Filing an Application to Set Aside a Decree does not suspend the Limitation unless a Stay Order is issued --- Islamabad High Court (IHC) Dismisses Time-Barred Execution Petition
Islamabad 11-02-2025: The Islamabad High Court (IHC), in a significant ruling, has dismissed an Execution Petition citing that the petition was time-barred. The judgment, delivered by Ms. Justice Saman Rafat Imtiaz, also settled a related dispute regarding the applicability of mark-up on the decreed amount.
The case originated when the petitioner filed a suit for recovery of Rs. 5.5 million against the respondent (Pvt.) Ltd. The company failed to appear in Court, leading to ex-parte proceedings, and the suit was decreed in petitioner’s favor on September 30, 2011.
However, in December 2012, the respondent filed an application to set aside the ex-parte decree, which was allowed by the Trial Court in January 2017, subject to payment of Rs. 20,000 as costs. The company failed to comply with this condition, prompting the Trial Court to recall its earlier order and restore the ex-parte decree on November 22, 2022.
Following the restoration of the decree, the petitioner filed an Execution Petition on February 16, 2023. The respondent objected, arguing that the execution was filed more than 11 years after the original decree and was, therefore, barred by limitation. Additionally, the company challenged the petitioner’s claim for mark-up, asserting that it had not been awarded in the original decree.
The Executing Court partially accepted the objections, dismissing the argument regarding limitation but agreeing that the mark-up claim exceeded the decree.
Both parties filed cross-appeals before the Islamabad High Court (IHC):
- [F.A.O. No. 141 of 2024]: The respondent challenged the Executing Court’s dismissal of their objection regarding the limitation period.
- [F.A.O. No. 155 of 2024]: The petitioner contested the Executing Court’s decision to disallow the mark-up.
Ms. Justice Saman Rafat Imtiaz ruled in favor of M/s R.P. Corporation, holding that the Execution Petition was indeed time-barred. The Court emphasized that the limitation period for filing an execution petition is three years, as per Article 181 of the Limitation Act, 1908. The limitation period began on September 30, 2011, when the original ex-parte decree was issued, and expired on September 29, 2014.
The Court rejected the petitioner’s argument that the restoration of the decree in 2022 provided a fresh starting point for limitation. It ruled that the doctrine of merger, which applies when a decree is challenged before a higher forum, was not applicable since the restoration was made by the Trial Court and not by an Appellate Court.
Regarding the mark-up, the Islamabad High Court (IHC) upheld the Executing Court’s decision, stating that no mark-up had been granted in the original decree, and thus, Naqvi was not entitled to claim it during execution.
The three-year limitation period under Article 181 of the Limitation Act begins from the date the decree is passed. Filing an application to set aside an ex-parte decree does not suspend this period unless a stay order is issued.
The restoration of an ex-parte decree by the Trial Court does not reset the limitation period as the doctrine of merger applies only when higher Courts affirm, modify, or reverse lower Court decisions.
The Executing Court cannot grant reliefs, such as mark-up, that were not included in the original decree.
The ruling underscores the strict application of limitation laws in execution proceedings and clarifies the non-applicability of the doctrine of merger in cases where trial Courts restore decrees. The decision serves as a reminder that failure to comply with procedural deadlines can permanently bar legal remedies, even if the underlying decree remains valid.
The Court’s decision to dismiss the petitioner’s execution petition and uphold the objection on mark-up brings this long-standing legal battle to a close, highlighting the critical importance of timely action in legal disputes.
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