INDIA Trends and Developments Contributed by: Pritha Srikumar Iyer, Aditya Chatterjee, Mansa Shukla and Mrinali Dave, Keystone Partners
held to be on the merits of the case and enforcement was allowed. Complementing the decision on the merits yardstick is the natural justice limb under Section 13 (d) of the CPC. In Sankaran Govindan v Lakshmi Bharathi (1975) 3 SCC 351, the Supreme Court clarified that the expression “proceedings opposed to natural justice” concerns the fairness of the procedure adopted by the foreign court and has nothing to do with the cor - rectness of the decision itself. The enquiry is confined to whether the defendant received adequate notice and a meaningful opportunity to present its case. This distinction between procedural fairness and substan - tive correctness is a recurring theme, forming the con - ceptual bridge between a decision on the merits and natural justice. Against this backdrop, Messer Griesheim arose in the specific context of an order passed by a foreign court exercising summary jurisdiction. While International Woollen Mills concerned an ex parte decree, and in Alcon , the foreign court had heard both parties, the English judgment in Messer Griesheim had been ren- dered in a situation where the defendant did appear in the English proceedings and sought to contest the claim, but was refused leave to defend. Messer Griesheim – issues and implications The Supreme Court in Messer Griesheim considered whether a reasoned foreign summary judgment, deliv - ered after hearing both parties, necessarily amounts to a decision “on the merits”? Or whether the sum - mary procedure itself may have denied the opposing party a meaningful opportunity to contest the claim. The dispute arose out of a share purchase and co- operation agreement pursuant to which Messer Griesheim furnished a corporate guarantee in respect of an external commercial borrowing availed by Goy - al. Following Goyal’s default, Messer Griesheim dis - charged the guarantee and sought recovery before the English court. Messer Griesheim initially obtained a default judgment after Goyal failed to make an appearance. It subse - quently relied on the default judgment while initiat - ing winding-up proceedings in India. Goyal resisted
those proceedings on the ground that the judgment was passed ex parte and “did not constitute a judg - ment on the merits under Indian law” for the purposes of enforcement. Recognising the difficulty in enforcing the default judg - ment, Messer Griesheim successfully applied before the English court to have it set aside and instead sought summary judgment. Goyal opposed summary disposal, contending that it had genuine triable issues requiring a full trial. The English court nevertheless granted summary judgment after refusing leave to defend, following which Messer Griesheim initiated execution proceedings before the Delhi High Court. The execution proceedings ultimately reached the Supreme Court after the Delhi High Court declined to enforce the English judgment, holding that it did not satisfy the requirements for enforcement under Indian law. Findings by the Supreme Court The Supreme Court primarily looked at two issues: whether the English judgment met India’s require - ments for enforcing foreign judgments and wheth - er prior permission was needed under the Indian exchange control laws before the foreign judgment became enforceable. The Supreme Court held that the judgment was not enforceable because the summary procedure adopt - ed by the English court did not result in a genuine adjudication of the dispute and failed to afford Goyal a meaningful opportunity to present its defence. In particular, the Supreme Court held that: • The questions of whether the judgment was ren - dered on the merits of the case and whether the proceedings complied with the requirements of natural justice were closely connected. The cen - tral enquiry was whether the summary procedure afforded Goyal a real opportunity to contest the claim. • To answer that question, the Supreme Court set out the graduated Indian standard for securing leave to defend under the CPC ( IDBI Trusteeship v Hubtown ; B L Kashyap v JMS Steels ) alongside the English standard under the English Civil Procedure
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