TaxTMI 
TaxTMI 
TaxTMI 
2009 (7) TMI 775
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....ellant-company is unable to pay its debts. 4. Pursuant to an agreement between the parties, the appellant herein supplied one of its products known as marine teak plywood to the respondent. On the ground that the materials supplied by the appellant were defective, the respondent herein instituted a suit in the United States District Court, Middle District of North Carolina. The further details of the suit are not necessary for the present except to state that eventually the said suit came to be decreed on 12-4-2001, for a sum of US$ 22,57,147.58. 5. On 29-6-2002, the appellant received a notice, dated 24-6-2002, from the respondent demanding payment of the abovementioned decretal amount equivalent to Rs. 11,06,00,227 along with interest at the rate of 8 per cent per annum. The appellant disputed its liability. Consequently, the Company Petition No. 10 of 2002 (California Pacific Trading Corpn.'s case (supra) came to be filed. 6. By the judgment dated 19-11-2008 (California Pacific Trading Corpn.'s case (supra) the learned company judge allowed the company petition directing the appellant-company to be wound up. The present appeal was admitted on 7-1-2009, an interim stay of the ....
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....e Companies Act, whether a petition (such as the one herein) is a petition for execution of a decree within the meaning of section 44A of the CPC ?" 11. The adjudicatory process in any civilised system is a mechanism established by the State for the peaceful resolution of the disputes arising between (i) its subjects inter se, or (ii) between the States and its subjects, or (iii) between either the State or its subjects on one hand and a foreigner on the other. To create the mechanism for the adjudication of disputes of the first two of the abovementioned three categories is, undoubtedly, within the powers of the State. Because the State has the necessary sovereignty to establish the legal system not only for the adjudication of such disputes but also for the enforcement of the legal rights and obligations determined by the process of adjudication. Coming to the third category mentioned above the State would, undoubtedly, have the authority to set up a mechanism for the adjudication of the rights of a foreigner against either the subjects of the State or the State itself. But when it comes to the question of the obligations of a foreigner the difficulty arises because the enforcem....
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....ction 43 deals with the execution of decrees passed by the civil courts established in any part of India but to which the Code of Civil Procedure does not apply. It may be mentioned here that by virtue of the declaration of section 1, sub-section (3) of the Code of Civil Procedure does not apply to the State of Jammu & Kashmir and various other areas specified therein. Section 44 deals with decrees passed by the revenue courts. It may be worthwhile to mention here that neither the expression civil court nor a revenue court is defined under the Code of Civil Procedure. It is beyond the scope of our present discussion to examine that aspect of the matter. 16. Section 44A deals with the execution of decrees passed by "superior courts" of "reciprocating territories". Section 44A reads as follows : "S. 44A. Execution of decrees passed by courts in reciprocating territory.-(1) Where a certified copy of decree of any of the superior courts of any reciprocating territory has been filed in a District Court, the decree may be executed in India as if it had been passed by the District Court. (2) Together with the certified copy of the decree shall be filed a certificate from such superior ....
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....mount represents the liability of payment of some tax or fine or penalty or of money payable pursuant to an arbitration award. Such exception is obviously in recognition of a principle of private international law that the municipal courts of a country do not recognise or enforce the revenue law of the other countries. It is clear from the scheme of section 44A that only a limited class of decrees passed by the courts established outside the territory of India are made executable in accordance with the provisions of the Code of Civil Procedure. The limitations, as already noticed, are threefold based on (i) the status of the court, (ii) the territory to which the court is located, and (iii) the nature of the decree. 19. The scheme of Part-II of the Code of Civil Procedure, more specifically with reference to sections 38, 39 and 44A of the Code of Civil Procedure. fell for consideration of the Hon'ble Supreme Court in m. v. Al Quamar v. Tsavliris Salvage (International) Ltd. [2000] 8 SCC 278. In paragraph 8 of the said judgment the Hon'ble Supreme Court has held as follows (page 318) : "63. When we turn to section 38, we find that a decree may be executed either by the court which....
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....another foreign national in India. The second distinguishing feature is that section 44A permits the foreign judgment debtor to challenge the foreign decree even before the executing court being the District Court in India on any of the grounds mentioned in clauses (a) to (f) of section 13. A transferee court under section 39 which is called upon to execute an Indian decree passed by a competent Indian Court against the judgment-debtor cannot permit the judgment-debtor to go beyond the decree sought to be executed by such transferee court." 20. It is also required to be noticed while dealing with section 44A that under sub-section (3) the execution of such decree which otherwise satisfies requirements of section 44A shall be refused "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". 21. The history and background of section 13 and section 44A of the Code of Civil Procedure and their purpose is required to be examined to arrive at the correct conclusion and the questions framed by us earlier. 22. The authority/jurisdiction of every court is confined to the territory over which the cou....
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....he English rules of the conflict of laws, the judgment is conclusive in England (unless it is impeachable for reasons for fraud, public policy or the like) and not merely prima facie evidence of the defendant's liability as had at one time been supposed. In Adams v. Cape Industries Plc. Scott J. accepted Blackburn J.'s restatement of the obligation doctrine as being the basis on which English courts would recognise and enforce foreign judgments in personam. The Court of Appeal, however, accepted that the obligation doctrine was purely theoretical, since it has no practical value in identifying the foreign judgments which give rise to the obligation. The Court of Appeal accepted that at common law foreign judgments were enforced, not through considerations of comity, but on the basis of the principle that a legal obligation arises to satisfy a judgment of a court of competent jurisdiction, but in a later passage it also expressed the view that some notion of comity lay behind the recognition of judgments, but 'this cannot be comity on an individual nation-to-nation basis, for our courts have never thought it necessary to investigate what reciprocal rights of enforcement are concede....
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....r Gurdial Singh v. Maharaja of Faridkot (21 IA 171). Their Lordships held as follows:- "Under these circumstances there was, in Their Lordships' opinion, nothing to take this case out of the general rule, that the plaintiff must sue in the court to which the defendant is subject at the time of suit ('actor sequitur forum rei'); which is rightly stated by Sir Robert Phillimore (International Law, volume 4, section 891) to 'lie at the root of all international, and of most domestic, jurisprudence on this matter'. All jurisdiction is properly territorial, and 'extra territorium jus dicenti, impune non paretur'. Territorial jurisdiction attaches (with special exceptions) upon all persons either permanently or temporarily resident within the territory while they are within it; but it does not follow them after they have withdrawn from it, and when they are living in another independent country. It exists always as to land within the territory, and it may be exercised over movables within the territory; and, in questions of status or succession governed by domicil, it may exist as to persons domiciled, or who when living were domiciled, within the territory. As between different provinc....
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....try to which the provisions of the Code of Civil Procedure apply, unless the defendant succeeds in establishing any one or some of the objections enumerated under clauses (a) to (f ) of section 13, the judgment of the foreign court is declared to be conclusive as to any matter that is directly adjudicated between the same parties and the decree is required to be passed in terms of the said foreign judgment by the Indian court. Thereafter, the decree can be executed in the manner provided by the Code of Civil Procedure. 31. On the other hand, section 44A came to be introduced in the Code of Civil Procedure by Act VIII of 1937. The Division Bench of the Madras High Court in N.P.A.K. Muthiah Chettiar v. K.S. Rm. Firm Shwebo, Burma AIR 1957 Mad. 25, traced out the history of section 44A as follows (page 27) :- "The history of section 44A of the Civil Procedure Code may be considered. This section was introduced into the Civil Procedure Code, for the first time by section 2 of the Act 8 of 1937, and therefore, till then there was no provision in the Civil Procedure Code by which decrees passed outside India and Burma could be executed in British-Indian courts. By section 2 of Foreign ....
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....entioned in section 41 are relevant only if they are related to matters of public nature relevant to the enquiry. 37. Section 43 declares that judgment, order or decrees other than those mentioned in sections 40, 41 and 42 are irrelevant except in such a situation where prior judgment is a fact in issue. Obviously, the judgments referred to in sections 40 to 43 of the Evidence Act are judgments of the competent courts established within the territory of India by the authority of law made either by Parliament or a State Legislature. 38. The CPC which is a later enactment than the Evidence Act made a provision under section 131 which makes the judgment of a foreign court conclusive between the parties on the issue decided by the foreign court subject to the condition that such a judgment is not otherwise the shortcomings pointed out in clauses (a) to (f). Section 13 in our view incorporated the rules of the conflict of laws as evolved and applied in the courts of England and is an exception to the rule contained in sections 40 to 43 of the Evidence Act. 39. Clauses (a) to (f ) of section 13 of the CPC, stipulates the conditions, the existence of any of them, makes the foreign decr....
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.... whole or in part;" 45. Section 439 of the Act prescribes the procedure by which a company is to be wound up by the court. We must necessarily enquire whether sections 433, 434 and 439 create any right in favour of a creditor, either Indian or foreigner, and if such a right is created what is the nature of the right? 46. While section 433 of the Act authorises the court to wind up a company in the various contingencies specified therein the right to file an application for such winding up is conferred on various bodies enumerated under section 439(1)(a) to (g)5 including the company itself and also by the Central Government or the State Government. Therefore, it follows that anyone of the persons specified under section 439(1) can seek winding up of a company by the court on the ground that one of the contingencies spcified under section 433 occur subject, of course, to the limitations further prescribed under the various sub-sections of section 439, for example, a petition to wind up a company on the ground that it is unable to pay its debts need not necessarily be filed only by a creditor or creditors, it can be filed by the company itself or by the Registrar of Companies or by....