Foreign summary judgment denying leave to defend despite triable issues violates natural justice and is not enforceable under Section 13 CPC
Facts
The dispute arose from a Share Purchase and Co-operation Agreement (1995) and a loan arrangement where the respondent obtained ECB funding from Citibank, guaranteed by the appellant. RBI approval (03.09.1997) imposed conditions, including that no liability would extend to the Indian company upon invocation of the guarantee.
After default by the respondent, the appellant discharged the loan (2001) and sought reimbursement under subrogation rights. The respondent disputed liability, claiming prior understandings and adjustment of liability in its financial statements.
The appellant obtained a default judgment (2003) in the English Court, later set aside and replaced by a summary judgment (2006) after refusal of leave to defend. Execution was sought in India under Section 44A CPC. The Single Judge allowed enforcement, but the Division Bench refused, holding the decree unenforceable under Section 13 CPC.
Issues Framed
- Whether the English Court judgment satisfies Section 13 CPC requirements.
- Whether enforcement is barred due to RBI conditions under FERA.
Court’s Reasoning
(a) On “judgment on merits” and natural justice (Section 13(b), (d) CPC):
The Court reiterated that a foreign judgment must follow “due judicial process by giving reasonable notice and opportunity” (Para 34). A judgment is on merits only when the court considers rival submissions and evidence.
The Court observed that summary judgment after refusal of leave to defend, especially where triable issues exist, cannot be treated as a decision on merits. Relying on precedents, it held that where “highly contested facts compel deeper scrutiny, disposal… in summary jurisdiction would cause great prejudice” (Para 42).
(b) Existence of triable issues:
The respondent raised multiple defences involving oral agreements and produced contemporaneous documents such as Balance Sheets and Board Minutes. These carried statutory value under the Companies Act and indicated potential absence of liability.
The Court held that these materials created “realistic” (not fanciful) defences, requiring full trial (Para 45–46). Denial of leave to defend foreclosed the respondent’s right to establish its case through evidence and cross-examination.
(c) Effect of summary procedure:
The Court emphasized that even under English law (CPR 24.2), summary judgment is improper where factual disputes require trial. The English Court’s approach resulted in premature adjudication and denial of fair opportunity (Para 52).
Thus, the judgment violated natural justice and was not “on merits.”
(d) On RBI/FERA issue (obiter):
Though unnecessary, the Court clarified that under Section 47 FERA, there is a distinction between initiating proceedings and enforcing decrees. While adjudication is permissible, enforcement requires prior RBI/Government permission.
Held
The foreign judgment is unenforceable in India as it violates Section 13(b) and (d) CPC. Civil Appeal dismissed.
Ratio
A foreign judgment rendered through summary procedure after refusal of leave to defend, despite existence of triable issues supported by material evidence, is not a judgment “on merits” and violates natural justice, rendering it unenforceable under Section 13 CPC
Case Details
Citation: 2026 INSC 401
Decided on: 21 April 2026
Case Title: Messer Griesheim GmbH (now Air Liquide Deutschland GmbH) v. Goyal MG Gases Pvt. Ltd.
Court: Supreme Court of India