Admission is not warranted to application for initiating Corporate Resolution Process on facts.
Where the respondent has disputed the existence of operational debt on the ground that the arbitration proceedings have not come to an end as the appeal and also execution proceedings for enforcement of award are pending and claimed that no ‘default’ within the meaning of sub-section (1) of section 8 read with clause (12) of section 2 is deemed to have occurred, admission of application for passing an order for initiating Corporate Insolvency Process is not warranted. More so, when applicant has availed effective remedy by initiating proceeding for execution of award.
Insolvency and Bankruptcy Code, 2016 – Sections 8 and 9 – Insolvency resolution by operational creditor – Application for initiation of corporate insolvency resolution process by operational creditor – Admission of application for passing an order for initiating corporate insolvency resolution process – Is admission of application not warranted for initiating corporate resolution process on facts of the case – Whether it is a classical case where dispute has already been subjected to arbitration proceedings which are yet to attain finality – Held, yes [Para 20] – Whether in the instant case an arbitral award has been announced on 9th September, 2016 and the application for setting aside the award filed under section 34 of the Arbitration and Conciliation Act has been rejected on 19thDecember, 2016 – Held, yes, respondent in response to notice sent under section 8(2) has mentioned that debt is disputed and appeal under section 37 of the Arbitration Act is pending [Para 22] – Whether a close examination of the aforesaid reply would show that the respondent has disputed the existence of operational debt by disclosing that its application under section 34 of the Arbitration Act was dismissed and the appeal under section 37 was pending adjudication – Held, yes – Whether execution proceedings for enforcement of the award have also been initiated and are pending for consideration of the High Court of Delhi – Held, yes [Para 23] – Whether the facts of the case are a complete answer to the claim made by the applicants in terms of clause (a) of sub-section (2) of section 8 read with sub-section (1) of section 9 which bar initiation of insolvency process – Held, yes, it cannot be said that arbitration proceedings have come to an end merely on the dismissal of application under section 34 as is sought to be canvassed on behalf of the applicant [Para 24] – Whether the Tribunal is also of the view that as proceedings for execution of award have been initiated, an effective remedy has been availed by the applicant – Held, yes, it is not acceptable that a party can invoke more than one remedy simultaneously, as that would promote forum shopping which is wholly impermissible is law [Para 27] – Whether, in view of the above, there is no necessity of expressing views of the Tribunal on other issues which are left open – Held, yes [Para 28].
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