Light shed on foreign facets of due debt and arbitration

While deciding a petition for winding up of Coastal Marine Construction & Engineering, brought by Marine Geotechnics, Bombay High Court considered the question of whether a foreign decree of a court in a non-reciprocating territory amounts to a “debt” which is currently payable and as such is sufficient to maintain an action for winding up under sections 433 and 434 of the Companies Act, 1956.

Section 13 requirement

A plethora of judicial decisions have established that a foreign decree, in order to be enforceable in India, must satisfy the criteria set out in section 13 of the Code of Civil Procedure, 1908 (CPC), and must have been decided on merits. This criterion would be satisfied if there was an application of mind and appreciation of evidence by the court that made the judgment.

What is required is that the court has made an informed decision, taking into account the case of the plaintiff along with the evidence to support it, and not passed the judgment merely on the ground that the defendant has not appeared before the court or not defended the case or sought leave to defend. This principle equally applies to examining the maintainability of a winding-up petition.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners, where Shreya Gupta is an associate.