Case Name: MESSER GRIESHEIM GMBH (NOW CALLED AIR LIQUIDE DEUTSCHLAND GMBH) V. GOYAL MG GASES PRIVATE LIMITED.
Petition Number: CIVIL APPEAL OF 2026 ARISING OUT OF SLP (C) NO. 4774 OF 2023
Neutral Citation: 2026 INSC 401
Date of Judgement: 21.04.2026
Coram: HON’BLE MR. JUSTICE PAMIDIGHANTAM SRI NARASIMHA AND HON’BLE MR. JUSTICE ALOK ARADHE
INTRODUCTION
The present case is an important precedent of the Supreme Court of India with regard to the enforceability of foreign judgements under CPC. The Supreme Court examined whether a summary judgement of an English Court directing to reimburse the Foreign Appellant, could be enforced in India under the CPC.
FACTS AND PROCEDURAL HISTORY
The Foreign Appellant, Messer, (now Air Liquide Deutschland), a German Company entered into a Share and Purchase Agreement in 1995 with the Indian Respondent, Goyal MG Gases Private Ltd to establish a Joint Venture Company for manufacturing and conducting business of industrial gases. Subsequently, as a part of overseas borrowing for acquiring plants and machinery, the Respondent got External Borrowing sanctioned from Citbank UK. This loan was unconditionally and irrevocably guaranteed by the Appellant. The Agreement mentioned it would be governed by English Law, subject to Section 13 of the CPC regarding its enforceability in India. When the Respondent defaulted in payment, Citbank invoked the guarantee and the Appellant discharged the liability with interest, demanding reimbursement vide the subrogation clause of the loan agreement.
The Appellant instituted proceedings against the Respondent in the English Court. The Respondent did not file a reply or appear and the English Court passed a default judgement, directing reimbursement towards the Appellant. On the plea of the Appellant for enforceability, the English Court set aside the default judgement and passed a summary judgement in favour of the Appellant. The Appellant filed an Execution Petition before the Delhi High Court to enforce the decree of the English Court wherein the Learned Single Judge held that it is enforceable in India. Aggrieved, the Respondent appealed before a Division Bench which directed to transfer the execution petition to the District Court. The Appellant has appealed in the Supreme Court against the impugned judgement of the High Court.
ISSUE
Whether the English Court’s Judgement refusing leave to defend, was enforceable in India under Section 13 CPC read with Section 44A CPC?
SUBMISSIONS OF THE PARTIES
The Learned Counsel for the Appellant submitted that the Decree does not fall within the exceptions of Section 13 CPC and is therefore enforceable as the liability discharged was invoked from the guarantee in the loan agreement. Hence, the Appellant is entitled to Right of Subrogation as per the loan agreement to recover the amount. It was expressly provided in the agreement that it will be governed by English Law to which the Respondent voluntarily submitted without raising any objections to the jurisdiction. Moreover, it was contended that the English Judgement was made on merits after providing sufficient opportunity to the Respondent. Once the foreign judgement was final, findings of fact cannot be disturbed in the execution stage and the executing court does not have to adjudicate the merit of the decree.
Learned Counsel for the Respondent submitted that the English Judgement is contrary to Section 13 CPC, that it is violative of the permissions granted under Foreign Exchange Regulation Act, 1973 as statutory provisions exempt an Indian Company from holding liability on the event of invoking a guarantee. The English Judgement ignored the mandatory provisions of the Indian Law, which rendered them unenforceable under Sections 13(c) and 13(f) of the CPC. Absence of a full trial, including cross-examination, amounted to a gross violation of natural justice. It was further submitted that the RBI Circulars are only applicable to creditor banks in India whereas in the present case, the creditor bank is in England.
JUDGEMENT AND ANALYSIS
The Supreme Court noted that after the loan was disbursed in 1997, the respondent paid two installments in 1999 and 2000. The Court further noted the defences of the Respondent which were rejected in the English Court: that they entered into 3 agreements, first being the Non-Recourse Agreement before the loan was sanctioned in June 1997 wherein the Appellants agreed that they shall not take recourse once the guarantee is invoked. Secondly, there was a mutual agreement between the parties after disputes arose on the non-compete clause, that the appellant would discharge the debt of the respondent towards the bank as a set-off for the claims against them. Lastly, in December 2002, the parties agreed that if the Appellant initiated proceedings for their own internal purposes, the default judgement would not be enforced. Moreover, the Balance Sheets and accounts were unanimously adopted with the participation and signatures of the Appellant during the Board Meetings.
The Court while referring to Alcon Electronics (P) Ltd. v. Celem S.A. of France (2017) 2 SCC, highlighted that the fundamental principle of Section 13 CPC is giving reasonable opportunity and time to the proper and necessary parties to put forth their case. The Court also enumerated the principles enshrined in Section 13 with regard to foreign judgements, namely:
- It should be pronounced by a Court of Competent Jurisdiction.
- It should be rendered on merits after considering evidence and submissions of both parties.
- A judgement not following principles of natural justice including absence of notice and denial of reasonable opportunity of hearing is unenforceable.
- Not enforceable if there is an incorrect view of International Law or Refusal to recognise Indian law wherever applicable.
- Judgement sustaining a claim that breaches Indian Law is not enforceable in India.
Thus, the Court accepted the contention of the Respondents that a reasonable leave to defend was rejected by the English Court. The core issue was whether a Foreign Judgement, refusing leave to defend, qualifies as a Judgement under Section 13(b) of the CPC. The Court upholding the judgement of the Division Bench noted that the English Court and Learned Single Judge, despite examining the material evidence, did not warrant a full-fledged trial when triable issues existed.
The Court explained that a decree pronounced without full investigation into the merits of the case when there are reasonable grounds to do so, does not qualify as a decree “on merits” within Section 13(b) of the CPC. The Court cautioned that while granting summary judgement in cases of least chances of prospects, it is essential to not accept factual assertions only on the face value and conduct inquiry into substantial issues. The Apex Court held that when the dispute before the Court is demonstrative of the fact that the highly contested facts compel deeper scrutiny, disposal of the case in summary jurisdiction would cause great prejudice to the party seeking leave to defend. Thus, the Court reaffirmed that disputes of questions of fact were prematurely adjudicated, denying the respondent an opportunity to present oral evidence and for cross-examination.
CONCLUSION
The Supreme Court therefore concluded that the procedure adopted in the summary judgement of the English Court was not in accordance with procedural principles or that of natural justice and held that it does not fall within the ambit of Section 13(b) of CPC to be enforced. Accordingly, the appeal was dismissed.
