Foreign default judgment from a non-reciprocating country is not, by itself, a debt for winding up proceedings.

A foreign default judgment from a non-reciprocating territory does not, by itself, create a legally recoverable debt in India. It must satisfy Section 13 of the Code of Civil Procedure, 1908, and may need to be enforced through a suit on the foreign judgment or on the underlying cause of action. A winding up petition cannot be used to bypass that requirement, because an untested ex parte decree without adjudication on the merits is not conclusive for the purpose of Sections 433 and 434 of the Companies Act, 1956. The creditor may still proceed on the original cause of action, but not on the foreign decree alone.

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Issues: Whether an ex parte default summary judgment obtained in a non-reciprocating foreign country against an Indian company constitutes a debt due and payable so as to sustain a winding up petition under Section 433(e) of the Companies Act, 1956.

Analysis: A foreign decree from a non-reciprocating territory does not become an enforceable debt in India merely by its existence. It must first satisfy the requirements of Section 13 of the Code of Civil Procedure, 1908, and, where necessary, be established through a suit on the foreign judgment or on the underlying cause of action. A winding up petition cannot be used to bypass that process. A foreign judgment that is a bare default order, without adjudication on the merits or evidence against the judgment-debtor, is not conclusive under Section 13 and does not create a present, legally recoverable debt for the purposes of Sections 433 and 434 of the Companies Act, 1956. A creditor may nevertheless rely on the original cause of action in a winding up proceeding, but not on such an untested foreign decree alone.

Conclusion: The foreign default judgment against the Indian company was not a debt due and payable within the meaning of Section 433(e) and could not found a winding up petition. The petition was not maintainable.

Ratio Decidendi: A foreign decree from a non-reciprocating territory, unless it satisfies Section 13 of the Code of Civil Procedure, 1908, and is based on an adjudication on merits, does not by itself constitute a debt due for sustaining a winding up petition under the Companies Act, 1956.

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