M/S ALCON ELECTRONICS PVT. LTD.versusCELEM S.A. OF FOS 34320 ROUJAN, FRANCE & ANR.

                        [2016) 8 S.C.R. 577



            M/S ALCON ELECTRONICS PVT. LTD.                            A
                                v.
    CELEM S.A. OF FOS 34320 ROUJAN, FRANCE & ANR.
                 (CivilAppea!No. 10106of2016)
                      DECEMBER 09, 2016                                B

            (A. K. SIKRI AND N. V. RAMANA, JJ.]
       Code of Civil Procedure, 1908- ss. 13, 44A(3) - When foreign
iudgment not conclusive - Interlocutory order of an English court -
Dismissal of the application challenging its jurisdiction, alongwith . C
a direction for payment of costs - Execution of, by Indian Court -
Held: To be conclusive an order or decree must liave been obtained
after following the due judicial process by giving. reasonable notice
and opportunity to all the proper and necessary parties to put forth
their case - When once these requirements are fulfilled, the executing
Court cannot enquire into the validity, legality or otherwise of the· D
;udgment - On facts, the order passed by the English Court does
not fall under any of the exceptions to s. 13 and it is a conclusive
one - Said order falls within the definition of 'Order' and therefore,
it is a judgment and thus. becomes a ..decree" as per Explanation
to s. 44A(3) and the same is executable - Further, the costs imposed
                                                                       E
on the basis of the indemnity is not a penalty or tax - Thus,
Explanation II to Section 44A does not re.fer to the costs as
contemplated uls. 35"_ Although the interest on costs are not
available due to exclusion of s. 35(3), it does not mean that Indian
Courts are powerless to execute the decree for interest on costs ~
Thus, the execution petition filed by the respondents for execution F
of the order passed by the English Court is maintainable.
      Dismissing the appeal, the Court
       HELD: 1.1 A plain reading of Section 13 CPC would show
that to be conclusive an order or decree must.have been obtained
after following the due judicial process by giving reasonable notice   G
and opportunity to all the proper and necessary parties to put
forth their case. When once these requirements are fulfilled, the
executing Court cannot enquire into the validity, legality or
otherwise of the judgment. [Para· 13) (585-B-C]
                                                                       H
                                577
578           SUPREME COURT REPORTS                     [2016) 8 S.C.R.



A           1.2 A glance on the enforcement of the foreign judgment,
      the position at common law is very clear that a foreign judgment
      which has become final and conclusive between the parties is not
      impeachable either on facts or law except on limited grounds
      enunciated under Section 13, CPC. In construing Section 13, CPC
      the plain meaning of the words and expressions used therein is
B
      to be looked at and not any other factors. Further, under Section
      14, CPC there is a presumption that the Foreign Court which
      passed the order is a Court of competent jurisdiction which of
      course is a rebuttable presumption. [Para 14) [585-C-E]
         1.3 The order passed by the English Court is an order on
c merits. The appellant who has submitted itself to the jurisdiction
  of the Court and on its own requested the Court to assess the
  costs summarily. While passing a reasoned order by dismissing
  the application filed by the appellant, English Court granted the
  costs against the appellant. The appellant did not prefer any appeal
D and inrleed sought time to pay the costs. The appellant, therefore,
  cannot be permitted to object the execution. It is a pure abuse of
  process of law and the-Courts should be very cautious in
  entertaining such petitions. [Para 16) [586-A-B]
           International Woollen Mills v. Standard Wool (UK; Ltd.
E          2001 (3) SCR 166: 2001 (5) SCC 265 - referred to.
             1.4 The demand of the principles of comity of nation
      demands to respect the order of English Court. Even in regard
      to an interlocutory order, Indian Courts have to give due weight
      to such order unless it falls under any of the exceptions under
F     Section 13 CPC. Thus, the order passed by the English Court
      does not fall under any of the exceptions to Section 13 CPC and
      it is a conclusive one. [Para 18) [586-F-G)
         2.1 There is no dispute that England is a reciprocating
  territory for the purpose of Section 44A CPC. Section 44A CPC
0 indicates an independent right conferred on a foreign decree
  holder for enforcement of a Decree/Order in India. Section 44A
  is meant to give effect to the policy contained in the Foreign
  Judgments (Reciprocal Enforcement) Act, 1933. It is a part of
  the arrangement under which on one part decrees of Indian
  Courts are made executable in United Kingdom and on the other
H part, decrees of Courts in the United Kingdom and other notified
  M/S ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                    579
             FOS 34320 ROUJAN, FRANCE

parts of Her Majesty's dominions are made executable in India. A
Therefore, the order passed by that Court is executable in India
u/s. 44A CPC. [Para 20) [587-H; 588-A-C]
      2.2 On conjoint reading of 'decree', 'judgment' and 'order'
from any angle, the order passed by the English Court falls within
the definition of 'Order' and therefore, it is a judgment and thus    B
becomes a "decree" as per Explanation to Section 44A(3) of CPC.
In the instant case, the Court at England, after following the
principles of natural justice, by recording reasons and very
importantly basing on the application of the appellant itself, has
conclusively decided the issue with regard to jurisdiction and        C
passed the order coupled with costs. Hence, the order passed by
the Foreign Court is conclusive in that respect and on merits.
Hence executable as a decree. [Para 21) [589-A-B]
      Johnstone v. The Law Society of Prine!!. Edward
      Island 2 PEIR B 28 (1988) - referred to.
                                                                       D
      3.1 A penalty normally means a snm payable to the State,
not to a private claimant, so the costs imposed on the basis of the
indemnity is not a penalty or tax. Therefore, the Explanation II
to Section 44A does not refer to the costs as contemplated under
Section 35 of the CPC. The costs having been quantified have
assumed the character of a money decree for costs and cannot           E
be equated, either with a fine or penalty which is imposed on a
party by the Court or taxes claimed and are taxes payable to a
local authority, Government, or other charges of a like nature.
[Para 28) [590-H; 591-A]
       3.2 The ap11ellant submitted that as per Section 35A of the F
CPC, no Court should pass any order for the payment of
compensatory costs exceeding Rs.3,000/- or exceeding the limits
of its pecuniary jurisdiction of the said Court whichever amount
is less; and that since the costs imposed exceeded the bar
imposed by Section 35A, therefore, the order of the English Court G
is not executable. The submission lacks merit and is rejected. A
bare perusal of Section 35A shows that bar operates on the Indian
Courts with regard to imposition of costs in respect of false or
vexatious claims or defences. The bar is not attracted in the
instant case as the Court that has ordered the costs is the High
Court of Justice in England which is not governed by the H
580            SUPREME COURT REPORTS                      [2016] 8 S.C.R.


A provisions of the CPC and that the respondent merely approached
  the Indian Courts for the satisfaction of a foreign decree.
  Moreover, the nature of compensatory costs prescribed in Section
  35A of the CPC are different from 'costs' dealt with in Section 35
  of the CPC as the former are limited to the claims of defences of
  a party which are frivolous or vexatious. It is settled that before
B
  awarding costs under Section 35A of the CPC, the Court should
  satisfy itself that the claim was false or vexatious to the knowledge
  of the party who put it forward and that the interests of justice
  require the award of such compensatory costs. In the instant case,
  no clajm has been advanced by the appellant that the claim filed
c by the respondents is false or vexatious, therefore, the bar in
  Section 35A is not applicable. [Paras 29, 30] [591-B-F]
            4.1 It is to the reciprocal advantage of the Courts of all
      nations to enforce foreign rights as far as practicable. To this
      end, broad recognition of substantive rights should not be
D     defeated by some vague assumed limitations of the Court. When
      substantive rights are so bound np in a foreign remedy, the refusal
      to adopt the remedy would substantially deprive parties of their
      rights. The necessit" of maintaining the foreign rights outweighs
      the practical difficulties involved in applying the foreign remedy.
      In India, although the interest on costs arc not available due to
E     exclusion of s. 35(3), the same does not mean that Indian Courts
      are powetlcss to execute the decree for interest on costs. Indian
      Courts arc very much entitled to address the issue for execution
      of the interest amount. [Para 35] [593-B-C]
           4.2 The Execution Petition filed by the Respondents for
F     execution of the order passed by the English Court is
      maintainable under the relevant provisions. Therefore, there is
    - no reason to interfere with the impugned order. [Para 36) [593-
      D-E]
                            Case Law Reference
G
      2001 (3) SCR 1662              referred to            Para 17
           CIVIL APPELLATE JURUSDICTION: Civil Appeal No. I 0 I 06
      of2016.
            From the Judgment and Order dated 08.04.2013 of the High Court
H     of Judicature at Bombay in Civil Revision Application No. 680of2011.
  M/S ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                            581
             FOS 34320 ROUJAN, FRANCE

      Shyam Divan, Sr. Adv. D. M. Nargolkar, Adv. for the Appellant.          A
      G. K. Masand, Subhash Bijlani, Yogesh Kumar Dahiya, Ms. Manjul
Dahiya, Chandra Bhushan Prasad, Advs. for the Respondents.
      The Judgment of the Court was delivered by
       N. V. RAMANA, J. I. In this appeal by special leave, the                B
appellant-judgment debtor assails the impugned judgment dated 81h April,
2013 passed by the High Court of Bombay in Civil Revision Application
No. 680of2011, whereby the High Court has dismissed the application
filed by the appellant seeking declaration that the Judgment and Order
dated 191h October, 2006 passed by the High Court of Justice, Chancery         C
Division, Patents Court, England (hereinafter referred to as 'the English
Court') is not executable before the District Court at Nasik, by confirming
the order dated 15 1h April, 2011 passed by the District Judge-2, Nasik.
       2. The facts in nutshell are that the respondents herein filed a Suit D
against the appellant before th,~ English Court for infringement of patent
vested in the respondents besides other reliefs. In the said suit, the
appellant-defendant filed an application challenging the jurisdiction of
the English Court. In that application, the reliefs sought by the appellant
include the relief that the respondents-original claimants have to pay the
costs to the appellant occasioned by filing the application to be summarily E
assessed. The English Cout1 by its Order dated 191h October, 2006
dismissed the claim of the appellant and further directed it to pay the
costs of application to the respondents-original claimants set at
£ 12,229.75. Thereafter it appears that the appellant agreed to pay the
costs and sought for some time. When the respondents filed a petition
                                                                             F
for execution in India, the appellant opposed it in an application on the
ground that the order of English Cout1 is not executable. The executing
Cout1 dismissed the same which was confirmed by the High Court.
Hence the appellant is before us by way of this appeal.
       3. The appellant made following submissions assailing the Judgment
of the Courts below-                  ·                                        G
          a. An interlocutory Order of English Court with respect to its
             own jurisdiction (with or without a direction for payment of
             costs) does not amount to a judgment 'on merits of the
             case' and is therefore not conclusive under Section 13(b)
                                                                               H
582             SUPREME COURT REPORTS                            [2016] 8 S.C.R.



A                   of the Civil Procedure Code (CPC for short).
                b. In the alternative, the Order of the English Court in the
                   present case does not amount to 'decree' under Explanation
                   2 to Section 44A of the CPC.
               c. Without prejudice to the aforesaid, the part of the order of
B                 the English Court relating to the payment ofinterest on costs
                  should not be executed in view of the deletion of the erstwhile
                  Section 35(3) of the CPC.
            4. The Respondents have responded in the following manner. The
      decree passed by the English Court is very much a decree on merits as
c     the English Court has not only given a detailed Judgment on merits of
      the matter but also considered the entire evidence as produced by the
      parties including oral evidence by way of witness statements,
      documentary evidence produced by the parties and the application
      challenging the jurisdiction of the English Court has been decided finally
D     on merits of the case put fo1ih by the defendants. Nothing further was
      required to be done insofar as consideration of the application of the
      appellant challenging the jurisdiction of the English Court is concerned.
              5, It is submitted that Explanation-II to Section 44A is concerned,
      the same does not refer to costs which are defined under Section 35 of
E     the CPC. The costs having been quantified have assumed the character
      of a money decree for costs which cannot be equated, either with a
      fines or penalty which is imposed on a party by the Court or taxes payable
      to a local authority or to a Government or other charges oflike nature. It
      is the submission of the respondent that the legislative intent was to keep
      out of the purview of Section 44A the execution of the foreign decree if
F     it related to payment of either taxes or charges of a Iike nature or a fine
      or penalty. Even an arbitration award has been excluded. At best it could
      be argued that compensatory costs in respect of false or vexatious claims
      which have been defined under Section 35A could be excluded.
              6. It is further submitted that Section 13, CPC specifically excludes
G     the execution of such decrees which are mentioned under Clauses (a)
      to (f) thereof and this Section does not mention decrees for the costs.
             7. Furthermore they respond that the Judgments Act, 1838 of
      United Kingdom, as amended in 1993, provides that every judgment
      debt shall carry interest@ 8%. The rules framed in U.K. provide for
H     interest to run from the date the Judgment is given. The rules also provide
  MIS ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                            583
     FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

that a judgment or order takes effect from the day when it is given on        A
merits or such dates as Court may specify. The Rules further provide
that a party must comply with a judgment or order for the Payment of an
amount of money (including costs) within 14 days of the date of Judgment
or order unless the judgment or order specifies a different date for
compliance or any of the rule specify a different date for compliance or      B
the Court has stayed the proceedings or execution.
        8. Moreover, all the Orders of the Court are required to be obeyed
and implemented, unless the Court itself sets a date for its non-execution.
Otherwise orders will only remain a piece of paper and merely decorate
the file oflitigant, which would lead to an impression being created in the
minds of the litigants that they could with impunity avoid to obey the         c
Court Order. It is neither the legislative intent nor the desire of the
Judiciary.
       9. Legislative intent of executing Orders relating to payments of
costs is clear from amendment carried out to section 36, CPC to clarify
that the provisions relating to execution of decree or order include payment D
under a decree or order as well.
      10. We have heard the learned counsel on either side at length
and perused the record. The following issues fall for our consideration:
       ( 1)   Whether the order passed by the Foreign Court falls within , E
              the Exceptions to Section 13 of the CPC?
       (2)    Whether the order passed by the Foreign Court amounts to
              a "decree" and the same is executable?
       (3)    lfanswer to issue No. 2 is in affirmative, whether the decree
              for costs would fall within the ambit of Explanation 2 of        F
              Section 44A (3) ofCPC and makes it inexecutable?
       (4)    Whether interest on costs would fall within the ambit of
              Explanation 2 of Section 44A of CPC?
       (5)    Whether the interest on costs can be executed in India in
              view of deletion of Section 35(3) of CPC?                        G

       11. In re Issue No. 1 -Admittedly the English Court passed an
order dated 19'h October, 2006 dismissing the application passed by the
appellant questioning the jurisdiction of the Court. The appellant itselfat
the time of filing the application has prayed the Court to summarily assess
                                                                               H
584           SUPREME COURT REPORTS                          (2016] 8 S.C.R.


A the costs to be paid to him in the event of his application being allowed.
  Both the appellant-defendant as well the respondents-claimants
  participated in the proceedings by adducing their respective oral as well
  as documentary evidence. Skelton arguments on behalf of both parties
  were filed before Court. The appellant herein has filed schedule of costs
  at£ 25,406.30. Then the English Court has passed a detailed order on
B
   J9•h October, 2006 on the question of jurisdiction holding that it has
  jurisdiction to entertain the Suit and also directed the defendants to pay
  the costs of the application which was summarily assessed at a sum of
  £ 12,429.75.
           12. It appears that the appellant herein has accepted the order
c  and sought for time to pay the costs. Moreover, it did not choose to
   approach the appellate Court assailing the order and the same has attained
  "finality. In spite of the same, the appellant filed the application opposing
   the execution petition filed by the respondents. The first and foremost
   ground of attack against the order passed by the English Court is that
D the order is not conclusive as per Section 13(b), CPC. Such argument
   appears to be attractive but we are not able to appreciate the same in
   the facts and circumstances of the case. Before we proceed further, it
   is appropriate to have a look at Sections 13 and 14 of CPC which read.
   as under:
E          Section 13. When foreign judgment not conclusive : A foreign
           judgment shall be conclusive as to any matter thereby directly
           adjudicated upon between the same parties or between parties
           under whom they or any of them claim litigating under the same
           title except-

 F         (a) where it has not been pronounced by a Cou11 of competent
           jurisdiction;
           (b) where it has not been given on the merits of the case;
           (c) where it appears on the face of the proceedings to be founded
           on an incorrect view of international law or a refusal to recognise
           the law oflndia in cases in which such law is applicable;
G
           (d) where the proceedings in which the judgment was obtained
           are opposed to natural justice;
           (e) where it has been obtained by fraud;
           (f) where it sustains a claim founded on a breach of any law in
H          force in India.
  MIS ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                           585
      FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

      Section 14. Presumption as to foreign judgments: The Court shall A
      presume upon the production of any document purpo11ing to be a
      certified copy of a foreign judgment that such judgment was
      pronounced by a Court of competent jurisdiction, unless the contrary
      appears on the record; but such presumption may be displaced by
      proving want ofjurisdiction.
                                                                              B
       13. A plain reading of Section 13, CPC would show that to be
conclusive an order or decree must have been obtained after following
the due judicial process by giving reasonable notice and opportunity to
all the proper and necessary parties to put forth their case. When once
these requirements are fulfilled, the executing Court cannot enquire into
the validity, legality or otherwise of the judgment.                      C
       14. A glance on the enforcement of the foreign judgment, the
position at common law is very clear that' a foreign judgment which has
become final and conclusive between the parties is not impeachable
either on facts or law except on limited grounds enunciated under Section
13, CPC. In construing Section 13, CPC we have to look at the plain D
meaning of the words and expressions used therein and need not look at
any other factors. Fmiher, under Section 14, CPC there is a presumption
that the Foreign Court which passed the order is a Court of comp<:tent
jurisdiction which of course is a rebuttable presumption. In the present
case, the appellant does not dispute the jurisdiction of the English Court E
but its grievance is, it is not executable on other grounds which are
canvassed before us.
        15. The appellant contends that the order of the English Court is
not given on merits and that it falls under Section 13(c) of the CPC as a
result of which it is not conclusive and therefore inexecutable. We cannot F
accept such submission. A judgment can be considered as ajl!dgment
passed on merits when the Court deciding the case gives opportunity to
the parties to the case to put forth their case and after considering the
rival submissions, gives its decision in the form of an order or judgment,
it is certainly an order on merits of the case in the context of interpretation
of Section 13(c) of the CPC.                                                    G
       16.' Applying the same analogy to the facts of the case on hand,
we have no hesitation to hold that the order passed by the English Court
is an order on merits. The appellant who has submitted itself to the
jurisdiction of the Court and on its own requested the Court to assess the
costs summarily. While passing a reasoned order by dismissing the H
586              SUPREME COURT REPORTS                            [2016] 8 S.C.R.



A     application filed by the appellant, English Court granted the costs against
      the appellant. Had it been the case where appellant's application was
      allowed and costs were awarded to it, it would have as well filed a
      petition for the execution of the order. Be that as it is, the appellant did
      not prefer any appeal and indeed sought time to pay the costs. The
      appellant, therefore, cannot be permitted to object the execution. It cannot
B
      be permitted to blow hot and cold at the same time. In our opinion, it is a
      pure abuse of process of law and the Courts should be very cautious in
      entertaining such petitions.
      17.   In International Woollen Mills v. Standard Wool (UK) Ltd. 1,
      this Court observed :
 c
               " ... Even where the defendant chooses to remain ex parte and to
               keep out, it is possible forthe plaintiff to adduce evidence in support
               of his claim (and such evidence is generally insisted on by the
               Courts in India), so that the Court may give a decision on the
               merits of his case after a due consideration of such evidence
 D             instead of dispensing with such consideration and giving a
               decree merely on account of the default of appearance of
               the defendant.
               In the former case the judgment will be one on the merits
               of the case, while in the latter the judgment will be one not
 E             on the merits of the case. Thus it is obvious that the non-
               appearance of the defendant will not by itself determine the nature
               of the judgment one way or the other. That appears to be the
               reason why Section 13 does not refer to ex parte judgments falling
               under a separate category by themselves ..."
 F            18. The principles of comity of nation demand us to respect the
       order of English Court. Even in regard to an interlocutory order, Indian
       Courts have to give due weight to such order unless it falls under any of
       the exceptions under Section 13 of the CPC. Hence we feel that the
       order in the present case passed by the English Court does not fall under
       any of the exceptions to Section 13 of the CPC and it is a conclusive
  G
       one. The contention of the appellant that the order is the one not on
       merits deserves no consideration and therefore liable to be rejected.
       Accordingly, Issue No. I is answered.



 H     I    AIR 2001SC2134
  M/S ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                           587
     FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

        19. In re Issue No. 2- The next ground put forth by the appellant A
is that the order being an interlocutory order does not have the shades of
a 'judgment' to be executed before the Indian Court and hence the order
not being a 'decree' is in executable. To appreciate this, it is appropriate
to have a look at Section 44A of CPC
      44A. Execution of decrees passed by Courts in                           B
      reciprocating territory-
      (!) Where a certified copy of decree of any of the superior
      Courts of any reciprocating territory has been filed in a District
      Court, the decree may be executed in India as if it had been passed
      by the District Court.                                                  C
      (2) Together with the certified copy of the decree shall be filed a
      certificate from such superior Court stating the extent, if any, to
      which the decree has been satisfied or adjusted and such certificate
      shall, for the purposes of proceedings under this section, be
      conclusive proof of the extent of such satisfaction or adjustment.      D
       (3) The provisions of section 47 shall as from the filing of the
       ce1tified copy of the decree apply to the proceedings of a District
       Court executing a decree under this section, and the District Comt
       shall refuse execution of any such decree, if it is shown to the
       satisfaction of the Court that the decree falls within any of the      E
       exceptions specified in clauses (a) to (t) of section 13.
       Explanation 1-- "Reciprocating territory" means any country
       or territory outside India which the Central Government may, by
       notification in the Official Gazette, declare to be a reciprocating
       territory for the purposes of this section; and "superior Courts",      F
       with reference to any such territory, means such Courts as may
       be specified in the said notification.
        Explanation 2.- "Decree" with reference to a superior Cou1t
        means any decree or judgment of such Cou1t under which a sum
        of money is payable, not being a sum payable in respect of taxes G
        or other charges of a like nature or in respect to a fine or other
        penalty, but shall in no case include an arbitration award, even if
        such an award is enforceable as a decree or judgment.
       20. As far as the explanation with regard to reciprocal territory is
  concerned, there is no dispute that England is a reciprocating territory
                                                                                  H
588           SUPREME COURT REPORTS                         [2016] 8 S.C.R.


A for the purpose of above Section. Section 44A of CPC indicates an
  independent right conferred on a foreign decree holder for enforcement
  of a Decree/Order in India. Section 44A was inserted by Section 2 of
  the Civil Procedure Code (Amendment)Act, 1937 (Act No. 8of1937).
  This Section is meant to give effect to the policy contained in the Foreign
B Judgments (Reciprocal Enforcement) Act, 1933. It is a part of the
  arrangement under which on one part decrees oflndian Courts are made
  executable in United Kingdom and on the other part, decrees of Courts
  in the United Kingdom and other notified parts of Her Majesty's dominions
  are made executable in India. It is to be seen that as United Kingdom is
  a reciprocating territory and the High Court of Justice, Chancery Division,
C England being a recognized superior Court in England. Therefore, the
  order passed by that Court is executable in India under Section 44A of
  the CPC. Now we come to the next limb of the argument put forth by
  the appellant that the order passed by the English Court does not amount
  to a decree and hence it is not executable. It is no doubt correct, Section
D 44A of CPC deals with "execution of decrees passed by Courts in
  reciprocating territory". Before we further decide this issue it is
  appropriate to have a look at how decree, order and foreign judgment
  are defined under the CPC. -
          21. As per Section 2(2) of the CPC, "decree" means the formal
   expression of an adjudication which, so far as regards the Court expressing
 E it, conclusively determines the rights of the parties with regard to all or
   any ofthe matters in controversy in the suit and may be either preliminary
   or final. It shall be deemed to include the rejection of a plaint and the
   determination of any question within Section 144 of CPC but shall not
   include- (a) any adjudication from which an appeal lies as an appeal
 F from an order, or (b) any order of dismissal for default.
          Then a "foreign judgment" is defined under Section 2(6) as
  judgment of a foreign Court. "Judgment" as per Section 2(9) of C.P.C.
  means the statement given by the Judge on the grounds of a decree or
  order. Order is defined under Section 2( 14) of CPC as a formal expression
G of any -decision of the Civil Court which is not a 'decree'. Then
  Explanation 2 to Section 44A (3) says "decree" with reference to a
  superior Court means any 'decree' or 'judgment'. As per the plain reading
  of the 'definition' Judgment' means the statement given by the Judge on
  the grounds of decree_ or order and order is a fonnal expression of a
  Court. Thus "decree" includes judgment and 'judgment" includes "order".-
H
     MIS ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                        589
        FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

On conjoint reading of'decree', 'judgment' and 'order' from any angle, A
the order passed by the English Court falls within the definition of'Order'
and therefore, it is a judgment and thus becomes a "decree" as per
Explanation to Section 44A(3) ofCPC. In this case, the Court at England,
after following the principles ofnaturaljustice, by recording reasons and
very importantly basing on the application of the appellant itself, has
                                                                            8
conclusively decided the issue with regard to jurisdiction and passed the
order coupled with costs. Hence in our considered opinion, the order
passed by the Foreign Court is conclusive in that respect and on merits.
Hence executable as a decree and accordingly the issue is answered.
       22. In re Issue Nos. 3 & 4 - The next contention advanced is
that the decree for costs does not attract the Explanation II of Section C
44A which concerns itself with taxation or other charges oflike nature
or in respect of fine or other penalty. We have to first see the nature of
the costs imposed by the decree for interpreting the relevant explanation.
Before referring to the principles/guidelines in the decisions cited, it would
be apposite to adve1t to the concept of'costs' and the general principles D
governing the award of costs. Law Commission in its 24Q•h Report on
"Costs on Civil Litigation" provides valuable resource on nature of costs
in India as well as England.
       23. The 'costs' signifies the sum of money which the Court orders
one party to pay to another party in respect of the expenses of litigation    E
incurred. Except where specifically provided by the statute or by rules
of the Court, the costs of proceedings are in the Court's discretion.
       24. In Jolinstone v. Tlie Law Society ofPrince Edward Is/a11d1,
the Canadian Court of Appeal speaking through McQuaid, J described
costs in the following words :                                                F
         " ... the sum of money which the court orders one party to pay
         another party in an action as compensation for the e~pense of
         litigation incurred. The definition continues to the effect that costs
         are awarded as compensation (i.e. reimbursement); there is, unlike
         damages, no restitution in integrum, that is to say, no concept in G
         costs, as there exists in damages, that the injured person should
         be placed, in so far as money can do so, in the same position as he
         occupied before the injury was suffered".
          25. Under the Federal Rules of Civil Proceeding (USA), "costs
2
    2 PEIR B-28 ( 1988)                                                       H
590             SUPREME COURT REPORTS                           [2016] 8 S.C.R.


A     shall be allowed as of course to the prevailing party unless the court
      otherwise directs." In most of the States in US, the attorney's fee is not
      allowed as litigation cost. Costs can even be on interim Application. A
      bill ofcosts is a certified, itemized statement of the amount of the expenses
      incurred in bringing or defending a law suit/proceeding. The charges/
      expenses claimed are taxed by the Court or its officer according to the
B
      procedural rules and set of norms.
             26. The basis of assessment of costs in UK has been explained
      thus in Halsbury's Laws of England:
            "Where the court is to assess the amount of costs (whether by
c           summary or detailed assessment) it will assess those costs on the
            standard basis or on the indemnity basis, but the court will not in
            either case allow costs which have been unreasonably incurred
            or are unreasonable in amount. Where the amount of costs is to
            be assessed on the standard basis, the court will only allow costs
            which are proportionate to the matters in issue and will resolve
 D          any doubt which it may have as to whether costs were reasonably
            incurred or reasonable and proportionate in amount in favour of
            the paying party. Where the amount of costs is to be assessed on
            the indemnity basis, the court will resolve any doubt which it may
            have as to whether costs were reasonably incurred or were
 E          reasonable in amount in favour of the receiving party. Where the
            court makes an order about costs without indicating the basis on
            which the costs are to be assessed, or makes an order for costs to
            be assessed on a basis other than the standard basis or the
            indemnity basis, the costs will be assessed on the standard basis."

 F        27. The Patt 44 of the Civil Procedure Rules (CPR) in the USA
  contains general rules about costs and entitlement to costs. The rules
  are supplemented by practice direction. However, part 44 does not apply
  to the assessment of costs to the extent different provisions exist, for eg,
  Access to Justice Act, 1999 and the Legal Aid Act, 1988. Further, the
  general rule that the unsuccessful party will be ordered to pay the costs
G of the successful party unless the court makes a different order does not
  appl~_ to family proceedings.

       28. It is important to note that a penalty in this sense normally
  means a sum payable to the State, not to a private claimant, so the costs
  imposed on the b«sis of the indemnity is not a penalty or tax. Therefore,
H the Explanation II to Section 44A does not refer to the costs JIS
  M/S ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                             591
     FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

contemplated under Section 35 of the CPC. The costs having been                A
quantified have assumed the character of a money decree for costs and
cannot be equated, either with a fine or penalty which is imposed on a
party by the Court or taxes claimed and are taxes payable to a local
authority, Government, or other charges of a like nature.
      29. The appellant has advanced an argument that as per Section B
35A of the CPC, no Court should pass any order for the payment of
compensatory costs exceeding Rs.3,000/- or exceeding the limits of its
pecuniary jurisdiction of the said Court whichever amount is less. It is
thus argued by the appellant that in the present case, since the costs
imposed exceed the bar imposed by Section 35A, therefore, the order of
the English Court is not executable in the present case.                 C
       30. This argument lacks merit and deserves to be rejected. A bare
perusal of Section 35A shows that bar operates on the Indian Courts
with regard to imposition of costs in respect of false or vexatious claims
or defences. The bar is not attracted in the present case as the Court
that has ordered the costs is the High Court of Justice in England which        D
is not governed by the provisions of the CPC and that the respondent
merely approached the Indian Courts for the satisfaction of a foreign
decree. Moreover, the nature of compensatory costs prescribed in Section
35A of the CPC are different from 'costs' dealt with in Section 35 of the
CPC as the former are limited to the claims of defences of a party              E
which are frivolous or vexatious. It is settled that before awarding costs
under Section 35A of the CPC, the Court should satisfy itself that the
claim was false or vexatious to the knowledge of the party who put it
forward and that the interests of justice require the award of such
compensatory costs. In the present case, no claim has been advanced
by the appellant that the claim filed by the respondents is false or            F
vexatious, therefore, the bar in Section 35A is not applicable. Accordingly
the issue is answered.
       31. In re Issue No. 5 - It is the case of the appellant that the
claim for interest on costs is not recognized in the Indian law. It is to be
noted that matters of procedure are to be governed by the lex Jori,             G
whereas the matters of the substance are governed by lex causae. In
this case, the question whether the interest on sum of decree of costs to
be executed in India is a matter of substance as the interest on decree is
a substantive right of the decree holder and does not concern itself with
the procedural law of the forum.                                                H
592            SUPREME COURT REPORTS                           [2016] 8 S.C.R.


A            32. The appelfantreiied upon Section 35 of the CPC which enables
      Courts in India to impose litigation costs at the discretion of the Court.
      However, there is no provision under the CPC or the Interest Act, 1978
      which permits imposition of interest on Jitigation costs. Further tried to
      impress upon that the amended Section 35(3) of the CPC permitted a
      Civil Court to grant interest on costs. The unamended Section 35(3)
B
      stated as follows:
            The Court may give interest on costs at any rate not exceeding
            six per cent per annum, and such interest shall be added to the
            costs and shall be recoverable as such.
c     This Provision was consciously omitted in 1956 (pursuant to Act 66 of
      I 956). In view of the deletion of Section 35(3) of the CPC, it is argued
      that grant of interest on costs is no longer recognized under India law.
            33. In this context, it is educative to read the following comments
      made in the Debate on the Bill against the deletion of Section 35 (3), by
D     Hon'ble Member of Lok Sabha Shri Tek Chand;
             " .. In this connection, a reference has been made to section 35,
            sub-section (3), which according to clause 3 of the Bill, is to be
            omitted. Not that I have usurious propensities, but I do not like
            this provision. It is true that there should not be any profiteering
E           by the people; I concede that, but there are instances when the
            costs amount to five figures or more, and there is no reason why,
            when an unsuccessful party is subjecting the successful party not
            only to a long dilatory and unending dispute, but also to frivolous
            and vexatious litigation whereby he is out of pocket to the tune of
            several thousands, the law or the legislature should be so solicitous
 F          that such person should not pay interest, if he does not propose to
            pay or if he intends to delay the payment of the costs. One
            unfortunate and unhappy feature of administration of civil law in
            our land, is apart from delays and objections of frivolous and
            vexatious nature, justice is made available, if at all, at a very high
G           and exorbitant price".
             34. The Hon'ble Member of Lok Sabha thus articulated that
      omitting sub-section (3) would encourage delay in realization of decree
      costs. A reference to the Report of Law Commission and the views
      expressed in Debate on the Bill, as extracted in the Law Commission
H     Report (supra), would indicate that the consequences of deletion of sub-
  M/S ALCON ELECTRONICS PVT. LTD. v. CELEM S.A. OF                            593
     FOS 34320 ROUJAN, FRANCE [N. V. RAMANA, J.]

section (3) of Section 35 were very much considered by the Parliament.        A
When the idea of deletion is not to encourage interest on costs as a
source of income to the litigants, the Parliament did not choose positively
to prohibit interest on costs by inserting suitable clause in Section 35.
       35. lt is to the reciprocal advantage of the Courts of all nations to
enforce foreign rights as far as practicable. To this end, broad recognition B
of substantive rights should not be defeated by some vague assumed
limitations of the Court. When substantive rights are so bound up in      a
foreign remedy, the refusal to adopt the remedy would substantially
deprive parties of their rights. The necessity of maintaining the foreign
rights outweighs the practical difficulties involved in applying the foreign
remedy. In India, although the interest on costs are not available due to·
                                                                             c
exclusion of Section 35(3), the same does not mean that Indian Courts
are powerless to execute the decree for interest on costs. Indian Courts
are very much entitled to address the issue for execution of the interest
amount. The right to 8% interest as per the Judgments Act, 1838 of UK
can be recognized and as well as implemented in India.                       D
       36. Therefore, we are of the considered opinion that the Execution
Petition filed by the Respondents for execution of the order dated l 9'h
October, 2006 passed by the English Court is maintainable under the
relevant provisions. Therefore, we do not find any reason to interfere
with the impugned order. Resultantly, the appeal is dismissed with costs.      E
Nidhi Jain                                              · Appeal dismissed.