http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 14  

CASE NO.: Appeal (civil) 3316  of  2001 Appeal (civil)  3317     of  2001

PETITIONER: M/S. INTERNATIONAL WOOLEN MILLS

       Vs.

RESPONDENT: M/S. STANDARD WOOL (U.K.) LIMITED

DATE OF JUDGMENT:       25/04/2001

BENCH: V.N. Khare & S.N. Variava

JUDGMENT:

L...I...T.......T.......T.......T.......T.......T.......T..J

S. N. VARIAVA, J.

       Leave granted.

       Heard parties.

   Both  these  Appeals  are against a Judgment  dated  9th December,  1999  and  are being disposed of by  this  common Judgment.  The parties will be referred to in their capacity in  Civil  Appeal  arising out of SLP (Civil) No.   2250  of 2000.  Briefly stated the facts are as follows :

   In  1996  the  Appellant had placed an  order  with  the Respondent  for  purchase of greasy fleece wool.  The  goods were  shipped to Mumbai on C.I.F.  terms in September  1996. The Appellant claimed the goods from Mumbai and took them to Ludhiana.   The Appellant did not pay the price of the goods on  the ground that after taking delivery it was found  that the  goods were of an inferior quality.  The Respondent sent a  Lawyer’s notice dated 18th October, 1997.  The Appellant, through his lawyer, sent a reply dated 8th November 1997.

   On  19th  January, 1998 the Respondent filed a  case  in Central  London  Country  Court  in  United  Kingdom.    The Respondent  claims  that the Appellant was served  with  the summons  of that case.  The Appellant claims that he had not been  served  in  that case.  For our purposes  we  are  not concerned  with  this  controversy and  express  no  opinion thereon.  On 20th April, 1998, an ex-party decree came to be passed by the Central London County Court.  The decree reads as follows :

   "IT  IS ORDERED that There be Judgment for the Plaintiff in  the sum of US $49,178.50 plus interest of US $717 00 ANF court costs.  A total of US $49,895.50 plus £ 243.75."

   On  20th August, 1998 the Respondent filed an  Execution Application  in the Court of Civil Judge (Senior  Division), Ludhiana.   Upon  receipt  of the summons in  the  execution

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 14  

proceedings  the Appellant filled an Application praying for dismissal  of  the  execution application as  it  was  filed without  following  the procedure prescribed under  Sections 38,  39 and 40 of the Code of Civil Procedure.  In reply  to this Application the Respondent contended that the execution was  under Section 44- A of the Code of Civil Procedure  and as  such there was no requirement to observe the  provisions of  Sections  38, 39 and 40 of the Code of Civil  Procedure. In  view  of  this  stand   the  Appellants  filed   another Application stating that the decree was not on merits and as per  the provisions of Section 44(A) read with Section 13(b) of  the  Code of Civil Procedure the Court had to refuse  to execute the decree.  Both the Applications were heard by the Civil  Judge  (Junior Division), Ludhiana.  By two  separate Orders  dated  15th March, 1999, both the Applications  were dismissed.

   The  Appellant  then filed Civil Revision No.   2703  of 1999  against two Orders dated 15th March, 1999.  This Civil Revision came to be dismissed by the impugned Judgment dated 9th  December, 1999.  By this Judgment the High Court  found that the decree was not on merits but it still dismissed the Revision  on  the  ground that the  second  Application  was barred  by the principles of constructive res-judicata.   It is  against  this Judgment that these two Appeals have  been filed.   The Appellant has filed the Appeal [arising out  of SLP  (Civil)  No.  2250 of 2000] against dismissal of  their Revision.   The Respondent has filed Appeal [arising out  of SLP  (Civil) No.  5332 of 2000] against that portion of  the impugned  Judgment  which holds that the decree was  not  on merit.

   One  further  fact which must be mentioned is  that  the Appellant  has  now  filed a Suit in  Ludhiana  against  the Respondent  claiming  damages  in a sum of Rs.  4  lacs  for having  supplied goods of an inferior quality and for having committed  a  breach  of the contract.  That Suit  is  still pending.   The  first question for consideration is  whether the  High  Court  was  right  in  holding  that  the  second Application  was  barred  on   principles  of   constructive res-judicata.   It must be noted that the first  Application was on the ground that the provisions of Sections 38, 39 and 40  of  the  Code of Civil Procedure had not  been  complied with.   In  that Application the defence taken was that  the decree  was  being executed under the provisions of  Section 44-A of the Code of Civil Procedure.  In view of this stand, before  any  decision was given, the second Application  had been  filed.  Both the Applications were heard together.  In other  words  the  second Application was  filed  and  heard before  any  decision  was given in the  first  Application. Both the Applications were only decided on 15th March, 1999. There was thus no question of their being a decision finally deciding  a  right  or  claim   between  the  parties.   Mr. Hingorani  however submitted that this case would be covered by  Explanation  IV  to  Section 11 of  the  Code  of  Civil Procedure.  He submitted that in the earlier Application the defence regarding non compliance of Section 13(b) could have been taken but had not been taken.  He submitted that it was not  open  to  the Appellants to take such a  defence  in  a subsequent  Application.  In our view there is no  substance in  this  submission.  Explanation IV to Section 11  of  the Code  of  Civil procedure would have come into play only  if some  decision  had  been finally given  before  the  second Application  was  filed.  In that event it could  have  been urged  that  all  available points should  have  been  urged

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 14  

before  that  decision was given.  In this case  the  second Application  was  filed  before any decision  on  the  first Application  was given.  The Appellants could have,  instead of   filing  a  second   Application,  amended  their  first Application  and  taken  these  pleas  in  that  Application itself.   Had they amended the first Application there would be  no bar of res-judicata or constructive res judicata.  If that   be  so  one  fails  to  understand  how  the   second Application  was  barred  by principles of  res-judicata  or constructive  res-  judicata.   To be  remembered  that  the Orders  were  passed  after hearing arguments  on  both  the Applications.   Under such circumstances no question  arises of   their   being   any    res-judicata   or   constructive res-judicata.

   At  this stage it must be mentioned that Mr.   Hingorani relied  upon cases of Janki Vallabh v.  Moolchand and others reported in AIR (1974) Rajasthan 168, Baijnath Prasad Sah v. Ramphal  Sahni and another reported in AIR (1962) Patna  72, P.K.   Vijayan  v.  Kamalakshi Amma reported in AIR 1994  SC 2145,  Mohanlal Goenka v.  Benoy krishna Mukherjee and  Ors. reported in (1953) SCR 377 in support of his submission that the   principles   of   res-judicata   and/or   constructive res-judicata also apply to execution proceedings.  It is not necessary  to deal with these authorities as there can be no dispute  to the proposition that principles of  res-judicata and/or   constructive   res-judicata   apply  to   execution proceedings.   However, as stated above, in this case  there was no final decision which operated as res- judicata.

   The  second  question which arises is whether the  above mentioned  decree of the English Court could be executed  in India.  Section 44-A of the Code of Civil Procedure reads as follows :

   "44-A  (1) Where a certified copy of a 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.

   Explanation  I.   - "Reciprocating territory" means  any country  or  territory  outside   India  which  the  Central Government  may,  by notification in the  Official  Gazette, declare  to be a reciprocating territory for the purpose  of this section, and "superior Courts’, with reference;  to any such territory, means such Courts as may be specified in the said notification.

   Explanation  2  - "Decree’ with reference to a  superior Court means any decree or judgment of such Court under which

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 14  

a  sum  of  money  is payable, not being a  sum  payable  in respect  of  taxes or other charges, of a like nature or  in respect  of  a fine or other penalty, but shall in  no  case include  an  arbitration  award, even if such  an  award  is enforceable as a decree or judgment."

By virtue of Sub-section (3) the Court shall refuse execution if it is shown to the satisfaction of the Court that the Decree falls within any of the Exceptions in clauses (a) to (f) of Section 13.

   Section 13 reads as follows :

   "13.   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 any 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.

Thus under  sub-clause (b) if the decree has not been given on the merits of the case then the foreign judgment is not conclusive between the parties and the same cannot be executed in India.

   The  question  which then arises is whether the  Decree, set  out herein, above can be said to be a decree on merits. Parties  have cited a large number of authorities of various High  Courts on the question as to when a decree can be said to  be  on  merits.  In support of the contention  that  the above mentioned decree is on merits reliance has been placed upon  the  case of Sheikh Abdul Rahim alias S.A.  Rahim  vs. Mohamed  Din and another reported in AIR (1943) Calcutta 42. In  this  case it has been held by the Calcutta  High  Court that  a person asserting that the judgment was not on merits because  no evidence was given must prove the same as  there is  a  presumption in Section 114 of the Evidence  Act  that judicial  acts  have  been  regularly  performed.   On  this principle  the Calcutta High Court has held that even though a  decree was given ex-parte the same must be presumed to be on  merits.   In  our view the law laid down  in  this  case cannot  be  said to be the correct law.  Section 114  merely raises the presumption, under illustration (e) thereof, that judicial  acts have been regularly performed.  To say that a decree  has  been passed regularly is  completely  different from  saying that the decree has been passed on merits.   An ex-parte  decree passed without consideration of merits  may be  decree passed regular if permitted by the rules of  that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 14  

Court.   Such  a  decree would be valid in that  country  in which  it  is passed unless set aside by a Court of  Appeal. However,  even  though  it may be a  valid  and  enforceable decree in that country, it would not be enforceable in India if  it  has  not  been passed on merits.   Therefore  for  a decision on the question whether a decree has been passed on merits or not, the presumption under Section 114 would be of no  help  at all.  It must be mentioned that in  support  of submission  that  it must be presumed that  all  formalities were  complied with and the decree passed regularly reliance was  also  placed  on cases of Krishna Kumar  v.   State  of Haryana  reported in AIR 1999 SC 854 and The Commissioner of Income  Tax,  A.P.  v.  M.  Chandra Sekhar reported  in  AIR 1985  SC 114.  In our view these authorities are of no  help in  deciding  the question under consideration.  Even if  we presume  that all formalities were complied with and  Decree was  passed  regularly  it  still  would  not  lead  to  the conclusion that it was passed on merits.

   In  the  case  of Middle East Bank Ltd.   vs.   Rajendra Singh  Sethia reported in AIR 1991 Calcutta 335 a decree had been  passed  ex parte and without service of notice on  the judgment- debtor.  A number of authorities were cited before the  Court  including the case of Abdul Rahim (supra).   The Court  held that even though a decree may be ex parte it may still be on merits provided it could be shown that the Court had  gone  through  the case made out by the  Plaintiff  and considered  the same and taken evidence of the witnesses put up by the Plaintiff.  It was held that if an ex parte decree was  passed  in a summary manner under a  special  procedure without  going  into the merits and without taking  evidence then  those decrees would not be executable in India.  Based on  this  authority it was submitted that a decree could  be said  to be not on merits only if it is passed in a  summary manner  in  any  special  or   summary  procedure.   It  was submitted  that  such a decree i.e.  a decree which has  not been  passed  in  a summary manner in a  summary  proceeding would be a decree on merits.  This authority itself makes it clear  that  the decree would not be on merits if Court  has not  gone  through and considered the case of the  Plaintiff and  taken evidence of witnesses of the Plaintiff.  It  must also  be  noted that in this case the Court ultimately  held that the concerned decree was not a decree on merits.

   Reliance was placed upon the case of Gustave Nouvion vs. Freeman  and another reported in 15 Appeal Cases 1,  wherein it  was  held  that  if  a  foreign  judgment  finally   and conclusively  settles  the  existence of the debt so  as  to become res judicata between the parties, then the action can be  brought  on  such  a judgment.  Based  on  this  it  was submitted  that  as the judgment and decree of  the  English Court  would operate as res judicata between the parties, it would  be  a  decree on merits, which could be  enforced  in India.  It must be seen that this judgment is based upon the English  law.   The law in India is different by  virtue  of Section  13  of the Code of Civil Procedure  which  provides that  if a decree is not on merits it cannot be enforced  in India.

   Reliance  was also placed upon the case of D.T.   Keymer vs.  P.  Visvanathan reported in AIR 1916 Privy Council 121. In this case it has been held as follows :

   "The whole question in the present appeal is whether, in the  circumstances  narrated, judgment was given on the  5th

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 14  

May  1913,  between the parties on the merits of  the  case. Now  if  the  merits of the case are examined,  there  would appear  to be, first, a denial that there was a  partnership between  the defendant and the firm with whom the  plaintiff had  entered into the arrangement;  secondly, a denial  that the arrangement had been made;  and, thirdly, a more general denial,  that  even  if the arrangement had  been  made  the circumstances  upon  which  the plaintiff alleged  that  his right  to  the money arose had never transpired.  No  single one  of  those matters, was ever considered or was ever  the subject  of  adjudication  at all.  In point  of  fact  what happened  was that, because the defendant refused to  answer the  interrogatories  which had been submitted to  him,  the merits  of the case were never investigated and his  defence was  struck  out.   He  was treated as  though  he  had  not defended  and  judgment  was given upon  that  footing.   It appears to their Lordships that no such decision as that can be  regarded  as a decision given on the merits of the  case within  the  meaning of section 13, sub-section (b).  It  is quite plain that that sub-section must refer to some general class of case, and Sir Robert Finlay was asked to explain to what  class of case in his view it did refer.  In answer  he pointed out to their Lordships that it would refer to a case where  judgment  had  been given upon the  question  of  the Statutes  of Limitation, and he may be well founded in  that view   But  there  must  be   other  matters  to  which  the sub-section  refers, and in their Lordships’ view it  refers to  those  cases  where,  for one  reason  or  another,  the controversy  raised in the action has not, in fact, been the subject of direct adjudication by the Court."

   It  was  submitted  that this Judgment  lays  down  that decree is not on merits if defence of the defendant has been struck  off.  It is submitted that as, in the present  case, defence had not been struck off, the present decree would be a  decree  on merits.  In our view no such principle can  be drawn from this authority, if anything, this is an authority against the proposition that the present decree was a decree on merits.

   Reliance  was also placed upon the case of Ishri  Prasad vs.   Sri  Ram reported in AIR 1927 Allahabad 510.  In  this case  it  was held that the phrase ’the merits of the  case’ has  to be understood in contradistinction to a judgment  by way  of penalty.  It was held that if a decree is passed  by way of penalty or on default then such a decree would not be a  decree  on merits but if the decree is  passed  otherwise even though it is an ex-parte it will be a decree on merits.

   Reliance  was also placed upon the case of Ram Chand vs. John  Bartlett  reported in Vol.  III Indian Cases 523.   In this case it has been held as follows :

   "The  next  contention  that  has been  raised  for  the appellant  to show that the respondent’s suit on the foreign judgment  did  not  lie, is that the said judgment  was  not passed  on  the  merits, and that, therefore, it  cannot  be enforced  by  the  Indian  Courts.    In  my  opinion   this contention  has no force.  The writ of summons issued by the High  Court  in England was, it is admitted, duly served  on the  appellant  in  this country, but the  latter  did  not, within  the  time  allowed  for   that  purpose,  enter   an appearance and deliver a defence.  The respondent had (under the  rules  of procedure that govern the Supreme Court)  the right,  at the expiration of the prescribed period, to enter

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 14  

final judgment for the amount claimed, with costs.  The writ aforesaid  was  especially  endorsed with the  statement  of claim,  containing all the necessary particulars, and  there is  nothing to show that the application for leave to  serve the  writ  was not supported by affidavit or other  evidence stating  the several particulars required by Order XI,  rule 4.   In  short,  the proceedings held in the high  Court  of England  appear to have been strictly in accordance with the existing  rules  of procedure, which are not shown to be  in any  way  contrary to the fundamental principles of  justice and  fair  play  ;   and the  judgment  passed  against  the defendant on the facts of the case must be considered as one passed   on  the  merits.   It   does  not  proceed  on  any preliminary point, i.e., a point collateral to the merits of the  case,  but is based on the merits as disclosed  by  the pleadings  before  the Court, if the defendant did  not,  in spite  of notice of action, choose to appear and defend  it, the  judgment passed by the Court in plaintiff’s favour  was not  the  less a judgment on the merits, because it was  not founded  upon  detailed evidence which the  plaintiff  might have  produced  had the defendant entered an appearance  and contested the claim.  The position to my mind is the same as if  the  defendant had appeared and confessed judgment.   In support  of  his  contention that the judgment  in  question cannot  be  considered  as  one passed on  the  merits,  the appellant’s  counsel has relied on the following passage  in Sir  William Rattigan’s Private International Law (1895)  at pages 234-235:

   "It  would  seem  to  be equally  plain  that,  if,  for instance,  it  should  happen that by the law of  a  foreign country,  a plaintiff was entitled to judgment simply on the non-appearance  of a defendant who had been duly served, and without  adducing  any evidence whatever in support  of  his claim,  or if the wrong-headedness of a foreign Judge should induce him to so decide, the plaintiff would not be entitled in  an English Court to sue upon a judgment so obtained.  If on  no  other  ground, such a judgment of  a  foreign  Court would,  at  all  events, be so contrary to  the  fundamental principles  of the Law of England as, for this reason alone, to be incapable of receiving any effect in a British Court." The  above passage does not, however, as I read it,  support the  present  appellant’s  position,  as it  cannot,  in  my opinion,  be  affirmed in this case that the  plaintiff  has obtained  judgment from the High Court in England "simply on the  non-appearance  of the defendant without  adducing  any evidence  whatever in support of his claim." Under Order XI, rule  4, the plaintiff’s application for leave to serve  the writ of summons out of the jurisdiction must be supported by affidavit or other evidence stating that the plaintiff has a good  cause of action * * * * and the grounds upon which the application  is  made, and leave can only be granted if  the Court  or  Judge is satisfied that the case is a proper  one for the service prayed for.  The necessary procedure must be presumed  to have been followed in this case, and it has not been  shown  by the appellant that it was not  so  followed. The  affidavit filed by the present plaintiffs-  respondents in  pursuance  of  the  above rule, would,  in  my  opinion, constitute  "evidence  in support of the claim"  within  the purview  of  the principle laid down in the  passage  quoted above,  and the judgment obtained after service of the  writ on  the  defendant as required by the rules of  the  Supreme Court  would,  I  think, be a judgment on the  merits.   If, however,  the  passage  relied  upon   does  not  bear   the construction  I have placed upon it, if, that is to say,  it

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 14  

means  that  thee can be no judgment on the merits,  unless, after  the  service  of  the writ on the  defendant  in  the regular way the plaintiff has adduced some evidence, oral or documentary,  in support of his claim, such as he would have produced  if  the defendant had appeared and  contested  the claim,  then,  with  all possible respect  for  the  learned author  of  that passage, I venture to think that  the  rule laid  down  by him is expressed in too wide language, and  I should be reluctant to follow it unless it were supported by clear authority.  I can discover no such authority either in Dicey’s  "Conflict  of  Laws"  (p.  411), or  in  any  other standard  text-book on the subject;  and I do not think that the  maxim enunciated by Sir William Rattigan himself as the one applicable in such cases, viz., that the judgment passed must not contravene the fundamental principles of a rational system  of law, supports the wide proposition, which it  has been urged, is laid down in the passage quoted above."

   In  our  view  the  passage in  Sir  William  Rattigan’s Private   International  Law  (1895)   at   pages   234-235, reproduced  above,  states  the  correct  law.   With  great respect  to  the  learned Judges  concerned  the  restricted interpretation  sought to be given cannot be accepted.  With greatest  of respect to the learned Judges we are unable  to accept  the  broad  proposition that any  decree  passed  in absence  of Defendant, is a decree on merits as it would  be the  same  as  if  Defendant   had  appeared  and  confessed Judgment.   We  also cannot accept the proposition that  the decree  was  on merits as all documents and particulars  had been  endorsed  with  the  statement  of  claim.   With  the greatest  of respect to the learned Judges they seem to have forgotten  at stage of issuance of writ of summons the Court only  forms,  if  it  at all does,  a  prima-facie  opinion. Thereafter  Court  has to be consider the case of merits  by looking into evidence led and documents proved before it, as per  its rules.  It is only if this is done that the  decree can be said to be on merits.  It was also submitted that the burden  of  proving  that  a decree was  not  on  merits  is entirely  on  the  Appellants.   It was  submitted  that  no evidence  had  been led by the Appellants to show  that  the decree  was  not  on merits and for that reason it  must  be presumed  that the decree is on merits.  In support of  this submission  reliance  was placed upon the authority  in  the cases  of R.M.V.  Vellachi vs.  R.M.A.  Ramanathan  reported in  AIR  1973 Madras 141, R.  Viswanathan vs.   Rukn-ul-Mulk Syed   Abdul  Wajid  reported  in   1963  (3)  S.C.R.    22. Undoubtedly  the burden of proving that the decree is not on merits  would  be on the party alleging it.  However  Courts never  expect impossible proofs.  It would never be possible for  a party to lead evidence about the state of mind of the judge  who  passed  the decree.  Of  course,  amongst  other things,  the  party must show that the decree does not  show that  it is on merits, if necessary the rules of that Court, the  existence  or lack of existence of material before  the Court when the decree was passed and the manner in which the decree  is passed.  All this has been done in this case.  It was  also submitted that the Courts of law are not concerned with  the result and even though the result may be repugnant to  the Court, still the Court cannot relieve the party from the  burden  if  the  law provides for  a  contingency.   In support  of  this reliance was placed upon the case  of  The Martin  Burn Ltd.  vs.  Corporation of Calcutta reported  in AIR 1966 S.C.  529 and Firm Amar Nath Basheshar Dass v.  Tek Chand  reported  in  AIR 1972 S.C.  1548.  There can  be  no dispute  to this proposition.  However this proposition cuts

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 14  

both ways.  If the decree is not on merits then, even though the  Court may be reluctant to leave the Respondents  remedy less,  the  Court would still have to refuse to enforce  the decree.   In  support of the proposition that such a  decree could  not be a decree on merits.  Reliance has been  placed upon the authority in the case of Algemene Bank Nederland NV v.   Satish Dayalal Choksi reported in AIR 1990 Bombay  170. In this case a summary suit had been filed in Hong Kong.  In that  suit leave to defend was granted to the defence.  Thus the  High Court had prima facie considered the merits of the matter  and had granted unconditional leave.  Thereafter the defendant  filed  a written statement.  It appears that  the defendant  applied to the Reserve Bank of India for  foreign exchange  in  order  to engage lawyer in Hong Kong  and  his application  was  not granted by the Reserve Bank of  India. As  a result the defendant could not appear at the trial and an  ex parte decree came to be passed against the defendant. The question which arose before the Court was whether such a decree  could  be  said to be a decree on merits.   A  large number  of  authorities were cited before that Court and  it was ultimately held as follows :

   "28.   In  the light of these authorities I have to  see whether  in  the present case the Hong Kong court  gave  its decision  on  the merits of the controversy.  The Hong  Kong Court  had  before  it the defence which was  filed  by  the present  defendant.  The defence questioned the execution of the  guarantee to repay the debts of Madhusudan & Co.   Ltd. The  entry of 7.4.85 in the Register of Guarantees was  also questioned  by  the  defendant.   In   the  absence  of  the defendant,  these  contentions raised by him could not  have been  considered.  The judgment which is before me does  not indicate  whether  actually any evidence was led before  the Hong  Kong Court and whether the Court went into the  merits of  the  case.   The judgment merely sets out that  "on  the defendant’s  failure to appear and upon proof of plaintiff’s claim,"  the  judgment  is entered for the  plaintiff.   The plaintiff-Bank  has  emphasised  the words  "upon  proof  of plaintiff’s  claim".   They have also produced the  original guarantee  which bears in one corner a sticker showing  that it   was  exhibited  before  the   Hong  Kong  Court.    The plaintiff-Bank  has  not  said  in its  affidavit  that  the documents which were tendered before the court were properly proved  or  that  anybody on behalf of the  bank  had  given evidence  to establish the plaintiff’s claim.  This  becomes relevant  because it is the contention of the defendant that the  guarantee  which he had given was a blank  and  undated guarantee.  It had been misused by the plaintiff-Bank in the present   case.    The  defendant   has  also  relied   upon alterations and erasures in the plaintiff-Bank’s register of guarantees   to  show  that   this  undated  guarantee   was subsequently  entered  in the register by  altering  another entry  to indicate that it was given around 7th April  1985. There  is  no  material to show that these  aspects  of  the dispute  were  ever  examined by the Hong Kong  Court.   The Court  seems to have proceeded to pronounce the judgment  in view  of the defendant’s failure to appear at the hearing of the case to defend the claim on merits.

   29.  In my view, in these circumstances, the case before me  falls under the ratio laid down by the Privy Council  in Keymer’s  case  (AIR 1916 P.C.  121).  The decision  of  the Hong Kong Court is not given on examination of the points at controversy  between  the  parties.  It seems to  have  been given ex parte on the basis of the plaintiff’s pleadings and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 14  

documents  tendered by the plaintiff without going into  the controversy  between the parties since the defendant did not appear  at the time of the hearing of the suit to defend the claim.   The present judgment, therefore, is not a  judgment on  the  merits of the case.  Hence this is not a  fit  case where  leave  can be granted under Order 21 Rule 22  of  the Code  of  Civil Procedure for the purpose of  executing  the decree here."

   In  our  view  this  authority  lays  down  the  correct proposition of law.

   Reliance  was  also placed upon the case  of  Chintamoni Padhan and others vs.  Paika Samal and ors.  reported in AIR 1956  Orissa  136.   In this case it has been  held  that  a judgment  on the merits is one which is entered after a full trial  of  the  issues through  pleadings,  presentation  of evidence,  and arguments by both sides.  It is held that the expression  ’judgment  on the merits’ implied that  it  must have  been passed after contest and after evidence had  been let in by both sides.  In our view the authority also cannot be  said to be laying down the correct law.  In a given case it  is  possible that even though Defendant has not  entered evidence  the Plaintiff may prove its case through oral  and documentary evidence.  If after consideration of oral and/or documentary  evidence an ex parte decree is passed, it would be a decree on merits.

   In  the case of Trilochan Choudhury vs.  Dayanidhi Patra reported  in  AIR  1961  Orissa  158,  the  above  mentioned decision in Chintamoni Padhan’s case has been overruled.  In this  case  it is held that under Section 13(6) even  an  ex parte  judgment in favour of the plaintiff may be deemed  to be a judgment given on merits if some evidence is adduced on behalf of the Plaintiffs and the judgment, however brief, is based on a consideration of that evidence.  Where however no evidence  is adduced on the plaintiff’s side and his suit is decreed  merely  because  of the absence  of  the  defendant either by way of penalty or in a formal manner, the judgment may not be one based on the merits of the case.  In our view this  authority  lays down the correct law.  In the case  of Govindan   Asari   Kesavan  Asari    vs.    Sankaran   Asari Balakrishnan  Asari  reported in AIR 1958 Kerala 203, it  is held as follows :

   "In construing S.  13 of the Indian Civil Procedure Code we  have to be guided by the plain meaning of the words  and expressions  used  in the section itself, and not  by  other extraneous  considerations.  There is nothing in the section to  suggest  that the expression judgment on the merits  has been  used in contradistinction to a decision on a matter of form or by way of penalty.

   The section prescribes the conditions to be satisfied by a  foreign  judgment in order that it may be accepted by  an Indian  Court  as conclusive between the parties thereto  or between  parties  under  whom they or any of  them  litigate under  the  same  title.   One such condition  is  that  the judgment  must  have been given on the merits of  the  case. Whether  the judgment is one on the merits, must be apparent from  the  judgment itself.  It is not enough if there is  a decree  or  a decision by the foreign Court.  In  fact,  the word ’decree’ does not find a place anywhere in the section. What  is  required is that there must have been a  judgment.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 14  

What the nature of that judgment should be is also indicated by  the  opening portion of the section where it  is  stated that  the  judgment  must  have  directly  adjudicated  upon questions arising between the parties.

   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 that 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  his  case  after a due consideration  of  such  evidence instead  of dispensing with such consideration and giving  a decree merely on account of the default of appearance of the defendant.

   In  the  former  case the judgment will be  one  on  the merits of the case, while in the latter the judgment will be one  not on the merits of the case.  Thus it is obvious that the  non-appearance  of  the defendant will  not  by  itself determine  the nature of the judgment one way or the  other. That  appears to be the reason why S.  13 does not refer  to ex  parte  judgments  falling under a separate  category  by themselves.   A  foreign  Court  may have  its  own  special procedure  enabling  it  to  give  a  decision  against  the defendant  who has failed to appear in spite of the  summons served  on him and in favour of the plaintiff, even  without insisting  on  any evidence in support of his claim  in  the suit.

   Such a judgment may be conclusive between the parties so far  as that jurisdiction is concerned, but for the  purpose of S.  13 of the Indian Civil Procedure Code such a judgment cannot  be accepted as one given on the merits of the  case, and  to  that extent the law in India is different from  the law in other jurisdictions where foreign judgments given for default  of  appearance of defendants are also  accepted  as final  and  conclusive  between the parties  thereto.   This position was noticed and recognised in AIR 1927 Mad 265 (D). The  contention that the defendant who had chosen to  remain ex  parte,  must be taken to have admitted the plaint  claim was  also  repelled in that case as unsound  and  untenable. His  non-appearance can only mean that he is not inclined to come forward and contest the claim or even to admit it.

   His  attitude may be one of indifference in that matter, leaving  the  responsibility on the plaintiff to  prove  his claim  if  he  wants to get a decree in  his  favour.   Such indifference on the part of the defendant cannot necessarily lead  to the inference that he has admitted the  plaintiff’s claim.   Admission  of  the claim is a positive act  and  it cannot be inferred from any negative or indifferent attitude of  the person concerned.  To decree the plaint claim solely on  account  of  the default of the  defendant  and  without considering  the question whether the claim is  well-founded or  not and whether there is any evidence to sustain it, can only mean that such a decree is passed against the defendant by way of penalty.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 14  

   It  will not satisfy even the minimum requirements of  a judgment on the merits of the claim.  What such requirements are,  have  been  explained  in Abdul Rehman  v.   Md.   Ali Rowther, AIR 1923 Rang 319 (J), in the following terms :

   "A  decision  on the merits involves the application  of the  mind  of  the  Court to the truth  or  falsity  of  the plaintiff’s  case  and  therefore though a  judgment  passed after  a  judicial  consideration of the  matter  by  taking evidence  may be a decision on the merits even though passed ex parte, a decision passed without evidence of any kind but passed only on his pleadings cannot be held to be a decision on the merits."

   The  same view was taken by the Patna high Court also in Wazir Sahu v.  Munshi Das, AIR 1941 Pat.  109 (K), where the question  when an ex parte decision can be said to be on the merits, was answered as follows :

   "An  ex parte decision may or may not be on the  merits. The  mere  fact  of its being ex parte will  not  in  itself justify  a finding that the decision was not on the  merits. That is not the real test.  The real test is not whether the decision  was or was not ex parte, but whether it was merely formally  passed as a matter of course or by way of  penalty or  it  was  based  on the consideration  of  the  truth  or otherwise of the plaintiff’s claim."

   We  are  in respectful agreement with the view taken  in these two cases."

   In  our  view this authority lays down the correct  law. In  the  case  of R.M.V.  Vellachi  v.   R.M.A.   Ramanathan Chettiar  reported  in AIR 1973 Madras 141, the  facts  were almost  identical to the present case.  In that case also an ex parte decree had been obtained.  In this case it was held as  follows  :   "The Law of Civil Procedure  governing  the institution of suits, service of summons upon the defendant, the  liberty to the plaintiff to apply for a decree  against the  defendant  in  case  of   the  defendant’s  default  of appearance,  in the Supreme Courts of Penang and  Singapore, are all similar and identical and are on the same pattern as the  procedural  laws  in England, i.e., "The Rules  of  the Supreme  Court".   The  Full Bench decision  of  this  Court referred  to  above in ILR 50 Mad 261 = (AIR 1927  Mad  265) (FB)  which  dealt  with the enforceability  of  a  judgment obtained in the Supreme Court of Penang has been followed in almost  all  the  high Courts.  This decision  was  rendered about  45  years back and had been uniformally  followed  by this  Court.   (Vide:  the Bench decision of  Jagadisan,  J. and  Kailasam,  J., in Sivagaminatha v.  Nataraja, AIR  1961 Mad 385.  It is unnecessary to refer to all the cases and it is  sufficient to refer to the latest Bench decision of this Court reported in Mohammad Sheriff and Co.  V.  Abdul Jabbar ILR  (1966)  1 Mad 18 in which a Bench of this Court had  to deal  with  a  similar  problem arising  out  of  a  foreign judgment  rendered  by  the Supreme Court  of  Singapore  on default of appearance of the defendant.  Veeraswami, J., (as he  then  was),  delivering the judgment on  behalf  of  the Bench,  after  referring  to  the  relevant  decisions,  has followed  and  applied the principle enunciated by the  Full Bench.

   The  learned  Judge  pointed out that  the  decree  that followed  as  a  matter of course solely on account  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 14  

default  of  the  defendant’s  appearance  could  not  be  a judgment on merits, as no evidence was adduced and there was no  judicial consideration of the tenability or justness  of the  claim.   In  view of this recent pronouncement  of  the Bench  of  this Court which is binding upon us,  the  matter does not require further elaboration.  It is true that under Section  44-A  sub-clause  (3),  the   burden  is  upon  the defendant  who  resists  execution,  to  establish,  to  the satisfaction  of  the Court which is called upon to  execute the decree, that the foreign decree suffers under any one of the  infirmities covered by any of the exceptions  specified in  clauses (a) to (f) of Section 13, Civil Procedure  Code. We  may  refer  to the Bench decision of the  Calcutta  High Court  in Abdul Rahim v.  Mohamed Din, AIR 1943 Cal 42.   In the  instant case, the respondent has discharged his  burden by  placing ample materials that the foreign judgment cannot be  executed  because the High Court of Singapore was not  a "Court  of  competent  jurisdiction" within the  meaning  of Section  13  (a) and that the defendant has not  voluntarily submitted  to the decision of the Tribunal and also that the decree  of the High Court of Singapore was not given on  the merits of the case within the meaning of Section 13 (a)."

   On  the  basis  of this law let us now see  whether  the present decree is a decree on merits.  It is to be seen that between  the  parties  there is a  controversy  whether  the Appellant/defendant  was at all served.  As stated above  it is  not  necessary for us to resolve this controversy.   For the  purposes  of this Order only we will presume  that  the Appellant  had  been served.  Facts on record disclose  that before  service was effected an affidavit had been filed  in the  English  Court by one Kaashif Basit, Solicitor for  the Respondent,  to  which affidavit had been annexed copies  of the  the invoice and other relevant documents.  On the basis of this affidavit an order in the following terms came to be passed :

   "UPON  reading  the Affidavit of Kaashif Basit sworn  20 January 1998

   IT  IS ORDERED that the Plaintiff be at liberty to serve the  Summons  in  this  action  on  the  Defendant  at   31, Industrial  Area-A,  Ludhiana-  141003,  Punjab,  India,  or elsewhere  in  India,  and that the time  for  acknowledging service shall be 23 days after service of the Summons on the Defendant."

   This shows that leave to serve the Appellant was granted after  reading the affidavit.  Thus at this stage the  Court had  presumably  seen  the documents annexed  thereto.   The Court  has been careful enough to note that it had read  the affidavit.   However,  at  this stage, only  a  prima  facie opinion  was being formed.  Thereafter the said Mr.  Kaashif Basit,  Solicitor for the Respondent had filed an  affidavit of  service  stating that service had been effected  on  one Yash  Paul,  who  is  claimed  to  be  an  employee  of  the Appellant.   To  this Affidavit also all relevant  documents were  annexed.  Thereafter no documents are tendered nor any evidence  led.   The  English   Court  then  pronounces  the judgment  and  decree, which has been set out herein  above. It  does  not  even say that the second Affidavit  had  been read.   This  Judgment and decree does not indicate  whether any  documents were looked into and/or whether the merits of the  case  was at all considered.  It merely grants  to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 14  

Respondent  a decree for the amounts mentioned therein.   To be  noted  that the Appellant had, by his letter  dated  8th November,  1997,  replied  to the Notice of  the  Respondent dated  18th  October,  1997.   In this  reply  it  had  been mentioned that goods were of inferior quality and not as per contract.  Court has not applied its mind or dealt with this aspect.   It has not examined points at controversy  between the  parties.   It  is given ex-parte as Appellant  did  not appear at hearing of Suit.  It is not a judgment on merits.

   On the principles of law enunciated herein above, in our view,  it is clear that such a decree cannot be said to be a decree  on  merits.   Such a decree cannot  be  enforced  in India.   In this view of the matter Civil Appeal No.   of 2001  [arising  out  of SLP (Civil) No.  2250  of  2000]  is allowed  and  the  Application of the  Appellant  that  this decree cannot be enforced in India as it is not on merits is made  absolute.  Civil Appeal No.  .  of 2001 [arising out of  SLP (C) No.  5332 of 2000] stands dismissed.  There will be no order as to costs in both the Appeals.