# ROSHANLAL KUTHIALA .& ORS v. R. B. MOHAN SINGH OBERAI

- **Citation:** [1975] 2 S.C.R. 491
- **Court:** Supreme Court of India
- **Decided:** 1974-10-11
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/roshanlal-kuthiala-ors-v-r-b-mohan-singh-oberai-6328
- **Pages:** 20

## Headnote

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ROSHANLAL KUTHIALA .& ORS.
v.
R. B. MOHAN SINGH OBERAI
October 11, 1974
4 9I
. (H. R. KI:JANNA, M. H. BEG and V. R. KRISHNA IYER, JJ.)
Code of Civil Procedure (Act S of !908) t. 13~Enforcement of foreign judgment.
Limitation Act (9 of J90R), s. 14-Scope of.
Pract/ce-Appllcatfon of equity by Indian Courts.
The appellaot agreed to sell his hotel to the first respondent and the first respondent paid an earnest money of Rs. S lacs. Alleging a breach of contract the
tlrst respondent flled,a suit in the sub-court Lahore, for return of the earnest money,
and the suit was decreed. The appellant filed an appeal.to the High Court at Lahore
and the execution of the decree was stayed on condition of his depositing Rs. 3
lacs. The appellant deposited the amount but the decree holder (first reSpondent),
on objection by the appellant, wa.S not allowed to withdraw the amount before the
disposal of the appeal. The appeal was allowed by the High Court, alid there·
after, the appellant moved the High Court for refund of the deposit made by him.
The Pakistan (Administration of Evacuee Property) Ordinance, 1949, having come
into force by then, notice was given by the High Court to the Custodian and the
Custodian prayed for staying the return of the amount on the gro'und that the appellant was an evacuee and also for the payment of the amount' in deposit to the Custodian. The amoun~ however continued to be in deposit in court. The respondent.
appealed to tbe Federal Court of Pakistan against the Judgment of the High Court
and. his appeal was allowed. The amount, however, continued to be in tfie Pakistan Treasury. In January, 1954, the appellant filed &. petition in the High Court
·of Lahore praying, that the amount of Rs. 3 lacs deposited by him may be directed
to be·adjusted towards the satisfaction of the decree as orginally intended, &nd that
his request for the refund may be treated as withdrawn, and that the objections
tiled by the Custodian dismissed. As a result of political understanding between
the two countries; court deposits were agreed to be tran.qferred to the respective
countries. Oa the strength of that law in Pakistan the respondent moved the High
Court at Lahore for transfer of'the· deposit of Rs. 3 lacs to the concerned officer or
authority in India on the ground that the money was deposited in part satisfaction
o.f his decree. T.he High Court dismissed the application but the Supreme Court of
Pakistan allowed it and dl.recterl the transfer of the deposit to the concerned authority in India after dismissing the Custodian's objections. But the deposit conti·
nued in the Pakistan Treas~;~ry.
The respondent thereupon moved the High Court of Punjab in India for leyying
execution of his decree and invoked the provisiolb of the lndian ·Independence
(Legal Proceedings) Order, 1947. The High Court dismissed the execution appJi.
cation. Jn appeal, the Supreme Court of Jndia held that the forum for enforcement
and the process for getting relief and execution of the fore'gn decree was a suit
under ss. 9 and 13, .Civil Procedure Code, in the Compdent Court. The respondent thereupon filed a suit for recovery of the decree amount based on the forei$D
judgment in his favour and the trial couit and tlie High Court. in appe~al, "decided m
his favour.
In appeal, to this Court, it was contended by the appellant. :· d> that the
decree of the Federal Court of Pakistan which was the foundation of the action in
India had vested automatically in the Custodian under the Pakistan Ordinance of
1949, and that therefore. the respondent had no right to recover on the basis of the
foreign judgment; (2} the six years period available under art. 117 of the Jndiau
Limitation Act, 1908 for a suit upon a foreigri decree having expired long ago the
suit was barred by .limitation; and (3) in any event,th e sum of Rs. 3 lacs already
deposited to the credit of the decree in the Lahore Court, having been actually ad·
.lusted towards the. decree, the appella

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ROSHANLAL KUTHIALA .& ORS.
v.
R. B. MOHAN SINGH OBERAI
October 11, 1974
4 9I
. (H. R. KI:JANNA, M. H. BEG and V. R. KRISHNA IYER, JJ.)
Code of Civil Procedure (Act S of !908) t. 13~Enforcement of foreign judgment.
Limitation Act (9 of J90R), s. 14-Scope of.
Pract/ce-Appllcatfon of equity by Indian Courts.
The appellaot agreed to sell his hotel to the first respondent and the first respondent paid an earnest money of Rs. S lacs. Alleging a breach of contract the
tlrst respondent flled,a suit in the sub-court Lahore, for return of the earnest money,
and the suit was decreed. The appellant filed an appeal.to the High Court at Lahore
and the execution of the decree was stayed on condition of his depositing Rs. 3
lacs. The appellant deposited the amount but the decree holder (first reSpondent),
on objection by the appellant, wa.S not allowed to withdraw the amount before the
disposal of the appeal. The appeal was allowed by the High Court, alid there·
after, the appellant moved the High Court for refund of the deposit made by him.
The Pakistan (Administration of Evacuee Property) Ordinance, 1949, having come
into force by then, notice was given by the High Court to the Custodian and the
Custodian prayed for staying the return of the amount on the gro'und that the appellant was an evacuee and also for the payment of the amount' in deposit to the Custodian. The amoun~ however continued to be in deposit in court. The respondent.
appealed to tbe Federal Court of Pakistan against the Judgment of the High Court
and. his appeal was allowed. The amount, however, continued to be in tfie Pakistan Treasury. In January, 1954, the appellant filed &. petition in the High Court
·of Lahore praying, that the amount of Rs. 3 lacs deposited by him may be directed
to be·adjusted towards the satisfaction of the decree as orginally intended, &nd that
his request for the refund may be treated as withdrawn, and that the objections
tiled by the Custodian dismissed. As a result of political understanding between
the two countries; court deposits were agreed to be tran.qferred to the respective
countries. Oa the strength of that law in Pakistan the respondent moved the High
Court at Lahore for transfer of'the· deposit of Rs. 3 lacs to the concerned officer or
authority in India on the ground that the money was deposited in part satisfaction
o.f his decree. T.he High Court dismissed the application but the Supreme Court of
Pakistan allowed it and dl.recterl the transfer of the deposit to the concerned authority in India after dismissing the Custodian's objections. But the deposit conti·
nued in the Pakistan Treas~;~ry.
The respondent thereupon moved the High Court of Punjab in India for leyying
execution of his decree and invoked the provisiolb of the lndian ·Independence
(Legal Proceedings) Order, 1947. The High Court dismissed the execution appJi.
cation. Jn appeal, the Supreme Court of Jndia held that the forum for enforcement
and the process for getting relief and execution of the fore'gn decree was a suit
under ss. 9 and 13, .Civil Procedure Code, in the Compdent Court. The respondent thereupon filed a suit for recovery of the decree amount based on the forei$D
judgment in his favour and the trial couit and tlie High Court. in appe~al, "decided m
his favour.
In appeal, to this Court, it was contended by the appellant. :· d> that the
decree of the Federal Court of Pakistan which was the foundation of the action in
India had vested automatically in the Custodian under the Pakistan Ordinance of
1949, and that therefore. the respondent had no right to recover on the basis of the
foreign judgment; (2} the six years period available under art. 117 of the Jndiau
Limitation Act, 1908 for a suit upon a foreigri decree having expired long ago the
suit was barred by .limitation; and (3) in any event,th e sum of Rs. 3 lacs already
deposited to the credit of the decree in the Lahore Court, having been actually ad·
.lusted towards the. decree, the appellant would be liable only for a sum of R,a. 2
lacs together with subsequent interest.
492
SUPREME COURT REPORTS
[1975] 2 s.c.tt
Allowing the appeal on the la:st ground,
HELD : 1. (a) A foreign judgment is enforceable by a suit upon the judgment
and it shall be c9nclusivc as to any matter thereby directly adjudicated upon bet~n
the same parties subject· to the ~ceptions enumerated ins. 13, C.P.C. In the present
case, th.e Judgment of the Pakistan Court was in favour of the respondent, and none
of the nullifying clauses in that section being attracted, it is conclusive under s. 13.
[SOOO·H}
(h) Since the decree was not treated as evacuee property under s. 3 of the
Pakistan Administration of Evacuee Property Act, 1957, it IS not evacuee property,
and therefore, did not vest in the Custodian. The Custodian never demanded any
right qua the decree-holder-respondent nor as stepping into his shoes. His claim in
the Lahore court was that the appellant became an evacuee and that the amount
should not . .be returned to him: and, at no stage did the appellant even-contend that
the r~po1ldent was not entitled to sue for the amount and that the Custodian alone
had such right. [501F-H]
(2) Section 14 of the Linlitation Act, 1908, saves tbe respondent's suit from
the bar of limitation. [SOZ D]
It is a sine qua non of a claim under s. 14 that the' earlier proceeding is prosecuted in good faith; and any circumstances, legal or factual, which inhibits enter·
tainment or consideration by the court of the dispute on the merits comes within the
scope of s. 14. 1 Section 14 is also wide enough to cover periods covered by cxec:ution proceedings. In the present case, the launching of execution of the Pak:istani
decree in India was done after consulting twc> leading Indian lawyers and the cir·
cumstance shows the bona fides of the respondent; and the prosecution of the e:teo
cution proceedi,ngs in the High Court of Punjab was repelled, because and only
because, the institution of such proceedings on the execution side was without jUJis·
diction. The question thus was one of initial jurisdiction of the Court to entertain
the execution proceedings. [502B·H; S03A-C]
Raghunath Das v. Gokal Chand and Another [1959] S.C.R. 817 at 818, India
Eleclrlc Works1Ltd. v. James Mantosh & Anr. (1971] 2 S.C.R. 397 at 401 and '111t
Associated Holels of India Ltd. and Another v. R. B. Jodha Mal Kuthalfa [1961] 1
S.C.R. 2S9 at 272 referred to.
(3) In India, the historical and artificial distinction between e9ui~ and law
does not exist and equity itself is enforced as law with all its built m lu.nitatlons.
Our equitable jUrisdiction is not hidebound by tradition and blinkered by precedent,
though trammelled by judicially approved rules of conscience. When law speaks
in positive terms equity may Mt be invoked against it, but, while applying the lnw,
the coun can and must ameliorate unwitting rigow-s inflicted by legalisms, where
there is room f,or play by the use of equity. (S03H; S07G: S09C·D]
In the present case, neith~r party w~ blameworthy and indeed both \YCfO
agreed at a stage that the deposit should go in satisfaction of the decree affirmed by
the final court in Pakistan. The decree holder had laid claim to the sum to the
exclusion not only of the Custodian but also of the judgment-debtor. Taklna
a pragmatic view of .he justice of the case, the Coun has to see who should bear the
loss in these circumstances. Although the courts and the parties as!>umed that the
coun dep.osit as specially carmarkro towards. the discharge of the decree, because
of supervening political up.heavals, and eventual disregard of the court's order by
the Pakistan Government, the decree-holder-respondent could not withdraw the
sum. The equjty arises largely from the iniquity of a foreign government's refusal
to carry .out the directions of its municipal courts. Therefore, the deposit of Rs. 3
lacs should be treated as a pro tamo discharge of the decree io favour of the respondent from that date when t:1e appellant a1trecd for such ad.iustment. The decree
amount as on the d~ote inclusive of costs incurred will have to be calculated and Rs:
3 lacs deducted therefrom. There will be a decree in favour of the respondent only
for the balance which would carry 5% interest from then on as stipulated in the
decree. [S04C, B;,505P·H; 509F·G]
Chowthmttll Manganmu/1 v. The Ca/cu/la Wheat and Seeds Association I.L.R.
51 Cal. 1010 and Shco Cho/(lm Sahoo v. R(lhut Hosstin I.L.R. 4 Cal. 6 referred
tO.
.
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ROSHANLAL 'V. M. s. OBBRAI (Krishn~ lyer, /.)
. 493CIVIL APPELLATE JUlUSDICTION : Civil ~ppeals Nos. 2248 & 2303
~ 1%l
.
From the Judgment & Order dated the 30th August, 1968 of the
Delhi High Court (Himachal Bench), Simla in Regular First Appeals
No. 21 of 1967).
·
S. T. Desai, A. Subba Rao, Naunit Lal and Lalita Kohli, for
·the apPellant (In CA No. 2248/68).
A. K. Sen, M. C. Bhandare and Rameshwar Natlt, for respon4e~ts.
Nos. 1 & 2 (In CA No. 2248/68).
.·'
B. P. Singh, for respondents i-fos. 4, 6-ll(ln CA. No. 2248/68).
A. K. Sen and M. c.' Bh~ndare, for the appellanr (In CA .No .
. c . 2303/68);
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S. T. Desai, A. Subba Rao, Naunit Lal and IA/ita Kohli, for
respondents Nos. 1, 2 & 4-9 (In CA. No. 2303/68).
The Judgment of the Court was delivered by
KRISHNA IYER, J.-The principal appeal, C. A. 2303 of 1968, has.
arrived in ~s Court by cert_ificates, JlDder Art.
133(1)(a) of the
Constitution, granted by the High Court of Delhi. (The other, C.A.
. 2248 of 1968 has been extinguished by efflux of time and even otherwise is not pressed, si.nce counsel concedes the decision to be just).
The subject matter is large, the rounds of litigation many, the ···
ar&uments long and yet the issues of law and disputes of fact .are
few although their ultimate decision w)lere justice and law have, we
think, come to cordial terms, has been reached after uneasy hours.
but with an easy conscience. Hopefully, we avoid burdening the
. judgment with heavy historical material much of which has been
wisely jettisoned to help tum the forensic focus on the three-pronged·
attack on the decree made by counsel fdr the appellant Shri S. T.
Desai.
Even so, the sequence and significance ()f events leading up to thecurrent controversy, ,sprawling across India and Pakistan and surviving for nearly ·three decades now, may be unfolded with advantage.
Now to the story.
Lahore was the venue of the earlier forensic
episodes. The legal saga formally began in undivided India when the
1st appellant, Kuthalia; the ownet: of Sedous Hotel, agreed to sell
it on October 2, 1946 for a price of Rs. 52,75,000/- to the 1st respondent Oberoi, who became a name in the hotel industry. An earnest
money of Rs. 5,00,000/- was advanced and the time fixed for completion· of the sale was January 20, 1947.
On alleged breach .of contract, (::ivil Suit No: 514/61 of 1946 was filed in the Court of the Senior
Sub-Judge, Lahore, by the 1st respondent (Oberoi) as the Ist plaintiff and the Associated Hotels of India Ltd., as the 2nd plaintiff, for
recovery of the earnest money with interest. A decree in favour of
the lst plaintiff was made in the sum of Rs. 5,08,333-5-4 with
future interest and costs. 'So far as the 2nd plaintiff was -concerned
the reason for whose presence as party js obscure, if not oblique_
494
SUPREME COURT REPORTS
(1975] 2 s.C.R.
the suit was dismissed . An appeal was successfully carried by the
present appellant to the High Court of West Pakistan in Lahore
since, by the time the trial Court's decree was made the "Great Divide"
had happened with all the blood and tears of political history and
traumatic effects on the law and life in both the countries. The uprooting and overturning of human masses led to 'evacuee' legislation on
both sides of the frontiers and the common case of the parties is that
both of them are evacuees under the relevant Pakistani laws. The
Lahore High Court, on 24th November, 1949 dismissed the suit in
toto, but, undaunted, Shri Oberoi moved the Federal Court of
Pakistan which restored the decree of the trial Co\lrt (on 21-12-53)
in reversal of the High · Court's decree. Thus the final Court in
Pakistan at the relevant time granted a decree in favour of the I st
respondent, against the appellant, and that stands. This landmark
event closes the chapter of substantive rights and here begins a set of
encounters in realising the fruits of the decree. The crescendo of this
unique series is the persuasive but opposing 'submissions' we have
listened to.
Two crucial factors gave a dramatic turn to the course of the
conflict viz., 'evacuee' legislation and the deposit of Rs. 3,00,000/* in
Court, in connection with the decree, pending the High Court appeal.
A brief narration of those matters is now necessary to follow the development of the dispute before us. In the High Court, stay of execution was
sought and granted on condition of deposjt ofRs. 3,00,000/-on July, 16
1949 and furnishing of security for the balan~e. Pursuant thereto,
the sum was deposited by the judgment -debtor into the executing Court,
but the decree holder, on objection by the former, was not allowed to
withdraw th~ money before disposal of the appeal. All this took
place in July, 1949. Thus a key fact, whatever its impact. emerges
that the judgment-dehtor (appellant) had put into Court this substantial
sum but he had also prevented the respondent getting instant benefit
of it.
The social disasters of the political surgery already adverted to were
alleviated by legislative bandaging of economic wounds through laws
to rehabilitate evacuees on either side. As part of this package, the
Pakistan (Administration of Evacuee Property) Ordinance, 1949 was
promulgated. This legislation defines an 'evacuee' and, as stated
earlier. the contestants in this case are both admittedly evacuees. Section
2(3) of the Pakistan Ordinance defines 'Evacue<.: property' and one of the
points in controversy before us is as to whether the decree passed by
the Federal Court of Pakistan for the sum of around Rs. 5,00,000/- or the
deposit of Rs. 3,00,000/- in connection with that decree, is 'evacuee
property'. We may have to dilate on the scheme and provisions of this
Pakistan Ordinance a little later, but it is sufficient to state, at
this stage,
that this Ordinance contemplates the appointment of
Custodians of Evacuee Property and invests them with certa-in powers.
Right away we may read s.6 (1) of the Ordinance since its effect has
impact on one of the important contentions urged by Mr. Desai :
"6(1) All evac11ee property shall vest and shall be deemed
always to have vested in the Custodian with effect from the
first day of March, 1947."
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ROSHANLAL v. M. S. OBERAI (Krishna lyer, ]. )
4 9 5
In simplistic terms, if we may here anticipate Shri Desai's submission, there was a statutory vesting of the decree obtained by
Oberoi in the Custodian and no rights accruing from that decree
could be claimed by the former. The foundation of the present suit
thus collapsed, according to him. We will investigate the merits of
this knock-out blow to the plaintiff's case in due course. Two other
legislations, the Transfer of Evacuee Deposit Act, 1954 and the Pakistan
Administration of Evacuee Deposit Act, 1954 and the Pakistan
Administration of Evacuee Property Act, 1957 loom large as thelegal chronicle continues. The former primarily provides inter alia
for transfer of court deposits of evacuees by each country to the other
and the latter saves some items from the all-embracing of operation
evacuee property. More later.
Anyway, the present appellant, when be won in the High Court,.
moved for refund of the deposit by his application of December 1,
1949. Follow-up by way of an order for refund was natural the Court
having dismissed the suit. But the Court tacked on a further direction
that intimation be given ~o the Custodian to take appropriate proceedings, if he thought fit. Thus alerted, the officer hastened. Hardly
had 4 days passed when the Custodian moved the High Court for
interdictip.g the return of the amount on the score that the entitled
party was· an evacuee under the aforesaid Ordinance of 1949. · TheHigh Court thereupon stayed refund of the deposit to the appellant
by an order dated December 20, 1949. The sequel shows that this
amount has eluded the hands of both parties up till now, an extralegal misfortune which has a bearing on the ultimate relief claimable·
in this appeal. ·
To resume the fluctuating fortunes of the deposit, the main apple
of discord. The Custodian's petition of 20th December, 1949 included
a prayer for payment Ollt to him of the amount in deposit, as, according to him, it belonged to Kuthalia (the defendant) an evacuee.
However, it was kept pending on notice having been ordered to the
depositor. But when the suit by Oberoi was decreed by the Federal'
F
Court, the right to refund put forward by the defendant disappeared.
Even so, since both parties were evacuees the Rehabilitation Com-·
missioner sent a request to the High Court in these te~ms:
"From
S.S. JAFRI ESQUIRE C.S.P.
REHABILITATION COMMISSIONER AND SECRETARY
G
TO GOVERNMENT PUNJAB, REHABI-
, To
H
LITATION DEPARTMENT.
THE REGISTRAR HIGH COURT OF1UDICATURE'
PUNJAB LAHORE
Dated Lahore the 4th January, 1954
Subject :-Hedous Hotel Lahore Deposit of Rs. 3 lacs in the·
High Court of Lahore.
496
SUPREME COURT REPORTS
['1975] 2 s.c.R.
MEMORANDUM
A
A sum of Rs. 3,00,000 was deposited by R.B. Jodha Mal of Hoshiar~
pur, in tho High Court Lahore for tho bonofit of tho Associated Hotel
of India Limited. A decroe was passed by the Senior Civil Judge
·Labore in favour of the Associated Hotel of India Limited against
R.B. Jodha Mal for a sum of Rs. 5,08,333·5·4. The deposit of Rs.
3,00,000 was mad~ in part payment of the above decree. R.B. Jodha
B
Mal preferred an appeal in the High Court against the order of the Civil
Judge. This appeal was accepted on 24th November, 1949. Against
this decree of the High Court the Associated Hotel of India Limited,
filed an appeal in the Federal Court of Pakistan. This appeal was
accepted by the Federal Court on 21st of December, 1953.
2. Since both the contesting parties are evacuees the amount in
c
question cannot be paid until instructions from Government ofPakistan
are received jnthe matter. It is therefore requested that the amount
of Rs. 3;00,000 may please be deposited in the Treasury under the
detailed head.
"Sale proceeds of Immovable Property and debts due to
Evacuee etc." Under the head. "P. Deposits and Advances Part
D
II Deposits; not bearing interest Departmental and Judicial Deposits Civil Deposits, Deposits on account of Evacuee Estates"
in the accounts of the Deputy Rehabilitation Commissioner
(Rent and Repairs), Lahore under intimation to this office.
(Sd.) GHULAM SHABBIR,
Deputy Secretary Rehabilitation,
for Rehabilitation Commissioner and
E
Secretary to Government Punjab Rehabilitation
Department.
No. U.
Reh. Ace. G/333, Dated Lahore, 4th January, 1954."
Thus the amount remained frozen. A couple of days later (January
~) the defendant Kuthalia moved the High Court at Lahore not for
refund of the deposit-which he could not .ask for in view of the
Federal Court decree-but praying 'that the aforesaid amount of
Rs . 3,00,000/- may be directed to be adjusted towards satisfaction of
the decree as originally intended and the request for refund be treated
as withdrawn and the objections filed by the Deputy Custodian.be
dismissed.' Anyway, the lid was put on this part of the lis bearing
<>n
the Custodian·s claim to keep the deposit
in
Pakistan
by the Supreme
Court of Pakistan, holding to the contrary.
To
appreciate
this
decision
of
the
S.uprcme
Court
reference has to be made to s. 4 of the Pakistan Ordinance I of
1954 (which reincarnated as Act VI of 1954 with the same name)
relating to trapsfer of deposits. This enactment had its counterpart
in India. As a result of political understanding reached between
the two countries, Court and other deposits were agreed to be transferred to the respective countries into which the evacuees entitled to
them had moved. On the strength of this law Shri Oberoi the decreeholder, moved the High Court at Lahore for transfer of the deposit
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ROSHANLAL v. M, s. OBERAI (Krishna /yer, J.)
·497
of Rs. 3,00,000/- together with the records relating
there~o 1to
·.such officer or authority in India as the Central Government has by
order specified in this behalf or specifies in future as the provisions of
the said Act fully applies to it.' It may incidentally be mentioned since
it has considerable importance at a later stage, that in this application
Shri Oberoi h,ad categorically asserted:
"That Rai Bahadur ·Mohan Singh, decr~e-holder ·submits
that judgment-debtor had no interest in the said sum and the
same is lying deposited with this Hon'ble Court for the payment
to him, as it was deposited for the due performance of such
decree as may ultimately oe passed in his favour. The said
decree-holder contends that no other person has any 'right or
interest in the said' amount and that the same.is lying with
this Court in trust for payment to him. The judgment-debtor
has accepted this position, and·ctaims no right or interest in
the said amount."
Although the High Court declined to uphold the claim for transfer
of the deposit under Act. VI of 1954, on being approached by the
. decree-holder the matter received different treatment at the hands of
the Supreme Court.
Shri Oberoi's contention was :
"That the Federal Court of Pakistan having passed a
decree ~n favour of the petitioner aild the sum deposited being
for the satisfaction of the decretal amount this Hon'ble Court
has erred in holding that the petitioner had no interest in the
deposit. It was neither within its jurisdiction to deeide the
same nor its decision on that point is legal and correct."
Cornelius C. J., speaking for the Court, overruled the pretended
claim of the 2nd plaintiff, the Associated Hotels of India Ltd., rejected
the Custodian's objections and ruled:
" ... .It would appear that prima facie the principal and
direct interest in the money is that ofRai Bahadur Jodha Mal.
The money having been deposited in relation to a decree of the
Court, for the purpose of being applied to the satisfaction of that
decree, and such decree standing exclusively in th~ name of Rai
Bahadur MJhan Singh Oberoi, he might appear to have
a secondary and indirect interest in the money .... "
In short, the highest court directed the transfer of the deposit, subject
to an innocuous finding by the High Court about both contestants
being evacuees. In fulfilment of the Supreme Court's remand
the High Court of West Pakistan passed final orders in these peremptory terms:
''We, therefore, have no hesitation in ~olding that both
Rai Bahadur Jodha Mal Kuthalia, the depositor, and Rai
Bahadur Mohan Singh Oberoi, for whose benefit the .deposit
was made !lie within the purview of section 4 of the Transfer
498
SUPREME COURT REPORTS
(1975) 2 s.C.R.
of Evacuee, Deposits Act, 1954, "evacuees" a·nd direct that the
deposit be sent to the Custodian of Evacuee Property,
along with the record of the case, for transmission to such an
authorised officer or authority in India as the Central Government has specified in this behalf for disposal in accordance with
the law."
In the sorry scheme of affairs this direction remained a dead letter.
Courts can only command, but if Governments ignore them, the
finer flame of the rule of law is puffed out and the darker forces of rule
by executive: diktat choke the life breath of the law. Anyway, the
· Supreme Court's order notwithstanding, the deposit of Rs. 3,00,000/-
lies idle stiU, after a lapse of 14 years, in Pakistan Treasury.
The scene now shift~ to India, Both the drama tis personae move to
India and, perhaps make good. Here is a decree paralysed by circumstances beyond the control of the parties. The decree-bolder
Oberoi, after taking legal advice at the highest level, moved the High
Court of Punjab at Chandigarh for levying execution of his decree,
which, by passage of time, had added adipose by way of interest and
remained undiminished by the deposit in the Pakistan Court to the
credit of the decree. The swollen sum claimed in execution was
10 79.820/4. In doing so he sought the aid of s.4(3) of the Indian
Independence (Legal Proceedings) Order, 1947 read with O·XLV,
r.l5 and s. 15, C.P.C. Many road blocks in the way of the executability
of the decree were placed by the judgment debtor but the High Court
of Punjab at Chandigarb, assisted by eminent counsel, elaborately
considered the many legal questions and dismissed the execution
petition. The Court found that the situs of the decree which
was 'property' :was Lahore and so Oberoi, an evacuee, had been
divested of all interest therein, the Pakistan Custodian being th.e
repository of all such rights .. The property in the decree being negatived, the prysent respondent failed. Many other findings hostile to
his claim w~re also rendered by the High Court.
However, the
quietus to this Operation execution was given by the .Supreme Court
of India where the parties, engaging top legal talent, hopefully
reached, obtaining leave under Art. t33(t)(a) and (c) of the Constitution. In that appeal
the judgment debtor (present appellant)
resisted the proceedings, filing a statement of the case through· his
advocate Shri Naunit La!, as required by the Supreme Court Rules
(fhis statement has pertinence to the point regarding limitation vis-avis s. 19 of the Limitation Act, to be dealt with later). The Court,
after stating the facts of the long litigation, punctuated by the puzzling
waves of evacuee legislation, by-passed issues unnecessary to the
determination of the case (although decided by the High Court) and
came to the crux of the matter whether this Pakjstani decree could
be straight executed invoking 0·45, r.l5, C.P.C. When one gets
entangled in the skein of details impertinent to the core issue,
the true problem gets obfuscated. This happened, to an extent,
in the High Court. Side-stepping these inessentials, Gajendragadkar
]. (as he then was) speaking for the Court, came to the scope and
sweep of the Indian Independence (Legal Proceedings) Order, cleared
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llOSHANLAL V, M. S. OBERAI (Krishna Jyer, J,)
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the .Iegal·cobwebs and laid bare the object and ambit of that law in
the back-ground of the historic surgery of Indian geography .which
took place then. The Court concluded thus :
"The next question which must be considered is whether
the presen~ suit falls within Section 4(1) at all. The answer to
the question must obviously be in the negative. The m'aterial
allegations made by the appellants in the plaint filed by them
in the present suit clearly show that the whole cause of action
had .accrued within the jurisdiction of the Senior Su~Judge at
Lahore. The original contract had taken place at Lahore,
the property agreed to be sold. was situated at, Lahore, the
eat nest amount of R~. 5,00,000/· was paid by the appellants to the
respondent at Lahore, the breach of the contract took place at
Lahore, and so under S~ction 20(c) ofihe Code of Civil Procedure the suit was properly filed in the Court at Lahore and the
jurisdiction of the said.Court to try the suit was in no manner
affected by the passing of the Act or the transfer of territory.
This position was not and ~s not disputed. There is, therefore,
no-doubt that·the trial Court could have proceedeQ to deal with
this suit even if the Order in question had not been p'assed; and
so the statutory fiction raised by the provisions of the Order
cannot be ·invoked enforcing a decree passed by the Federal
Court in· an appeal arising from ··such a suit. In our
opinion~ therefore, the Hi_$.h Court was in error in holding that
the provisions of Section 4 applied t.o the decree . sought to be
executed by the appella~ts."
·
The view, though in reversal of the High Court's holding, did
not effect the ultimate outcome. For the Court ruled that the execution orthe foreign decree, as if i~ were one of the Supreme Court .of
'India, was misconceived. In other words, the forum for enforcement
and the process for getting relief viz., a suit under s. 9 and 13 of the
C.P.C. in the com·petent Court of ot1ginal jurisdiction could not be
circumvented or short-circuited by resort to the exceptional methodology indicated in s. 4(1) or (3) of the Indian Independence (Legal Pro-
·ceedings) Order.
· ·
This extinguished the. fires of controversY regarding ·executability
but ign1ted 'the current original suit. Shri Oberoi, discomfited in
execution, was driven to filing a regular suit for recovery of the decree
am~mnt . based on the foreign judgment in 'his favour and indeed
success attended his efforts, since the trial Court and the High Court
made shortshrift .of .all the pleas to non-suit him.
. It is this defeat on aU points that has · escalated the appellant's
litigation tO" the top judicial deck, this Court, urging his triple opposition to the plaintiff's decree.
Sbri Desai's 'submissions' logically and sequentially, were three.
Firstly, the decree of the Federal Court of Pakistan, which waS the
foundation of the present action, had vested automatically in the
Custodian ·under the Pakistan Ordinance of 1949 and, therefore, the
1-2S5Sup.CI/75 .
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[1975] 2 s.c.R.
plaintiff Obcroi had no right to recover on the basis of the foreign
Judgment. Absent locus standi or cause of action, his suit was bound
to fail and therefore the appeal was bound to bo allowed on that ini·
tial ground alone.
His second submission was that the six-year period available under
Art. 117 of the Indian Limitation Act for a suit upon a· foreign decree
had long ago expired, reckoned from the date when the Federal Court
of Pakistan granted the present plaintiff a decree. BY simple
arithmetic he is right but the plaintiff has sought to salvage his action
from the clutches of limitation by reliance on ss. 14 and 19 of th<:
Indian Limita,tion Act. In the facts and circumstances of the present
case, Shri De~ai repel~ this rescue operation as a misapplication
of the relevant provisions.
The last, yet to our mind the most meaningful, point urged by the
appellant, was that a)t hough a decree for Rs. 5,00,000/- had been
awarded by the Pakistan Court in favour of the present plaintiff,
a sum of Rs. 3,00,000/- had already been deposited to the credit
of that decree in the Lahore Court and had been actually adjusted
towards the decree, with the result that the worst coming to the
worst only a st~m of Rs. 2,00,000/- together with subsequent interest
could be claimed by the plaintiff, in law and justice. The equities
between the parties were a component of the branch of jurisprudance
bearing on execution of foreign deerees.
We proceed to examine the soundness of these three contentions
in the order set out above.
Locus Standi
Ordinarily, a suit on fact of a foreign decree is sustainable and s.
13 C.P.C., sets out the limitations on the amplitude of the right. This
proposition is not disputed but what Shn Desai argues is that the
decree being 'evacuee property' ~nder the Pakista~J Ordinance, it has
already vested in the Custodian by statutory Operation, so much so
the plaintiff has long ago ceased to be decree-holder. May be other
limited remedies, to get relief as an evacuee who has lost large properties,
may be available to OberoL under other enactments in both countries
but qua holder of a foreign decree he, cannot bring a suit to recover
the debt-an infirmity affecting the root of his right.
The plaintlff's answer is simple and sufficient and deflates the
defendant's resistance, based on 'evacuee' legislation. A foreign judgment is enforceable by a suit upon the judgment which creates nn
obligation between the parties. Indeed, it 'shall be ·conclusive as to
any · matter thereby directly adjudicated upon
between the same
parties' subject to the exceptions enumerated in s. 13 C.P.C. None
of these nullifying clauses being attracted, prima facie the foreign
judgment on which the plaintiff founds his present action is unassailable.
Certainly, the judgment of the Pakistan Court was in favour of the
plaintiff and, Qeing conclusive under s. 13, the defendant could
not be heard to urge to the contrary.
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Even so, let us analyse, the evacuee law -based bar, to see if it
has substance.
To appreciate the merit of this argument, it is necessary, as earlier pointed out, to follow the provisions of the evacuee legislation
in Pakistan.
The Ordinance of 1949 defines 'evacuee' [s. 2(2)] and
both the parties herein fall squarely within that definition. The second
question then is whether the decree, which is the source of the plaintiff's rights, is 'evacuee property' as defined in s. 2(3) of the 1949
Ordinance or is 'property' as defined in s.2(5) thereof. If it. is, s. 6 of
the said Ordinance will operate to divest the plaintiff of his ownership
of the decree and vest it in the Custodian, notwithstanding any other
law to the contrary (s.4 of the Ordinance is an over-riding provision).
The first point that falls for decision therefore is to decide whether
the decree of Shri Oberoi is 'evacuee property'. Assuming for a
moment that it is-:"and ·at the first flush it is-an argument which
neutralises this contention is urged by the other side, based on the
Pakistan (Administration of Evacuee) Property Act, 1957 (12/58).
There is hardly .any doubt that the parties
are 'evacuees'
within the meaning of this Act also. Even so, the Pakistan Administration of Evacuee Property Act, 1957 (XII of 1958) carves out
a category of evacuee property out of the Custodian:s control. Does
this decree thus escape the net ? Yes, if it has not been treated as
. evacuee property. For, although all evacuee property vests in the
Custodian by force of s. 7 of this Act s. 3(1) is of strategic significance and reads:-
"3. Property not to be treated as evacuee property on or
atter 1st January; 1957.
(1) Notwithstanding anything ·contained in this Act, no
( 7) person ·or property not treated as evacuee or as evacuee
property immediately before the first day of January, 1957, shall
be treated as evacuee or, as the case may be, as evacuee property, on or after the said date.
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Certainly, the judgment debtor is an evacuee and the Custodian
has treated him as such in court proceedings. But has that decree been
treated as evacuee property ?
The answer is an easy negative.
The Custodian never demanded any right qua decree holder nor as
stepping into the shoes of Shri Oberoi. Thus, whichever way we
view .the matter the appellant must fail in this branch of his case.
It is pregnant with meaning that the Custodian did not seek to get
himsrlf impleaded as a co-appell?.nt in the Feder;>.\ Court of Pakistan
and at no tier of the long-drawn out litigation in Pakistan did the
defendant contend that the plaintiff Oberoi was no longer entitled
to sue for the amount and that the Custodian alone had such right
if at all.
Bar of limitation
The slow flow of the plaintiff's rights along the stream of statutory
limitation would have normally been stilled into a final freeze, for the
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[1975) 2 S.C.R.
prescribed life span of six years under Art. 117 of the Limitation Act had
admittedly run out. The t:escue raft on which Shri Oberoi clutched
o survival of his right to sue was s. 19 and his life-belt as it were
was s. 14. The facts and law are fairly clear; their rival interpretation~
by counsel D!Verth!~e : s diverged so much that the encounter generated
at the bar as much heat as light-inevitable, may be, in an adversary
system. Be that as it may, we will scrutinise the case urged by the
plaintift' to attract these rejuvinatory and exclusionary provisions.
Courts must a~ far as is reasonably permissible put a liberal construction on documents to save, not to scuttle, when faced with a
plea of limitation to non-suit an otherwise good claim.
Section 19, to help renew limitation, requires, as rightly stressed
by Shri Desai, an intention to own a subsisting liability by the debtor
to the particular creditor.
Mere chronicles
of
litigations
and
recitals
of
documentary
events,
it
is
argued,
cannot
be
regarded
as
acknowledgement
if the
whole
drift of the writing is a denial of the plaintiff's claim. But,
in th~ view we take of the applicabilitY of s. 14, a further probe into
or pronouncement on t~e legal labyrinths of s. 19 and the rulings
cited in that connection need not detain us.
Suffice it to say that
we do not express any opinion on the issue including an advocatels
authoritY to acknowledge liability in the course of a Statement of the
Case. It all depends on the circumstances of each case.
Section 14, which neatly fits in, is simple in its ingredients, to thr
extent we are called upon to consider.
I
It is a sine qua non of a claim under s.14 that the earlier proceeding
is prosecuted in good faith. It is beyond cavil that before launching
on execution of the Pakistani decree Shri Oberoi had taken advice
from two leading Indian lawyers and set about the job diligently. Bona.
fides is thus writ large in his conduct. The controversy is that the defect ofnon-executability ofthe foreign decree by virtue of the Governcr
General's Order does not savour of a jurisdictional or like error but
{)fa mere misconstruction of Ia~. We need not labour the obvious
that here the prosecution of the execution proceedings was repelled
because and on.ly because the institution of such proceeding on the
-execution side was without jurisdiction. Normally, a money claim
.due under a foreign decree can be enforced on the original side by a
·suit under ss. 9, 13 and 26, C.P.C. in the appropriate Court and the
executing court has no jurisdiction to straightway levy execution
under 0 · 21, C.P.C. An exception is provided in this regard by the
Governor General's Order and a special forum t•iz, the High Court
is indicated when the decree to be executed is of the Supreme Court
of Pakistan. All this pertains to jurisdiction and in the Associated
Hotels case this Court negatived executability solely on grounds
jurisdictional or quasi-jurisdictional. Section 14 thus comes to the
rescue of the defendant in this suit.
Certainly, Section 14 is wide enough to cover periods covered by
execution proceedings4See 1959 SCR 817 at 818). After all. s. 47
jtself contemplates. transmigration of souls as it were of execution
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petitions and suits. The substantial identity ll'of the subject matter.
of the lis is a pragmatic test. Moreover, the defects· that will attract
the provision are not merely juri~dictional strictly so called but
others more or less neighbours to such deficiencies. Any circumstance legal or factual, which inhibits entertainment or consideration
by the Court of the dispute on the merits, comes within the scope of
the section and a liberal touch must inform the interpretation of the
Limitation Act which deprives the remedy of one who has a right
(See (1971)2 SCR 397 at 401). in the Associated Hotels case (i.e.
the· very lis in its earlier round on the execution side this Court
pointed out [1961] I SCR 259 at 272) that the question was one of
initial jurisdiction of the Court to entertain the proceedings. Thus
in this very matter. the obstacle was jurisdictional and the exclusionary
operation of s. 14 of the Limitation Act was attracted.
Equitable Adjustment
The last ditch battle fought by the appellant relates to the deposit
of Rs. 3,00,000/· which, if deducted 'from the date of payment into
Court from the amount decreed a huge scaling down of the figure
will be the result.