.A. Ramanathan Chettiar, AIR 1973 Mad. 141, it was alleged by the respondent that since he was not a subject of the foreign country, and that he had not submitted to the jurisdiction of the Foreign Court (Singapore Court), the decree could not be executed in India. The Appellant, in defense of this argument, stated that the Respondent was a partner of a firm which was doing business in Singapore and had instituted various suits in the Singapore Courts. Therefore, the Appellant argued, that the Respondent had accepted the Singapore Courts jurisdiction. The Court held that it was the firm which had accepted the jurisdiction of the foreign Court and the Respondent, in an individual capacity, had not accepted the jurisdiction. This was one of the reasons for which the High Court held that the decree against the Respondent was not executable.

The High Court in the above case had referred to a decision of the Madras High Court in the case of Ramanathan Chettiar v. Kalimuthu Pillai AIR 1914 Mad. 556, which lays down the circumstances when the foreign courts would have jurisdiction under this Section. The circumstances mentioned are as follows:

a)Where the person is a subject of the foreign country in which the judgment has been obtained                             against him on prior occasions. b) Where he is a resident in foreign country when the action is commenced. c) Where a person selects the foreign Court as the forum for taking action in the capacity of a plaintiff, in which forum he is sued later. d) Where the party on summons voluntarily appears e) Where by an agreement a person has contracted to submit himself to the forum in which the judgment is obtained.

In the case of Oomer Hajee Ayoob Sait v. Thirunavukkarasu Pandaram, the Madras High Court while dealing with the issue of submission to jurisdiction held that mere conduct or circumstances indicative of intention to submit to the jurisdiction is enough to derive a conclusion of submission to jurisdiction. In the present case, during the pendency of the suit, plaintiff effected attachment before judgment of certain property of the defendant and the defendant by a letter acknowledged the attachment and requested merely for a concession, which was not a conditional request and when the offer is refused and the defendant remained ex parte and the suit was decreed, it was deemed that the defendant submitted to the jurisdiction of the foreign Court.

In the case of British India Steam Navigation Co. Ltd. v. Shanmughavilas Cashew Industries Ltd. the Supreme Court held that even though the defendant had taken the plea of lack of jurisdiction before the trial Court but did not take the plea before the Appeal Court or in the Special Leave Petition before the Supreme Court, it amounted to submission to jurisdiction.

           PROPOSITION

 

By reading the aforesaid cases under Section 13(a) of CPC the following proposition may be laid:

 

In case of actions-in-personam, a Foreign Court may pass a decree or judgment against an Indian defendant, who is served with the summons but has chosen to remain ex parte. But the said judgment or decree may be enforceable against such a defendant in India, only if by fulfilling any of the following conditions it can be shown that the Foreign Court had jurisdiction upon the Indian defendant:

 

  • Where the person is a subject of the foreign country in which the judgment has been obtained against him on prior occasions.
  • Where he is a resident in foreign country when the action is commenced.
  • Where a person selects the foreign Court as the forum for taking action in the capacity of a plaintiff, in which forum he is sued later
  • Where the party on summons voluntarily appears
  • Where by an agreement a person has contracted to submit himself to the forum in which the judgment is obtained

 

 

 

 

  • Not given on the merits of the case:

 

 

The fountainhead of all decisions under this head has been the decision of the Privy Council in the case of D.T. Keymer v. P. Viswanatham. In this case, a suit for money was brought in the English Courts against the defendant as partner of a certain firm, wherein the latter denied that he was a partner and also that any money was due. Thereupon the defendant was served with certain interrogatories to be answered. On his omission to answer them his defence was struck off and judgment entered for the plaintiff. When the judgment was sought to be enforced in India, the defendant raised the objection that the judgment had not been rendered on the merits of the case and hence was not conclusive under the meaning of S. 13(b) of CPC. The matter reached the Privy Council, where the Court held that since the defendant’s defence was struck down and it was treated as if the defendant had not defended the claim and the claim of the plaintiff was not investigated into, the decision was not conclusive in the meaning of S. 13(b) and therefore, could not be enforced in India.

In deciding International Woolen Mill’s case (supra), the Supreme Court of India also noted with approval the decision rendered by the Kerala High Court in the case of Govindan Asari Kesavan Asari v. Shankaran Asari Balakrishnan Asari AIR (1958) Ker. 203 wherein the Kerala High Court held as follows :-

(a) In construing section 13 of the CPC, the Indian Court has to be guided by the plain meaning of the word 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.

(b) 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 portions of the section where it is stated that the judgment must have directly adjudicated upon the questions arising between the parties”.

(c) The Court must have applied its mind to that matter and must have considered the evidence made available to it in order that it may be said that there has been an adjudication upon the merits of the case. It cannot be said such a decision on the merits is possible only in cases where the defendant enters appearance and contests the plaintiff’s claim. Even where the defendant chooses to remain ex-parte and to keep out, it is possible for the plaintiff to adduce evidence in support of his claim and such evidence is generally insisted on by the Courts in India, so that the Court may give a decision on the merits of the plaintiff’s case after a due consideration of such evidence, instead of dispensing with such considerations and giving a decree merely on account of the default of appearance of the defendant.

     PROPOSITION

Under Section 13(b) of CPC the following proposition may be laid:

A judgment or decree passed by a Foreign Court against an Indian defendant, who has    chosen to remain ex-parte, may not be enforceable against him, until unless it can be shown that the said judgment was passed after investigation into, and leading of evidence on the plaintiff’s claim

 

 

  1. Where the judgment is passed disregarding the Indian Law or the International Law. –

 

      In the case of Panchapakesa Iyer v. K.N. Hussain Muhammad Rowther, the facts were that the foreign Court granted the probate of a will in the favour of the executors. The property was mostly under the jurisdiction of the foreign Court, but some of it was in India. A suit came to be filed by the wife of the testator against the executors for a claim of a share in the property. The suit of the widow was decreed and a part of it was satisfied. The remaining part the widow assigned in favour of the Plaintiff in the present suit. In the present suit the Plaintiff relied upon the foreign judgment for a claim against the defendants for a share in the property within the jurisdiction of the domestic Court. One of the defences which was taken for resisting the suit was that the widow’s claim was founded upon a breach of a law in force in India. The Court observed that

She made as the Learned Subordinate Judge has found in another part of his judgment, a claim which could not be entirely supported by the law of British India; but that is a different thing from founding a claim on a breach of the law in British India, for instance a claim in respect of a contract which is prohibited in British India.”

 

      Another issue which fell for the Courts consideration was that whether the foreign Court had decreed the suit on an incorrect view of International Law. In this regard the Court held that the foreign Court had adopted an incorrect view of International Law, since a foreign Court does not have jurisdiction over the immovable property situated in the other Country’s Court’s jurisdiction. Therefore the judgment was declared to be inconclusive and unenforceable in India.

 

PROPOSITION

       Under Section 13(c) of CPC the following proposition may be laid:

 

  • A judgment or decree passed by a foreign Court upon a claim for immovable property which is situate in the Indian territory may not be enforceable since it offends International Law.
  • A judgment or decree passed by the foreign Court to where before a contrary Indian law had been shown, but the Court had refused to recognise the law, then that Judgement or decree may not be enforceable. However if the proper law of contract is the foreign law then this may not be applicable. 

 

 

  1.  
  • Where the proceedings in which judgment was obtained are opposed to natural justice –  

 

  1.  
  2.  

In the case of Sankaran Govindan v. Lakshmi Bharathi, the Supreme Court while interpreting the scope of S. 13(d) and the expression “principles of natural justice” in the context of foreign judgments held as follows:

 

“… it merely relates to the alleged irregularities in procedure adopted by the adjudicating court and has nothing to do with the merits of the case. If the proceedings be in accordance with the practice of the foreign court but that practice is not in accordance with natural justice, this court will not allow it to be concluded by them. In other words, the courts are vigilant to see that the defendant had not been deprived of an opportunity to present his side of the case. … The wholesome maxim audi alterem partem is deemed to be universal, not merely of domestic application, and therefore, the only question is, whether the minors had an opportunity of contesting the proceeding in the English Court. If notices of the proceedings were served on their natural guardians, but they did not appear on behalf of the minors although they put in appearance in the proceedings in their personal capacity, what could the foreign court do except to appoint a court guardian for the minors.”

 

PROPOSITION

 

Under Section 13(d) of CPC the following proposition may be laid:

 

The Foreign Court which delivers the judgment or decree must be composed of impartial persons, must act fairly, without bias in good faith, and it must give reasonable notice to the parties to the dispute and afford each party adequate opportunity of presenting his case, in order to avoid any allegation of not fulfilling the principles of natural justice in case the judgment or decree comes to the Indian court for enforcement. Unless this is done the judgment or decree passed by a foreign Court may be opposed to Principles of Natural Justice.

 

  • Where it has been obtained by fraud- In the case of Sankaran v. Lakshmi the Supreme Court held as follows:“In other words, though it is not permissible to show that the court was mistaken, it might be shown that it was misled. There is an essential distinction between mistake and trickery. The clear implication of the distinction is that an action to set aside a judgment cannot be brought on the ground that it has been decided wrongly, namely that on the merits, the decision was one which should not have been rendered but that it can be set aside if the Court was imposed upon or tricked into giving the judgment.” 
  • PROPOSITION 

 

           Under Section 13(e) of CPC the following proposition may be laid:

 

“In case the plaintiff misleads or lies to the Foreign court and the judgment is obtained on that basis, the said Judgment may not be enforceable, however if there is a mistake in the judgment then the Indian courts will not sit as an appeal Court to rectify the mistake”.

 

  1. Where it sustains a claim founded on a breach of any law in force in India –
  2. “It is argued that the Orissa Money Lender’s Act precludes a decree being passed for more than double the principal amount and in passing a decree, based on a claim which violates that rule, the English Court sustained a claim founded on the breach of a law in force in the State of Orissa. I am unable to accept the argument. The claim was not based on the law as prevailing in India at all. Rightly or wrongly, the plaintiffs alleged that the parties were governed not by the Indian law but the English Law. The English Court accepted that plea and were consequently not sustaining a claim based on any violation of the law in India. Suppose, that the defendant had submitted to the jurisdiction of the English Court and that Court passed a decree. Such a decree would by implication have decided that the defendant was bound by English Law and that the Orissa Money Lender’s Act did not apply. Such a decision would be binding from the international point of view and the point could not be further agitated in these Courts.”
  3. In the case of I&G Investment Trust v. Raja of Khalikote, it was held as follows:

 

PROPOSITION

             Under Section 13(f) of CPC the following proposition may be laid:

 

A judgment or a decree, passed by a foreign court, on a claim founded on a breach of any law in force in India may not be enforceable. However, in case it is based upon a contract having a different “proper law of the contract” then it may be enforced.

 

 

 

 

 

 

 

 

 

With the liberalization of Indian economy and the globalization of business activities, there is now almost a free flow of foreign capital/funds in India and similarly Indian companies are increasingly investing in foreign companies. Naturally, in many such international contracts, there are provisions for settlement of inter-se disputes through arbitration at International level or through the adjudication of disputes by the foreign courts. While routinely signing such international contracts may not be in vogue, but still many Indian companies assume that just like in India, litigation in foreign courts will also be protracted and time consuming and that somehow the Indian companies can stall the enforcement of decrees passed by the foreign Courts against Indian companies.

“Recently the Bombay High Court had rendered a judgment ordering admission of a winding up of an Indian company based on the decree passed by a foreign court”

 

The Bombay High Court has passed a judgment in China Shipping Development Co. Limited v. Lanyard Foods Limited (2007-77 SCL 197-Bom) wherein the High Court has held that a petition for winding up of an Indian company would be maintainable on the basis of judgment of foreign Court. In the above case before the Bombay High Court, the foreign company delivered cargo to the Indian company in compliance with requests made by the Indian company and in the process the foreign company had incurred certain liabilities towards third parties and it had to pay certain amount in legal proceedings and therefore, in terms of the letter of indemnity issued by the respondent Indian company, the foreign company claimed the amount from the respondent Indian company, which denied its liability and therefore the foreign petitioner company initiated legal proceedings against the Indian company in the English Courts as provided in the Letter of Indemnity. The respondent Indian company did not file defence and therefore the English Court passed ex-parte order awarding certain amount in favor of the petitioner foreign company and the foreign court’s order made it clear that the said order was passed on consideration of evidence and was a judgment granted on merits of the claim filed by the foreign company. By a notice issued under sections 433 and 434 of the Companies Act, 1956, the petitioner foreign company called upon the respondent Indian company to pay the amount due under the order of the English Court. As the respondent Indian company still did not pay the amount, the Petitioner foreign company filed a petition for winding up of the Indian company. In the above circumstances since the records of the case manifestly revealed that the respondent Indian company was unable to pay its debts, the petition for winding up was admitted vide order dated 4.4.2007 under sections 433 and 434 of the Companies Act, 1956.

 

 

Therefore the Analysis of the legal issues involved in enforcement of foreign decrees in India emphasizes the need for the Indian business sectors not to treat the summons received from foreign courts casually and enter appearance and make submissions against the plaint initiated in the foreign courts. Otherwise, to contend at a later stage that the foreign decision/decree is not based on “merit” and does not conform to the provisions of the Indian Civil Procedure Code, may turn out to be too much of a risk and may jeopardize the protective umbrella which the Indian companies are so accustomed to while dealing with litigations in Indian courts.                                                                                                                                    

                                                                                                                                            AASHISH. M DAFARIA

  CHENNAI LAW ASSOCIATES.

Inherent Power of Civil Court-a Hand Maid of Justice!

Prof. Dr. Annam Subrahmanyam, and (Dr.) Mohan Rao B.,

 

The Code of Civil Procedure, 1908 (CPC) consolidated and amended the laws relating to the procedure of the Courts of Civil Judicature in India. All the rules of procedure are the handmaids of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing the procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of CPC or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. Justice is the goal of jurisprudence, processual, as much as substantive.

 

The Concept of inherent power vested in the Courts under Section 151 CPC is a hand maid to meet the ends of justice.

 

Inherent power

The expression ‘inherent’ means inbuilt, embedded, implicit or implied. The expression ‘inherent’ contemplates something latent though not directly expressed. Inherent powers are powers, which are resident in all Courts. These powers spring not from legislation but from the nature and the constitution of the tribunals or Courts themselves so as to enable them to maintain their dignity, secure obedience to its process and rules, protect its officers from indignity and wrong and to punish unseemly behavior. This power is necessary for the orderly administration of the Court’s business.

The civil courts have inherent power to do all that is necessary to meet the ends of justice. Therefore, it is a common practice for the clients to add a sweeping prayer in any petition ‘to pass such other orders necessary and expedient for the Court to meet the ends of justice’ besides praying for something expressly sought’. Almost all the petitions contain such an expression in view of the inherent power granted under Section 151 of the CPC.

 

Section 151 CPC

 

Section 151 of the CPC reads:

“Nothing in this Code shall be deemed to limit or otherwise affect the inherent powers of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court “.

Section 151 deals with saving of inherent powers of the Court and provides that nothing in Civil Procedure Code shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court.

Section 151 delineates that the inherent power of the Court. It enables the Court to make orders necessary i) for the ends of justice or ii) to Prevent of abuse of process of the Court and iii) there is no limitation on such inherent power under the Code. But, Section 151 of the Code has not created any new power but has preserved the power to act in the ends of justice and to prevent abuse of the processes of the court, which the courts had been exercising from before.

 

Judicial Interpretations

Very wide power of necessity- In Gokul Mandar v. Pudmanand Singh, it was observed that the inherent power has been preserved in order to enable the courts to deal with matters and situations which are not covered by any specific provision of the Code. It was neither practicable nor desirable to define the limits or to enumerate the circumstances in which this power can be exercised. As, however, the power is, of necessity, very wide, the courts have to be very cautious and vigilant in exercising it. It may also be safely laid down that the Court has no inherent power to override express provisions of the Code.

 

Alternative for ‘No other remedy’– Further, in the absence of some special circumstances which amount to abuse of the process of the Court, it cannot grant a relief in exercise of its inherent power when the ends of justice can be served by another remedy provided by the Code which is available to the party concerned. The mere fact that the procedure for following the other remedy is longer or more costly will not entitle the Court to disregard this rule because its order will not be necessary either in the ends of justice or to prevent abuse of the processes of the court.

 

To Advance Interests of Justice– Section 151 C.P.C. can always be exercised to advance interests of justice and the technicalities will have no place in such matters. In M/s. Ram Chand & Sons Sugar Mills Pvt. Ltd. Barabanki (U.P.) v. Kanhayalal Bhargava, the appellant contended that during the pendency of the first suit, certain subsequent events had taken place which made the first suit infructuous and in law the said suit could not be kept pending and continued solely for the purpose of continuing an interim order made in the said suit. While examining the question the Supreme Court was to consider whether the court can take cognizance of a subsequent event to decide whether the pending suit should be disposed of or kept alive. The question arose was whether, a defendant could make an application under Section 151 CPC for dismissing the pending suit on the ground the said suit had lost its cause of action. The Court answered it affirmative.

 

Continuation of Infructuous Suit Amounts to Abuse of the Process of the Court -The Apex Court opined that continuation of a suit which had become infructuous by disappearance of the cause of action would amount to an abuse of the process of the court and interest of justice requires such suit should be disposed of as having become infructuous. The application under Section 151 of CPC in this regard was held maintainable. It was also held that there was nothing in Order XXXIX of the Code which expressly or by necessary implication precluded the exercise of inherent power of Court under Section 151 CPC. Accordingly, it was open for the Court to pass a suitable consequential order under Section 151 CPC as may be necessary for ends of justice or to prevent the abuse of process of Court.

 

Not to Nullify or By Pass any Provisions of the Code – Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal indicates the wide scope of Section 151 CPC where as per the majority view, in the facts and circumstances of the case, it was open to pass an injunction order under Section 151 CPC where it may not be in conflict with any provision of Order XXXIX of the Code or other provision of law. It has been held that inherent jurisdiction of the Court to make orders ex debito justitiae is undoubtedly affirmed by Section 151 CPC, but that jurisdiction cannot be exercised so as to nullify the provisions of the Code, where the Code deals expressly with a particular matter, the provision should normally be regarded as exhaustive. It was held that Section 10 CPC had no application and consequently, it was not open to the High Court to bye-pass Section 10 CPC by invoking Section 151 CPC.

 

Complementary to Powers Expressly Conferred– The Supreme Court after considering its various previous judgments on the scope of Section 151 CPC, held: “The inherent power of a court is in addition to and complementary to the powers expressly conferred under the Code. But that power will not be exercised if its exercise is inconsistent with, or comes into conflict with, any of the powers expressly or by necessary implication conferred by the other provisions of the Code. If there are express provisions exhaustively covering a particular topic, they give rise to a necessary implication that no power shall be exercised in respect of the said topic otherwise than in the manner prescribed by the said provisions. Whatever limitations are imposed by construction on the provisions of S.151 of the Code, they do not control the undoubted power of the Court conferred under Section 151 of the Code to make a suitable order to prevent the abuse of the process of the court.”

 

It was clarified that if there is no specific provision which prohibits the grant of relief sought in an application filed under Section 151 of the Code, the courts have all the necessary powers under Section 151 CPC to make a suitable order to prevent the abuse of the process of court. Pertinently, the Supreme court observed that the court exercising the power under section 151 CPC, has to consider first whether exercise of such power is expressly prohibited by any other provisions of the Code and if there is no such prohibition, then the Court will consider whether such power should be exercised or not on the basis of facts mentioned in the application.

 

Consolidation of Suits to Avoid Duplication – In Chitivalasa Jute Mills vs Jaypee Rewa Cement, the cause of action alleged in the two plaints referred to the same period and the same transactions, i.e., the supply of jute bags between the period 07.01.1992 and 31.12.1993. What is the cause of action alleged by one party as foundation for the relief prayed for and the decree sought for in one case is the ground of defense in the other case. The issues arising for decision would be substantially common. Almost the same set of oral and documentary evidence would be needed to be adduced for the purpose of determining the issues of facts and law arising for decision in the two suits before two different courts. Thus, there will be duplication of recording of evidence if separate trials are held. The two courts would be writing two judgments. The possibility that the two courts may record finding inconsistent with each other and conflicting decrees may come to be passed cannot be ruled out.

 

It was observed by the Apex Court that the CPC does not specifically speak of consolidation of suits but the same can be done under the inherent powers of the Court flowing from Section 151 of the CPC. Unless specifically prohibited, the Civil Court has inherent power to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. In the instant case, consolidation of suits was ordered for meeting the ends of justice as it would save the parties from multiplicity of proceedings, delay and expenses. Accordingly, complete or even substantial and sufficient similarity of the issues arising for decision in two suits would enable the two suits to be consolidated for trial and decision. The parties are relieved of the need of adducing the same or similar documentary and oral evidence twice over in the two suits at two different trials. The evidence having been recorded, common arguments need be addressed followed by one common judgment. However, as the suits are two, the Court may, based on the common judgment, draw two different decrees or one common decree to be placed on the record of the two suits. This is how the Trial Court at Visakhapatnam shall proceed consequent upon this order of transfer of suit from Rewa to the Court at Visakhapatnam.

 

Recall Judgment /Order Obtained by Fraud– In Indian Bank v. Satyam Fibres (India) Pvt. Ltd. , the Supreme Court after referring to Lazarus Estates observed that since fraud affects the solemnity, regularity and orderliness of the proceedings of the Court, it also amounts to an abuse of the process of the Court. It was also held that the Courts have inherent power to set aside an order obtained, by practicing fraud upon the Court, and that where the Court was misled by a party or the Court itself commits a mistake which prejudices a party, the Court has the inherent power to recall its order. The Court held:

 

“The judiciary in India also possesses inherent power, specially under Section 151 CPC, to recall its judgment or order if it is obtained by fraud” on Court, In the case of fraud on a party to the suit or proceedings, the Court may direct the affected party to file a separate suit for setting aside the decree obtained by fraud. Inherent powers are powers, which are resident in all Courts, especially of superior jurisdiction. These powers spring not from legislation but from the nature and the constitution of the tribunals or Courts themselves so as to enable them to maintain their dignity, secure obedience to its process and rules, protect its officers from indignity and wrong and to punish unseemly behavior. This power is necessary for the orderly administration of the Court’s business.”

 

No Business to Collect Evidence (Documents/Books) Forcibly -In Supreme Court Bar Association & … v. B.D. Kaushik Section 151 deals with saving of inherent powers of the Court and provides that nothing in the CPC shall be deemed to limit or otherwise affect the inherent power of the court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. A party has full rights over its books of account. The Court has no inherent power forcibly to seize its property. If it does so, it invades the private rights of the party. Specific procedure is laid down in the Code for getting the relevant documents or books in Court for the purpose of using them as evidence. A party is free to produce such documents or books in support of its case as be relevant. A party can ask the help of the Court to have produced in Court by the other party such documents as it would like to be used in evidence and are admitted by that party to be in its possession. If a party does not produce the documents it is lawfully called upon to produce, the Court has the power to penalize it, in accordance with the provisions of the Code. The Court has the further power to draw any presumption against such a party who does not produce the relevant document in its possession, especially after it has been summoned from it. Even in such cases where the Court summons a document from a party, the Court has not been given any power to get hold of the document forcibly from the possession of the defaulting party.

 

The Apex Court held that the defendants had no rights to these account books. They could not lay any claim to them. They applied for the seizure of these books because they apprehended that the plaintiff might make such entries in those account books which could go against the case they were setting up in Court. The defendants’ request really amounted to the Court’s collecting documentary evidence which the defendants considered to be in their favour at that point of time. It is no business of the Court to collect evidence for a party or even to protect the rival party from the evil consequences of making forged entries in those ac. count books. If the plaintiff does forge entries and uses forged entries as evidence in the case, the defendants would have ample opportunity to dispute those entries and to prove them forgeries.

 

Not Powers over the Substantive Rights – Thus, the inherent powers saved by s. 151 of the Code are with respect to the procedure to be followed by the Court in deciding the cause before it. These powers are not powers over the substantive rights which any litigant possesses. Specific powers have to be conferred on the Courts for passing such orders which would affect such rights of a party. Such powers cannot come within the scope of inherent powers of the Court in the matters of procedure, which powers have their source in the Court possessing all the essential powers to regulate its practice and procedure.

 

In Ram Chand and Sons Sugar Mills v. Kanhayalal the Supreme Court held that the Court would not exercise the inherent power under S.151 CPC if it was inconsistent with the powers expressly or impliedly conferred by other provisions of Code. It had opined that the Court had an undoubted power to make a suitable order to prevent the abuse of the process of the Court.

 

In Union of India v. Ram Charan & Ors., the issue was what would be the period of limitation for making an application for setting aside the abatement. It was held that the limitation for application to set aside abatement should start from the date of death and not from the date of appellant’s knowledge of death. The said application was filed by the appellant to bring legal representatives of the respondent on record. It was further held that there is a specific provision under Order 22 Rule 9 of the CPC and recourse cannot be had to Section 151 of the Code of Civil Procedure. It was held that the Court cannot invoke its inherent powers under Section 151 of the Code of Civil Procedure for the purpose of impleading legal representatives of the deceased respondent if the suit had abated on account of the appellant for not taking appropriate steps within time.

 

The Apex Court in M/s Jaipur Mineral Development Syndicate v. The Commissioner of I.T, has categorically maintained that the Courts had power under Section 151, in the absence of any express or implied prohibition, to pass an order as may be necessary for the ends of justice or to prevent the abuse of the process of the Court.

 

Restoration of Money Suit – The earliest decision of this Court dealing with the aforesaid question of law is the case of Bahadur Pradhani v. Gopal Patel. In that case the plaint in a Money Suit was rejected for non-payment of deficit court fee within the time granted by the court. The plaintiff filed a petition under Section 151, C.P.C. for restoration of the suit in the ends of justice. The court allowed the petition and the suit was restored to file. Against the said order a revision was carried up to this court. This Court examined the scope of the inherent powers of the Court saved by Section 151 of the Code and expressed that the provisions of the Code do not control the inherent powers of the court by limiting it or otherwise affecting it. It is a power inherent in the court by virtue of its duties to do justice between the parties before it.

 

When there is no scope for getting any relief -It was further explained in Manoharlal v. Seth Hiralal that the provisions of the Code are not exhaustive as the legislature is incapable of contemplating all possible circumstances which may arise in future litigation. The Lordship while dealing with the applicability of Section 151 of the Code observed that although the order rejecting the plaint was a decree and was appealable, there was hardly any scope for getting any relief in the appeal, as the sufficient cause to be established for setting aside the order rejecting the plaint and for restoration of the suit can be brought to the notice of the trial court more appropriately and more effectively (by invoking the inherent power) and, therefore, Section 151 of the Code could be made applicable for providing the remedy in such a situation.

 

 

 

 

Summarized Scope of Section 151

 

In the very recent verdict Justice R.V. Raveendran, in K.K. Velusamy v. N. Palaanisamy the Apex Court opined that Section 151 of the Code recognizes the discretionary power inherent in every court as a necessary corollary for rendering justice in accordance with law, to do what is ‘right’ and undo what is ‘wrong’, that is to do all things necessary to secure the ends of justice and prevent abuse of its process. The Court summarized the scope of Section 151 of the CPC as follows:

 

(a) Not a substantive provision – Section 151 is not a substantive provision which creates or confers any power or jurisdiction on courts. It merely recognizes the discretionary power inherent in every court as a necessary corollary for rendering justice in accordance with law, to do what is `right’ and undo what is `wrong’, that is, to do all things necessary to secure the ends of justice and prevent abuse of its process.

 

(b) co-extensive with circumstances -As the provisions of the Code are not exhaustive, section 151 recognizes and confirms that if the Code does not expressly or impliedly cover any particular procedural aspect, the inherent power can be used to deal with such situation or aspect, if the ends of justice warrant it. The breadth of such power is co-extensive with the need to exercise such power on the facts and circumstances.

 

(c) Not to act inconsistent with the Code/Law- A Court has no power to do that which is prohibited by law or the Code, by purported exercise of its inherent powers. If the Code contains provisions dealing with a particular topic or aspect, and such provisions either expressly or necessary implication exhaust the scope of the power of the court or the jurisdiction that may exercised in relation to that matter, the inherent power cannot be invoked in order to cut across the powers conferred by the Code or a manner inconsistent with such provisions. In other words the court cannot make use of the special provisions of Section 151 of the Code, where the remedy or procedure is provided in the Code.

 

(d) complementary power – The inherent powers of the court being complementary to the powers specifically conferred, a court is free to exercise them for the purposes mentioned in Section 151 of the Code when the matter is not covered by any specific provision in the Code and the exercise of those powers would not in any way be in conflict with what has been expressly provided in the Code or be against the intention of the Legislature.

 

(e) Not a carte blanche- While exercising the inherent power, the court will be doubly cautious, as there is no legislative guidance to deal with the procedural situation and the exercise of power depends upon the discretion and wisdom of the court, and the facts and circumstances of the case. The absence of an express provision in the code and the recognition and saving of the inherent power of a court, should not however be treated as a carte blanche to grant any relief.

 

(f) Out of absolute necessity – The power under section 151 will have to be used with circumspection and care, only where it is absolutely necessary, when there is no provision in the Code governing the matter, when the bona fides of the applicant cannot be doubted, when such exercise is to meet the ends of justice and to prevent abuse of process of court.

 

The Court in the instant case finally ruled that in the interests of justice and to prevent abuse of the process of court, the trial court ought to have considered whether it was necessary to re-open the evidence and if so, in what manner and to what extent further evidence should be permitted in exercise of its power under section 151 of the Code. The court ought to have also considered whether it should straightway recall the witnesses and permit the appellant to confront the said recorded evidence to the said witnesses or whether it should first receive such evidence by requiring its proof of its authenticity and only then permit it to be confronted to the witnesses (PW1 and PW2).

 

Conclusion:

 

From the above analysis it may be understood that Section 151 CPC is not a substantive provision. Section 151 CPC is also not an independent provision. In the matters with which the CPC does not deal with, the Court will exercise its inherent power to meet the ends of justice utilizing the hand maid residuary power of the Court. It confers very wide power out of absolute necessity. It is not a carte blanche, but a complementary power. It is a provision supplementary to all the other provisions in the Code. It is an enabling provision but not to act inconsistent with the code/law. It can be utilized even when there is no scope for getting any relief to meet the ends of justice. There could be a recall judgment /order obtained by fraud. Stoppage of continuation of infructuous suit and consolidation of suits to avoid duplication are inter alia made possible to prevent the abuse of the process of the court. It is not meant to nullify or by pass any provisions of the Code.It can never be utilized contrary to the specific provisions of law.

 

Expediency suggests including a routine prayer before the Courts that the Court may be pleased to pass any order expedient/deems fit in view of the inherent power granted under Section 151. As was rightly pointed out in Rajendra Prasad Gupta v. Prakash Chandra Mishra & Ors,. if there are specific provisions of the CPC dealing with the particular issue and they expressly or by necessary implication exhaust the scope of the powers of the Court or the jurisdiction that may be exercised in relation to a matter, the inherent powers of the Court cannot be invoked. The Kolkata High Court opined that ‘Inherent power of the Court must be exercised sparingly in exceptional cases for securing the ends of justice and not in a routine manner.’

 

The provision has frequently been misunderstood and various applications before the civil Courts are made under this section which does not properly fall within its purview. The two phrases used in Section 151 of the CPC viz., ‘the ends of justice’ ‘abuse of the process of the Court’ must have not been defined in the CPC. However, the Principles which regulate the exercise of inherent powers by a Court have been highlighted in many cases particularly, the recent leading decision in K.K. Velusamy v. N. Palaanisamy. The courts have been cautiously and diligently utilizing the inherent power as a hand maid of justice.