Winding-up petition maintainable despite foreign links, regulatory approval objection, and foreign judgment supporting prima facie liability.

The Gujarat High Court held that a winding-up petition remained maintainable despite the guarantee and underlying dealings being connected with England, because the jurisdiction clause preserved proceedings in any court of competent jurisdiction and the company's Gujarat registration conferred competence on the Company Court. It further rejected the defence that absence of Reserve Bank of India approval under FEMA made the guarantee unenforceable, treating procurement of any permission as the respondent's obligation and not a ground to evade liability. The Court also allowed reliance on the foreign judgment as prima facie support for the debt, and found the respondent's objections not to be a bona fide defence at the admission stage.

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Issues: (i) Whether the winding-up petition could be entertained in India despite the guarantee and underlying transactions being connected with the United Kingdom and an exclusive English jurisdiction clause; (ii) whether absence of Reserve Bank of India approval under the Foreign Exchange Management Act, 1999 rendered the guarantee unenforceable; (iii) whether the foreign decree/judgment could nevertheless support a winding-up petition; and (iv) whether the respondent had raised a bona fide defence warranting rejection of the petition at the admission stage.

Issue (i): Whether the winding-up petition could be entertained in India despite the guarantee and underlying transactions being connected with the United Kingdom and an exclusive English jurisdiction clause.

Analysis: The jurisdiction clause reserved exclusive jurisdiction to the courts of England and Wales, but it also expressly preserved the supplier's right to commence proceedings against the guarantor in any court of competent jurisdiction. The company being registered in Gujarat was treated as sufficient to confer competence on the Company Court for winding-up proceedings. The location of supply or execution abroad did not, by itself, exclude the Court's jurisdiction to consider winding up on the basis of the alleged liability.

Conclusion: The objection to jurisdiction was rejected, and the petition was held maintainable before the High Court.

Issue (ii): Whether absence of Reserve Bank of India approval under the Foreign Exchange Management Act, 1999 rendered the guarantee unenforceable.

Analysis: The Court treated procurement of any required permission as an obligation resting on the respondent at the time of executing the guarantee. It further held that the respondent could not rely on its own failure to obtain the permission to defeat the liability after inducing the petitioner to act on the guarantee. The absence of approval was therefore not accepted as a bona fide basis to deny enforcement in winding-up proceedings.

Conclusion: The challenge based on absence of Reserve Bank of India approval was not accepted.

Issue (iii): Whether the foreign decree/judgment could nevertheless support a winding-up petition.

Analysis: The Court noted that a foreign judgment existed fastening liability, even if it was not a decree on full contest. Questions of executable enforceability under the Code of Civil Procedure were held to be matters for execution proceedings and not a sole ground to deny admission of the winding-up petition. The existence of the foreign judgment was sufficient, at the prima facie stage, to support the claim of liability.

Conclusion: The foreign judgment could be relied upon for maintaining the winding-up petition.

Issue (iv): Whether the respondent had raised a bona fide defence warranting rejection of the petition at the admission stage.

Analysis: The Court applied the settled approach that a company petition may be admitted where the defence is not bona fide, and that a bona fide substantial defence may require dismissal. On the facts, the respondent's objections were found to be lacking in substance and treated as an attempt to avoid liability rather than as a genuine defence. The Court therefore considered admission of the petition appropriate, while giving the respondent an opportunity to demonstrate ability to pay by depositing part of the claimed amount.

Conclusion: The defence was held not bona fide, and the petition was admitted with a direction to deposit the quantified amount.

Final Conclusion: The winding-up petition was allowed to proceed at the admission stage, jurisdictional and enforceability objections were not accepted, and the respondent was directed to secure the admitted liability by deposit before further orders.

Ratio Decidendi: In winding-up proceedings, a foreign-connected liability and a foreign judgment may be relied upon where jurisdiction is otherwise competent, and objections based on unenforceability or absence of regulatory approval do not defeat the petition at the admission stage if the company's defence is found to be not bona fide.

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