Initializing CIRP against a Corporate Debtor with a foreign award is insufficient.

The NCLT in this case gave a significant judgement wherein it differentiated between domestic and foreign awards and whether a CIRP can be initiated against a Corporate Debtor who has been endowed with a foreign award. In the present case, Jaldhi Overseas Pte. Ltd. (Jaldhi Overseas), a Singapore-based company, attempted to file a CIRP against Steer Overseas Pvt. Ltd. (Steer Overseas), an Indian firm. The parties disagreed, and the issue was referred to arbitration in Singapore. The arbitral tribunal rendered a partial foreign award in favour of Jaldhi Overseas, which was also given leave to pursue the arbitral judgement by the High Court of the Republic of Singapore. Jaldhi Overseas filed a suit with the NCLT requesting the beginning of a CIRP against Steer Overseas because they refused to pay.

In the instant case titled Jaldhi Overseas Pte. Ltd v. Steer Overseas Private Ltd. the issue raised before the Court for clarification was:

Whether a foreign award is sufficient to start bankruptcy proceedings against the Corporate Debtor under the 2016 Insolvency and Bankruptcy Code?

About this issue, NCLT noted that in Government of India vs. Vedanta Limited, the Supreme Court clarified the situation of foreign awards. It is not enough to just produce a foreign prize to have an impact. The enforcement of foreign awards in India is dealt with under Part II Chapter I of the Arbitration and Conciliation Act 1996. According to the explanation of Section 47, "the court" refers only to High Courts. It is clear from the above provisions that only High Courts have jurisdiction to deal with foreign awards and enforce foreign awards. The subjective satisfaction of the concerned High Court with the conditions set out in Section 48 of the Act is required for the implementation of a foreign award in India. Only once the foreign award has been satisfied by the High Court is it enforceable, and only then is it recognised to be a decree.

With this in consideration, Jaldhi Overseas' petition was denied, and it was determined that a foreign award is insufficient to start a CIRP. It was further underlined that the NCLT does not have civil court authority and cannot enforce a foreign award.