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Judgment
Ranjit Singh, J
Appellant Indian Overseas Bank had filed an O.A. for recovery of Rs. 13,99,14,540/- with pendente lite and future interest. This O.A. was filed under Section 31A of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act).
The issue relates to sanction of a loan of HKD 20 million on 2.9.2008 to the company M/s. C&H (D1A) Trading Ltd. Respondent No. 2, Mr. Anil Kumar Sharma, executed guarantee agreement on 30.9.2008. The company committed default in payment of the loan amount. The Bank accordingly filed a suit before the Hon'ble High Court of Hong Kong against the company and Mr. Anil Kumar Sharma. The High Court of Hong Kong, Special Administrative Region, vide its order dated 21.9.2010, allowed the said suit against both the defendants jointly and severally for the recovery of HKD 1,22,10,401.79 along with interest @ 8% p.a. Cost of HKD 11,545/- was also allowed.
Relying on Section 44A, CPC, which deals with execution of decrees passed by Courts in reciprocating territory, the Bank approached the Tribunal at Jaipur with the plea that the decree passed by the High Court of Hong Kong be executed in India as the provision of Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap-319 are extended to India. It was also pleaded that the amount has been decreed by the High Court of Hong Kong comes within the meaning of debt as is recoverable by this Tribunal as per provisions of Section 2(g) of the RDDBFI Act. The prayer was for issue of recovery certificate for Rs. 13,99,14,530/- due as on 21.6.2011 with further pendente lite and future interest @ HKD 2676 per day equivalent to Rs. 15,520/- per day, which was granted.
The respondent No. 2 appeared and filed reply pleading that the Tribunal at Jaipur had no jurisdiction as respondent No. 2 did not reside or carry on business and worked for gain at Jaipur. The address mentioned in the O.A. was stated to be parental house of respondent No. 2 as, otherwise, he statedly had no immovable property at Jaipur.
Respondent No. 2 did not dispute availing of the loan and execution of guarantee deed, but pointed out that there was a Bankruptcy order dated 27.4.2011 which was passed by the High Court of Hong Kong, Special Administrative Region. His plea was that in view of this Bankruptcy order, no proceedings can be taken against him or continued against Bankrupt/debtor or his assets without leave of the Court and the provisional trustee/trustee would have control over the assets of Bankrupt.
The Tribunal below, on the basis of the pleading, framed two issues, one relating to territorial jurisdiction of the Tribunal to entertain the O.A. and the second to the effect if the applicant Bank was entitled to get recovery certificate of L 13,99,14,540/- with pendente lite and future interest and cost. The Tribunal has held that it would have jurisdiction to deal with this O.A.
The Tribunal has also considered the aspect of entitlement. The respondent placed reliance on Section 12 of Hong Kong Bankruptcy Order to point out that the Official Receiver shall thereby become the provisional trustee of the property of the Bankrupt, and thereafter, except as directed by the Ordinance, no creditor to whom the Bankrupt is indebted in respect of any debt provable in Bankruptcy shall have any remedy against the property. Relying on the judgment passed by the Hon'ble High Court of Punjab and Haryana in case of Lakhpat Rai Sharma v. Atma Singh, AIR 1962 Punjab 228, the Tribunal has viewed that in an insolvency proceeding started in a foreign country if an adjudication order is passed against the insolvent by the Court of that country, it has no effect on the immovable property of the insolvent in India and consequently the property of insolvent situated in India can be proceeded against by the decree-holder who has obtained a decree against the insolvent. The Tribunal accordingly has held that the Bank is entitled to seek execution of the decree even though the respondent may have been declared insolvent in the foreign country, if he has any property in this country. The Tribunal did not find Section 12 of Hong Kong Bankruptcy Order attracted.
The Tribunal however has relied upon Section 44-A(2) of CPC, to hold that the Bank has not complied with the said provision and has not filed annexed certificate from superior Court of Hong Kong, Special Administrative Region stating the extent if any to which the decree has been satisfied or adjusted and in absence of such certificate of superior Court, i.e., High Court of Hong Kong, Special Administrative Region, the O.A. is not maintainable. The O.A. has accordingly been dismissed.
The reading of Section 44A, CPC would show that it is an independent section and it is not controlled by any other section of the CPC. This section was intended to reciprocate the policy contained in the Foreign Judgments (Reciprocal Enforcement) Act, 1933. The section indicates an independent right conferred on a foreign decree holder for enforcement of decree in India. This section provides where a certified copy of a decree of any of the superior Courts of any reciprocating territory has been filed in the District Court, the decree may be executed in India as if it had been passed by the District Court. It is a first cause of action and has no correlation with jurisdictional issues. It can therefore be observed that the moment certificate copy of the decree of any of the superior Courts of any reciprocating territory and a certificate from such superior Court sating the extent, if any, to which the decree has been satisfied or adjusted, are produced in a District Court in India, then the decree may be executed in India as if it had been passed by the District Court. The requirement of a certificate showing the extent to which the decree has been satisfied or adjusted would arise in terms of Section 44-A(2) which says that copy of a decree shall be filed together with a certificate from 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.
Once the decree holder of a foreign decree opts to proceed under Section 44-A, CPC, it can directly file execution petition in the executing Court in India and there is no requirement to follow the procedure laid down in Section 38, 39 and 40 CPC. However, section of execution of foreign judgment under Section 44-A, CPC is alien to the scheme of domestic execution as is provided under Section 39 (3) CPC. Section 44-A is an authorisation given to foreign judgment and is replete with various conditions and as such independent of any common law rights. Thus an enabling provision for a foreign decree holder to execute a foreign decree has been engrafted on the statute book by the Section 44-A, CPC [See M. V. Al Quamar v. Tsavliris Salavage (International) Ltd., (2000) 6 SLT 365 : AIR 2000 SC 2826], Since Section 44-A, CPC has made the foreign decree executable in India as if it is passed by the District Court, the original character of the foreign decree is not of any consequence and the amount "payable under the decree or the order of any Civil Court" maybe treated as debt payable within meaning of 2(g) of the RDDBFI Act.
The Court in case of Lakhpat Rai (supra) has also held that there are two alternative which are given to the decree-holder. Either he can get his decree transferred in compliance with the provisions of Section 39 of the Code from the Court which passed the decree to a District Court in India for execution or he can directly put in an application for execution under Section 44A of the Code before the District Court in India, together with a certified copy of the decree and a certificate from such Court stating the extent, if any, to which the decree had been satisfied or adjusted. Thus, there are two alternatives available for the parties to choose from but in either of these two cases the decree-holder will have to make an application to the Court which passed the decree in one case, for the transfer of the decree for execution, and in the other, for obtaining a certificate of non-satisfaction, and in both the cases it would be for the Court passing the decree either to grant his application or refuse the same, depending on the facts of each particular case. The judgment-debtor in both the cases would be entitled to raise suitable objections before the Court which passed the decree and it is only after his objections are heard that the application of the decree-holder would be disposed of.
The High Court has also considered the question of the judgment-debtor having been adjudged as insolvent by the Court granting decree. After making reference to various judgments even of foreign Courts, it is held that the adjudication order passed by Singapore High Court had no effect on the immovable property of the insolvent in the District of Jalandhar and consequently this property could be proceeded against by the decree holder appellant. Similar view is expressed by Madras High Court in the case of Indian Overseas Bank v. S.M. Mohamad Mustbaha, AIR 1977 Madras 199. It is held in this case that where before execution of a decree of a foreign Court and was laid in the District Court in India, the judgment-debtor became insolvent, so far as the movable property is concerned the adjudication will have no effect and the execution can proceed. Thus the foreign adjudication order will not have the effect of vesting of the immovable property of the insolvent in the Official Assignee and that property will be governed by the law where it is situated.
In the light of above legal provision let us to examine the submission by the Counsel for the appellant. The Counsel submits that Tribunal has misconceivedly taken this view. As per the Counsel, the provisions of CPC are not applicable to the procedure prescribed under the RDDBFI Act. The full rigours Section 44-A CPC would be attracted only in case the execution was sought under the CPC. Since special provisions have been made under the RDDBFI Act for execution of a decree, the insistence on a certificate from a superior Court could not have rendered the O.A. filed by the Bank not maintainable.
The Counsel would then refer to Form-II given in the statute, which lays down the documents which are required to be annexed with the O.A. to plead that the annexing of such certificate is not one of the documents mentioned therein and so the OA could not have been dismissed as not maintainable on this Court.
Counsel for the respondents, however, would state that having placed reliance on Section 44-A(2), CPC, the Bank cannot be permitted to plead that CPC is not applicable to the procedure prescribed under RDDBFI Act.
It is clear that the Bank has placed reliance and has made reference to Section 44-A, CPC. The submission that CPC does not apply and the provisions of Section 44-A(2) would not apply in my view, is apparently misplaced. Firstly, it is not quite correct to say that the provisions of CPC would have no application to the proceedings under the RDDBFI Act. What is provided in Section 22 of the RDDBFI Act is that the Tribunals and the Appellate Tribunals shall not be bound by the procedure laid down by the CPC, but shall be guided by the principles of natural justice, which shall be subject to the other provisions of the Act and the rules. The Tribunals and the Appellate Tribunals are also given power to regulate their own procedure. What can thus be made out from this section is that the Tribunals may not bound by the procedure laid down in the CPC, but there is no bar as such to adopt the procedure given in the CPC in case the same is as per the principles of natural justice. This may also mean that the Tribunal under the RDDBFI Act is not bound by strict procedure provisions given in the CPC and would have power to adopt a procedure which is in tune with the principle of natural justice.
The legal position otherwise noticed above is that Section 44-A, CPC indicates an independent right and is a fresh cause of action and has no correlation to with jurisdiction issue. As per this Section foreign decree is to be filed before a District Court. By virtue of Section 31-A of RDDBFI Act, this decree may now have to be presented before the Recovery Tribunal. Once the Tribunal is called upon to issue a Recovery certificate it could well be within its jurisdiction to ask or to know if any recovery had been effected or not. Once the Bank had in view the jurisdiction of the Tribunal under Section 31-A, on the support of Section 44-A, CPC the Bank cannot ask the Tribunal to ignore the provisions. To seek execution of foreign Court decree, the Bank has relied upon Section 44-A, CPC. This section make the decree executable as if it a decree passed by District Court. Original character of the foreign decree is not of any consequence and the amount payable can be treated as debt payable. To see the amount payable the Tribunal can ask for this certificate. This may not be in violation of natural justice. I am, thus, not inclined to interfere with the view formed by the Tribunal below.
At stake is recovery of the Bank. The Bank right to recover this amount, even if the respondent is declared insolvent, in foreign country is not in dispute. The Tribunal has held OA maintainable on ground of jurisdiction and has even rejected the plea raised on the basis of insolvency. Will it therefore be prudent to prejudice the right of the Bank to recover this amount on technical ground. The Tribunal are to follow the procedure guided by the Principles of Natural Justice. The Tribunal below may be justified in requiring the Bank to come with the certificate as laid down in Section 44-A, CPC because the Bank had filed the application invoking this provision. The Tribunal however may not be justified in dismissing this OA simply on this technical ground as the Tribunals are to decide cases guided by the principles of natural justice. Since, the amount payable under the decree is to be treated as debt, the requirement of certificate may come into play to see the amount which is payable as that would be the 'debt due' with in the meaning of Section 2(g) of the RDDBFI Act. Since the Tribunal was not bound to follow the procedure laid down in the CPC, it could conveniently have issued direction for the Bank to produce this certificate instead of dismissing this OA. This, in my view, would have been appropriate course to ensure adherence to the principles of natural justice. The Bank could have been given liberty to place such certificate on record, this being a special requirement. In that view of the matter, I am inclined to give liberty to the Bank go back before the Tribunal and make a prayer for placing on record the requisite certificate. If, (306) however, such certificate is not being issued by the foreign Court the Bank can file necessary affidavit in this regard before the Tribunal below. The Tribunal may consider the request and may examine the issue afresh.
The present appeal is accordingly disposed in the above terms.
Appeal disposed of.