Foreign decree enforcement and pre-existing dispute bar insolvency admission when executability remains pending in India.

An application under the Insolvency and Bankruptcy Code could not be maintained on the basis of an ex parte foreign decree from a non-reciprocating territory where its executability was already under adjudication in India. A foreign decree from such a territory is not directly executable under the Code of Civil Procedure and must first satisfy the conditions for conclusiveness under Section 13 before it can support a legally enforceable claim. Because a suit on executability was pending before the Bombay High Court, the claimed debt had not crystallised into a payable debt and the matter involved a pre-existing dispute. The Section 9 application was therefore not maintainable and refusal to commence corporate insolvency resolution process was upheld.

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Issues: Whether an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 could be maintained on the basis of an ex parte foreign decree from a non-reciprocating territory when proceedings regarding its executability were pending in India.

Analysis: The claim arose from employment-related salary dues, but the debt was founded on a foreign decree obtained ex parte from a court in a non-reciprocating territory. Such a decree could not be directly executed in India under Section 44A of the Code of Civil Procedure, 1908 and had to satisfy Section 13 of the Code of Civil Procedure, 1908 before it could be treated as conclusive and legally enforceable. Since a suit seeking adjudication of the foreign decree's executability was already pending before the Bombay High Court, the debt had not yet crystallised into a legally payable claim. In these circumstances, the pending adjudication amounted to a pre-existing dispute, and the insolvency process could not be used to bypass the remedy already being pursued.

Conclusion: The application under Section 9 was not maintainable and initiation of corporate insolvency resolution process was rightly refused.

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