Ex-Parte Foreign Decree Can Be Enforced In India If Based On Evidence And Merits: Telangana High Court

The Telangana High Court has held that a money decree passed by the Federal Court of Sharjah is executable in India under Section 44A CPC since the United Arab Emirates is a notified reciprocating territory and the judgment debtor failed to show that the decree fell within any of the exceptions under Section 13 CPC.Section 13 states situations when a foreign judgment is not conclusive. One such situation is prescribed under Section 13(b) where the foreign judgment it has not been given on the merits of the case. A Division Bench of Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar held that even an ex parte foreign decree cannot automatically be treated as not being “on merits” if the foreign court has considered the material placed before it and adjudicated the claim.The Court observed:“In the present case, there is no dispute with regard to GSR 38(E) dated 17.01.2020, where the United Arab Emirates has been notified as a reciprocating territory for the purpose of Section 44A of CPC. Therefore, a decree passed by a superior Court in the UAE is capable of being executed in India, subject to the limitations prescribed under Section 13 of CPC...The contention of the judgment debtor is that the decree was not passed on merits and therefore falls within the exception contemplated under Section 13(b) of CPC. However, the law in this regard is well settled. Even if a decree is passed ex parte, it cannot automatically be presumed that such decree is not on merits. What is required to be examined is whether the Court had considered the material placed before it and adjudicated the claim"The Court was dealing with a civil revision petition filed by the judgment debtor challenging an order of the Commercial Court allowing an execution petition for attachment and sale of immovable property for realization of the decretal amount. The decree holder had sought execution in India of a judgment dated 31.05.2023 passed by the Federal Court of Sharjah.According to the decree holder, the parties had entered into arrangements for a company in Sharjah engaged in trading medical equipment, in which the decree holder initially held 90% and the judgment debtor 10%. It was alleged that after a share transfer arrangement, the judgment debtor fraudulently transferred company funds to his personal account and embezzled money. An accounting expert was appointed by the Sharjah Court and submitted a report on 10.11.2022 recording that funds had been transferred from the company's account to the personal account of the judgment debtor. Based on that material, the Federal Court of Sharjah decreed the suit on 31.05.2023 directing payment of AED 971,369.55 with 5% interest, along with AED 34,550 towards legal charges.The decree holder then obtained permission from the Federal Court of Sharjah to execute the decree outside the UAE. Since the UAE had been notified by India as a reciprocating territory by GSR 38(E) dated 17.01.2020, execution proceedings were initiated in India.The judgment debtor opposed execution on multiple grounds under Sections 13 and 44A CPC. He contended that the Sharjah Court lacked jurisdiction, that he was an Indian citizen who never resided in the UAE at the relevant time, that summons were never properly served on him, and that the decree was ex parte and therefore not on merits. He also argued that service ought to have complied with the Hague Service Convention and that the decree offended natural justice.The decree holder countered that the judgment debtor was indeed present in the UAE and carrying on business there, and relied on photographs showing his participation at the Medlab Middle East conference in Dubai in February 2023. It was also pointed out that summons had been issued through multiple modes permitted under UAE law, including court service, email, and publication in widely circulated Arabic and English newspapers. The decree holder stressed that the judgment debtor never denied that the email address used for service belonged to him.Upholding the executing court's order, the High Court first noted that there was no dispute that the UAE is a reciprocating territory for purposes of Section 44A CPC. It therefore held that a decree of a superior court in the UAE is capable of execution in India, subject only to the limitations in Section 13 CPC.The Bench rejected the judgment debtor's argument that the decree was not on merits. On examining the Sharjah judgment, it found that the foreign court had considered the accounting expert's report, the contractual relationship between the parties, and the applicable legal provisions, and had not decreed the suit merely because of the defendant's absence. The Accounting Expert Report had specifically recorded that AED 1,079,299.50 had been transferred from the company's account to the judgment debtor's personal account during the relevant period. The Sharjah Court had relied on that material while fixing liability.The High Court also rejected the plea...

Ex-Parte Foreign Decree Can Be Enforced In India If Based On Evidence And Merits: Telangana High Court

Ananya Tangri

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