Unsettling "Settled" Law: Indian Supreme Court Holds UK Summary Judgement Is Not Enforceable

Unsettling ‘Settled’ Law: Indian Supreme Court holds UK Summary Judgement is not enforceable

Lira Goswami (lira@ala-india.com) with inputs from Geetali Talukdar, Associated Law Advisers

Section 13 of the (Indian) Civil Procedure Code (“CPC”) states that a “foreign judgement shall be conclusive” on any “matter” directly adjudicated between the parties except where the exceptions (mentioned in section 13) apply, including where “it is not given on the merits of the case”. The other exceptions are:

• where it appears (on the face of the proceedings) to be founded on an incorrect view of international law or refusal to recognize the law of India, if applicable; or
• where the proceedings (in which the judgement was obtained) are opposed to natural justice (or obtained by fraud) or sustains a claim founded on a breach of any law in force in India.

Until recently, summary judgements given by a foreign court, after considering the evidence on record was considered to be a decision given on the merits and hence, enforceable in India. This was the consistent view of the High Courts and the Supreme Court of India. Courts have also emphasized that even an ex-parte decision may be considered to be “on the merits” if it involves due application of mind and is not given as a matter of course (or by way of penalty) merely because of default in appearance.

The recent decision of the Supreme Court in Messer Griesheim GmBH vs Goyal MG Gases Private Limited  2026 INSC 401 (“Messer Griesheim”) ‘unsettles’ this settled legal position by holding that summary judgement of a foreign court (refusing to grant leave to defend after hearing the respondent and considering all materials including the evidence on record) is not a decision given “on the merits” and hence unenforceable in India, under section 13 CPC.

In Messer Griesheim, the foreign judgement was passed by the High Court of Justice, Queen Bench Division, UK (“English Court”) which is a notified superior court of a reciprocating territory (pursuant to notification issued by the Indian Government in this regard) under Section 44A CPC, which deems decrees passed by such foreign reciprocating courts to be a decree passed by an Indian court.

A foreign currency loan was taken by an Indian joint venture company (“JVC”) based on a guarantee given by the foreign joint venture partner, Messer Griesheim GmBH (“MGG”). The loan agreement was governed by the laws of England. The loan was disbursed to the JVC after obtaining permission from India’s Reserve Bank of India. The JVC availed of the loan; utilized the loan proceeds; paid two instalments and thereafter defaulted, resulting in the bank encashing the guarantee given by MGG.  After paying the bank, MGG sued the JVC in the English Court, as provided in the loan agreement.

In the first round of litigation before the English Court, the JVC did not appear (although served) and a default judgement was passed in favour of MGG. However, as section 13 CPC states that a foreign judgement is not conclusive unless it is given “on the merits”, MGG requested the English Court to set aside the default judgement and pass a summary judgement “on the merits” of the case.

In the second round, the JVC appeared; filed three witness statements; and opposed the setting aside of the default judgement. In the witness statement, it was submitted to the English Court that the JVC had a good defence but a trial should not be conducted on the merits inter-alia on the ground that “If the court decides to set aside the default judgement and allows the matter to proceed to a hearing on the merits…”, the JVC will “suffer significant prejudice”.

The English Court considered the three witness statements and all documents/evidence on record. After due application of mind, by a detailed, reasoned judgement, it refused leave to defend on the ground that no triable issue was raised and proceeded to issue summary judgement in favour of MGG for an amount of USD 4,794,762.98 together with interest calculated in accordance with the loan agreement. The JVC did not file any appeal against the English Court’s judgement.

MGG sought enforcement in India, pointing out that the English Court’s judgement is a decision of a superior court in a reciprocating territory under section 44A CPC. A single judge of the Delhi High Court held that the English Court’s judgement is conclusive and enforceable, since it was a decision given “on the merits”.

On appeal, the Division Bench initially held that the Delhi High Court lacked jurisdiction (as it was not a “district court” under section 44A CPC). This was set aside by the Supreme Court (on appeal) and the matter was remanded to the Division Bench, which thereafter, held that the English Court’s decision was not enforceable as it is “on the merits”.

After nearly 20 years of litigation in the Indian courts, the Supreme Court held that the English Court’s summary decision is not a decision given on the merits (as it is not after a full trial) and hence unenforceable in India, even though the loan agreement was governed by English law; the English Court was a competent court having jurisdiction over the parties; there was no fraud; the respondent (JVC) participated and filed 3 witness statements; and the evidence given by the JVC was duly considered for deciding whether or not to grant leave to defend and thereafter, by reasoned judgement, leave to defend was refused on the ground that no triable issue was raised.

Yet, the Supreme Court held that this did not constitute a decision “on merits”. This interpretation conflicts with previous decisions which held that a judgement is considered to be given “on the merits” if parties had an opportunity to present their case, rival submissions are considered and the court applied its mind. (Alcon Electronics Private Limited v Celem Roujan, France  (2017) 2 SCC 253.

The interpretation adopted in Messer Griesheim is also not supported by the language of section 13 CPC, which nowhere states that to be a decision “on the merits of the case”, the judgement must be after a full trial of the issues. Section 13 requires adjudication between the parties on any “matter”. The expression “matter” does not mean a full trial as held by the Bombay High Court in Janardhan Mohandas Rajan Pillai vs Madhubhai Patel, AIR 2003 Bom. 490.

Even in the case of the International Woollen Mills vs Standard Wool (UK) (2001) 5 SCC 265 (“Standard Wool Case”) which involved an ex-parte foreign judgement and is relied upon in Messer Griesheim for its ultimate conclusion, the Supreme Court specifically disapproved the decision of the Orissa High Court in Chintamoni Pradhan v Paika Samal AIR 1956 Orissa 136 (“Orissa Decision”) which held that a judgement on merits is one which is entered after full trial. The Supreme Court not only disapproved the Orissa Decision but also noted that the same has been overruled in a later judgement of the same High Court in Trilochan Chaudhary v Dayanidhi Patra AIR 1961 Orissa 158, which held as follows:

“In innumerable subsequent decisions given by the High Courts in India the question as to whether an ex-parte judgement passed by a foreign court will, under all circumstances be deemed to have given not on the merits of the case, has been fully discussed and the High Courts are unanimous that an ex-parte judgement may be held to be given on the merits of the case, if some evidence has been led and the judgement was given on that evidence”. 

“Thus, there seems to be complete unanimity of all the High Courts….. that even an ex-parte judgement…. may be deemed to be to a judgement given on the merits of the case if some evidence is adduced on behalf of the plaintiff and the judgement – – however brief – – is based on a consideration of that evidence. Where however, no evidence is adduced on the plaintiff side and his suit is decreed merely because of the absence of defendant either by way of penalty or in a formal manner….the judgement may not be one based on the merits of the case”.

In another decision of the Delhi High Court in Navin Khilnani vs Mashreq Bank, 2008 (146) Delhi Law Times 134 (“Navin Khilnani”), the summary procedure adopted in the UK was specifically discussed and held to be a decision on the merits so long as it was given after considering the evidence of record and is not a default judgement pronounced merely because of non-appearance. An appeal against this decision was dismissed by the Supreme Court.

A similar view was taken by the Punjab & Haryana High Court in Karnail Singh Sandhar v Sandhar and Kang Ltd (2010), which, following Navin Khilnani, held that a summary judgement (of the UK court) refusing leave to defend is a judgement given on the merits of the case if the court’s refusal is after due application of mind. It further held that where the English court is of the opinion that “there are no triable issues” after considering all facts (including the defence put forward), it would be a decision of the merits and it would be a “travesty of justice” to hold otherwise. Referring to the Standard Wool Case (which involved an ex-parte judgement), the court held that the statement therein that a decision passed “without evidence” would not be a decision on the merits “would not include cases under [UK] summary procedure where leave to defend application is dismissed and the court comes to the conclusion, after detailed analysis of the respective contentions….”.

Messer Griesheim contradicts this well settled legal position, despite noting that “a decree passed by a foreign court may be treated as having been rendered ‘on the merits’ where the Court has applied its mind to the substantive issues of the case“. Nevertheless, it ultimately holds that in contested matters, “disposal of the case in summary jurisdiction will cause great prejudice to the parties seeking leave to defend”.

In coming to this conclusion, Messer Griesheim ignored the fact that the English Court considered the defence raised by the JVC (in its three witness statements) and by a reasoned judgement, set aside its earlier ‘default’ judgement and denied leave to defend since there were no triable issues and as the JVC’s defence was “so lacking in credibility and cogency and so inconsistent with the verifiable facts, that they cannot begin to justify a refusal to set aside the default judgement” nor provide any real prospect of a “successful defence”. It is, therefore, apparent that the English Court’s judgement was given after due judicial consideration “on the merits of the case” after considering the evidence on record and fulfilled the well-settled test of enforceability under section 13 CPC.

Messer Griesheim also ignored the important fact that the JVC chose not to file an appeal against the English Court’s judgement and consequently it became final and binding.

Notwithstanding these facts, the court in Messer Griesheim re-assessed the findings of the English Court, (as if it were an appeal court), disregarding well settled law that an executing court cannot sit in appeal over a foreign judgement or re-assess if the foreign court correctly appreciated the evidence nor can it re-appreciate the foreign court’s reasoning, evidence, procedure or conclusion once it is shown that it has been passed after due judicial process (R. Vishwanathan v Rukh-ul-Mulk Syed Abdul Wajid (1963) 3 SCR 22).

Messer Griesheim also failed to appreciate that justice, equity and good conscience demanded that a borrower should honour contractual (loan repayment) obligations to a guarantor; and the principle of comity required that a judgement of a superior court of a reciprocating territory (given after due judicial consideration of all matters /evidence on record), should be enforced.

As a result of the Messer Griesheim decision, the well ‘settled’ legal position (on what constitutes a decision “on the merits”) has been ‘unsettled’, creating uncertainty and exposing all summary judgments of foreign courts to execution challenges in India.  It has also led to a great travesty of justice since a borrower has been permitted to renegade on solemn contractual (repayment) obligations after availing of the loan.

Foreign companies, particularly lenders, typically choose English governing law and English courts for speedy resolution of commercial disputes. They will now find themselves re-visiting dispute resolution clauses particularly where the borrower is an Indian party, possibly opting for arbitration, where the grounds for refusing enforcement (including for breach of “natural justice“) are narrower (similar to New York Convention grounds) and there is reduced scope for appeal under the (Indian) Arbitration and Conciliation Act, 1996.

Given the ‘unsettling’ impact of the  Messer Griesheim, not only the law but the ends of justice (and certainty in judicial decisions), call for a review of the Messer Griesheim and/or its reconsideration by a larger bench.