Pending insolvency petition does not bar arbitration where no moratorium has commenced; sole arbitrator appointed.

A pending insolvency petition does not, by itself, bar reference of disputes to arbitration or appointment of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996. Insolvency proceedings acquire precedence only after admission of the petition and commencement of moratorium; until then, there is no embargo on invoking arbitration where the contract contains an arbitration clause and live reciprocal monetary claims exist. An objection that the party should first have sought Section 8 relief in the insolvency proceedings was rejected, and unilateral appointment of an arbitrator was held impermissible. The Court appointed a sole arbitrator to decide the disputes and any counterclaims.

---

---

Issues: Whether the pendency of a petition under the Insolvency and Bankruptcy Code barred reference of disputes to arbitration and appointment of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.

Analysis: The collaboration agreement contained an arbitration clause, and the parties had a live dispute concerning reciprocal monetary claims. The objection that the petitioner ought to have moved an application under Section 8 of the Arbitration and Conciliation Act, 1996 in the insolvency proceedings was rejected. The governing principle, as applied, was that insolvency proceedings take precedence only once the insolvency petition is admitted and moratorium commences. So long as the insolvency petition is merely pending and no moratorium has begun, there is no embargo on seeking reference of disputes to arbitration or on approaching the Court for appointment of an arbitral tribunal. The Court also noted that a unilateral appointment by the petitioner was impermissible.

Conclusion: The objection based on the pending insolvency petition failed, and the Court appointed a sole arbitrator to adjudicate the disputes and counterclaims, if any.

Ratio Decidendi: A pending insolvency petition, without admission and without commencement of moratorium, does not bar arbitration proceedings or prevent the Court from appointing an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.

---