2009 (8) TMI 1189 - HC - Companies Law

Summary

Issues involved:
The issues involved in the judgment are seeking winding up of the respondent Company, jurisdiction of Indian courts for enforcing a Deed of Guarantee executed in the UK, enforceability of the Deed of Guarantee without RBI approval, and the enforceability of a decree of the Court of England in India.

Winding up Petition:
The petitioner sought winding up of the respondent Company, GHCL Ltd., based on a Deed of Guarantee for goods supplied to its subsidiary Company, Rosebys Operations Limited, which was not executed. The respondent argued that since the guarantee was executed in the UK, the cause of action is outside India, making the claim unenforceable in Indian courts.

Jurisdiction and RBI Approval:
The respondent contended that the Deed of Guarantee specified exclusive jurisdiction of courts in England and Wales. However, the court found that the respondent being registered in Gujarat, Indian courts have jurisdiction. The respondent also argued that the Deed of Guarantee lacked prior approval from RBI under FEMA, making it non-enforceable in India. The court held that even without RBI approval, the respondent cannot evade liability if the petitioner acted based on the Deed of Guarantee.

Enforceability of Foreign Decree:
The respondent claimed that the decree of the Court of England is non-enforceable in India under CPC sections 13B and 13D. The court noted that the respondent did not defend the UK court proceedings, and the decree, though not on merit, exists. The court emphasized that non-enforceability of the decree is not a sole ground to deny winding up proceedings, as liability must be determined in execution proceedings.

Conclusion:
The court found the respondent's defenses not bona fide and directed a deposit equivalent to the claimed amount. The court emphasized the need for genuine defenses and commercial solvency considerations before passing further orders. The respondent was directed to deposit the specified amount, and further orders were scheduled for a later date.