EA No. 471 of 2009

1. For reasons stated therein, this application is allowed.

2. The application stands disposed of.

EA Nos. 32 of 2007, 152 of 2008 and 470 of 2009

1. Execution Petition No. 70 of 2006 has been filed by Messer Griesheim GMBH (presently called Air Liquide Deutschland GmbH) against Goyal MG Gases Pvt. Ltd (Judgement Debtor) under Section 44A of the Code of Civil Procedure, 1908 (‘CPC’) and Section 151 thereof for execution of a foreign judgment and decree dated 7th February 2006 passed by the High Court of Justice, Queen’s Bench Division, Commercial Court, Royal Court of Justice, U.K. By the said judgment and decree, the Decree Holder (‘DH’) has been awarded an aggregate sum of US$5824564.74 and Euro 31,364.74 comprising:

“a) US $4794762.98 plus

b) Interest up to the date of the Order in the sum of US $1019751.76 plus.

c) Costs and expenses in the sum of:-

i. Euro31364.74 and

ii US $ 10050.00 together with

d) Interest on the aforesaid sum of US $ 5824564.74 and Euro 31364.74 (Judgment sum) @ 8% p.a. from 7th February 2006 upto the date of payment.”

2. Accompanying the Execution Petition is a certified copy of the aforementioned judgment and decree together with a certificate under Section 10 of the Foreign Judgments (Reciprocal Enforcement) Act, 1973 (‘FJREA’) certifying that the said judgment and decree has not been satisfied in full or in part by means of execution or otherwise within the jurisdiction of the High Court of Justice, Queen’s Bench Division, Commercial Court. A copy of the order dated 7th February 2006 containing the reasons for passing of the decree of that date has also been enclosed.

3. The background to the execution petition is that the Judgment Debtor (‘JD’) entered into a loan agreement with the lender bank (Citibank International Plc) for a term loan of US $ 7 million on 30th June 1997 in order to finance the acquisition of capital equipment. The DH, a company incorporated in Germany, held 49% of the shares in the JD. In that capacity the DH agreed to irrevocably and unconditionally guarantee the loan.

4. Under Clause 16.12 of the loan agreement, the DH was to be subrogated the rights of the lender bank against the JD. The loan agreement was governed by English law.

5. With defaults committed by the JD, the DH as guarantor was obliged to pay US $4,794,762.98 to the lender bank. It paid the said amount to the lender bank. Thereafter, the DH raised the demand on the JD to clear the outstanding amount. The JD failed to make the payment.

6. On 17th January 2003, the DH initiated the proceedings against the JD before the High Court of England for recovery of the aforementioned sum. The JD did not enter appearance and accordingly a default judgment dated 6th February 2003 was passed by the High Court of England. On 25th March 2003, the DH issued a notice of demand to the JD under Section 434 (1) (a) read with Section 433 (e) of the Companies Act, 1956. The JD took a stand in the reply to the notice that the said default judgment dated 6th February 2003 was not enforceable in India since it was not a judgment on merits and had been passed in the absence of the JD.

7. On 6th July 2005, the DH applied to the High Court of England to set aside the default judgment and for a judgment on merits. The JD was served in the said proceedings and appeared before the High Court of England. The JD did not raise any objection to the jurisdiction of the High Court of England. The JD also filed the statements of its witnesses.

8. One of the pleas raised by the JD before the High Court of England was that although it was not willing to comply with the default decree, the said default decree should not be set aside.

9. The summary of the detailed reasons given in the judgment dated 7th February 2006 of the High Court of England is as under:

(i) There was no injustice to the JD in setting aside the default judgment and in enabling the JD to put forth the defences it might have on merits. The JD