"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Saturday, March 10, 2018

Is Transfer of Decrees under the Civil Procedure Code a Vestigial Requirement?

Section 38 of the Code of Civil Procedure, 1908 describes the courts can execute a decree. It states that a decree can be executed by the Court which passed it or by the Court to which the decree is sent for execution. The expression "Court which passed a decree" is explained in Section 37 of the Code. Section 38 reads: "A decree may be executed either by the Court which passed it, or by the Court to which it is sent for execution." 

One of the implications of this provisions seems to be this: say, if a decree is passed by a court in Mumbai, the decree can be executed by the Mumbai court, and if the decree-holder wants to execute the decree against the judgement-debtor who has his office, bank accounts accounts, assets, etc. at Kolkata, the decree-holder cannot directly file the decree directly in the relevant court at Kolkata for execution. The decree-holder has to file the decree in the Mumbai court for it to be transferred to the Kolkata court for execution. Section 39 of the Code states in this regard:

"(1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court of competent jurisdiction,-
(a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or
(b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or
(c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or
(d) if the Court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.
(2) The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.
(3) For the purposes of this section, a Court shall be deemed to be a Court of competent jurisdiction if, at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed.
(4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction."

Given the antiquity of these provisions [Section 38 and a part of Section 39 existed even under the 1877 Code (see, here)], it is possible that the requirement of transfer of decrees was laid down in a period in history when it was difficult for an executing court which did not pass the decree to confirm the valdidity of decree passed by another court, especially if the executing court was at a considerable distance from the court which passed the decree.  However, such constraints may not be altogether valid in the current times. 

Now, compare this scenario with an arbitral award. There is an arbitral award rendered, say, by an arbitral tribunal at Singapore. There is no need to file the said award in a Singaporean court for the award to be executed/ enforced in India. If the assets of the Award debtor are located at, say, Mumbai, the Award-holder can proceed to directly enforce the arbitral award in the relevant Mumbai court having jurisdiction over the Award Debtor. Similarly, an arbitral award passed in the domestic context also can be directly executed/ enforced even if the place of arbitration is not the place where execution of the arbitral award is sought (see, this post). 

Given that even arbitral awards, domestic and foreign, are directly enforceable, why shouldn't decrees be directly executable in the court within whose jurisdiction the judgement debtor or his assets are in place?

2 comments:

Kshitij said...

Hi Badri,

This comment is unrelated to this post. But I have been regularly following your blog since your posts on the 2015 Amendment to the A&C Act, 1996.

Finally, the Cabinet has cleared the Arbitration and Conciliation (Amendment) Bill, 2018 (http://pib.nic.in/newsite/PrintRelease.aspx?relid=177128).
Point no. vi states:
"A new section 87 is proposed to be inserted to clarify that unless parties agree otherwise the Amendment Act 2015 shall not apply to (a) Arbitral proceedings .which have commenced before the commencement of the Amendment Act of 2015 (b) Court proceedings arising out of or in relation to such arbitral proceedings irrespective of whether such court proceedings are commenced prior to or after the commencement of the Amendment Act of 2015 and shall apply only to Arbitral proceedings commenced on or after the commencement of the Amendment Act of 2015 and to court proceedings arising out of or in relation to such Arbitral proceedings."

I think this clarifies the ambiguity created by the Repeals and Savings provision (Section 85) inserted by the 2015 Amendment (a point which you had extensively covered in three posts). An appeal against the judgment of the Bombay High Court in Rendezvous Sports v. BCCI is also pending before the Supreme Court [SLP (c) No. 20224 of 2016]. But once the Act is amended, hopefully, the courts will stop contradicting each other on the question of applicability of the 2015 Amendment to pending arbitration related court proceedings.

Also, could you please share your email id as a reply to this comment?

Thank you.

Badrinath Srinivasan said...

Thanks for the comments. My email id is lawbadri@gmail.com