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1990 Supreme(Online)(Bom) 12

BOMBAY HIGH COURT
Judge, J
Algemene Bank Nederland NV v. Satish Dayalal Choksi
Summary Suit No. 4067 of 1985



Execution of foreign judgments requires compliance with domestic legal provisions, including obtaining necessary permissions, which were not secured in this case.

Headnote:(A) Code of Civil Procedure, 1908 - Order XXI Rule 22 - Execution of foreign judgment - Plaintiff, a bank in Hong Kong, sought to execute a decree obtained in a summary suit against the defendant in India - The Supreme Court of Hong Kong recognized as a superior court as per Section 44A - Issues of natural justice and breach of Indian laws raised by the defendant were addressed - It was found that the defendant had sufficient chances to defend the Hong Kong suit but failed to appear - The judgment was, therefore, considered a judgment given on merits despite the defendant’s absence - The necessary permission from the Reserve Bank of India for enforcement under the Foreign Exchange Regulation Act, 1973, had not been obtained. (Paras 1-38)

(B) Foreign Exchange Regulation Act, 1973 - Section 26(6) and S.47(3)(b) - Permissions required for executing foreign judgments if they contravene Indian law - Court held that enforcement of the judgment was not maintainable due to lack of permission. (Paras 30-38)

Table of Content
1. details of the decree against the defendant. (Para 1 , 2 , 3 , 4)
2. contest over the enforcement of the decree under indian law. (Para 11 , 12 , 30)
3. nature of judgment and its validity on merits. (Para 19 , 20 , 28)
4. court's final ruling on the execution application. (Para 38 , 39)

1. This is a notice under Order XXI R.22 of the Code of Civil Procedure for leave to execute against the defendant in Bombay a decree of the Supreme Court of Hong Kong obtained by the plaintiff - applicant against the defendant.

2. The plaintiff - Bank in Hong Kong had ,dealings with one M/s. Madhusudan and Co. Ltd. To secure the amounts advanced by the plaintiff - Bank to the Company, the brothers of the defendant who were directors of the Company, gave personal guarantees, in or about 7th April 1975, to the plaintiff - Bank at Hong Kong. According to the plaintiff - Bank, the defendant had also executed in favour of the plaintiff - Bank a personal guarantee for repayment of the Company's debts on or about 7th April 1975.

3. In November 1984, as Madhusudan and Co. Ltd. was unable to discharge its liabilities to the plaintiff - Bank, the plaintiff - Bank filed a suit against Mudhusudan and Co. The brothers of the defendant were joined as party defendants on the basis of the guarantees executed by them. The defendant was not joined as a party to this suit and no amount was claimed from him. In December 1984 the suit was decreed against Madhusudan and Co. Ltd., as well as the brothers of the defendant. On or about 28th January 1985 Madhusudan and Co. was ordered to be wound up.

4. Thereafter in July 1985 the plaintiff - bank instituted a suit against the defendant on the basis of the guarantee said to have been executed in or around 7th April 1985 by the defendant, for about Rs. 2.05 crores. It is the case of the defendant that he was in no way concerned with Madhusudan and Co. Ltd. and had not given any guarantee to the plaintiff - Bank in respect of the dues of Madhusudan and Co. Ltd. around April 1975 or at any time. It is the contention of the defendant that in 1971 and a few years thereafter the defendant had resided in Hong Kong and had worked with his brothers. Madhusudan and Co. was then a proprietary concern. Madhusudan and Co. Ltd. was incorporated only in 1975 by which time the defendant had returned to India. He was never a director of this company. He contends that he may have executed a blank form of personal guarantee in favour of the plaintiff - Bank during the periods when he was in Hong Kong prior to 1975. It is his case that since 1971-72 the defendant resides in Bombay and carries on independent business in the name and style of M/s. Indiamco. In this connection the defendant enjoyed banking facilities with the plaintiff - Bank at Bombay.

5. The suit which was instituted by the plaintiff - Bank against the defendant was a summary suit being No. 4067 of 1985. In the second week of July 1985 the Hong Kong solicitors of the plaintiff - Bank served a writ of summons and papers in respect of this Hong Kong suit on the defendant. In the first week of September 1985 an application was filed by the plaintiff in the Hong Kong Supreme Court for a summary judgment against the defendant. On 25th September 1985 the defendant filed an affidavit in reply to this application. On 7th October 1985 an unconditional leave was granted to the defendant by the Hong Kong Supreme Court to defend the suit.

6. On 10th October 1985 the defendant filed his defence in the suit. On 2nd May 1986 the plaintiff - Bank took out a summons for directions in the Hong Kong Supreme Court. On 6th June 1986 the g Kong Supreme Court gave direction for trial as a result on 4th July 1986 the plaintiffs filed their list of documents in which they disclosed the guarantee executed by the defendant in favour of the plaintiff - Bank. It is an accepted position that the guarantee itself does not bear any date. According to the plaintiff - Bank it was executed aro









































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