SORIN GROUP ITALIA S.R.L. v. NEERAJ GARG

14. I have considered the submissions made by the learned counsels for the parties.

15. Primarily, the issue involved in the present application is the effect of Clause 14.10 and Clause 15.[1] of the Sole Distribution Agreement executed between the parties.

16. Clause 14.10 of the Agreement states that any claim relating to the contract or performance thereof shall be commenced in a Court of competent jurisdiction within one year after the claim or the cause of action arises, „after which time the claim or cause of action shall be barred‟.

17. Clause 14.10 of the Agreement is reproduced hereinunder:- “14.10 Statutory limitations. Any claim or cause of action the Parties hereto may have relating to arising from or connect with the performance of this Agreement, including but not limited to the sale of the Products to Distributor, post-contractual disputes or otherwise or any matters relating thereto must be commenced in a court of competent jurisdiction as set forth in Article 15.[2] within one (1) year after the claim or cause of action arises, after which time the claim or cause of action shall be barred.”

18. Clause 15.[1] of the Agreement further states that any issue or dispute arising out of the Agreement shall be governed by and construed in accordance with laws of Italy. The same is reproduced hereinbelow:- “15.[1] Choice of Law This Agreement, and any issues or disputes arising out of or in connection with it (whether such disputes are contractual or non-contractual in nature, such as claims in tort, for breach of statute or regulation, or otherwise) shall be governed by and construed in accordance with the laws of Italy, excluding its rules governing conflicts of laws and the United Nations Convention on the International State of Goods.”

19. The first question that arises in consideration of the present application is as to whether the present suit is governed by the law of limitation as prescribed under the Limitation Act, or by the law of limitation as may be applicable in Italy.

20. Section 11 of the Limitation Act is reproduced hereinunder:- ―11. Suits on contracts entered into outside the territories to which the Act extends. – (1) Suits instituted in the territories to which this Act extends on contracts entered into in the State of Jammu and Kashmir or in a foreign country shall be subject to the rules of limitation contained in this Act. (2) No rule of limitation in force in the State of Jammu and Kashmir or in a foreign country shall be a defence to a suit instituted in the said territories on a contract entered into in that State or in a foreign country unless— (a) the rule has extinguished the contract: and (b) the parties were domiciled in that State or in the foreign country during the period prescribed by such rule.”

21. A reading of the above provision would show that for the suit instituted in the territory to which the Limitation Act applies, the rules of limitation contained in the Limitation Act shall apply, even if the contract is entered into in a foreign country. In the present case, the period of limitation would, therefore, be governed by the Limitation Act.

22. In Bank of Baroda (supra), the Court was considering the question as to the period of limitation for filing an application for seeking enforcement of a foreign decree of a reciprocating country in India. The Court held that there is no concept of a cause of action in so far as an Execution Petition is concerned; the cause of action is a concept relating to civil suits and not to execution petitions; a decree is a determination already made by a Court on the basis of the reasoned judgment and becomes enforceable the day it is passed. The Court held that filing of an application under Section 44A of the CPC, will not create a fresh period for enforcing the decree. The Court further held as under:- ―34. The view worldwide appears to be that the limitation law of the cause country should be applied even in the forum country. Furthermore, we are of the view that in those cases where the remedy stands extinguished in the cause country, it virtually extinguishes the right of the decree-holder to execute the decree and creates a corresponding right in the judgment-debtor to challenge the execution of the decree. These are substantive rights and cannot be termed to be procedural. As India becomes a global player in the international business arena, it cannot be one of the few countries where the law of limitation is considered entirely procedural.

35. We have already clearly indicated that if the law of a forum country is silent with regard to the limitation prescribed for execution of a foreign decree then the limitation of the cause country would apply.”

23. The said judgment, as is evident from the above, was in relation to the execution of a decree passed in a reciprocating country. Section 11 of the Limitation Act, as it has no application to such proceedings, was not considered by the Court to be governing a Suit instituted under Section 44A of the CPC to enforce such a decree. The said judgment, therefore, would have no application to the facts of the present case.

24. The submission of the learned counsel for the defendant that as the defendant had executed the agreement in India, Section 11 of the Limitation Act would not apply, cannot be accepted at this stage of the proceedings. The plaintiff has placed reliance on Section 11 of the Limitation Act in its reply to this application. The defendant has not filed any rejoinder thereto. In any case, the submission now advanced is a mixed question of fact and law and cannot be a ground to summarily reject the plaint under Order VII Rule 11 of the CPC.

25. Having concluded that in view of Section 11 of the Act, the Limitation Act would apply and, therefore, the Suit could have been filed within three years of the cause of action, that is, three years from 26.06.2018, when the first instalment under the alleged invoices became due, the question still remains of the effect of Clause 15.[1] of the Sole Distribution Agreement.

26. Clause 15.[1] of the Agreement provides that the contract shall be governed by the substantive laws of Italy. Section 28 of the Indian Contract Act, 1872 (in short, „the Indian Contract Act‟) provides that any agreement which provides for extinguishment of the rights of any party to an agreement on the expiry of a specified period, so as to restrict any party from enforcing his rights, is void to that extent. The same is the effect of any agreement which limits the time within which such party may enforce its rights. Therefore, any agreement which restricts the period of limitation for enforcement of the right to sue would be void in India. However, as the Agreement between the parties is governed by the Laws of Italy, it would have to be considered as to whether the plaintiff‟s claim is barred having been instituted beyond one year of the cause of action.

27. Section 45 of the Indian Evidence Act reads as under:- ―45. Opinions of experts.—When the Court has to form an opinion upon a point of foreign law or of science, or art, or as to identity of handwriting or finger impressions, the opinions upon that point of persons specially skilled in such foreign law, science or art, or in questions as to identity of handwriting or finger impressions are relevant facts. Such persons are called experts.”

28. Section 57 of the Indian Evidence Act reads as under:- ―57. Facts of which Court must take judicial notice.—The Court shall take judicial notice of the following facts:— (1) All laws in force in the territory of India; (2) All public Acts passed or hereafter to be passed by Parliament of the United Kingdom, and all local and personal Acts directed by Parliament of the United Kingdom to be judicially noticed; (3) Articles of War for the Indian Army, Navy or Air Force; (4) The course of proceeding of Parliament of the United Kingdom, of the Constituent Assembly of India, of Parliament and of the legislatures established under any law for the time being in force in a Province or in the State; (5) The accession and the sign manual of the Sovereign for the time being of the United Kingdom of Great Britain and Ireland; (6) All seals of which English Courts take judicial notice: the seals of all the Courts in India, and all Courts out of India established by the authority of the Central Government or the Crown Representative; the seals of Courts of Admiralty and Maritime Jurisdiction and of Notaries Public, and all seals which any person is authorized to use by the Constitution or an Act of Parliament of the United Kingdom or an Act or Regulation having the force of law in India; (7) The accession to office, names, titles, functions, and signatures of the persons filling for the time being any public office in any State, if the fact of their appointment to such office is notified in any Official Gazette; (8) The existence, title and national flag of every State or Sovereign recognized by [the Government of India]; (9) The divisions of time, the geographical divisions of the world, and public festivals, fasts and holidays notified in the Official Gazette; (10) The territories under the dominion of the Government of India; (11) The commencement, continuance, and termination of hostilities between the Government of India and any other State or body of persons; (12) The names of the members and officers of the Court, and of their deputies and subordinate officers and assistants, and also of all officers acting in execution of its process, and of all advocates, attorneys, proctors, vakils, pleaders and other persons authorized by law to appear or act before it; (13) The rule of the road, on land or at sea. In all these cases, and also on all matters of public history, literature, science or art, the Court may resort for its aid to appropriate books or documents of reference. If the Court is called upon by any person to take judicial notice of any fact, it may refuse to do so, unless and until such person produces any such book or document as it may consider necessary to enable it to do so.

29. Interpreting the above provision, in Hari Shanker Jain (supra), the Supreme Court has observed that under Section 57(1) of the Indian Evidence Act, foreign laws are not of which the Indian Court can take judicial notice of. It has been held that Section 45 and Section 84 of the Indian Evidence Act permits proof being rendered and opinion of experts being adduced in evidence as proof of the foreign law. However, for this, in terms of Order VI Rule 2 of the CPC, pleadings must contain a statement in concise form of the material facts relied upon by a party, including on the applicability foreign law on the issue, failing such requisite pleading, the party concerned would not be entitled to lead evidence thereon. The relevant observation of the Supreme Court is reproduced hereinbelow:-

28. There is, thus, no manner of doubt that in the courts in India, a point of foreign law is a matter of fact and, therefore a plea based on a point of foreign law must satisfy the requirement of pleading a material fact in an election petition filed before the High Court. The two election petitions do not satisfy this requirement. The averments made in the two election petitions do not go beyond making bald assertions. The pleadings do not give any indication of such Italian law on which are based the averments made in the election petitions — whether it is any statutory enactment or any other provision or principle having the force of law in Italy. During the course of hearing, we asked the two appellants if they could show us any book, authority or publication based whereon we could form an opinion, even prima facie, in support of the averments relating to Italian law made in the election petitions. The two appellants regretted there inability to show us anything.

30. In the present case, as far as the period of limitation is concerned, the plaintiff, apart from pleading the cause of action in paragraph 34 of the plaint, has further stated that in India, since the issue of limitation is treated as procedural law, the period of limitation for the filing of a suit for recovery is 3 years. The plaintiff, however, has not averred that under the laws of Italy the provision in the agreement prescribing that a claim made beyond one year from the date of cause of action would be barred, is void. Equally, the defendant has not pleaded that there is no provision akin to Section 28 of the Contract Act in the laws in Italy.

31. In Aksh Optifibre Limited (supra), the High Court of Bombay has held that there is a presumption that, unless the contrary is proved, the general law of a foreign country is the same as Indian law and that mere fact that the contract was entered into with reference to the law of another country will be immaterial.

32. The Division Bench of the High Court in Aksh Optifibre Limited (supra), followed the judgment of the learned Single Judge of the High Court of Bombay (who was also a part of the Division Bench which gave the said judgment) in Malaysian International Trading Corporation Sdn Bhd.& Anr v. Mega Safe Deposit Vaults Pvt. Ltd., 2006 SCC OnLine Bom 92, wherein it was held as under:

33. The Court in Malaysian International Trading Corporation Sdn Bhd.& Anr (supra) also distinguished the judgment of Hari Shanker Jain (supra) by observing as under:

34. The principle of law that, in absence of a proof that the law in a foreign country is different from that in India, it shall be presumed that it is the same, also follows from the commentary by Dicey, Morris and Collins, titled „The Conflict on Laws‟ (14th Edition, 2012), which states this principle as under: “RULE 18- (1) In any case to which foreign law applies, that law must be pleaded and proved as a fact to the satisfaction of the judge by expert evidence or sometimes by certain other means. (2) In the absence of satisfactory evidence of foreign law, the court will apply English Law to such a case.”

35. The above Rule indicates that in absence of satisfactory pleadings and evidence on foreign law, even in case where the foreign law applies, the Court will apply the domestic law on a presumption of similarity between the two laws.

36. In FS Cairo (Nile Plaza) LLC v. Lady Brownlie, (2021) UKSC 45, Lord Leggatt examined the above principle from the perspective of it being a „default rule‟ as against a „rule of presumption‟. It was held that this really is a rule of presumption, which is a rule of evidence concerned with what the content of foreign law should be taken to be; it will operate unless and until evidence of foreign law is adduced; it does not alter the legal burden of proof but merely places such burden on a party who wishes to displace the presumption. It was held that, on the other hand, the „default rule‟ is not concerned with establishing the content of foreign law but treats English law as applicable in its own right where foreign law is not pleaded. Lord Leggatt held that there is no scope for applying English law by default. If English law has any role to play, it can only be “on the basis of a presumption” that the content of the applicable foreign law is materially similar to the English law on the matter in question.

37. Lord Leggatt explained the applicability of the Rule of Presumption as under:-

124. The requirement of materiality is the second factor which it is important to keep in mind. Unless there is a real likelihood that any differences between the applicable foreign law and English law on a particular issue may lead to a different outcome, there is no good reason to put a party to the trouble and expense of adducing evidence of foreign law. The object of adjudication is not to achieve a goal of abstract legal purity but to do practical justice between the parties. Moreover, unlike decisions applying English law which may be relied on as precedents in later cases, where foreign law applies there is no larger purpose to be served beyond reaching the correct result in the instant case.

125. A third important factor is that the presumption of similarity does not itself determine any legal issue. It only ever operates unless and until evidence of foreign law is adduced. Nor does the presumption alter the legal burden of proof. Where the presumption applies, it merely places the burden of adducing evidence on a party who wishes to displace it. It is always open to a party to adduce evidence of the applicable foreign law showing that it is in fact materially different from English law on the point in issue. The limits of the presumption

126. These factors provide good pragmatic reasons for applying the presumption in a range of cases, but they also determine its proper limits. There is no warrant for applying the presumption of similarity unless it is a fair and reasonable assumption to make in the particular case. The question is one of fact: in the circumstances is it reasonable to expect that the applicable foreign law is likely to be materially similar to English law on the matter in issue (meaning that any differences between the two systems are unlikely to lead to a different substantive outcome)? xxxxx General guidance

143. Because the application of the presumption of similarity is fact-specific, it is impossible to state any hard and fast rules as to when it may properly be employed. In light of the authorities discussed above, however, the following observations may be made.

144. First, for reasons already given, as a matter of broad generalisation the presumption is more likely to be appropriate where the applicable foreign law is another common law system rather than a system based on Roman law. There are, however, “great and broad” principles of law which are likely to impose an obligation in all developed legal systems.

145. Second, also as a matter of broad generalisation, the presumption is less likely to be appropriate where the relevant domestic law is contained in a statute, but this depends on the nature of the statute and, more specifically, the relevant statutory provision. There is a difference between a statute which codifies general principles and one which introduces a local scheme of regulation. The fact that the events in question are not actually within the scope of the domestic statute, for example because it does not have extraterritorial effect, is not a bar to relying on the presumption - as the question is not whether the domestic statute itself applies but whether it is reasonable to presume, unless and until the contrary is shown, that the foreign system of law contains a materially similar rule. That may depend upon the particular aspect of the statutory rule on which a party is seeking to rely. To take an example, it might be reasonable to presume that, if death is caused by a wrongful act of the defendant, the foreign law will make provision for a claim for damages for bereavement. It also seems likely, however, that the extent of such provision will vary from one legal system to another. So, whereas it might be reasonable to presume that the spouse of the deceased is entitled to claim such damages, it might be hard to argue that, for example, the right of action should be presumed to extend - as it now does under section 1A of the Fatal Accidents Act 1976 in the UK - to a cohabiting partner of the deceased.

146. Third, it is in the nature of the test that its application may often be uncertain so that it is difficult to predict whether a judge will consider that the presumption can be relied on in a particular case. I do not think this problematic, however, given that reliance on the presumption is always a matter of choice. It is always open to the party who is asserting a claim or defence based on foreign law to adduce direct evidence of the content of the relevant foreign law rather than take the risk of relying on the presumption. Equally, it is always open to the other party to adduce such evidence showing that the foreign law is materially different from the corresponding English law rather than take the risk that the presumption will be applied.

147. Fourth, the procedural context in which the presumption is relied on matters. Selfevidently, there is more scope for relying on the presumption of similarity at an early stage of proceedings when all that a party needs to show in order to be allowed to pursue a claim or defence is that it has a real prospect of success. By contrast, to rely solely on the presumption to seek to prove a case based on foreign law at trial may be a much more precarious course.” (Emphasis supplied)

38. From a reading of the above, it is evident that similarity of laws is a rule of presumption. It applies to general laws, including laws of Contract. It is for a party which wants to dispel such presumption, to lead evidence of foreign law. At initial stage of proceedings, there is more scope of relying upon this Rule.

39. Applying to the above principles to the facts of the present case, in absence of anything to the contrary, it has to be presumed that laws of Italy will also prohibit a restriction on the period of limitation by contract, as is prohibited by Section 28 of the Indian Contract Act. In any case, this will be a question to be determined in the trial, and cannot be a ground for dismissing the suit at the present stage while considering an application under Rule 11 of Order VII of the CPC.

40. For the reasons stated hereinabove, I find no merit in the present application filed by the defendant. The same is accordingly dismissed. It is, however, made clear that any observation made hereinabove is confined merely to the consideration of the present application and within the limited scope of such consideration. It shall not be considered as a final determination of the issues raised CS(COMM) 92/2020 & IAs 2712/2020, 1795/2021

41. List on 1st August, 2023.

NAVIN CHAWLA, J. MAY 29, 2023 RN/DJ