KISHENDAS Vs. INDO CARNATIC BANK IN LIQUIDATION

JUDGEMENT

(1.) This appeal comes before us on a reference by our brother Qamar Hasan J., as involving an important question of law, viz.; the executability of a decree passed by the Madras High Court in 1940 by the Courts of the then Hyderabad State on the ground of it being a foreign decree. There is no dispute with respect to the facts. The respondent, the Indo-Carnatic Bank Ltd., Madras, went into liquidation and a liquidator was appointed by the original side of the Madras High Court. The liquidator filed an application under Section 191 of the Indian Companies Act for the recovery of a sum of Rs. 1,375/-from the appellant who was a subject of His Exalted Highness the Nizam and resident of Hyderabad, on account of unpaid calls and the Court passed an ex parte order on 15-8-1940 against the appellant to pay this sum to the liquidator. The liquidator presented E, P. 170/1951 praying for transmission of the decree which was ordered ort 16-3-1951.

(2.) The determination of the question now before us relating to the executability of the decrees of those courts which were foreign courts before the partition of India or before the coming into force of the Constitution of India, by the Courts which have now become domestic courts, has given rise to conflicting judgments in different High Court. The Bombay High Court in Bhagwan v. Rajaram, A.I.R. 1951 Bombay 125 (FB), the Madhya Bharat High Court in Brajmohan v. Kishorilal, A.I.R. 1955 Madhya Bharat 1 (FB) and the Hyderabad Court in ILR 1952 Hyd 1030 : A.I.R. 1953 Hyderabad 19 held the view that the decrees passed by the Courts in what were provinces in India were decrees with an impediment, and this impediment having been removed by political changes beginning from the Indian Independence in 1947 and culminating in the transformation of these Courts which were then considered foreign Courts into domestic courts and the foreign creditors into citizens of India by the promulgation of the Constitution, such decrees become executable as decrees of the Indian Courts, and that no question of vested rights would arise as the changes which took place were changes arising due to the acts of the Legislature, but were due to an act of State. The Mysore High Court in Subbaraya Setty and Sons v. palani Chetty and Sons, A.I.R. 1952 Mysore 69 (FB), the Calcutta High Court in Firm Shah Kantilal v. Dominion of India, A.I.R. 1954 Calcutta 67; and the Nagpur High Court in Ramkisan v. Harmukhrai, A.I.R. 1955 Nagpur 103 and Firm Kanhaiyalal Mohanlal Somani v. Paramsukh, A.I.R. 1956 Nagpur 273; the Allahabad High Court in Maloji Rao v. Sankar Saran, A.I.R. 1955 Allahabad 490; the Punjab High Court in Firm Radhe Sham Roshan Lal v. Kundan Lal Mohanlal A.I.R. 1956 Punjab 193 (FB), and the Rajasthan High Court in Laxmichand v. Mst. Tipuri, A.I.R. 1956 Rajasthan 81 (FB) held that the decrees were a nullity and the subsequent changes did make them valid and executable. Some of these cases also decided that the immunity from execution being a vested right was saved by virtue of Section 20 of the Code of Civil Procedure Amendment Act 2 of 1951 and in some a distinction was sought to be made between a decree passed by the Courts of the Provinces or Part A States which were sought to be executed against a judgment-debtor who was a subject of a Native State merged in the Part A State, and those passed by a Native State which was sought to be executed in a Part A State, the former being held to be executable while the latter not.

(3.) On a full and careful consideration of the conflicting case law and of the weighty opinions of learned authors on the subject including the recent well-considered article on "Recognition and Execution of Foreign Judgments and Decrees" in 1958 SCJ 122 (Journal Portion), we propose in the first instance to state what in our view is the legal position relevant to the question before us for consideration. We will then examine the several decisions to ascertain to what extent they accord with our view, and whether it is possible to reconcile any that are at variance with those views. It is a matter beyond any controversy that prior to the Constitution of India, judgments and decrees of Courts in what were then called Native States were foreign judgments and their enforcement in the Provinces of India was subject to the provisions of the Indian Civil Procedure Code. Similarly judgments of the Courts in the Provinces of India (what were then termed as British India) were foreign judgments vis-a-vis the native States; their enforcement depending upon the provisions contained in the respective Civil Procedure Codes in force in those States. After the Indian Independence and before the Constitution certain political changes took place in some of the States which had acceded to the Indian Union. Some of them had merged in the erstwhile British Indian Provinces, while some others joined together forming bigger units. On the enforcement of the Constitution four categories of States came into existence; former British Indian Provinces became 'A' States, former native States Part 'B' States, and some other territories both native States as well as British Indian Provinces which comprised of the Chief Commissioner's Provinces were classified as Part 'C States, while the Andaman and Nicobar islands were classified as Part "D" States. Clause (3) of Article 261 of the Constitution provides that final judgments or orders delivered or passed by the Civil Courts in any part of India shall be capable of execution within that territory but notwithstanding this provision the execution of the final judgments and orders of the Civil Courts depended upon the provisions of the Civil Procedure Code in force in the respective territories.