The judgment of the Supreme Court in Bank of Baroda v. Kotak Mahindra Bank Ltd involved clarifying the limitation for filing an application for the execution of a foreign decree of a reciprocating country in India. The question of limitation as a bar for application to execute decree assumes legal dimensions when it is seen in the context of multi-jurisdictional litigation, legal differences between cause and forum country and procedural or substantive categorization of limitation. The facts concern a letter of credit issued by Kotak Mahindra Bank whilst Bank of Baroda was the confirming bank of the said letter of credit. BOB filed a suit for recovery of its dues against Kotak Mahindra in High Court of Justice, Queens Bench, and Divisional Commercial Court of London. BOB filed an execution petition 14 years after the decree was passed by the London Court.

In 2013, Add. City Civil & Session Judge Bangalore dismissed the execution petition as being time-barred holding that Article 136 of the Limitation Act, 1963 applies and the execution petition should have been filed within 12 years of the decree being passed by the London Court. High Court affirmed the view of the Trial Court.

The inquiry of the Court was fairly open-ended in terms that it evaluated not just the existence of limitation but also the element s like duration and initiation of limitation. The Court kicked off the inquiry by discrediting the submission that there is no limitation period for an application for the execution of a decree of a reciprocating country. Therefore, the Respondent sought for application of Doctrine of Lapse and Laches as applicable in writ proceedings to the aforementioned applications for execution. The Court rejected the contention noting the distinct character of an execution application and a writ proceeding. A foreign decree was not automatically enforceable in India until 1937 whence Section 44A of the CPC provided that such decrees pursuant to procedural compliance would be executed in as if they were decrees of the District Court itself. Section 44A thus prescribes the process through which a foreign decree would be executed in India. The question then concerns the scope and ambit of Section 44A of the Act. The difficulty with interpretation of Section 44A concerned its classification as being either a mere procedure for execution of a foreign decree or being a comprehensive provision for the execution of the foreign decree. This interpretative conundrum was dovetailed with conflicting views on the proper and logical ends of the deeming fiction of Section 44A of the Act. Quite simply put, Section 44A posits execution of a foreign decree, pursuant to requisite procedural compliance, in as if it had been passed by the District Court itself. Thus, it is questionable whether deeming fiction of “in as if” imports the legal prescription of limitation into the execution proceedings of a foreign decree. The Court ruled that the plain reading of Section 44A indicates that it only empowers the District Court to execute the decree as if the decree had been passed by an Indian Court and it does not deal with the period of limitation. The Court’s interpretation of Section 44A eliminated any role Section 44A might have insofar as the question of limitation is concerned. The debate, therefore, shifts to the role of express limitation law in Cause country (United Kingdom) and Forum Country (India). A determination of applicable law would provide requisite guidance as to the period as well as the initiation of the limitation period applicable to the dispute.

The debate surrounding cause-forum conflict for proper law of limitation concerns the divergent classification of the law of limitation as being either procedural or substantive. When we say that law of limitation is a procedural matter, it implies that it would law of limitation of the forum country which shall apply to the dispute at hand. Similarly, a substantive classification would carry limitation law of cause country in the determinations being made for execution in the forum country. This lack of commonality plays the role of spoilsport especially in circumstances where limitation bars remedy in one but not in other law. Different period of limitation underscores the importance the determination of applicable law has in a just resolution of disputes. On the question of forum-cause conflict, the Court highlighted the distinct positions on law of limitation while holding that the present thinking appears to be that law of limitation is not procedural especially when it leads to the extinguishment of rights or remedies. This contradicts the existing legal position of the law of limitation of the forum country being applied in India as detailed in Uthamram v. K.M. Abdul Kasim Co.

The Common law approach conceptualized the law of limitation as being procedural and thereby prescribed that the law of the forum country would govern the field. Additionally, the Court citing Dicey noted that the common law expression procedure includes all legal remedies and everything connected with the enforcement of the right. It includes the question of set-off and counterclaim, the whole law of evidence, as well as every rule in respect of the limitation of an action or any other legal proceeding for the enforcement of a right and hence includes methods e.g. seizure of goods or arrest of the person, by which a judgment may be enforced. The application of limitation law of forum country implied that a claim would be allowed in the forum country if it fell within the limitation period prescribed in its law, even if the action was time-barred as per the law of the cause country. This conclusion of procedural classification was notwithstanding whether the lex cause holds limitation law as procedural or substantive. Thus, the extinction of the right of action by the proper law of the transaction was not held to be a bar to an action in England. If the permissible period is longer in the forum country than the cause country, the plaintiff is at liberty to explore his action in the forum country notwithstanding the extinguishment of his right in the cause country.
The shift from common law to the modern view in the US as well as in the UK has been enabled by statutory enactments to that effect. The Court cited the Foreign Limitation Period Act, 1984 which adopts the general principle that the limitation rules of the lex cause (law of the cause country) shall be applied in actions in England and that English limitation rules are not to be applied. Court further quoted Uniform Conflict of laws Limitation Act, 1982 which provides that if a claim is substantively based upon the law of one other state, the limitation period of that state must be applied. This new consensus appears to be that the limitation law of the cause country should be applied even in the forum country.

The broader trend of applying limitation law of the cause country and thereby classifying such law as being substantive is driven by the need to foster commercial ties and harmonize global trade. In legal terms, the shift to a substantive standard for limitation was also justified by the Court on the grounds that the common law approach would actively hinder the corresponding right of the judgment-debtor to challenge a decree that has been time-barred. The classification of limitation as substantive is subject to the caveat that if the law of a forum country is silent about the limitation prescribed for execution of a foreign decree then the limitation of the cause country would apply. Thus, the Court ruled that the limitation law of the UK (cause country) as opposed to the Indian Limitation Act, 1963 would be applied to the present dispute between the parties.
The Court was then seized with the question of the date from which the period of limitation would run in relation to a foreign decree sought to be executed in India. The question was whether an application for execution of foreign decree would fall within Article 136 or Article 137 of the Limitation Act, 1963. To that end, the Court located Article 137 as opposed to Article 136 as the source for the prescription of the time period for a bar of limitation. The Court held that Article 136 of the Limitation Act dealt only with decrees passed by Indian Courts and does not cover the execution of foreign decrees. The Court also adversely noted the silence of Article 136 of the Limitation Act vis-à-vis foreign decrees when read with Section 44A of the CPC. Naturally, Article 137 was employed to provide for 3 years of limitation for an application for the execution of the foreign decree in India. As to the question of when such a period of limitation would be initiated, the Court delineated two specific situations:

First Situation
Where the decree-holder does not take any steps for execution of the decree during the period of limitation prescribed in the cause country for the execution of decrees in that country. In such a case he has lost his right to execute the decree in the country where the cause of action arose. The limitation would start running from the date the decree was passed in the cause country and the period of limitation prescribed in the forum country would not apply. In case the decree-holder does not take any steps to execute the decree in the cause country within the period of limitation prescribed in the country of the cause, it cannot come to the forum country and plead that the limitation of the forum country should apply.

Second Situation
When a decree-holder takes steps-in-aid to execute the decree in the cause country. The Proceedings in execution may go on for some time, and the decree may be executed, satisfied partly but not fully. The Judgment debtor may not have sufficient property or funds in the cause country to satisfy the decree. In such circumstances, the right to apply under Section 44A would accrue only after the execution proceedings in the cause country is finalized and the application under Section 44A of the CPC can be filed within 3 years of the finalization of the execution proceedings in the cause country as prescribed by Article 137 of the Act. Thus, the decree-holder must approach the Indian court along with the certified copy of the decree and the requisite certificate within a period of 3 years.

In conclusion, the period of limitation would start running from the date the decree was passed in the foreign court of a reciprocating country. However, if the decree-holder first takes steps-in-aid to execute the decree in the cause country, and the decree is not fully satisfied, then he can then file a petition for execution in India within a period of 3 years from the finalization of the execution proceedings in the cause country.