Ruling dismisses FEMA objections, mandates Prakash Industries to pay over USD 11 million to Peter Beck UND Partner Vermogensverwaltung GMBH
In a landmark decision, the Delhi High Court, presided over by Justice Amit Bansal, has ruled in favor of executing a foreign decree from the High Court of Justice Business & Property Courts of England & Wales, directing Prakash Industries Limited to remit substantial sums to Peter Beck UND Partner Vermogensverwaltung GMBH. The decision, dated February 23, 2026, came after the Delhi High Court rejected objections raised under the Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) guidelines.
The case revolved around Prakash Industries' default in paying coupon interest on Foreign Currency Convertible Bonds (FCCBs) issued in 2009 and 2010, which were subscribed to by Peter Beck. The English Court had awarded Peter Beck an Early Redemption Amount of USD 11,230,700, alongside damages and interest for delayed conversion of bonds, amounting to several million dollars.
Prakash Industries contended that the decree violated FEMA and RBI guidelines, arguing that the payments exceeded the permissible 'all-in-cost ceiling' for external commercial borrowings. However, the Delhi High Court found these objections lacking merit, emphasizing that FEMA violations cannot obstruct the execution of foreign judgments. The court underscored that damages awarded by a competent foreign court are not subject to FEMA regulations.
The judgment referenced the Supreme Court's stance in similar cases, asserting that foreign judgments should be enforced broadly to uphold substantive rights, even if they surpass Indian statutory limits. The court also noted the RBI's contradictory position, which initially suggested that damages should conform to ECB guidelines but later clarified that such payments are permissible under current account transaction rules.
Justice Bansal directed Prakash Industries to remit the decretal amount, including interest, to Peter Beck's Euro-denominated bank account, while imposing costs of Rs. 1,00,000 on Prakash Industries for filing meritless objections. This decision reinforces the enforceability of foreign judgments in India, particularly those from reciprocating territories like the United Kingdom, under Section 44A of the Civil Procedure Code.
Bottom Line:
Foreign judgments - Execution of foreign decree under section 44A of CPC - Damages awarded by foreign courts cannot be subjected to FEMA regulations or RBI guidelines.
Statutory provision(s):
Section 44A of the Civil Procedure Code, 1908; Section 13(c) and (f) of the Civil Procedure Code, 1908; Foreign Exchange Management Act, 1999 (FEMA); RBI Guidelines on External Commercial Borrowings (ECB).
