The judgment established the maintainability of a winding up petition based on a foreign judgment and the criteria for demonstrating a company's inability to pay its debts.

( 1 ) IN pursuance of a contract of affreightment dated 23rd december 1999 for a consignment of RDB palmolein Cargo, the respondent executed four letters of indemnity of 13th April 2000. Those letters were purported to have been issued by the Company jointly and severally with the State Bank of Saurashtra. For the purposes of the present proceedings, reliance has been placed by both the Counsel on the indemnity bearing No. 1308. The provisions of the indemnity contained the following request to the petitioner: "we hereby request you to order the vessel to proceed to Mangalore and give delivery of the said cargo at the port of Mangalore to delivery to the order of Lanyard Foods Ltd. No. 1119-A, Kiadb Industrial Area, Balkanpadi, mangalore 975011, India without production of the original Bills of Lading. " the request contained in the other three letters of indemnity (bearing Nos. 1065, 1066 and 1309) was similar, save and except that the Ports of delivery were referred to therein as Chennai and Karwar. Each of the documents of indemnity executed by the respondent indemnified the petitioner in the following terms: " 1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss damage or expenses of whatsoever nature which you may sustain by reason of the vessel proceeding and giving delivery of the cargo in accordance with our request.

( 2 ) IN the event of any proceedings being commenced against you or any of your servants or agents in connection with the vessel proceeding and giving delivery of the cargo as aforesaid to provide you or them on demand with sufficient funds to defend the same.

( 3 ) IF, in connection with the vessel proceeding and giving delivery of the cargo as aforesaid, the ship or any other ship or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property and to indemnify you in respect of any liability, loss, damage or expenses caused by such arrest or detention or threatened arrest or detention whether or not such arrest or detention or threatened arrest or detention may be justified.

( 4 ) AS soon as Bills of Lading for the above cargo shall have come into our possession to deliver the same to you

( 5 ) THE liability of each and every person under this Indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person whether or not such person is party to or liable under this indemnity.

( 6 ) THE liability of each and every person under this Indemnity shall in no circumstances exceed 200% of the GIF value of the above cargo.

( 7 ) THIS Indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this Indemnity shall at your request submit to the jurisdiction of the High Court of England. " the petitioner delivered the cargo in compliance with the request made by the respondent and in terms of the Letters of indemnity. Delivery of the cargo covered by the Bill of lading relating to indemnities 1065 and 1066 was effected at Chennai on 2nd and 3rd June 2000; delivery of the cargo represented by the Bill of Lading described in indemnity 1308 was effected at Mangalore on 23rd and 24th April 2000 and of the cargo represented in Indemnity 1309 at Karwar on 25th and 26th April 2000. By reason of the petitioner having delivered the cargo in accordance with the request of the respondent in terms of the letters of Indemnity, the petitioner incurred liabilities towards third parties who asserted that they were lawful holders of one or more of the original bills of lading. Legal proceedings were initiated against the petitioner in which the petitioner had to pay an aggregate sum of US $ 44,65,890/-apart from incurring costs and expenses. By le