International Woollen Mills Ltd. v. Standard Wool (U.K.) Ltd.
Supreme Court of India, 25 April 2001, 2 judges
An English ex parte decree passed without any consideration of evidence or of the points in controversy is not a judgment on the merits under Section 13(b) CPC and cannot be executed in India under Section 44A.
Facts
The appellant bought greasy fleece wool from the respondent, an English company, in 1996 and refused to pay, saying the goods were of inferior quality. The respondent sued in the Central London County Court, which passed an ex parte decree for about US $49,895 in April 1998. The respondent sought execution under Section 44A CPC before the Civil Judge, Ludhiana. The appellant's two applications, the second contending that the decree was not on the merits under Section 13(b), were dismissed. The High Court found that the decree was not on the merits but dismissed the revision, holding the second application barred by constructive res judicata. Both sides appealed.
Questions before the Court
- Was the appellant's second objection to execution barred by res judicata or constructive res judicata?
- When is an ex parte foreign decree a judgment 'given on the merits of the case' under Section 13(b) CPC, so as to be executable under Section 44A?
What the Court held
- Res judicata and constructive res judicata apply to execution proceedings, but there was no bar here: the second application was filed before any decision on the first and both were heard and decided together, so there was no earlier final decision.
- Under Section 44A(3) execution must be refused if the decree falls within any exception in Section 13(a) to (f). A decree not given on the merits is not conclusive and cannot be executed in India.
- An ex parte decree may be on the merits if the court considered the plaintiff's oral or documentary evidence. A decree passed only because the defendant did not appear, without weighing the truth of the claim, is not. The presumption under Section 114 of the Evidence Act that judicial acts were regularly done does not prove this.
- The burden is on the party alleging the decree is not on the merits, but courts do not expect impossible proof. Here the English decree showed no consideration of documents, evidence or the dispute about quality. The appellant's appeal was allowed and the respondent's appeal dismissed.
Why it matters
The judgment explains when a foreign ex parte decree is 'given on the merits' under Section 13(b) CPC. It approves the test that the foreign court must have considered evidence on the truth of the plaintiff's claim, rejects the view that every decree passed in the defendant's absence is on the merits, and holds the presumption of regularity irrelevant to that question. It also clarifies when constructive res judicata applies in execution.
In the Court's words
Copied from the official judgment; each passage links to its page.
“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 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.”
“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.”
“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.”
Provisions interpreted
Case and bench
- Parties
- M/s. International Woolen Mills v. M/s. Standard Wool (U.K.) Limited
- Case
- Civil Appeal Nos. 3316 and 3317 of 2001
- Decided
- 25 April 2001
- Bench
- V.N. Khare, S.N. Variava
- Opinions
- Unanimous. Judgment delivered by S.N. Variava, J.
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