Introduction:

In a recent judgment by the Calcutta High Court, Uphealth Holdings challenged the applicability of a U.S. Bankruptcy Court’s moratorium order in ongoing Indian legal proceedings. Dr. Syed Sabahat Azim and others, the respondents, sought a stay on an anti-arbitration suit filed by Uphealth, invoking both Indian and foreign legal principles.

Arguments of Both Sides:

The petitioner argued for the recognition of the U.S. Bankruptcy Court’s worldwide stay under the ‘Doctrine of Comity of Courts’. They emphasized that they weren’t seeking enforcement of the foreign court’s order as a decree but sought judicial recognition of the foreign insolvency proceedings. Uphealth contended that the moratorium order applied to creditors and not to them as initiators of the anti-arbitration suit. They highlighted the lack of legislative recognition of the Doctrine of Comity in Indian law and stressed the need for reciprocity for foreign judgments to be enforceable in India.

Court’s Judgment:

The Calcutta High Court ruled that Indian courts are not bound to stay proceedings due to ongoing foreign insolvency proceedings unless there is reciprocity established through central government notification. The court acknowledged the significance of cross-border insolvency frameworks but noted India’s current lack of comprehensive legislation in this regard. It held that while the U.S. Bankruptcy Court’s moratorium order could be considered by the Trial Court, it was not binding under Indian law without reciprocity.