Judgment :- Prabha Sridevan, J. The appellant’s petition for winding up under Section 433(1) of the Companies Act was dismissed and therefore, this appeal has been filed. 2. The appellant is a Company incorporated in Israel and dealing interalia in home textiles. The respondent is a Company registered under the Companies Act and deals interalia in cotton fabrics. In the year 2001, there was a transaction between the appellant and the respondent. The respondent instituted legal proceedings against the appellant for amounts due on supply of goods. The appellant filed a counter/claim for damages for supplying defective fabrics. 3. By a judgment dated 04-05-2005, the Magistrate Court in Israel allowed the counter-claim of the appellant and rejected the claim of the respondent. This amount awarded by the Israel Court works out to approximately U S $ 342, 623.11 as on 18-07-2006 (Rs.1,38,76,235/-). The appellant issued a notice dated 18-07-2006 under Section 433(2) read with Section 434 of the Companies Act. The respondent denied its liability to pay, questioning the demand made based on the Israelie Court’s adjudication. Since there was no positive response to this notice, the appellant filed a petition for winding up alleging that the respondent is unable to discharge it debts because of mismanagement and defalcation and since it is unable to meet its admitted liabilities it must be insolvent. The respondent in its counter specifically denied the allegation regarding mismanagement and according to them, the company’s financial position is very healthy. They denied that they had supplied defective quality fabrics. If the appellant had been genuinely dissatisfied they would have made the claim earlier. The counter claim was filed only to resist the claim of the respondent and as a counter blast. According to the respondent, Israel is not a reciprocating country and the provisions of Section 13 and Section 44 (A) of CPC must be complied with. According to them, the appellant cannot straightaway file a petition for winding up based on the Israeli Judgment. The learned Single Judge accepted the ground raised by the respondent with reference to Section 13(1)(c) and Section 44A and further was of the opinion that on a perusal of the balance sheet of the respondent it was clear that the respondent was a going company and there was no justification for ordering winding up. 4. The learned Senior Counsel, Mr. 4. The learned Senior Counsel, Mr. Yashod Vardhan appearing for the appellant submitted that the respondent cannot raise any of the grounds mentioned in Section 13, CPC. The respondent cannot raise the issue of jurisdiction since it was the respondent who invoked the jurisdiction of the Israeli Court. Both parties were heard and therefore, the respondent cannot raise the issue of absence of natural justice. It was a decision on merits and there is no ground to show that it was against Indian Laws. The learned Senior Counsel referred to Section 73 of the Contract and submitted that loss of profit if proved can be made the basis for the claim for damages and so the counter claim was rightly allowed. The learned Counsel submitted that the appellant had the option of invoking either Section 434 (a) or (b). 5. The learned Senior Counsel submitted that it is hardly relevant that the health of the respondent-Company is good if there is refusal to pay the debt and therefore, a deemed inability to pay the debt. The learned Senior Counsel submitted that while it is true that the jurisdiction of the Company is a discretionary one. The discretion should be exercised soundly. According to the learned Senior Counsel, an adjudication of a claim against the respondent results in a liability to pay the debt. A judgment debtor is equally a debtor. Similarly, a judgment creditor is also a creditor for the purpose of the Section. When all the legal requirements are met, winding up should be ordered. 6. The learned Senior Counsel appearing for the respondent produced the balance sheets of the Company to show that it has a robust financial health. He submitted that the claim made by the appellant is so far-fetched that it would not have been accepted in India. The learned Senior Counsel submitted that Section 73 of the Contract Act which provides for loss of profit also demarcates the expenditure to which it would be awarded. He submitted that in the present case the fabric was taken by the appellant straightaway to the manufacturing unit and the garments were thereafter sent to USA. The Americal buyer made complaints about the quality. In the absence of any evidence to show that the respondent knew that he was supplying the fabric so that the appellant could fulfill his contract with an American dealer this liability cannot be foisted. The Americal buyer made complaints about the quality. In the absence of any evidence to show that the respondent knew that he was supplying the fabric so that the appellant could fulfill his contract with an American dealer this liability cannot be foisted. He submitted that a counter claim which is several times more than the claim had been awarded. The respondent’s defence is not a moon shine defence but bona fide defence. The learned counsel also submitted that the appellate jurisdiction cannot be exercised if the view of the leaned Single Judge was a plausible view. Both the counsel relied on several judgments which we will extract hereafter: (a) Section 13 and 44, CPC reads thus: “13. When foreign judgment not conclusive. A foreign judgment shall be conclusive as to any mater thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except. (a) where it has not been pronounced by a Court of competent jurisdiction; (b) where it has not been given on the merits of the case; (c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognize the law of [India] in cases in which such law is applicable; (d) where the proceedings in which the judgment was obtained are opposed to natural justice; (e) where it has been obtained by fraud; (f) where it sustains a claim founded on a breach of any law in force in [India]. (b) 44. Execution of decrees passed by Revenue Court in places to which this Code does not extend. [Execution of decrees passed by Revenue Court in places to which this Code does not extend. The State Government may, by notification in the Official Gazette, declare that the decrees of any Revenue Court in any part of India to which the provisions of this Code do not extend or any class of such decrees, may be executed in the States as if they had been passed by Courts in that State] 433. Circumstances in which company may be wound up by Tribunal. Circumstances in which company may be wound up by Tribunal. A company may be wound up by the Tribunal,- (a) if the company has, by special resolution, resolved that the company be wound up by the Tribunal; (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting; (c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year; (d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; (e) if the company is unable to pay its debts; (f) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up; (g) if the company has made a default in-filing with the Registrar its balance sheet and profit and loss account or annual return for any five consecutive financial years; (h) if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign states, public order, decency or morality; (i) if the Tribunal is of the opinion that the company should be wound up under the circumstances specified in section 424G: Provided that the Tribunal shall make an order for winding up of a company under clause (h) on application made by the Central Government or a State Government (d) S.434. Company when deemed unable to pay its debts. Company when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts- (a) if a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding [one lakh rupees] then due, has served on the company, by causing it to be delivered at its registered office, by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor; (b) if execution or other process issued on a decree or order of 2[any Court or Tribunal] in favour of a creditor of the company is returned unsatisfied in whole or in part; or (c) if it is proved to the satisfaction of the 3[Tribunal] that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the 3[Tribunal] shall take into account the contingent and prospective liabilities of the company. (2) The demand referred to in clause (a) of sub-section (1) shall be deemed to have been duly given under the hand of the creditor if it is signed by any agent or legal adviser duly authorized on his behalf, or in the case of a firm, if it is signed by any such agent or legal adviser or by any member of the firm. 7. AIR 1953 Hyd 29 (Barket Lal Vs. Devidas and others) the Hyderabad High Court had to consider the decree passed by the Original Side of the said High Court on the basis of two judgments of the Bombay High Court. The Division Bench referred to Chesire in his third Edition of Private International Law at page 766 wherein it was observed as follows: “It is unnecessary, however, to consider theory of comity further for it has been supplanted by a far more defensible principle which has been called the doctrine of obligation. This doctrine, which was laid down in 1842, in that where a foreign court of competent jurisdiction has adjudicated a certain sum to due from one person to another, the liability to pay that sum becomes a legal obligation, which may be enforced in this country by action. This doctrine, which was laid down in 1842, in that where a foreign court of competent jurisdiction has adjudicated a certain sum to due from one person to another, the liability to pay that sum becomes a legal obligation, which may be enforced in this country by action. Once the judgment is proved the burden lies upon the defendant to show why he should not perform the obligation……. In other words, a new right has been vested in the creditor and a new obligation imposed upon the debtor at the instance of the foreign Court. Lord Esher once said that ‘ the liability of the defendant arises upon an implied contract to pay the amount of the foreign judgment. This does not mean that the justification for the enforcement of the obligation is an implied contract, but that for procedural purposes the debtor is regarded in having implicitly promised to pay. Historically this is well founded for according to the doctrine of SLADE’S case’ the mere existence of the debt raises an implied promise to pay the amount due. The creditor sue for the recovery of a simple contract debt, and since this is a liquidated amount he may proceed by way of a specially endorsed writ.” They also extracted from Schmitthoff in his Text-book of the English Conflict of Law at page 417 also observes: “Subject to compliance with certain requirements, the decision of a foreign court imposes upon the parties against whom the decision is given a legal duty to obey it. To this legal DUTY corresponds the RIGHT of the person in whose favour the decision has been given that the foreign judgment should be obeyed. That a pronouncement of the soverign power may impose on private persons a legal duty which gives rise to corresponding vested rights of others is well known from other provinces of English law, e.g., the legislature may create, by statute, a legal duty to take care, and any person belonging to the class of persons for whose benefit and protection the duty has been imposed, may bring an action for statutory negligence against the wrong doer. ……..” and they observed that, ‘in England and those countries which are governed by the common law, such judgments are enforced, not by virtue of any statue, but upon a principle very well stated by Parke, B., in ‘Williams V. Jones’, (1845) 13 M.&W.628: 14L.J.Ex 145: “Where a Court of competent jurisdiction has adjudicated a certain sum to be due from one person to another, a legal obligation arises to pay the sum, on which an action of debt to enforce the judgment may be maintained. It is in this way that the judgments of foreign and colonial Courts are supported and enforced.” 8. In AIR 1974 SC 1764 (Sankaran Govindan Vs. Lakshmi Bharathi), the Supreme Court dealt with the allegation that the foreign judgment was obtained by fraud and the proceedings were opposed to natural justice and therefore, they will not operate as res judicata. “It is a well established principle of private inter national law that if a foreign judgment was obtained by fraud, or if the proceedings in which it was obtained were opposed to natural justice, it will not operate as res judicata, see Section 13 of the Civil Procedure Code. …..As Garrow, J. said in Jacobs v. Beaver (supra), the fraud relied upon must be extrinsic or collateral and not merely fraud which is imputed from alleged false statements made at the trial which were met with counter-statements and the whole adjudicated upon by Court and so passed into the limbo of estoppel by the judgment. That estoppel cannot be disturbed except upon allegation and proof of new and material facts which were not before the former court and from which are to be deduced the new proposition that the former judgment was obtained by fraud…….It was held that no action lay upon the judgment. From the non-appearance of a defendant who is not otherwise subject to the jurisdiction of the foreign court it is impossible to spell out any such duty. The true basis of enforcement of a foreign judgment is that the judgment imposes an obligation upon the defendant and, therefore, there must be a connection between him and the forum sufficiently close to make it his duty to perform that obligation. The true basis of enforcement of a foreign judgment is that the judgment imposes an obligation upon the defendant and, therefore, there must be a connection between him and the forum sufficiently close to make it his duty to perform that obligation. If the principle upon which judgments are enforceable been comity, the Court of Queen’s Bench in the above case said that, having regard to the English practice of service out of the jurisdiction, it would have reached a different conclusion.” 9. In Vol.15 Corporate Law Adviser page 92(Silver Shield Construction & Trading Ltd., Vs. Recondo Ltd.), the learned Judge of the Bombay High Court dealt with Section 13 and Sections 433 (e) and 434 of the Companies Act. There4 the petitioners had obtained a decree in the High court of Justice, Queens Bench Division, England. The petitioners filed an executive application in the Bombay High Court based on the said judgment and notice under Order 21 Rule 22 was issued and was pending. Then the petitioners called upon the respondent to pay the decree amount and thereafter, the winding up petition was filed. It was contended by the petitioner that under Section 13 CPC, the foreign judgment is conclusive. In the facts of the case none of the exceptions were available. The learned Single Judge rejected all the objections which included (a) it was not pronounced by a Court of competent jurisdiction; (b) it was not given on merits of the case; (c) it was based on natural justice and that the claim was founded on breach of provisions of FERA and therefore, came under exception 13(f). 10. The learned Single Judge admitted the company petition ordering publication but refused to appoint the Official Liquidator as provisional liquidator since it was a drastic measure. The following sentence is also relevant in this case: “it is true that none of the balance sheet are produced before the Court. However, it is also not satisfactorily shown that the Company is in an insolvent position.” 11. In AIR 1971 SC 2600 (M/s. Madhusudan Gordhandas Vs. Madhu Woolen Industries Private Ltd.) “20. Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. However, it is also not satisfactorily shown that the Company is in an insolvent position.” 11. In AIR 1971 SC 2600 (M/s. Madhusudan Gordhandas Vs. Madhu Woolen Industries Private Ltd.) “20. Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable (See London and Paris Banking Corporation [1874] L.R. 19 Eq.444. Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed. (See Re. Brighton Club and Nor-fold Hotel Co. Ltd. [1865] 35 Beav. 204. 21. Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt (See Re. A Company 94 S.J.369). Where however there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantity the debi precisely (See Re. Tweeds Garages Ltd. [1962] Ch. 406. The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the company adduced prima facie proof of the facts on which the defence depends.” 12. In 2009 (5) MLJ 686 = 2009-3-L.W.642 (Tata Iron & Steel Company Ltd., Vs. Omega Cables Ltd.,), the Division Bench of this Court held that “In view of the deeming clause, the appellant company need not further prove that the respondent company was unable to pay the debts. As the respondent company had failed to honour the statutory notice by making payment, it must be held that it was unable to pay the debts.” 13. In 2000 8 (SCC) 278 (M.V. Al Quamar Vs. As the respondent company had failed to honour the statutory notice by making payment, it must be held that it was unable to pay the debts.” 13. In 2000 8 (SCC) 278 (M.V. Al Quamar Vs. Tsavilris Salvage (International) Ltd.,), the Supreme Court considered the scope of Section 44A in the context of admirality jurisdiction and the relevant paragraphs are extracted below: “Incidentally, a plain reading of Section 44-A would depict the following components: (i) The decree must be of a superior court of a reciprocating territory; (ii) The decree is to be filed in a District Court; (iii) The decree may be executed in India as if it had been passed by the District Court; (iv) Provisions of Section 47 of the CPC shall apply, subject t to the exceptions specified in Clauses (a) to (f) of Section 13; (v) “Decree” means any decree under which a sum of money is payable. (See Explanation II). 50. Section 44-A thus indicates an independent right, conferred on to a foreign decree holder for enforcement of its decree in India. It is a fresh cause of action and has no co-relation with jurisdictional issues. The factum of the passing of the decree and the assumption of jurisdiction pertaining thereto, do not really obstruct the full play of the provisions of Section 44-A. It gives a new cause of action irrespective of its original character and as such it cannot be termed to be emanating from the admiralty jurisdiction as such. The enforcement claimed is of an English decree and the question is whether it comes within the ambit of Section 44-A cr not. The decree itself need not and does not say that the same pertains to an admiralty matter neither it is required under Section 44-A of the Code. Though however in the facts of the matter under consideration, the decree has been passed by the High Court of England (a superior Court) in its admiralty jurisdiction. Registration in this country, as a decree of a superior foreign Court having reciprocity with this country would by itself be sufficient to bring it within the ambit of Section 44-A. The conferment of jurisdiction in terms of Section 44-A, cannot be attributed to any specific jurisdiction but an independent and an enabling provision being made available to a foreigner in the matter of enforcement of a foreign decree. …A mere glance at that provision, read with relevant explanations, shows that before it is invoked by any decree-holder, he must satisfy the following conditions. 1. A decree-holder who seeks execution must be armed with a money decree passed by any of the superior Court of any reciprocating territory, being any foreign country or territory which the Central Government may, by notification in official gazette, has declared to be a reciprocating territory for the purpose of the Section. 2. 2. Such an execution petition can be entertained by the executing Court in India being the District Court that will be clothed with the legal fiction as if the said foreign decree was passed by itself and whose aid and assistance are required for executing such a decree. 3. Such a decree can be put up for execution before a District Court in India being the principal civil court or original jurisdiction and which will include the local limits of the original civil jurisdiction of a High Court. 4. Once such execution petition is filed before the appropriate District Court the entire machinery of Section 47 for execution of Indian decrees would automatically get attracted. 5. In such execution proceedings, the judgment-debtor of a foreign Court decree will be entitled to satisfy the executing Court in India that the foreign decree cannot be executed against him as it is hit by any of the exceptions specified in Clauses(a) to (f) of Section 13 of the CPC.” 14. In 50 Compcas 422 (1980) = (1980) 93 L.W. 85 (Seethai Mills Ltd., Vs. N.Perumalsamy and another) it was held: “A creditor who has obtained a decree against a company is not compelled to confine his remedy against the company under s.434(1)(b) alone but he can resort to s. 434(1)(a) as well. There is no mutually exclusive dichotomy between the two sub-clauses. Hence even a decree-holder in respect of a money decree can institute proceedings under s.434(1)(a), if the other requirements of that provision are satisfied. The decree that is contemplated under s.434(1)(b) is not confined only to a money decree or an order for payment of money but is general is nature. Hence even a decree-holder in respect of a money decree can institute proceedings under s.434(1)(a), if the other requirements of that provision are satisfied. The decree that is contemplated under s.434(1)(b) is not confined only to a money decree or an order for payment of money but is general is nature. The fact that the original debt had merged in the decree and the person wh9o was originally a creditor has become a decree-holder afterwards, does not destroy his character as a creditor or the character of the money due to him from the company as a debt.” 15. In (2008) 142 Comp Cas 647 (Bom)(China Shipping Development Co. Ltd., Lanyard Foods Ltd.) a foreign decree was obtained before the High Court of England by the petitioner before the Bombay High Court. The respondent called upon the petitioner to pay the amount otherwise due and outstanding. The petitioner instituted a winding up petition.” “The remedy invoked by the Petitioner in the form of a petition for winding up cannot be regarded as an exercise for the execution of the decree of the English Court. …The such a Petition for winding up would be maintainable on the basis of a judgment of a foreign court also emerges from a judgment of Hon’ble Mr. Justified N.D. Vyas in Silver Shield Construction v. Recondo Ltd. [1994] 15 CLA 92.” 16. In AIR 1963 SC 1 (Viswanathan Vs. Abdul Wajid) the Supreme Court held thus: “24. In an action in personam the court has jurisdiction to make an order for delivery of movables’ where the parties submit to the jurisdiction. A person who institutes a suit in a foreign court and claims a decree in personam cannot after the judgment is pronounced against him, say that the court had no jurisdiction which he invoked and which the court exercised, for it is well recognized that a party who is present within or who had submitted to jurisdiction cannot after wards question it. We may briefly refer to cases on which counsel for the plaintiffs relied in support of his plea that the judgment of the Mysore High Court in so far as it relates to movables outside the State of Mysore was not conclusive between the parties in the Madras suit. …32. We may briefly refer to cases on which counsel for the plaintiffs relied in support of his plea that the judgment of the Mysore High Court in so far as it relates to movables outside the State of Mysore was not conclusive between the parties in the Madras suit. …32. A foreign judgment is conclusive as to any matter directly adjudicated upon thereby; but it does not include the reasons for the judgment given by the foreign court. What is conclusive under S.13 of the Code of Civil Procedure is the judgment, i.e., the final adjudication, and not the reasons Brijlal Ramjidas v. Govindram Gordhandas. I.L.R. (1947) IndAp 203..Section 13 in essence enacts a branch of the rule of res judicata in its relation to foreign judgments, but not every foreign judgment is made conclusive in the Indian Courts by S.13. To be conclusive, a foreign judgment must be by a court competent both by the law of the State which has constituted it and in an international sense, and it must have directly adjudicated upon the “matter” which is pleaded as res judicata. The expression “matter” in s. 13 is not equivalent to subject matter; it means the right claimed. To be conclusive the judgment of the foreign Court must have directly adjudicated upon a matter, the adjudication must be between the same parties, and the foreign Court must be a court of competent jurisdiction. Story in his “Conflict of Laws”, Eighth Edition at p. 768 s. 551 says “In respect to immovable property every attempt of any foreign tribunal to found a jurisdiction over it must be from the very nature of the case, utterly nugatory, and its decree must be for ever incapable of execution in rem.” Similarly, Dicey in his “Conflict of Laws” 7th Edition, Rule 85, enunciates the rule as follows: “All rights over or in relation to an immovable (land) are (subject to the exceptions hereinafter mentioned) governed by the law of the country where the immovable is statute (ex situs).” The-exceptions for the purpose of the present case are not material. In the comments under the Rule, Dicey states at p. 513: “The sovereign of the country where land is situate has absolute control over the land within his dominion: he alone can bestow effective right over it; his courts alone are as a rule, entitled to exercise jurisdiction over such land. In the comments under the Rule, Dicey states at p. 513: “The sovereign of the country where land is situate has absolute control over the land within his dominion: he alone can bestow effective right over it; his courts alone are as a rule, entitled to exercise jurisdiction over such land. Consequently, any decision by an English Court which ran counter to what the lex situs had decided or would decide would be, in most cases a brutum fulmen.” In Compandia de Mocambique v. British, South C. De Souza v. Samb [1891] 2 Q.B. 358 Wright, J., observed at p. 366: “The proper conclusion appears to be that, speaking general, subject to qualifications depending on personal obligation, it is a general principal of jurisdiction that title to land is to be directly determined, not merely according to the law of the country, where the land is situate, but by the Court, of that country, and this conclusion is in accordance with the rule ordinarily adopted by the juris-prudence of other countries”. Title to immovable property may therefore be determined directly or indirectly only by the law of the State, and by the courts of the State in which it is situate. A decision of a foreign Court directly relating to title to immovable property within its jurisdiction will of course be regarded between the same parties as conclusive by the Court s in India: but that decision is ineffectual in the adjudication of claims to immovables without the jurisdiction of that foreign Court, even if the foundation of title in both the jurisdictions is alleged to be identical. A foreign Court being incompetent to try a suit relating to immovable property not situate within its jurisdiction, the grounds on which its decision relating to title to immovable property within it jurisdiction is founded will not debar investigation into title to other property within the jurisdiction of the municipal courts, even if the latter properties are alleged to be held on the same title. Every issue and every component of the issue relating to title to immovable property must be decided by the Court within whose jurisdiction it is situate: to recognize the authority of a foreign court to adjudicate upon even a component of that issue would be to recognize the authority of that Court to decide all the components thereof. ….35. Every issue and every component of the issue relating to title to immovable property must be decided by the Court within whose jurisdiction it is situate: to recognize the authority of a foreign court to adjudicate upon even a component of that issue would be to recognize the authority of that Court to decide all the components thereof. ….35. The rule of conclusiveness of a foreign judgment as enacted in S.13 is somewhat different in its operation from the rule of res judicata. Undoubtedly both the rules are founded upon the Principle of sanctity of judgments competently rendered. But the rule of res judicata applies to all matters in issue in a former suit which have been heard and finally decided between the parties, and includes matters which might and ought to have been made ground of attack or defence in the former suit. The rule of conclusiveness of foreign judgments applies only to matters directly adjudicate upon. Manifestly, therefore, every issue heard and finally decided in a foreign court is not conclusive between the parties. What is conclusive is the judgment. Again, the competence of a Court for the application of the rule of res judicata falls to be determined strictly by the municipal law; but the competence of the foreign tribunal must satisfy a dual test of competence by the laws of the State in which the Court functions, and also in an inter national sense. ……41. By S.13 of the Civil Procedure Code a foreign judgment is made conclusive as to any matter thereby directly adjudicated upon between the same parties. But it is the essence of a judgment of a Court that it must be obtained after due observance of the judicial process, i.e., the Court rendering the judgment must observe the minimum requirements of natural justice-it must be composed of impartial persons, acting fairly, without bias, and in good faith, it must give reasonable notice to the parties to the dispute and afford each party adequate opportunity of presenting his case. A foreign judgment of a competent court is conclusive even if it proceeds on an erroneous view of the evidence or the law, if the minimum requirement of the judicial process are assured: correctness of the judgment in law or on evidence is not predicated as a condition for recognition of its conclusiveness by the municipal court. A foreign judgment of a competent court is conclusive even if it proceeds on an erroneous view of the evidence or the law, if the minimum requirement of the judicial process are assured: correctness of the judgment in law or on evidence is not predicated as a condition for recognition of its conclusiveness by the municipal court. Neither the foreign substantive law, nor even the procedural law of the trial need be the same or similar as in the municipal court. As observed by Charwell, J, in Robinson v. Fenner[1913] 3. K.B. 835 “In any view of it, the judgment appears, according to our law, to be clearly wrong, but that of course is not enough: Godard v. Gray 1870] L.R. 6 Q. B. 139 and whatever the expression “contrary to natural justice”, which is used in so many cases, means (and there really is very little authority indeed as to what it doe mean), I think that it is not enough to say that a decision is very wrong, any more than it is merely to say that it is wrong. It is not enough, therefore, to say that the result works injustice in the particular case, because a wrong decision always does.” A judgment will not be conclusive, however, if the proceedings in which it was obtained is opposed to natural justice. The words of the statute make it clear that to exclude a judgment under el. (d) from the rule of conclusiveness the procedure must be opposed to natural justice. A judgment which is the result of bias or want of impartiality on the part of a Judge will be regarded as a nullity and the “trial coram non judice” (Vassilades v. Vassilades, AIR 1945 PC 38 and Manik Lal v. Dr.Prem Chand [1957]1SCR575: ((S) AIR 1957 SC 425 ). …The plea of bias, of a foreign Court is indeed difficult to make out. The court will always presume, in dealing with judgment of a foreign Court that the procedure followed by that Court was fair and proper, that it was not biased, that the Court consisted of Judges who acted honestly, and however wrong the decision of the Court on facts or law may appear to be, an inference of bias, dishonesty or unfairness will not normally be made from the conclusion recorded by the Court on the merits. The party setting up a case that the judgment of a foreign court is not conclusive, because its proceeding was contrary to natural justice, must discharge this burden by cogent evidence, and we do not think that in this case such evidence has been led. The Judges had no pecuniary interest in the dispute. Bias in favour of the executors is sought to be inferred from close friendship of the Chief Justice with one of the defendants, and the expression of opinion by the other Judge on the merits-such expression of opinion being consistent with the practice prevailing in the Court-and refusal to grant facility to the plaintiffs to secure the presence of their chosen counsel. These grounds either individually or collectively do not justify us in inferring contrary to the view of the High Court that the Judges had forfeited their independence and impartiality and had acted not judicially but with bias.” 17. In AIR 2007 SC 168 (Paramjeet Singh Patheja Vs. ICDS Ltd.,) the Supreme Court held that a notice under the Insolvency Act is not a mode of enforcing a debt and enforcement can be done only by taking steps for institution available under CPC. They also held that an award did not become a decree as defined in CPC and no insolvency notice could be issued under Section 9(2) on the basis of the award. 18. In 103 Compcas 1002 (Chem-Crown India Ltd., Vs. Sports Equipment Private Ltd.) the Delhi High Court held that a belated dispute regarding the quality of goods supplied is not a bona fide dispute. This was referred to show that the dispute relating to defective goods was raised belatedly by the appellant and therefore, it was not a bona fide claim. 19. In 1957 Madras 25(N.P.A.K. Muthaiah Chettiar V. Firm Shwebo) a Division Bench of this Court held that the provisions of Section 44A cannot apply if the judgment or decree is obtained from a Court of a country which is not a reciprocating country. 19. In 1957 Madras 25(N.P.A.K. Muthaiah Chettiar V. Firm Shwebo) a Division Bench of this Court held that the provisions of Section 44A cannot apply if the judgment or decree is obtained from a Court of a country which is not a reciprocating country. “To reiterate if any foreign country establishes reciprocity in the matter of execution of decrees of that country by laws enacted there, Indian Courts will do likewise by applying Section 44-A, Civil P.C., but if there is no arrangement establishing reciprocity, our Courts ’cannot apply Section 44-A, 60 That suitor who has obtained a judgment & a foreign Court with which there are no such reciprocal relationships can only sue under Section 13, Civil P.C. by fulfilling the conditions enumerated therein. Until 1947, when India was a part of the British Empire, the enforcement of foreign judgments was conditioned upon the pattern of legislative enactments and Orders in Council prevalent in the United Kingdom and as such Section 44-A, Civil P.C. is an embodiment in the Indian statute book of the existing laws in England.” 20. In AIR 1995 P & H 29 (Punjab Recorders Ltd., Vs. M/s. Magnetic Information Technology Ltd.,) the learned Single Judge held that an award which has not been made a rule of Court cannot from a basis for winding up a company. 21. In (1900) 23 ILR 458 (Murugesa Chetti Vs. Annamalai Chetti) this Court held that when the Pondicherry Court had adjudicated the appellant as an insolvent then the Management of the property is entrusted to a syndic against whom only of suits in respect thereof must brought and therefore, as long as the adjudication of the insolvency remains in forcer, no suit can be brought against any French territory. When that is so the decision would be the same outside that territory also and the Court referred to the judgment in Ellis, v. M’Henry (1894) 1 Q.B. 633 where Bovill, C.J. observes at p. 234 “there is no doubt that a debt or liability arising in any country may be discharged by the laws of that country, and that such a discharge, if it extinguishes the debt or liability, and does not merely interfere with the remedies or course of procedure to enforce it, will be an effectual answer to the claim, not only in the Courts of that country, but in every other country.” 22. The learned Senior Counsel for the respondent also referred to AIR 1971 SC 530 (H.H. Maharajadhiraja Madhav Rao Jivaji Rao Scindia Bahadur Vs. Union of India) where the Supreme Court described four kinds of debts as extracted hereinunder: “The dynamic theory obligations regards a debt a claim to ‘an equivalent in a value to a floating charge against the generality of things which are the properties of the debtor’. From this is developed the notion of a credit-debt where property rights arise from a promise, express of implied in respect of ascertained or readily ascertained sums of money. Thus a debt or a liability to pay money passes through four stages. First there is a debt no yet due. The debt has not yet become a part of the obligor’s ‘things’ because no net liability has yet arisen. The second stage is when the liability may have arisen but is not either ascertained or admitted. Here again the amount due has not become a part of the obligor’s things. The third stage is reached when the liability is both ascertained and admitted. Then it is property proper of the debtor in the creditor’s hands. The law begins to recognize such property in insolvency, in dealing with it in fraud of creditors,. Fraudulent preference of one creditor against another, subrogation, equitable estoppel, stoppage in transitu etc. A credit-debt is then a debt fully provable and which is fixed and absolutely owing. The last stage is when the debt becomes a judgment debt by reason of a decree of a Court. Thus an American Judge held ‘ outstanding uncollected accounts’ as property. Standard Marine Insurance Co. v. Board of Assessors 123 la 717. It is because of this that the French law includes such obligations in mobiles.” According to the learned Senior Counsel, the judgment of the Israeli Court had not yet ripened into a decree or an enforceable claim. 23. we have to accept the submissions of the appellant that if there a debt, which is even a judgment debt then it is open to him to invoke Section 434(a) or Section 434(b). It was held thus in 50 Compcas 422(cited supra). The various judgments would show that the effect of S.13 is akin to the rule of res judicata hough the little narrower in scope. It was held thus in 50 Compcas 422(cited supra). The various judgments would show that the effect of S.13 is akin to the rule of res judicata hough the little narrower in scope. It means that if a suit is filed on the basis of any judgment obtained in any Court other than an Indian Court, it would be a conclusive subject as regards the matters adjudicated upon the exceptions under Section 13. (vide AIR 193 SC 1 (cited supra)). The judgments of Courts of reciprocating country stand on a better footing since those judgments can straightaway be put in execution in India as if it had been passed by the Indian Court and provisions of Section 47 will apply subject to the limits created by Section 13. It was held thus in 2000 (8) SCC 278 (cited supra). Therefore, every person against whom there is a judgment of a foreign court whether it is a reciprocating or a non-reciprocating country could raise the defense if a suit is filed or an execution petition is filed and resist it by showing that he has a valid defense which falls under one of the categories mentioned in Section 13. 24. The fact that this jurisdiction is a discretionary one is well-settled as detailed above in AIR 1971 SC 2600 (cited supra). Therefore, it is not as if the Court will order winding up on the mere proof that there is inability or there is non-payment. 25. In (2008) 142 Compcas 647 (China Shipping Development Co. Ltd., Vs. Lanyard Foods Ltd.), the learned Single Judge while rejecting the objections that the judgment of the Court of England is not a judgment on merits and that the judgment is not pronounced by a Court of incompetent jurisdiction also referred to the pleadings relating to the financial status of the Company and observed that the record before the Court manifestly revealed that the Company is unable to pay its debts within the meaning of Section 433(e) and that the requirements of clauses 9(a) and (c) of Sub-section (1) of Section 434 have independently been duly fulfilled. Therefore, this is a very important aspect to be borne in mind in a petition for winding up. 26. Section 434(1)(c) reads as follows: S. 434. Company when deemed unable to pay its debts. Therefore, this is a very important aspect to be borne in mind in a petition for winding up. 26. Section 434(1)(c) reads as follows: S. 434. Company when deemed unable to pay its debts. (1) A company shall be deemed to be unable to pay its debts- (a) …. (b) …. (c) if it is proved to the satisfaction of the [Tribunal] that the company is unable to pay its debts, and, in determining whether a company is unable to pay its debts, the 3[Tribunal] shall take into account the contingent and prospective liabilities of the company.” Therefore, the Section 434 creates a fiction that a Company is unable to pay its debts in case of Section 434(1)(a) situations or in cases of S.434(1)(b) situation or it is proved to the satisfaction of the Court that the Company is unable to pay its debts and the Court shall also take into account all the contingent and prospective liabilities of the Company. (Emphasis supplied) 27. In the present case, the learned Single Judge has also looked at the Company’s balance sheet and found that it was a going Company and the discretion ought not be exercised in favour of the winding up. The grievance of the appellant is that the learned Single Judge ought to have given a finding regarding Sections 13 and 44(a). The Division Bench clearly held in 50 Compcas 422(cited supra), as we have already observed that when a judgment is obtained, the person in whose favour the judgment was pronounced is a judgment creditor and that the liability cast on the judgment-debtor would be a debt. Therefore, the judgment obtained in a Court of law which is an adjudication on a claim for money would definitely be a debt. 28. But we still have to examine whether merely by producing the judgment without examining any of the contentions raised by the respondent, winding up can be ordered. The appellant had rightly contended that it is his option whether to choose Section 434(1)(a) or (b). This has to be accepted, and the same Division Bench has also held that the two sections are not mutually exclusive. We have extracted above the relevant paragraphs. But the conclusiveness of the judgment obtained in a foreign court whether it is a reciprocating territory or non-reciprocating territory is subject to the limitations of Section 13. 29. This has to be accepted, and the same Division Bench has also held that the two sections are not mutually exclusive. We have extracted above the relevant paragraphs. But the conclusiveness of the judgment obtained in a foreign court whether it is a reciprocating territory or non-reciprocating territory is subject to the limitations of Section 13. 29. Section 44A also reiterates the same, since theretoo the execution can be resisted by raising any of the grounds under Section 13. These grounds are based upon the principle of sanctity of judgments competently rendered. The adjudication of the foreign court would be conclusive within the Section 13 parameters in a suit filed based on the judgment. If the defences under Section 13, CPC are available to a judgment debtor when a suit is filed, then he cannot be put in a wore position, when he is asked to defend a winding up petition. He is entitled to raise the same defences and seek protection from the Court accordingly. 30. The learned Senior Counsel, Mr. Yashod Vardhan submitted that while examining the case it cannot go into the merits of the case, that is the merits of the foreign judgment. In this case, the respondent claimed before the foreign Court, that the fabrics sent by the respondent was received by the appellant and fabricated into garments to fulfill a contract with two parties in USA and those parties rejected the garments on certain grounds. Consequently, the appellant had made the counter-claim. The learned Senior Counsel appearing for the respondent submitted that there is no evidence that the respondent knew that the fabric that was exported was required for fulfilling the contract between the Israeli party and its American buyer and the compensation for loss or damage can be awarded under Indian Laws only as per Section 73 of the Contract Act. 31. Section 73 of the Contract Act reads as follows: Compensation for loss or damage caused by breach of contract. 73. 31. Section 73 of the Contract Act reads as follows: Compensation for loss or damage caused by breach of contract. 73. Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.- When an obligation resembling those created by contract has been incurred and has not been discharge, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. Explanation.- In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused-by the non-performance of the contract must be taken into account.” 32. Compensation cannot be given to any remote or indirect loss sustained by reason of the breach. The compensation is recoverable against any loss or damage, (a) that arise or occurs naturally in the usual course of things from the breach or (b) that none of the parties at the time of entering into the contract is likely to follow from the breach or in other words foreseeable damages. 33. Illustrations (j) and (q) reads thus: (j) A, having contracted with B to supply B with 1,000 tons of iron at 100 rupees a ton, to be delivered at a stated time, contracts with C for the purchase of 1,000 tons of iron at 80 rupees a ton, telling C that he does so for the purpose of performing his contract with B. C fails to perform his contract with A, who cannot procure other iron, and B, in consequence, rescinds the contract. C must pay to A 20,000 rupees being the profit which A would have made by the performance of his contract with B. (q) A contracts to sell and deliver to B, on the first of January, certain cloth which B intends to manufacture into caps of a particular kind, for which there is no demand, except at that season. The cloth is not delivered toll after the appointed time, and too late to be used that year in making caps. B is entitled to receive from A, by way of compensation, the difference between the contract price of the cloth and its market price at the time of delivery, but not profits which he expected to obtain by making caps, nor the expenses which he has been put to in making preparation for the manufacture.” Therefore, it is contended that the counter claim has to be decided in accordance with the Indian Law for which he has a valid defense and if a suit is filed in the Indian Court on the basis of the foreign judgment he would have been entitled to raise the defense. According to the appellant (j) applies. But according to the respondent (j) will apply only if respondents knew about the contract with USA buyer. Illustration (q) appears to deal with loss of profits. 34. While there is no dispute, that a judgment creditor can either resort to clause (a) or (b) of Section 434(1), if the Company raises a valid defense, we must examine the bona fides of the defense and we will have to decide the matter. Therefore, a) the foreign judgment imposes an obligation to pay on the judgment debtor; b) S.434(1)(b) and 434(1)(a) are not mutually exclusive; the judgment creditor can resort to either; c) The principle of conclusiveness of a foreign judgment operates only with regard to the matters directly adjudicated upon unlike the principle of res judicata which operates on a wider sphere. But within the extent and limits of S.13, the effect of conclusiveness is akin to res judicata. d) While giving effect to the deeming fiction of S.434 regarding inability to pay the debts; Courts shall consider the contingent and prospective liabilities of the Company; e) the jurisdiction of the Company Court is discretionary and will not be exercised merely because there is non-payment. d) While giving effect to the deeming fiction of S.434 regarding inability to pay the debts; Courts shall consider the contingent and prospective liabilities of the Company; e) the jurisdiction of the Company Court is discretionary and will not be exercised merely because there is non-payment. The quality of the defense raised is a vital input for exercise of discretion. 35. Admitting the petition for winding up is a very harsh remedy and we have to examine the matter very carefully. Here the defense that the respondent raises is not one on the merits of the judgments but it is a defense on the ground that such a judgment could not have been obtained as per the Indian law and it is contrary to Indian Law. The respondent may or may not succeed in substantiating his defense, if a suit is filed by the appellant on the basis of the Israeli judgment. But we cannot dismiss it as a moonshine defence. Further three is no material to show that the Company is in an insolvent condition. This is why the learned Single Judge was not inclined to grant the discretionary relief. 36. For the above reasons, we dismiss the appeal. However, there will be no order as to costs. The connected miscellaneous petitions are closed.