Messer Griesheim GmbH v. Goyal MG Gases Private Limited
Supreme Court of India, 21 April 2026, 2 judges, 2026 INSC 401
An English summary judgment entered after refusing leave to defend despite triable issues was not on the merits and was unenforceable in India under Sections 13 and 44A CPC; Section 47(3) FERA requires RBI permission before enforcement.
Facts
The appellant, a German company, guaranteed an external commercial borrowing from Citibank to the respondent, its Indian joint venture. The RBI permitted the guarantee on 03.09.1997 on the condition that on invocation no liability would extend to the Indian company. After the respondent defaulted, the appellant paid about USD 4.78 million in 2001 and claimed reimbursement by subrogation; the respondent said the payment was a set off under a mutual understanding, recorded in its Balance Sheets and Board Minutes. The English Court gave a default judgment in 2003, set it aside at the appellant's request, and on 07.02.2006 entered summary judgment. The appellant sought execution in the Delhi High Court under Section 44A CPC. The Single Judge rejected the respondent's Section 13 objections; the Division Bench, on 21.12.2022, refused enforcement.
Questions before the Court
- Whether the judgment of the English Court satisfies the requirements of Section 13 read with Section 44A CPC.
- Whether the judgment is unenforceable because of the conditions imposed by the RBI under FERA.
What the Court held
- A foreign decree is on the merits where the court applied its mind to the substantive issues. A decree passed summarily, without investigation into the merits, as where leave to defend is refused, is not given on the merits within Section 13(b) CPC.
- In summary jurisdiction the court asks whether a defence is realistic rather than fanciful. Here the defences rested on oral agreements supported by contemporaneous Balance Sheets and Board Minutes adopted with the appellant's nominee director. Triable issues were disclosed, and summary judgment denied the respondent a meaningful opportunity to lead oral evidence and cross-examine.
- The English Court had jurisdiction under the agreement and no fraud was shown, so clauses (a) and (e) of Section 13 were not attracted. But the judgment failed clauses (b), (c), (d) and (f), and was not enforceable under Section 44A CPC. The appeal was dismissed, for reasons distinct from the Division Bench's.
- Though not needed for the result, the Court held that Section 47(3) FERA does not bar instituting proceedings and determining liability, but RBI or Central Government permission is a sine qua non before steps are taken to enforce the decree. The submission that the RBI's conditional permission was an absolute and total bar to enforcement was rejected.
Why it matters
The judgment holds that a foreign summary judgment entered after refusing leave to defend, in the presence of triable issues, is not a judgment on the merits under Section 13(b) CPC, and applies the realistic versus fanciful test for summary judgment. It also construes Section 47(3) FERA as separating adjudication of liability, which is not barred, from enforcement, which requires prior regulatory permission, and says permission should be obtained before approaching the court for execution.
In the Court's words
Copied from the official judgment; each passage links to its page.
“A decree passed by Foreign Court may be treated as having been rendered “on the merits” where the Court has applied its mind to the substantive issues of the case. Conversely, 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.”
“In our considered view, triable issues were disclosed. The respondent sought leave to defend, adduced contemporaneous documents in support of its defence. It was incumbent upon the English Court to refrain from disposing of the case by way of summary judgment. The grant of summary judgment resulted in premature adjudication of disputed questions of fact and effectively denied the respondent a meaningful opportunity to establish its case through oral evidence and cross-examination.”
“Having considered the matter in detail, we are of the opinion that there is no prohibition for initiation of proceedings and for a determination as regards the liability. However, after obtaining a declaration, for its implementation, obtaining permission from RBI is sine qua non. In other words, without RBI approval, it is not possible to take steps for enforcement of a decree.”
Provisions interpreted
- Section 13, Code of Civil Procedure, 1908
- Section 44A, Code of Civil Procedure, 1908
- Section 47, Foreign Exchange Regulation Act, 1973
Related judgments
- Distinguishes Life Insurance Corporation of India v. Escorts Ltd. (1985)“The reliance placed on the decisions in LIC of India (supra) and Renusagar (supra) does not materially advance the contention urged, having regard to the distinct statutory setting” (page 54)
Case and bench
- Parties
- Messer Griesheim GmbH (now called Air Liquide Deutschland GmbH) v. Goyal MG Gases Private Limited
- Case
- Civil Appeal No. of 2026 (Arising out of SLP (C) No. 4774 of 2023)
- Decided
- 21 April 2026
- Bench
- Pamidighantam Sri Narasimha, Alok Aradhe
- Opinions
- Single judgment of the Court signed by Pamidighantam Sri Narasimha and Alok Aradhe, JJ. No separate opinion.
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