Bank of Baroda v. Kotak Mahindra Bank Ltd.
Background
Bank of Baroda's London branch honoured a letter of credit issued on behalf of Vysya Bank (predecessor of Kotak Mahindra Bank) and, after Vysya Bank failed to reimburse it, sued and obtained a money decree against Vysya Bank from a London court in 1995. Years later, Bank of Baroda sought to execute this foreign decree in India under Section 44A of the Civil Procedure Code, which allows decrees of "reciprocating countries" to be executed as if passed by an Indian court. The question was when the limitation period for filing such an execution petition actually begins to run.
Decision Breakdown
The Supreme Court held that ordinarily, limitation for executing a foreign decree of a reciprocating country runs from the date the decree was passed by the foreign court. However, it carved out an exception: if the decree-holder first takes genuine steps to execute the decree in the country where it was passed (the "cause country") and the decree remains unsatisfied, a fresh three-year limitation period (under Article 137 of the Limitation Act) begins only once those foreign execution proceedings conclude. Applying this framework to the facts, the Court found the appellant's execution petition in India was time-barred and dismissed the appeal, upholding the lower courts' orders though for different reasons.
Lesson Learnt
A decree-holder wanting to enforce a foreign money decree in India must act within three years of the foreign decree being passed, unless they can show they first genuinely pursued execution in the foreign country itself: in which case the Indian limitation clock only starts once that foreign process is finally concluded.