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TMI Blog2014 (3) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... rt granted Marine Geotechnics' motion and entered default judgment against Coastal Marine and one of the other defendants. A copy of that opinion/judgment is annexed to the affidavit in rejoinder. The order is composite. Against two other defendants it obtained a summary default judgment. Against Coastal Marine and one other defendant it obtained a default judgment. The total amount decreed is in the aggregate sum of US$ 432,731.28. 3. Marine Geotechnics' lawyers issued a statutory notice to Coastal Marine on 15 September 2012. Coastal Marine's advocates replied on 8 October 2012 denying liability, saying that Coastal Marine was unaware of any such decree. Marine Geotechnics' advocates responded on 20 October 2012. 4. Mr. Narula for the petitioner, Marine Geotechnics, submits that there is no defence to the petition. There is, he says, a valid decree against Coastal Marine, and it has not been satisfied despite service of a statutory notice. Coastal Marine must be deemed to be unable to pay its debts within the meaning of Section 434(1)(a) of the Companies Act, 1956. In any case, he says, Coastal Marine has liabilities in excess of Rs.26 crores and is commercially insolvent. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh court for a summary judgment under the English Civil Procedure Rules. The respondent-company received intimation of this. It did not appear. Summary judgment was entered against the respondent. The respondent was served with the decree and a certificate of the Master of the English Court that no appeal had been filed. 8. The petitioner then issued a statutory notice to the company in India, calling upon it to pay the decretal sum. There was no reply. The petitioner filed for winding up. The company's defence was, inter alia, that the English judgment did not meet the requirements of Section 13 of the CPC. This court held that the petition was maintainable. The defence taken before the China Shipping court was that the English courts lacked jurisdiction and that the decision was not on merits. Chandrachud, J. (as he then was) held that the provisions of Section 13 must be borne in mind. That section makes a foreign judgment conclusive on any manner directly adjudicated in it. This is subject to the exceptions listed in clauses (a) to (f ). Two of these were canvassed before the learned single Judge: that the English court was not one of competent jurisdiction; and that the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t later withdrew. It was in those circumstances that the learned single Judge admitted the winding up petition. The appeal court did not, in fact, decide the question of the 'bar' under Section 13 of the CPC: Kitply Industries, id., p. 289, pi. 9 So far as the other point raised by learned Counsel at the bar is concerned, we find that since the matter is yet to be finally decided after delivering defence by the appellant and the matter is still in its initial stage before the learned company court, any finding of ours may pre-judge the issue which we do not intend to do for the interest of either of the parties, and learned Counsel concur on this view. In that view of the matter, we do not find any merit in this appeal and, accordingly, the same is dismissed. (emphasis supplied) 11. Mr. Sheth is quick to point out that Mr. Narula's reliance on the 2008 decision in Kitply is misdirected as that case had a particularly chequered history. The Division Bench remanded the matter to the Company Court for a decision on merits. The Company Court made a conditional order on the petition requiring Kitply Industries to pay its debt to California Pacific in three months, failing which, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state. A decision of its court could not be binding until it was made a rule of a court in India. To do that, the petitioner would have to bring an action on that judgment or decree in an Indian court of competent jurisdiction. Till that was done, and a domestic judgment or decree obtained, the decision of the court in Israel did not constitute a debt. Further, since that action was now time-barred, there was no outstanding debt. The learned single Judge accepted the submissions made on behalf of the respondent-company, and held that the defence based on Sections 13(c) and 44A of the CPC was sufficiently substantial that no order of admission could be made on the winding up petition. The Court did not, however, finally decide whether the foreign judgment of the magistrate in Israel was or was not binding. 14. Intesa Sanpaolo SPA v Videocon Industries Ltd. Company Petition No.528 of 2012; decision dated 5 December 2013, per N.M. Jamdar, J. is a recent decision of a learned single Judge of this Court, one of which Mr. Narula places much reliance. The petitioning-creditor ("Intesa") was an Italian bank. It sought winding up of an Indian company, Videocon Industries Ltd ("Videocon"). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decree could be put in execution under Section 44A (read with O.XXI, R.22) of the CPC. The question of non-enforceability in that case would arise, the Gujarat High Court said, in execution of that foreign decree. That could not be a reason to deny the winding up action. Jamdar, J. in Intesa then considered the different considerations that obtain in a civil action and in an action for winding up. The fact that a creditor holds a decree does not make him any less a creditor. He said: 47. If a creditor with or without a decree of an Indian Court can file a petition for winding up based upon a original cause of action, pending the suit and after decree, there is no warrant to deprive a creditor with a decree of foreign Court to present a petition for winding up, independently of the decree, in the Company court having jurisdiction. The Companies Act does not contemplate such exclusion. To deprive a creditor with a decree of foreign court of this statutory right, will also not be in larger public interest. If a foreign creditor with decree of foreign Court is barred from presenting a petition for winding up on the original course of action and till the decree by Indian Court is pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CPC. The winding up action, however, was not based on the Turin decree at all; it was found to be based on the underlying Patronage Letter or guarantee. It was that guarantee/Patronage Letter, read with Videocon's admissions, that showed its liability to pay the debt claimed to be due. In the present case, the winding up action is based on, and only on, the foreign decree of the Houston court. No suit has yet been filed on it in India, or even on the underlying transaction, whatever that might be. There is not, in the petition, a single mention of that underlying transaction. Marine Geotechnics' only case is that since it has in its hands a decree of a foreign court against Coastal Marine, therefore, Marine Geotechnics is a creditor of Coastal Marine and can sustain this petition. 18. I do not believe this to be either the correct position in law or the Intesa's ratio. Indeed, this is a wholly incorrect and entirely unwarranted misreading of Intesa. That decision said that even if a creditor has a decree in his hands against the debtor-company, and even if that decree be of a foreign court, the petitioning-creditor is not prevented, merely for his having obtained such a decree, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of a District Court executing a decree under this section, and the District Court 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 exceptions specified in clauses (a) to (f) 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", 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 Court means any decree or judgment of such Court under which a sum of money is payable, not being a sum payable in respect of taxes or other charges of a like nature or in respect of 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. Section 13 enunciates the well-established principle of private international law that a court will not enforce a foreign judgment that is not of a competent court. What that section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooses to remain ex parte and to keep out, it is possible for the 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 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 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 ... (emphasis supplied) 21. Armed with a decree of a court in a non-reciprocating foreign territory, what must a party do in India? His option is to file, in a domestic Indian court of competent jurisdiction, a suit on that foreign decree, or on the original, underlying cause of action, or both. Badat and Co. v East India Trading Co., AIR 1964 SC 538, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on a minimal, prima-facie enquiry, it can possibly form the foundation of a winding up petition. 23. For the purposes of a winding up petition, therefore: (a) It is not every foreign decree, irrespective of whether or not it is on merits, that can, therefore, be said to be a 'debt' for the purposes of Section 433(e) of the Companies Act, 1956. Any foreign decree, whether of a reciprocating or non-reciprocating territory, that is not on merits, or does not otherwise satisfy the requirements of Section 13 of the CPC, cannot be the basis of a winding up petition. It is not a debt due. (b) A foreign decree of a reciprocating territory, if found to be on merits and otherwise not afoul of CPC Section 13, is a debt due, and a winding up petition can be maintained on it even without it being put in execution. (c) The only manner in which a decree of a nonreciprocating territory can be recovered is if it is made to pass the test of Section 13 of the CPC. Usually, that is done by filing a suit on it (or on the original cause of action, or both). Once the parameters of CPC Section 13 are met, it is not possible to examine the sufficiency of evidence before the foreign court, or to test th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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