Tribunal recognizes arbitration clause in dispute, deems insolvency application unnecessary

The Tribunal allowed the application under Section 8 of the Arbitration and Conciliation Act, 1996, filed by the corporate debtor against the operational creditor. The Tribunal recognized the presence of an arbitration clause in the invoices and the contractual nature of the disputes, leading to the conclusion that the dispute was arbitrable. Consequently, the Tribunal deemed the insolvency application filed by the operational creditor under Section 9 of the Insolvency and Bankruptcy Code, 2016, as unnecessary and disposed of the matter in favor of arbitration.

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Issues:
Application under Section 8 of the Arbitration and Conciliation Act, 1996 for disposing off the Section 9 Application.

Analysis:
The application was filed by the corporate debtor against the operational creditor under Section 8 of the Arbitration and Conciliation Act, 1996. The corporate debtor invoked the Arbitration Clause contained in the Invoices, stating that any dispute regarding the bill shall be referred to arbitration as per the terms and conditions mentioned in the invoices. The corporate debtor argued that the operational creditor had filed the application under Section 9 of the Insolvency and Bankruptcy Code, 2016, without disclosing the presence of the arbitration clause in the invoices, which was intentionally hidden. Citing relevant judgments, the corporate debtor contended that the operational creditor's application was mischievous and filed to avoid arbitration, despite having entered into an arbitration agreement.

The corporate debtor further argued that the dispute was arbitrable in nature, as per the judgment in 'Booz Allen and Hamilton Inc vs SBI Home Finance Limited & others,' which outlined the criteria for arbitrability. The corporate debtor emphasized that the alleged disputed amount claimed by the operational creditor was related to the invoices and fell within the scope of the valid arbitration agreement. Referring to various judgments by the Hon'ble Supreme Court, the corporate debtor highlighted the mandatory duty of the court to refer disputes to arbitration when an arbitration clause exists between the parties. The corporate debtor also pointed out that the dispute in question was contractual in nature, justifying the invocation of arbitration.

The Tribunal acknowledged the presence of the arbitration clause in the invoices and the exchange of communications between the parties regarding the disputed invoices. Considering the contractual nature of the disputes, the Tribunal held that the invocation of arbitration was justified. Therefore, the Tribunal allowed the application, making the insolvency application infructuous and disposed of the matter accordingly.

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