11.5 Foreign Judgments (Ss. 13-14), Transfer of Suits (Ss. 22-25) & Settlement Outside Court under Section 89

11.5 Foreign Judgments, Transfer of Suits & Settlement Outside Court under Section 89

The CPC does not run in a straight line from plaint to decree. Three self-contained clusters sit alongside that sequence, and each generates a predictable style of objective question because each is built on a closed list.

Foreign Judgments (Sections 13, 14 & 44A CPC)

Section 2(5) defines a foreign court as a court situate outside India and not established or continued by the authority of the Central Government; Section 2(6) defines a foreign judgment as the judgment of a foreign court.

Section 13: When a Foreign Judgment Is Conclusive

A foreign judgment is conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title — except in the six cases below. Learn the exceptions as a closed list; the examiner almost always asks which of four options is not an exception.

• Fraud (clause (e)) is special. A judgment obtained by fraud is a nullity, and the ordinary rule that a foreign decree cannot be attacked on the merits gives way. Satya v. Teja Singh (AIR 1975 SC 105) applied clause (e) to a Nevada divorce obtained on a false plea of domicile.
• Merits (clause (b)): a dismissal for default of appearance or a decree passed as a penalty for non-production of documents is generally not on the merits and therefore not conclusive.
• Section 14 raises a presumption that the foreign court had jurisdiction, on production of a certified copy of the judgment; the presumption may be displaced by proof of want of jurisdiction.
• Section 44A allows a decree of a superior court of a reciprocating territory notified by the Central Government to be executed in India as if it were a decree of a District Court, subject to the Section 13 exceptions. A judgment from a non-reciprocating country must be sued upon afresh.

Transfer and Withdrawal of Suits (Sections 22-25 CPC)

• Timing under Section 22: the application must be made at the earliest possible opportunity, and in all cases where issues are settled, at or before the settlement of issues. A defendant who waits until the evidence has begun is out of time.
• Section 24 is far wider than Section 22: it requires no objection by a defendant, can be exercised on the court's own motion, is not confined to suits which could have been filed elsewhere, and is available at any stage. The touchstone is the balance of convenience and the interests of justice, not the mere convenience of one party.
• Section 24(5) makes clear that a suit or proceeding may be transferred under Section 24 from a court which has no jurisdiction to try it.

Section 89 CPC: Settlement of Disputes Outside the Court

Inserted by the Code of Civil Procedure (Amendment) Act, 1999 with effect from 1 July 2002, on the recommendation of the Law Commission and the Malimath Committee.

"Where it appears to the Court that there exist elements of a settlement which may be acceptable to the parties, the Court shall formulate the terms of settlement and give them to the parties for their observations and after receiving the observations of the parties, the Court may reformulate the terms of a possible settlement and refer the same for — (a) arbitration; (b) conciliation; (c) judicial settlement including settlement through Lok Adalat; or (d) mediation."

• Order X Rule 1A requires the court, after recording admissions and denials, to direct the parties to opt for one of the modes in Section 89(1); Rule 1B requires appearance before the forum so opted; Rule 1C allows the presiding officer of that forum to refer the matter back if he considers that further conciliation would be inappropriate.
• Consequence of each mode: where the reference is to arbitration or conciliation, the Arbitration and Conciliation Act, 1996 applies as if the proceedings were referred for settlement under that Act. Where it is to a Lok Adalat, the Legal Services Authorities Act, 1987 applies and the award is deemed to be a decree of a civil court and is final with no appeal. Where it is to mediation, the court effects a compromise and follows the prescribed procedure.
• Refund of court fee: where a suit is settled under Section 89, the plaintiff is entitled to a refund of the court fee paid, under Section 16 of the Court Fees Act, 1870.
• Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24 is the governing decision. It held that the drafting of Section 89 is defective — the definitions of judicial settlement and mediation in clauses (c) and (d) have been interchanged and must be read as swapped — and that the court need not formulate and reformulate terms of settlement before every reference; a summary formulation of the disputes suffices. It also listed the categories of cases unsuitable for reference, such as representative suits, election disputes, prosecution for criminal offences, and cases involving serious allegations of fraud or forgery.

[!TIP] The examiner's favourite Section 89 point is not the text of the section but the Afcons correction: as enacted, clause (c) describes what is really mediation and clause (d) describes what is really judicial settlement, and the Supreme Court has directed that the definitions be read interchanged until Parliament corrects them.