# MIS. INTERNATIONAL WOOLEN MILLS v. MIS. STANDARD WOOL (U.K.) LTD

- **Citation:** [2001] 3 S.C.R. 166
- **Court:** Supreme Court of India
- **Decided:** 2001-04-25
- **Case number:** Civil Appeal No. 3317 of2001
- **Bench:** V.N. Khare, S.N. Variava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mis-international-woolen-mills-v-mis-standard-wool-u-k-ltd-17892
- **Pages:** 22

## Headnote

Code of Civil Procedure, 1908:
Section 11 explanation IV-Canstructive res-.iudicata-Second
C application filed before any decision on the first application-Held, second
application cannot be barred by principles of res-judicata or constructive
res-judicata.
Sections 13(b) and 44-A-Decree-Foreign judgment and decreeEnforcement of-Suit for recovery of price of goods supplied-Ex-parte
D judgement and decree passed-'-Does not indicate whether documents were
looked into or merits considered-Held, such decree not on merits and
cannot be enforced in India-Evidence Act, 1872-Section 114, illustration
(e)-Presumption-Sections 101 and 102-Burden of proof
Documents and particulars endorsed with statement of c/aim-Ex1>arte
E decree based thereon-Held, such decree not on merits-Court to consider
case on merits by looking into evidence led by plaintiff and documents
proved before it-Also such a decree cannot be said to be the same as if
defendant appeared and contested the suit and therefore on merits.
F
Appellant placed orders with Res11ondent for certain goods. On
receiving the goods appellant found them to be of inferior quality and refused
payment. Aggrieved, Respondent filed a suit is the Central London County
Court in United Kingdom. An exparte decree was passed. Respondent fded an
execution apulication in the Court of Civil Judge (Senior Division) Ludhiana.
Appellant filed an application for dismissal of execution application as it was
G filed without following the procedure 1>rescribed in Sections 38, 39 and 40 of
the Code of Civil Procedure, 1908. Respondent contended that the execution
was under Section 44A of the Code. Whilst the Application for dismissal was
still pending, the appellant filed an:>ther application stating that the decree
was not on merits and as per the provisions of Section 44A read with Section
H 13 (b) of the Civil Procedure Code, the Court had to refuse to execute the
166
{
'
~
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD.
167
decree. Both the ap1llications were heard together and dismissed. On revision A
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. Hence these cross appeals.
Disposing of the appeals, the Court
B
HELD: 1. Section 11 explanation IV of the Code of Civil Procedure
comes into play only if some decision has 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 before that decision was given. In the instant
-<
case there was no final decision which 011crated as res-judicata. Second
..;.
application stating that the decree was not on merits was filed before the c
decision on the first ap1Jlication filed for dismissal of execution application.
The appellant could have instead of filing a second a11plication, amended the
first application and taken these pleas in that application itself; then there
would be no bar of res-judicata or constructive res-judicata. (172-D-E-F]
Janki Vallabh v. Moolchand and Ors., AIR (1974) Rajasthan 168; D
Baijnath Prasad Sah v. Ramphal Sahni and Am:, AIR (1962) Patna 72; P.K.
Vijayan v. Kamalakshi Amma, AIR (1994) SC 2145 and Mohan/al Goenka v.
j
Benoy Krishna Mukherjee and Ors., (1953] SCR 377, referred to.
...
2.1. It cannot be said 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 E
contested the suit (179-E]
_.
Sir William Rattigan s Private International Law, (1895] pages 234235, relied on.
)
Ram Chand v. John Bartlett, Vol. Ill Indian Cases 523 and Chintamoni F
.)
Padhan and Ors. v. Paika Sama/ and Ors., AIR (1956) Orissa 136, overruled.
Dicey's "Conflict of Laws" P. 411, referred to.
' ...
2.2. It cannot also be said that the decree was on merits as all documents
and particulars had been endorsed with the statement of claim. At the stage G
of i

## Text

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A
MIS. INTERNATIONAL WOOLEN MILLS
v.
MIS. STANDARD WOOL (U.K.) LTD.
APRIL 25, 2001
B
[V.N. KHARE AND S.N. VARIAVA, JJ.]
Code of Civil Procedure, 1908:
Section 11 explanation IV-Canstructive res-.iudicata-Second
C application filed before any decision on the first application-Held, second
application cannot be barred by principles of res-judicata or constructive
res-judicata.
Sections 13(b) and 44-A-Decree-Foreign judgment and decreeEnforcement of-Suit for recovery of price of goods supplied-Ex-parte
D judgement and decree passed-'-Does not indicate whether documents were
looked into or merits considered-Held, such decree not on merits and
cannot be enforced in India-Evidence Act, 1872-Section 114, illustration
(e)-Presumption-Sections 101 and 102-Burden of proof
Documents and particulars endorsed with statement of c/aim-Ex1>arte
E decree based thereon-Held, such decree not on merits-Court to consider
case on merits by looking into evidence led by plaintiff and documents
proved before it-Also such a decree cannot be said to be the same as if
defendant appeared and contested the suit and therefore on merits.
F
Appellant placed orders with Res11ondent for certain goods. On
receiving the goods appellant found them to be of inferior quality and refused
payment. Aggrieved, Respondent filed a suit is the Central London County
Court in United Kingdom. An exparte decree was passed. Respondent fded an
execution apulication in the Court of Civil Judge (Senior Division) Ludhiana.
Appellant filed an application for dismissal of execution application as it was
G filed without following the procedure 1>rescribed in Sections 38, 39 and 40 of
the Code of Civil Procedure, 1908. Respondent contended that the execution
was under Section 44A of the Code. Whilst the Application for dismissal was
still pending, the appellant filed an:>ther application stating that the decree
was not on merits and as per the provisions of Section 44A read with Section
H 13 (b) of the Civil Procedure Code, the Court had to refuse to execute the
166
{
'
~
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD.
167
decree. Both the ap1llications were heard together and dismissed. On revision A
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. Hence these cross appeals.
Disposing of the appeals, the Court
B
HELD: 1. Section 11 explanation IV of the Code of Civil Procedure
comes into play only if some decision has 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 before that decision was given. In the instant
-<
case there was no final decision which 011crated as res-judicata. Second
..;.
application stating that the decree was not on merits was filed before the c
decision on the first ap1Jlication filed for dismissal of execution application.
The appellant could have instead of filing a second a11plication, amended the
first application and taken these pleas in that application itself; then there
would be no bar of res-judicata or constructive res-judicata. (172-D-E-F]
Janki Vallabh v. Moolchand and Ors., AIR (1974) Rajasthan 168; D
Baijnath Prasad Sah v. Ramphal Sahni and Am:, AIR (1962) Patna 72; P.K.
Vijayan v. Kamalakshi Amma, AIR (1994) SC 2145 and Mohan/al Goenka v.
j
Benoy Krishna Mukherjee and Ors., (1953] SCR 377, referred to.
...
2.1. It cannot be said 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 E
contested the suit (179-E]
_.
Sir William Rattigan s Private International Law, (1895] pages 234235, relied on.
)
Ram Chand v. John Bartlett, Vol. Ill Indian Cases 523 and Chintamoni F
.)
Padhan and Ors. v. Paika Sama/ and Ors., AIR (1956) Orissa 136, overruled.
Dicey's "Conflict of Laws" P. 411, referred to.
' ...
2.2. It cannot also be said that the decree was on merits as all documents
and particulars had been endorsed with the statement of claim. At the stage G
of issuance of summons the Court only forms, if it at all does, a prima-facie
~-
opinion. Thereafter, the Court has to consider the case on merits by looking
into evidence led and documents proved before it Then only the decree can be
. ....:--
said to be on merits. [179-F-G]
D.T. Kaymer v. P. Visvanathan, AIR (1916) Privy Council 121, relied H
168
SUPREME COURT REPORTS
[2001] 3 S.C.R.
A
OIL
B
Jshri Prasad v. Sri Ram, Am (1927) Allah~bad 510, overruled.
Gustave Nouvion v. Freeman and another, 15 Appeal Cases 1,
di~1inguished.
Middle East Bank Ltd. v. Rajendra Singh Sethia, Am (1991) Calcutta
335, approved.
2.3. Plaintiff may prove its case through oral and documentary evidence
even though defendant has not entered evidence. H after consideration of oral
C and/or documentary evid.ence ari ex-parte decree is passed, it would be a
decree on merits. 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, ~he judgment may not be one
based on the merits of the case. (182-C, E]
D
D.T. Keymer v. P. Visvanathan, Am (1916) Privy Council 121, relied
on.
Chintamoni Padhan and Ors. v. Paika Sama/ and Ors., Am (1956)
Orisa 136, overruled.
E
Algemene Bank Nederland NV v. Salish Daya/al Choksi, AIR (1990)
F
G
Bombay 170; Trilochan Choudhury v. Dayanidhi Patra, Am (1961) Orissa
158; Govindan Asari Kesavan Asari v. Sankaran Asari Ba/akrishnan Asari,
Am (1958) Kerala 203 and R.M. V. Vellaci v. R.M.A. Ramanathan Chettim;
Am (1973) Madras 141, approved.
R.E. Mahomed Kassim v. Seeni Pakir-ben Ahmed, Am (1927) Mad. 265.
(D); Abdul Rehman v. Md. Ali Rowther, AIR (1923) Rang 319 (J);
Sivagaminatha v. Nataraja, Am (1961) Mad. 385; Mohmmad Sheriff and Co.
v. Abdul Jabbar ILR (1966) 1 Mad 18 and Abdul Rahim v. Mohamed Din, Am
(1943) Cal. 42 and Wiizir Sahu v. Munshi Das, AIR (1941) Pat, 109 (K), cited.
2.4. 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 hel11 at
all. Section 114 illustration (e) of the Evidence Act, 1872 raises the
pre~11mption that judicial acts have been regularly performed. To say that a
decree has been passed regularly is completely different from saying that
H the decree has been passed on merits~ An ex-parte decree passed without
..
' '
'-1
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD.
169
consideration of merits may be decree passed regular if permitted by the A
rules of that Court. Such a decree would be valid in that country in which
~'-
it is JJassed unless set aside by a court of AJJpeal. 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. Further even if it
is presumed that all formalities were complied with and decree passed l3
regularly it still would not lead to the conclusion that it was passed on
merits. (175-D-B-C-D]
Sheikh Abdul Rahim Alias S.A. Rahim v. Mohamed Din & Am:, AIR
~
(1943) Calcutta 42, overruled.
....
Krishna Kumar v. State of Haryana, AIR (1999) SC 854 and The c
Commissioner of Income Tax, A.P. V.M Chandra Sekhar, AIR (1985) SC 114,
referred to.
2.5. 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
D
never be possible for a party to lead evidence about the state of mind of the
judge who passed the decree. The pai1y must show that the decree does not
show that it is on merits, the existence or lack of existence of material before
.J.
the court when the decree was passed and the manner in which the decree
....
was passed. 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 E
i
party from the burden if the law Jlrovides for a contingency. H the decree is
not on merits then, even though the court may be reluctant to leave th"e
respondents remedyless, the court would still have to refuse to enforce
decree. (180-A-B-C-D]
"
R.M T~ Vel/achi v. R.MA. Ramanathan, AIR (1973) Madras 141 and R. F
,,
Viswanathan v. Rukn-ul-mulk Syed Abdul Wajid, (1963) 3 S.C.R. 22, referred
to.
The Martin Burn Ltd. v. Corporation of Calcutta, AIR (1966)SC 529
and Firm Amar Nath Basheshar Dass v. Tek Chand, AIR (1972) SC 1548,
ref erred to.
G
2.6. In the instant case judgment and decree passed did not indicate
whether any documents were looks into and/or whether the merits of the
. .....,;
case was at all considered. It merely granted a decree for the amounts
mentioned. Appellant had replied to the notice of the respondent He mentioned
that goods were of inferior quality and not as per contract. But the court did H
170
SUPREME COURT REPORTS
[2001] 3 S.C.R.
A not apply its mind or dealt with this as1lect. It did not examine points at
controversy between the parties and passed ex-parte decree as a1lpellant did
not appear at the hearing of suit. Therefore, such a decree cannot be said
to be a decree on merits and cannot be enforced in India. [187-B-C-D]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3316 of
B 2001.
c
D
E
F
G
H
From the Judgment and Order dated 9 .12. 99 of the Punjab and Haryana
High Court in C.R. No. 2703 of 1999.
WITH
Civil Appeal No. 3317 of2001.
A.K. Chopra and P.N. Puri for the Appellant.
Aman Hingorani and Ms Priya Hingorani for Hingorani and Associates
for the Respondent.
The Judgment of the Court was delivered by
S.N. VARIAVA, J. Leave granted.
Heard parties.
Both these Appeais 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.l.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
County 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 be~n served in that case. For our purposes we are not concerned with
this controversy and express no opinion thereon.
r
...
l
i.
-"'
~-
~
(-
·)..-.
~
. I ,,.
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. [S.N. VAF.JAVA, J.] 171
!
On 20th April, 1998, an ex-parte decree came to be passed by the Central A
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 B
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 proceedings the Appellant filled an Application
praying for dismissal of the execution ~pplication as it was filed without C
following the procedure prescribed under. Sections 3 8, 3 9 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 D
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 Civ ii Procedure the Court had to r~fuse to execute the decree. Both the
Applications were heard by the Civil Judge (Junior Division), Ludhiana. By
two separate Orders dated 15th Marcf1, 1999, both the Applications were
dismissed.
E
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 Judgnient 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 Judgnient that these
two Appeals have been filed. The Appellant has filed the Appeal [arising out
F
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 Judgnient which holds that the decree G
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.
H
~
172
SUPREME COURT REPORTS
[2001) 3 S.C.R.
A
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
B
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 qu~stion of their being
)--
c a decision finally deciding a right or claim between the parties. Mr. lfingorani,
•
however, .submitted that this case would J:>e covered by Explanation IV. to
Section 11 of ·the Code of Civil Procedure. He submitted that in the earlier
Application fue defence regarding non compliance of Section 13(b) could
have been taken but had not been taken. He submitted that it was not open
D
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 before that decision was given. In this case the second Application
E 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 pli;:as in that Application itself. H~d 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
F
second Application was barred by principles of res-judicata or constmctive
~~
res- judicata. To be remembered that the Orders were passed after hearing
arguments on both the Applications. Under such circumstances n~)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
G 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 and Mohan Lal Goenka v. Benoy Krishna Mukherjee and Ors., reported
in (1953) SCR 377 in support of his submission that the principles of resjtidicata and/or constructive res-judicata also apply to execution proceedings.
H It is not necessary to deal with these authorities as there can be no dispute
-{
I
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. [S.N. VARIAVA, J.] 173
to the proposition that principles of res-judicata and/or constructive res- A
judicata apply to execution proceedings. However, as stated above, in this
..i..
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
'.B
Code of Civil Procedure ·reads as follows :
"44-A ( l) 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.
c
(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 purpose~ of proceedings under this section, be conclusive
proof of the extent of such satisfaction or adjustment.
D
(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 E
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; F
""
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 a sum of money
is payable, not being a sum payable in respect of taxes or other G
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 H
->--
I
174
SUPREME COURT REPORTS
[2001] 3 S.C.R.
A 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
B
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;
r
ic
,.._
(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 t11e proceedi'ngs in which the judgment was obtained are
D
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.
,>.._
E
Thus under sub-clause (b) if the decree has not been given on the
merits of the case then the foreign judgnient 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
F of authorities of various High Courts on the question as to when a decree
L
.......
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
G S.A. Rahim v. 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 judgnient was not o~ merits be~use 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. Ori this principle the
>-
Calcutta High Court has held that even though a decree was gi~n ex-parte
H the same must be presumed to be on merits. In our view the law laid down
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. [S.N. VARIAVA, J.] 175
.. · ..
in this case· cannot be said to be the correct law. Section 114 merely raises A
../..
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 Court. Such a decree would B·
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 c
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. D
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 rr,erits.
In the case of Middle East Bank Ltd. v. Rajendra Singh Sethi a reported
in AIR 1991 Calcutta 335 a decree had been passed ex parte and without E
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 F
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 G
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.
H.
176
SUPREME COURT REPORTS
[2001] 3 S.C.R.
· A
Reliance was placed upon the case of Gustave Nouvion v. 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 submitte4 that as the judgment and
decree of the English Court would operate as res judicata between the
B 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.
C
Reliance was also placed upon the case of D. T. Keymer v. P
D
E
F
G
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 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 ans~er 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 an_d 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
th~t sub-section must refer to some general class of case, and Sir
Robert Finlay was asked to e"-'Plain 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 fouI).ded in that view.
But there must be other matters to which the sub-section refers, and
H
in their Lordships' view it refers to those cases where, for one reason
....
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. (S.N. VARIAVA, J.) 177
......
or another, the controversy raised in the action has not, in fact, been A
j
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 B
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 Jshri Prasad v. 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 c
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.
:.
D
Reliance was also placed upon the case of Ram Chand v. 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 E
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 F
right, at the expiration of the prescribed period, to enter final judgment
for the amount claimed, with costs. The writ aforesaid was especially
endorsed with ihe 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 G
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
oh .the facts of the case must be considered as one pa5sed on the H
178
SUPREME COURT REPORTS
[2001] 3 S.C.R.
A
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 passe9 by the Court in plaintiff's favour was not the less
B
a judgment on the merits, because it \Vas not founded upon detailed
evidence which the plaintiff might have produced had the defendant
entered an appearance and contestell 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
'r
cannot be considered as one -passed on the merits, the appellant's
tc
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
D
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
>-
<: •t
an English C.ourt to. sue upon a judgment so obtained. If on no other
ground, such a judgment of a foreign Court would, at all events, be
E
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
F
the High Court in Engl~nd "simply on the non-appearance of the
defendant without adducing any evidence whatever in support of his
"" -·
claim." Under Order XJ, rule 4, the plaintiff's application for leave to
serve tiie 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
G
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
pursmμ1ce _of the above rule, would, in my opinion, constitute
H
"eviden,ce in support of the claim" within the purview of the principle
-
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. [S.N. V ARIAVA, J.j 179
laid down in the passage quoted above, and the judgment obtained A
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 means that there 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, B
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 C
supported by clear authority. I can discover no such authority either
in Dicey's "Conflict of Laws" (p. 411), or in any other standard textbook 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, D
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 · E
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 F
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 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
G
of this submission reliance was placed upon the authority in the cases of H
180
SUPREME COURT REPORTS
[2001) 3 S.C.R.
A R.M V. Vellachi v. R.MA. Ramanathan, reported in AIR 1973 Madras 14 land
R. "/liswanathan v. 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
B 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.
C
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. v. 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.
D 1548. There can be no dispute to this proposition. However this proposition
cuts both ways. 1f 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 decre~.
E
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 NVv. Salish Daya/al Choksireported 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.
F 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
G 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
H
the controversy. The Hong Kong Court had before it the defence
INTERN. WOOLEN MILLS v. STANDARD WOOL (U.K.) LTD. [S.N. VARIAVA, J.] 181
which was filed by the present defendant. The defence questioned the A
_,(
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 B
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 c
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 D
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 E
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.
F
29. In my view, in these circumstances, the case before me falls
under the ratio laid down by the Privy Council in Keymer ~ 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 G
pleadings and 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.