C.R. No.4821 of 2010 ******* IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH C.R. No.4821 of 2010 (O&M) Date of decision:10.09.2010. Karnail Singh Sandhar …Petitioner Versus M/s Sandhar and Kang Limited …Respondent CORAM : HON’BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Mr. Arun Jain, Senior Advocate, with Mr. Amit Jain, Advocate, for the petitioner. Mr. M.L.Sarin, Senior Advocate, with Mr. Rohit Khanna, Advocate, for the respondent. ***** RAKESH KUMAR JAIN, J. The petitioner has invoked the revisional jurisdiction of this Court under Article 227 of the Constitution of India to challenge the impugned order dated 26.02.2010 (Annexure P-7) passed by the District Judge, Sangrur upholding the maintainability of the execution application filed by the respondent who has sought to execute foreign judgments (judgments of the Courts at United Kingdom) at Sangrur in India. In order to trace the genesis of controversy between the parties to the dispute [hereinafter referred to as “the parties”] a few skeletal facts are necessary, namely, what was the basic - 1 - C.R. No.4821 of 2010 ******* dispute between the parties and what were the judgments and decrees passed by the Courts at United Kingdom. Litigation between the parties at United Kingdom The petitioner (Karnail Singh Sandhar) filed a Claim No.7BM30125 against i) Sandhar & Kang Limited; ii) Swarn Singh Kang; iii) Udham Singh Kang; and, iv) Avtar Singh Kang in the High Court of Justice, Chancery Division, Birmingham District Registry, United Kingdom [hereinafter referred to as the “High Court of Justice”] on 23.03.2007, inter alia, alleging that the petitioner was formerly a resident of United Kingdom [for short “UK”] as a citizen. Since about 1987, he and his wife are living in Canada as citizens. In or about 1964, the petitioner and defendant Nos.2, 3 and 4, namely, Swarn Singh Kang, Udham Singh Kang and Avtar Singh Kang, established a business partnership for trading in food retail under the name and style of “Sandhar & Kang”. In or about 1975, they purchased the property with the title No.WM65125, situated at and known as 228 and 260 Cheapside, 54 Bradford Street and land and buildings at the North East Side of Cheapside, North West side of Birchall Street, and South West side of Bradford Street [hereinafter referred to as the “Property”] together having quarter share each. It was registered in the legal estate of the petitioner and defendant Nos.2 to 4. In or about 1976, the partnership business was dissolved and was taken over by a new company called “Sandhar & Kang Limited” (defendant No.1) in which the petitioner and defendant Nos.2 to 4 were the shareholders. In or about 1978, a further property at 24 Chester - 2 - C.R. No.4821 of 2010 ******* Road, New Oscott [hereinafter referred to as the “Chester Road Property”] was purchased by the petitioner and defendant Nos.2 to 4 in equal quarter share. The said property was also registered in the legal estate of the petitioner and defendant Nos.2 to 4. It was alleged that the Property and the Chester Road Property were not transferred to the company (defendant No.1) and remained registered in the legal estate of petitioner and defendant Nos.2 to 4 to continue to hold the same as trustees for themselves in equal shares. In or about 1986, the petitioner and defendant Nos.2 to 4 fell out, the petitioner resigned as a Director and shareholder of the company and was paid £350,000 for his shareholding in the company. However, the petitioner remained registered as a holder of the legal estate in the Property and the Chester Road Property with defendant Nos.2 to 4 in equal shares. After his resignation, the petitioner left UK and settled at Canada and obtained Canadian citizenship. In December 1988, without the knowledge and consent of the petitioner, defendant Nos.2 to 4 sold the Chester Road Property by simulating signatures of the petitioner on the transfer deed and retained the consideration amount which, according to the petitioner, was of £200,000 and the amount has not been accounted for. In October 1992, defendant Nos.2 to 4, without the knowledge and consent of the petitioner, transferred the Property to the company by simulating his signatures on the transfer deed. Following that, the Property was registered in the sole legal title of the company. In the year 2000, the petitioner returned to the UK and discovered the aforesaid transfers. On his - 3 - C.R. No.4821 of 2010 ******* objection, defendant Nos.2 to 4 through their solicitors produced a copy of the purported “receipt” for £2000 allegedly signed by the petitioner on 15.08.1987. It was also alleged that the petitioner then submitted the documents, namely, i) the Transfer Deed dated 09.12.1988 relating to the Chester Road Property; ii) the Transfer Deed dated 19.10.1992 relating to the Property; and, the receipt dated 15.08.1987 for £2000, on which, the Forensic Handwriting Expert opined that transfer deed dated 09.12.1988 in relation to the Chester Road Property and transfer deed dated 09.10.1992 in relation to the Property are the simulations and are not genuine, whereas copy of receipt for £2000 dated 15.08.1987 could not be thoroughly examined as the copy was not fit for examination. It was also alleged that at some time after 2000, defendant Nos.2 to 4, in the capacity of the Directors of the Company (defendant No.1) applied for Planning Permission for the development of the Property into private accommodation, by division into apartments, to which Planning Permission was granted in the year 2006 and in view thereof, the value of the Property (located in a prime position in Digbeth, Birmingham) was estimated to be more than £30,000,000 (thirty million pounds). On this factual premise, the petitioner had sought the reliefs i) a declaration that the Property continues to be held on a resulting and/or constructive trust by the petitioner and defendant Nos.2 to 4 as trustees for themselves in equal shares; ii) the Transfer Deed dated 19.10.1992 of the Property in favour of defendant No.1 was sought to be set aside; iii) an order be - 4 - C.R. No.4821 of 2010 ******* passed that the Land Register relating to the Property be rectified to show the Property to be in the legal estate and title of the petitioner and defendant Nos.2 to 4 as tenants in equal shares; and, iv) for an order for all accounts and enquiries in respect of the sale of the Chester Road Property and the petitioner also prayed for various damages. The action commenced by the petitioner in respect of Property registered under Land Registry Title No.WM65125 was contested by the defendants by applying on 29.03.2007 for “1st High Court Application” for an order that i) there be summary judgment against the claimant; ii) that the claimant remove or cancel the notice registered by him from Title No.WM65125; and, iii) the claimant pay the costs of the action and the 1st High Court Application on an indemnity basis. On 03.05.2007, the High Court of Justice issued a judgment by way of a minute of order (the “Minute of Order”) whereby the petitioner was directed to pay the costs (the “1st Costs”) incurred by the defendants in relation to the 1st High Court Application to the tune of £20,000 which was paid to the defendants. On 07.06.2007, the defendants applied to the High Court (the “2nd High Court Application”) for an order that (i) there be summary judgment against the claimant on its counterclaim for a declaration that Title No.WM65125 is owned by Sandhar & Kang Limited; (ii) that the claimant be ordered to withdraw its pending applications at the Land Registry against Title No.WM65125 and be prevented from submitting further applications to the Land Registry to encumber Title No.WM65125; and, (iii) the Claimant - 5 - C.R. No.4821 of 2010 ******* pay the costs of the 2nd High Court Application. On 05.07.2007, the High Court of Justice issued a judgment by way of an order (the “High Court Order”) directing the petitioner to pay the costs (the “High Court Costs”) incurred by the defendants in relation to the 2nd High Court Application. The petitioner was ordered to pay £25,000 as costs to the defendants on account of the High Court Costs (“Payment on Account”). On 25.07.2007, the petitioner applied to the Court of Appeal (Supreme Court of UK) [for short “Court of Appeal”] against the order of the High Court of Justice, but did not apply for a stay in respect of the Payment on Account. Leave to appeal was granted on 02.10.2007. On 14.02.2008, the Appellate Court dismissed the appeal by way of an order (“Court of Appeal Order”) and directed the petitioner to pay costs (Court of Appeal Costs”) incurred by the defendants in relation to the Court of Appeal proceedings related to the Court of Appeal Order. The cost was assessed as £25,000 besides interest on the costs as assessed. At this stage, it would be relevant to refer to the order of the High Court of Justice dated 05.07.2007 by which costs of £25,000 was imposed and also the order dated 14.02.2008 passed by the Court of Appeal again imposing costs of £25,000, which are reproduced as under: - “IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION, BIRMINGHAM DISTRICT REGISTRY. BEFORE HIS HONOUR JUDGE SIMON BROWN QC THIS 5TH DAY OF JULY 2007 - 6 - C.R. No.4821 of 2010 ******* BETWEEN: KARNAIL SINGH SANDHAR …Claimant. -and- (1) SANDHAM & KANG LIMITED (2) SWARN SINGH KANG (3) UDHAM SINGH KANG (4) AVTAR SINGH KANG …Defendants. ORDER UPON THE HEARING of the First Defendant’s application notice of 7 June 2007 AND UPON HEARING counsel for the claimant and leading counsel for the First Defendant. IT IS ORDERED THAT: 1. There be summary judgment for the first defendant in relation to its counterclaim and the court declares that the claimant has no beneficial interest in Title No.WM65125 (“the Property”). 2. The claimant is ordered: 2.1 not to make any further application to the Land Registry to claim any interest in the estate and interest of the First defendant or its successors in title in the property on grounds substantially the same as those relied upon by the claimant in his application to enter a restriction in - 7 - C.R. No.4821 of 2010 ******* relation to the Property in Form RXI dated 20 December 2006 or otherwise in relation to the property without the permission of the court. 2.2 to execute (by himself or by his solicitors) forthwith and in any event by 4 pm on 6 July 2007, an application to the Registrar to withdraw his application to enter a restriction in relation to the Property in form RXI dated 20 December 2006 in the form attached to this order and marked “A”. 2.3 to execute (by himself or by his solicitors) forthwith and in any event by 4 pm on 6 July 2007, no application to the Registrar to withdraw his application to change the register in relation to the Property in form API dated 20 December 2006 in the form attached to this order and marked “A”. 3. In the event that the Claimant does not execute both of the documents referred to in paragraphs 1.2 and 1.3 above by 4 pm on 6 July 2007, pursuant to s.39 of the Supreme Court Act, 1981 the court orders that any such document not executed by the claimant may be executed by a person then holding office as a District Judge in this division at this registry, in which even the document so executed shall operate and be for all purposes available as if it had been executed by the claimant. It shall be - 8 - C.R. No.4821 of 2010 ******* sufficient for these purposes for the First Defendant to produce to a District Judge as aforesaid a sealed copy of this order, a witness statement verifying the Defendant’s failure to comply with paragraph 2.2 and/or 2.3 above and a document or documents as appropriate in a form substantially the same as those attached to the order for execution. 4. The Claimant’s Particulars of Claim dated 16 March 2007 be struck out. 5. The Claimant is to file and serve any application for permission to file and serve Amended Particulars of Claim against the Second, Third and Fourth Defendants only by 4 pm on 26 July 2007. 6. There be no order as to the costs and incidental to the Claimant’s Application Notice of 12 June 2007. 7. Otherwise the claimant is to pay the First Defendant’s costs of the proceedings to date on a standard basis. 8. The claimant is to pay the First Defendant a sum of 25,000 pounds on account of his liability for costs under paragraph 7 above. 9. Permission to apply. Sd/-9.7.07” “THURSDAY 14TH FEBRUARY 2008 IN THE COURT OF APPEAL ORDER No.5568 ON APPEAL FROM THE HIGH COURT OF JUSTICE CHANCERY DIVISION - 9 - C.R. No.4821 of 2010 ******* 7BM30125 BEFORE LORD JUSTICE LAWS LORD JUSTICE RIX LORD JUSTICE JACOB BETWEEN: KARNAIL SINGH SANDHAR APPELLANT -and- SANDHAR & KANG LIMITED & ORS RESPONDENT ON HEARING Judith Jackson QC Counsel for the Appellant and John Randall QC Counsel for the Respondent. IT IS ORDERED THAT 1) the appeal be dismissed. 2) the Respondent’s costs to be summarily assessed at £25,000 including VAT. 3) the Respondents may apply for a third party costs order within 90 days. 4) the Respondent’s costs be paid by 4 pm within seven days.” It may also be pertinent to mention that certificate had also been issued by the High Court of Justice under Section 10 of the Foreign Judgments (Reciprocal Enforcements) Act, 1933 [for short “Act of 1933”] in which it was categorically mentioned that “the Court hereby confirms that the whole of the sum outlined in the attached Certificate is due from the Claimant”. For the purpose of ready reference, the order dated 22.05.2008 and both the - 10 - C.R. No.4821 of 2010 ******* certificates issued by the High Court of Justice and the Court of Appeal are being reproduced as under: - “CLAIM No.7BM30125 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION, BIRMINGHAM DISTRICT REGISTRY BETWEEN: KARNAIL SINGH SANDHAR …Claimant and SANDHAR & KANG LIMITED AND OTHERS Defendant ---------------------------------- ORDER ---------------------------------- Before DISTRICT JUDGE ROGERS sitting at the Birmingham District Registry of the High Court of Justice, Chancery Division, Priority Courts, 33 Bull Street, Birmingham B4 6DS on 22 May 2008. Upon considering an application by the solicitors for the Defendants dated 22 May 2008. IT IS ORDERED THAT: 1. A Certificate under Section 10 of the Foreign Judgments (Reciprocal Enforcements) Act 1933 be provided; and 2. The Court hereby confirms that the whole of the sum outlined in the attached Certificate is due from the Claimant. 3. There be no order as to costs. Dated 22 May 2008 Sd/- DISTRICT JUDGE ROGERS 22.05.2008.” - 11 - C.R. No.4821 of 2010 ******* “Form 110 Certificate under Section 10 of the Foreign Judgments (Reciprocal Enforcement) Act, 1933. In the High Court of Justice, Chancery Division, Birmingham District Registry. Claim No.7BM30125 Caimant Mr. Karnail Singh Sandhar Defendant (1) Sandhar & Kang Limited (2) Swarn Singh Kang (3) Udham Singh Kang (4) Avtar Singh Kang I hereby certify 1. That the claim form, a copy of which is annexed, was issued out of the High Court of Justice, Chancery Division, Birmingham District Registry on 23 March 2007 by Mr. Karnail Singh Sandhar the above named claimant, against (please see the continuation sheet attached) the above named defendant, for declarations and orders in respect of the property with title number WM65125. 2. That the claim form was served on the defendant on 28 March by fax to Hammonds as solicitors for the Defendant. 3. That the defendant acknowledged service of the claim form. - 12 - C.R. No.4821 of 2010 ******* 4. That [no] objection has been made to the jurisdiction of the court. 5. That the Defendant obtained judgment against the Claimants in the High Court of Justice for the removal of a caution registered to Mr. Karnail Singh Sandhar on Title Number WM65125 and that the action by the Claimant against the First Defendant be struck out together with the sum of £25,000.00 for costs. 6. That the judgment carries interest at the rate of 8% per annum calculated on the judgment debt and costs from the date of judgment until payment. 7. That the judgment has been served on the Claimant Mr. Karnail Singh Sandhar in accordance with the provisions of Part 6 the Civil Procedure Rules 1998. 8. That [no application to set aside the judgment has been made]. 9. That [an appeal against the judgment has been finally disposed of and dismissed]. 10. That enforcement of the judgment is not for the time being stayed or suspended, that the time available for its enforcement has not expired and that the judgment is accordingly enforceable. 11. This certificate issued under [Section 10 of the Foreign Judgments (Reciprocal Enforcement) Act, 1933]. Signed District Judge Rosers Dated:22.5.08.” “Form 110 - 13 - C.R. No.4821 of 2010 ******* Certificate under Section 10 of the Foreign Judgments (Reciprocal Enforcement) Act, 1933. In the Court of Appeal on appeal from the High Court of Justice, Chancery Division, Birmingham District Registry. Claim No.7BM30125 Caimant Mr. Karnail Singh Sandhar Defendant (1)Sandhar & Kang Limited (2)Swarn Singh Kang (3)Udham Singh Kang (4)Avtar Singh Kang I hereby certify 1. That the claim form, a copy of which is annexed, was issued out of the High Court of Justice, Chancery Division, Birmingham District Registry on 23 March 2007 by Mr. Karnail Singh Sandhar the above named claimant, against (please see the continuation sheet attached) the above named defendant, for declarations and orders in respect of the property with title number WM65125. 2. That the claim form was served on the defendant on 28 March by fax to Hammonds as solicitors for the Defendant. 3. That the defendant acknowledged service of the claim form. 4. That [no] objection has been made to the jurisdiction of the court. - 14 - C.R. No.4821 of 2010 ******* 5. That the Defendant obtained judgment against the Claimant in the High Court of Appeal for removal of a caution registered to Mr. Karnail Singh Sandhar on Title Number WM65125 and that the action by the Claimant against the First Defendant be struck out together with the sum of £25,000.00 for costs. 6. That the judgment carries interest at the rate of 8% per annum calculated on the judgment debt and costs from the date of judgment until payment. 7. That the judgment has been served on the Claimant Mr. Karnail Singh Sandhar in accordance with the provisions of Part 6 the Civil Procedure Rules 1998. 8. That [no application to set aside the judgment has been made]. 9. That [an appeal against the judgment has been finally disposed of and dismissed]. 10. That enforcement of the judgment is not for the time being stayed or suspended, that the time available for its enforcement has not expired and that the judgment is accordingly enforceable. 11. This certificate is issued under [Section 10 of the Foreign Judgments (Reciprocal Enforcement) Act, 1933]. Signed District Judge Rosers Dated:22.5.08.” That after the aforesaid orders passed by the Courts at UK, the respondent/decree-holder filed an execution in the Court at Ontario, Canada as the petitioner is a citizen of Canada. The said - 15 - C.R. No.4821 of 2010 ******* execution is pending but no recovery could have been effected. At the same time, Ms. Ann Benzimira, Partner with the law firm Hammonds LLP, acting for the respondent, filed an affidavit to the effect that nothing could be recovered from the petitioner even at UK. Litigation between the parties on execution in India On 11.06.2008, the respondent filed an execution in the Court of learned District Judge, Sangrur for execution of the decrees to recover costs of £50,000 as the property of the petitioner is situated at Sangrur. On 20.11.2008, learned District Judge dismissed the application for execution on the ground of its maintainability observing that the orders sought to be executed are not passed on merits and in terms of Section 13(b) of the Code of Civil Procedure, 1908 [for short “CPC”] such foreign judgments were not found to be conclusive and, thus, unenforceable in India. The said order dated 20.11.2008, however, was set aside by this Court in Civil Revision No.577 of 2009 on 05.02.2010 and the matter was remitted back to the Court of District Judge, Sangrur for adjudication afresh. Pursuant to the order of this Court dated 05.02.2010, the petitioner filed an application dated 18.02.2010, inter alia, alleging that a simultaneous application for execution is not maintainable in view of the fact that the respondent has already filed an execution in the Court at Ontario, Canada. The learned District Judge, Sangrur, vide its impugned order dated 26.02.2010 rejected the plea raised by the petitioner and held that the application for execution of the foreign judgments is maintainable. - 16 - C.R. No.4821 of 2010 ******* Present Revision Petition The petitioner has challenged the impugned order dated 26.02.2010 before this Court by filing present revision petition on the following 3 points: - (i) whether a foreign judgment, not delivered on merits of the case, is not conclusive to the matter between the parties and unexecutable in terms of Section 13(b) of the CPC. (ii) Whether a judgment under which a sum of money is payable in respect of costs is enforceable in view of Explanation (II) to Section 44-A of the CPC. (iii) Whether two simultaneous execution applications are maintainable? Elaborating the first point, Shri Arun Jain, learned Senior counsel appearing on behalf of the petitioner, has submitted that the order of the High Court of Justice is not a judgment on merits because there was no trial of the claim set up by the petitioner as neither issues were framed nor evidence was led, rather the judgment has been passed on an application filed by the respondent(s) for summary judgment; or in the alternative, for causing the notice registered on 21st December 2006 to be removed; and thirdly, alteration of the register by removing or cancelling the notice. It is submitted that the question of fraud having been perpetuated at the instance of the respondent(s) upon the petitioner was not adjudicated upon and, therefore, the judgment in terms of which the costs has been imposed cannot be called a judgment on merits and is, thus, unexecutable in India in terms of Section 13(b) of the CPC. In support of his argument, he - 17 - C.R. No.4821 of 2010 ******* has relied upon two decisions of this Court in the case of International Woollen Mills (M/s.) Vs. Standard Wool (U.K.) Limited (M/s.), 2000(2) RCR (Civil) 249 and in the case of Gurdas Mann and others Vs. Mohinder Singh Brar, AIR 1993 (P&H) 92. In reply to the aforesaid argument, Shri M.L.Sarin, learned Senior counsel appearing on behalf of the respondent, has submitted that trial is not necessary to decide a case on merits nor issues are required to be framed and the evidence is also required to be led by the parties. He further submitted that the language used in Section 13(b) of the CPC is the “decision on merits” and not “decision on merits after a trial”. He has also drawn the attention of the Court to the orders passed by the High Court of Justice to contend that it was practically an order passed on merits of the controversy between the parties as the learned Judge has discussed the evidence available on record. First of all, he has referred to the order passed by Justice Simon Brown QC of the High Court of Justice dated 01.05.2007, in which it was observed: - “the claimant says this is a forgery, that he was out of the country at the time and that his signature is not on the document. That is the second