APEX COURT’S TAKE ON ENFORCEABILITY OF FOREIGN JUDGMENT IN INDIA

By – Astha Sehgal and Tannishtha Chatterjee

Table of Contents

Introduction

With the rise in cross-border commercial transactions and international business relationships, disputes increasingly involve parties spread across different jurisdictions. In such situations, parties often seek enforcement of foreign judgments before the Indian courts. However, Indian law does not permit automatic enforcement of every foreign decree merely because it has attained finality abroad. Courts in India continue to examine whether the judgment satisfies fundamental procedural safeguards, particularly whether the affected party was given a fair opportunity to contest and defend the proceedings.

APPLICABLE FRAMEWORK ON ENFORCEABILITY OF FOREIGN JUDGMENTS IN INDIA

The enforcement of foreign judgments in India is governed by the Code of Civil Procedure, 1908 (“CPC”), which lays down a structured framework to determine when such judgments may be recognised and enforced. While Section 44A of CPC provides for execution of decrees passed by courts in reciprocating territories, Section 13 of the CPC sets out the conditions required to be satisfied for deeming conclusiveness in case of foreign judgments. Importantly, the law makes it clear that enforcement shall not be automatic or by default. A foreign judgment must satisfy the requirements of Section 13 of CPC. 

• Meaning of foreign judgment and court: 

A foreign judgment is defined under Section 2(6) of the CPC as a judgment of a foreign Court, whereas a foreign Court, under Section 2(5) of CPC, is defined as a Court situated outside India and not established or continued by the authority of the Central Government. The enforceability of foreign judgments in India is governed primarily by Sections 13, 14, and 44A of the CPC. Sections 13 and 14 lay down the circumstances in which a foreign judgment may be regarded as conclusive, whereas Section 44A provides the mechanism for execution of decrees passed by courts situated in reciprocating territories. However, recognition and enforcement of foreign judgments remain subject to judicial scrutiny in India.

• Modes of Enforcement of Foreign Judgments in India

Broadly, foreign judgments may be enforced in India through two modes.

Judgments from Reciprocating Territories: Where a judgment is passed by a superior court of a reciprocating territory notified by the Government of India, such decree may be executed directly in India under Section 44A of the CPC as if it were a decree passed by an Indian court. In such cases, the decree holder may straightaway file an execution application in accordance with Section 44A read with Order XXI Rule 11(2) of the CPC. The scope of the expression “reciprocating territory” was judicially clarified in Kevin George Vaz v. Cotton Textiles Exports¹, wherein it was held by the Hon’ble Bombay High Court that the expression includes any territory notified by the Central Government, irrespective of its precise political status. For execution of such decrees, the decree holder is required to file a) certified copy of the foreign decree; and b) a certificate from the superior court specifying the extent to which the decree has been satisfied or adjusted. These documents are required to be annexed to the execution application.²

Judgments from Non-Reciprocating Territories: In contrast, decrees passed by courts situated in non-reciprocating territories cannot be directly executed in India.In Marine Geotechnics LLC v. Coastal Marine Construction & Engineering Ltd ³., the Hon’ble Bombay High Court held that where a decree is obtained from a non-reciprocating territory, the decree holder must institute a fresh suit before an Indian court based either on that foreign decree or on the original underlying cause of action or both. Accordingly, such foreign decrees cannot be executed directly in India in the manner contemplated under Section 44A of the CPC. However, a foreign decree from a reciprocating territory or a non-reciprocating territory must surpass the tests of conclusiveness explained hereinafter laid down in Section 13 of CPC.

• Test of Conclusiveness under Section 13 of CPC

The test of conclusiveness of a foreign judgment is determined by Section 13 of the CPC, which sets out specific exceptions where such judgment will not be binding. These include lack of jurisdiction, absence of a decision on merits, violation of principles of natural justice, fraud, contravention of Indian law, and inconsistency with public policy⁴. Among these safeguards, one of the most significant is contained in Section 13(b) of the CPC, which provides that a foreign judgment shall not be conclusive if it has not been given on the merits of the case. This requirement is closely connected with the principles of natural justice, particularly the right of a party to receive a fair and meaningful opportunity to present its defence. Thus, where a foreign judgment is rendered in a manner that curtails a party’s opportunity to effectively defend itself, whether due to procedural limitations or summary adjudication despite the existence of disputed questions of fact, such judgment may fall foul of Section 13 and become unenforceable in India.

The above position was recently reaffirmed by the Hon’ble Supreme Court of India in Messer Griesheim GmbH v. Goyal MG Gases Pvt. Ltd .⁵ In the said case, the apex Court held that a foreign judgment delivered in summary proceedings, despite the presence of triable issues requiring detailed examination, cannot be enforced in India as it denies the defendant a fair opportunity to defend. 

ENFORCEABILITY OF FOREIGN JUDGMENT VIZ -A-VIZ RULES OF NATURAL JUSTICE⁶

To understand the applicable framework as enshrined under the CPC, the litigation history in the case of Messer Griesheim GmbH v. Goyal MG Gases Pvt. Ltd deserves a discussion.  The dispute arose from a Share Purchase and Co-operation Agreement executed on 12.05.1995 between a foreign company (Appellant) and an Indian company (Respondent) for setting up a joint venture in India to manufacture and deal in industrial gases. By an addendum dated 07.11.1996, the Appellant’s shareholding was increased from 30% to 49%, and it was granted representation on the Board through three nominee directors. On the same date, the parties also entered into a Technical Collaboration Agreement for the supply of helium gas.

Subsequently, the Respondent decided to raise overseas funds for the acquisition of plants and machinery. With the assistance of the Appellant’s nominee directors, an external commercial borrowing (ECB) facility of up to USD 7 million was arranged through Citibank UK. This arrangement required approvals from the Government of India and the Reserve Bank of India (RBI), as foreign exchange was regulated under the Foreign Exchange Regulation Act, 1973 (FERA) at that time, now repealed.

While the Government granted approval on 02.04.1997 subject to certain conditions, including that no additional foreign exchange liability would arise, the RBI also granted approvals and ultimately permitted the Appellant to furnish a guarantee, subject to strict conditions, including that no liability would fall upon the Indian company in the event of invocation of the guarantee.

On 30.06.1997, the Respondent executed the loan agreement with Citibank N.A., London, and the Appellant provided an unconditional guarantee of repayment. The agreement was governed by English law, and the parties submitted to the jurisdiction of English courts. It was also expressly agreed that any judgment obtained in England would be enforceable in India, subject to the provisions of Section 13 of CPC. 

On 24.07.1997, the Government of India recorded the loan agreement and clarified that any provisions inconsistent with its earlier sanction would not bind the Government or the RBI. The RBI thereafter granted final approval on 12.08.1997, while keeping the guarantee issue open. Subsequently, on 03.09.1997, the RBI permitted the Appellant to furnish the guarantee subject to the conditions that no foreign exchange outflow would arise towards guarantee fees and that no liability would extend to the Indian company in the event of invocation of the guarantee.

Disputes subsequently arose between the parties during the period of 1997 -1998, including allegations of breach of a non-compete clause, leading to litigation in Indian courts. During this period, the Respondent defaulted on repayment of the ECB facility. As a result, on 08.10.2001, the lender invoked the Appellant’s guarantee. The Appellant discharged the outstanding liability of approximately USD 4.78 million along with interest and sought reimbursement from the respondent by invoking its subrogation rights. However, the Respondent refused payment, asserting that the amount had been adjusted against other claims between the parties.

The Appellant thereafter initiated proceedings before an English court in 2003. Initially, a default judgment was passed due to the non-appearance of the Respondent, directing payment of USD 5,120,833.56 along with interest at 8% per annum and costs. Thereafter, on 25.03.2003, the Appellant issued a statutory notice under Sections 433(e) and 434(1)(a) of the Companies Act, 1956, seeking winding up of the Respondent-company on the basis of the default judgment. In response, the Respondent contended that the foreign judgment was unenforceable in India as it had been passed ex-parte and did not constitute a judgment on merits under Indian law.

Upon facing objections regarding enforceability of the default judgment in India, the Appellant approached the UK High Court seeking its setting aside and for adjudication of the dispute through summary judgment proceedings. The Respondent, despite being duly served, opposed the proceedings on the ground that it possessed substantial defences on merits and that the dispute was not amenable to summary adjudication. The Respondent also resisted the setting aside of the earlier default judgment. However, by judgment dated 07.02.2006, the English Court set aside the default judgment and proceeded to pass a summary judgment directing the respondent to pay USD 5,824,564.74 and Euro 31,364.74 along with interest at 8% per annum and costs of 90,000 Pounds. No appeal was filed against the said judgment. Thereafter, on 21.02.2006, the Appellant sold its entire 49% shareholding in the respondent company to the existing shareholders, consequent to which the Respondent ceased to operate as a joint venture company.

Following this, the Appellant filed execution proceedings in India under Section 44A of the CPC before the Hon’ble Delhi High Court. While a Single Judge held the foreign judgment was passed on merits and therefore was enforceable in India, however the Division Bench later vide its judgment dated 01.07.2024 set aside this finding, holding that “ the Delhi High Court was not a “District Court” under Section 44A CPC and, therefore, lacked jurisdiction to execute the foreign decree. Accordingly, the execution petition was directed to be transferred to the competent District Court and the objections were to be decided afresh. The said judgment was challenged before this Court.”

The aforesaid judgment was challenged before the Hon’ble Supreme Court of India, which set aside the judgment dated 01.07.2014 and held that the Delhi High Court, in exercise of its original civil jurisdiction, possesses jurisdiction to execute foreign decrees under Section 44A of the CPC. Consequently, the appeal before the Division Bench was restored for adjudication on merits.

Observations of the Delhi High Court:

The Division Bench of the Delhi High Court observed that the foreign judgment did not satisfy the requirements of Section 13 of the CPC. It noted that material evidence, including balance sheets, board meeting minutes, and correspondence suggesting adjustment of the liability, had not been properly considered by the English Court. The High Court further observed that the RBI-imposed conditions limiting the Respondent’s liability had also been overlooked. According to the Division Bench, the English Court had failed to consider both the binding regulatory conditions and the applicable legal framework prevailing at the relevant time. In view thereof, the Court held that the foreign judgment did not meet the standard of conclusiveness required under Section 13 of the CPC for enforcement in India.

Aggrieved by the aforesaid judgment, the Appellant approached the Hon’ble Supreme Court.

Supreme Court’s Findings and Observations

The Supreme Court undertook a detailed examination of the matter and framed primary issues for consideration. The first issue concerned whether the judgment of the English Court satisfied the requirements of Section 13 read with Section 44A of the CPC. The second issue pertained to whether the foreign judgment had become unenforceable in India in light of the explicit conditions imposed by the Reserve Bank of India in exercise of its statutory powers under FERA. The Court’s analysis was anchored in the statutory framework of the CPC and the settled principles governing enforcement of foreign judgments. Referring to Section 13 of the CPC, the Court observed that a foreign judgment would be conclusive unless it falls within any of the six recognised exceptions. The Court acknowledged that the English Court possessed competent jurisdiction and that the judgment was not obtained by fraud, thereby satisfying the requirements under Sections 13(a) and 13(e) of the CPC.

However, the Supreme Court found significant infirmities in relation to the remaining exceptions. While examining Sections 13(b) and 13(d), the Court noted that the Respondent had raised bona fide and triable issues before the English Court, including the alleged oral arrangement for adjustment of liabilities against losses arising from breach of contract, as well as the statutory restrictions imposed by the RBI. Despite the existence of disputed questions requiring detailed adjudication, the English Court proceeded by way of summary procedure and denied leave to defend without conducting a full trial. It held that such a course deprived the Respondent of a fair and meaningful opportunity to present its defence. Consequently, the foreign judgment was held to be neither a judgment on merits nor one rendered in conformity with the principles of natural justice. In this regard, the Court observed that “where a decree is passed without any investigation into merits, it cannot be said to have been rendered ‘on the merits’ within the meaning of Section 13(b) of the CPC.”

The Court also closely examined the issue of violation of Indian statutory law while considering Sections 13(c) and 13(f) of the CPC. Emphasis was placed on RBI’s communication dated 03.09.1997, whereby the regulatory approval expressly prohibited shifting of liability onto the Indian company upon invocation of the guarantee. The Court observed that the English Court failed to adequately consider these binding statutory conditions and the regulatory framework governing the transaction.

According to the Supreme Court, enforcement of a liability contrary to binding statutory restrictions imposed under Indian law would directly attract the prohibitions contained under Section 13 of the CPC, particularly where the claim is founded upon a breach or disregard of Indian law.

The Court further clarified the scope of Section 47 of FERA by distinguishing between initiation of legal proceedings and enforcement of a decree. It held that while parties may pursue adjudication of disputes before foreign or domestic courts, enforcement and execution of such decrees within India would remain subject to the statutory permissions and regulatory regime governing foreign exchange.

In its final decision, the Supreme Court concluded that the summary judgment passed by the English Court failed to satisfy the substantive requirements of Indian law. Since the foreign decree attracted the exceptions contained under Sections 13(b), 13(c), 13(d), and 13(f) of the CPC, the same was held to be legally unenforceable in India. Accordingly, the Court upheld the impugned judgment of the Division Bench of the Delhi High Court and dismissed the civil appeal without any order as to costs.

Conclusion

This ruling reinforces the settled position that enforceability of foreign judgments in India is subject to Section 13 of the CPC, especially the requirement of natural justice. It confirms that any decree passed without a fair hearing or proper opportunity to defend cannot be executed in India. At the same time, it preserves the principle that respect for foreign judgments operates only within the boundaries of Indian statutory and procedural safeguards.

FAQs

References –

1. 2006 (5) BomCR 555
2. 2006 (5) BomCR 555
3. 2014 (2) BomCR 769.
4. Section 13, Code of Civil Procedure 1908
5. Neutral Citation: 2026 INSC 401
6. Neutral Citation: 2026 INSC 401

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