Skip to main content

Arbitration Clause In Agreement Is Not An Embargo On Filling Under Insolvency Code

Cause Title : Mr. Shahi Md. Karim vs M/s. Kabamy India LLP, Company Appeal (AT) (CH) (Ins.) No. 16 of 2023, National Company Law Appellate Tribunal At Chennai

Date of Judgment/Order : 25/01/2023

Corum : Justice M. Venugopal, Member (Judicial) & Ms. Shreesha Merla, Member (Technical)

Citied: 

Background

An appeal against order of the NCLT, Hyderabad admitting an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, was filed by the Suspended Director of the Corporate Debtor.

The Appellant, has challenged the Admission Order on the ground that there was an Arbitration Clause in the C & F Agreement and that the Respondent ought to have invoked this Clause.

Judgment

The NCLAT dismissing the appeal decided that there is no embargo on the Operational Creditor, to file a Section 9 Petition, under I & B Code, 2016, even if there is an Arbitration Clause, in the Agreement. The scope and objective of the Code is Resolution, and not a Recovery Mode / Forum. In the instant case, the Adjudicating Authority, based on the material on record, had arrived at a conclusion that there were recurring defaults on behalf of the Corporate Debtor and that the Operational Creditor, has requested for full and final payment of the outstanding dues. The Corporate Debtor vide Reply dated 01.02.2022, requested for dispatch of the inventory stocked in the warehouse in Mumbai. The Operational Creditor in reply to the email, sent an email dated 02.02.2022, highlighting the outstanding dues, along with the Ledger attached. But, there was no response and the Operational Creditor sent one more email dated 29.03.2022, demanding the outstanding total dues of Rs.3,12,81,028/- and therefore issued a Legal Notice dated 28.06.2022, for which, the Corporate Debtor sent a ‘Reply’ dated 12.07.2022, but the amounts were not paid. Therefore there is no illegality or infirmity in the impugned order of the Adjudicating Authority.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Vanishing promoters and languishing shareholders

Over Rs 60,000 crore of shareholders’ wealth is stuck in 1,450 companies suspended by the stock exchanges. More importantly, near 100 per cent pledging of promoter holding appears to be common in many of these companies. This, almost rules out any chance of the companies bouncing back. The suspension is for non-compliance of the listing norms. Vanishing Companies - Definition As per the definition stipulated by SEBI, any listed company, which raised moneythrough initial public offer and, thereafter, stopped operations, did not file returnseither with the RoC or SEBI and did not exist on the registered premises wastermed as vanishing.There are provisions under Companies Act under which companies are termedvanishing companies on satisfying certain conditions. it is provided a companywould be deemed to be a vanishing company, if it satisfies all the conditions given below : a) Failed to file returns with Registrar of Companies (ROC) for a period of two years; b) Failed to fil...
3 comments
Read more

Property can be sold on power of attorney - Delhi High Court

As reported in the Hindusthan Times on 5th May:-  http://www.hindustantimes.com/India-news/NewDelhi/Property-can-be-sold-on-power-of-attorney/Article1-1054964.aspx In a judgment that will benefit lakhs of Delhi residents living in co-operative housing societies and DDA flats, the Delhi High Court has quashed a Delhi government circular banning property sale in the Capital through general power of attorney (GPA). The court found that the directions in the circular, issued by the revenue department on April 27 last year, were contrary to the Supreme Court judgment dated October 11, 2011. The HC order will increase the number of saleable properties in Delhi and could bring down the value of freehold properties. According to realty watchers, on an average, around 20% of properties are registered through GPA transfers — a common way of selling leasehold properties and those that don’t have a clear title. The judgment came on a petition filed by a company, Pace Developers and ...
5 comments
Read more