Foreign-law bond contracts with exclusive foreign jurisdiction can bar local winding-up action before liability is determined.

A foreign currency convertible bond issue was treated as a contractual debt security governed by the trust deed and bond conditions, with debt obligations continuing until conversion or maturity. The documents also provided that English law governed the transaction and that English courts had exclusive jurisdiction over disputes arising from or connected with the bonds. In that setting, a local winding-up petition could not be used to determine event of default, contractual preconditions for enforcement, or liability under the foreign-law contract before the chosen forum had resolved those issues. The petition was therefore not maintainable on the stated contractual framework.

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Issues: (i) Whether the instrument issued by the respondent was in substance a debt instrument in the nature of convertible bonds governed by the trust deed and bond conditions. (ii) Whether the petitioner could invoke the jurisdiction of the High Court for winding up when the trust deed and bonds were governed by English law and exclusive jurisdiction was conferred on the English courts.

Issue (i): Whether the instrument issued by the respondent was in substance a debt instrument in the nature of convertible bonds governed by the trust deed and bond conditions.

Analysis: The bond issue was structured as foreign currency convertible bonds carrying a fixed coupon, a maturity date, and a right of conversion into equity shares or GDRs. The contractual documents treated the bonds as debt obligations until conversion or maturity, and the trustee was empowered to act upon default under the trust deed and conditions.

Conclusion: The instrument was treated as a contractual debt security in the form of convertible bonds, subject to the trust deed and bond conditions.

Issue (ii): Whether the petitioner could invoke the jurisdiction of the High Court for winding up when the trust deed and bonds were governed by English law and exclusive jurisdiction was conferred on the English courts.

Analysis: The trust deed expressly provided that English law governed the transaction and that the courts of England had exclusive jurisdiction to settle disputes arising from or connected with the bonds. The Court held that deciding whether an event of default had occurred, whether the contractual preconditions for enforcement were satisfied, and whether the respondent was liable under the foreign law contract would require application of English law, which was inconsistent with the contractual forum selection and governing law clause. The reservation allowing proceedings in other courts was understood as not extending to a winding-up petition that would first require adjudication on contractual liability under English law.

Conclusion: The petitioner was not justified in invoking the jurisdiction of the High Court, and the issue was answered against the petitioner.

Final Conclusion: The winding-up petition could not be maintained on the facts and contractual framework presented, and the respondent was not ordered to be wound up.

Ratio Decidendi: Where a contract is expressly governed by foreign law and confers exclusive jurisdiction on foreign courts, a local court should not adjudicate the contractual liability and default issues as a precondition to winding up unless those questions are first determined by the competent forum under the chosen law.

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