Arbitration clause cannot defeat insolvency proceedings when debt and default are established and no genuine dispute exists.

An arbitration clause governed by Swiss law did not bar Section 9 insolvency proceedings because the insolvency regime has overriding effect once debt and default are shown, so referral to arbitration under Section 45 was not required. No pre-existing dispute was made out where correspondence, acknowledgements, part-payments, and requests for time evidenced admission of liability, and a later leakage email did not amount to a genuine dispute. A plea that the corporate debtor was solvent also failed because solvency does not defeat an application where default and the statutory requirements for initiation are otherwise established.

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Issues: (i) Whether an arbitration clause governed by Swiss law barred admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 and required reference to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996; (ii) whether there was a pre-existing dispute between the parties so as to require rejection of the Section 9 application; (iii) whether the Section 9 application was not maintainable because the corporate debtor was a solvent company.

Issue (i): Whether an arbitration clause governed by Swiss law barred admission of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 and required reference to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996.

Analysis: The contractual arbitration clause could not prevail over the insolvency regime once debt and default were established. The Code gives overriding effect under Section 238, and the adjudicating authority is required first to examine whether default exists. The existence of an arbitration agreement does not compel referral to arbitration where the insolvency application discloses default and the debt is payable.

Conclusion: The arbitration clause did not bar the Section 9 proceedings, and reference to arbitration was not required.

Issue (ii): Whether there was a pre-existing dispute between the parties so as to require rejection of the Section 9 application.

Analysis: The correspondence, acknowledgements, part-payments, and repeated requests for time showed consistent admission of liability. The alleged dispute based on a later email about leakage was not supported by the record and did not amount to a plausible or genuine dispute. A defence must be real and substantiated, not feeble, spurious, or invented to avoid payment.

Conclusion: No pre-existing dispute was established, and the Section 9 application could not be rejected on that ground.

Issue (iii): Whether the Section 9 application was not maintainable because the corporate debtor was a solvent company.

Analysis: The material on record showed admitted liability, non-payment over a prolonged period, and inability to clear dues despite repeated assurances. Insolvency proceedings are not defeated merely by asserting solvency where default is proved and the statutory conditions for initiation are met.

Conclusion: The plea of solvency did not render the Section 9 application non-maintainable.

Final Conclusion: The admission order under the insolvency law was sustained and the challenge to it failed in all material respects.

Ratio Decidendi: Where debt and default are established, an arbitration clause cannot override the insolvency process, and only a genuine, substantiated pre-existing dispute can defeat a Section 9 application.

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