2022 (12) TMI 1060 - HC - Insolvency and Bankruptcy

Court dismisses petition seeking sole arbitrator appointment under Section 11 due to NCLAT's moratorium order.

DLF Ltd. Versus IL&FS Engineering And Construction Company

DLF Ltd. Versus IL&FS Engineering And Construction Company - TMI Issues Involved:1. Appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.2. Impact of NCLAT's moratorium order on arbitration proceedings.3. Whether claims post the cut-off date of October 15, 2018, can be referred to arbitration.Detailed Analysis:1. Appointment of a Sole Arbitrator:The petitioner sought the appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, for resolving disputes arising from a contract dated June 21, 2012. The contract included a Dispute Resolution Procedure mandating arbitration if mutual discussions failed. Despite the petitioner's invocation of arbitration, the respondent objected, citing the NCLAT's moratorium order dated October 15, 2018, which stayed all proceedings against IL&FS and its 348 Group Companies.2. Impact of NCLAT's Moratorium Order:The NCLAT's order dated October 15, 2018, and confirmed on March 12, 2020, stayed the institution or continuation of suits or any other proceedings against IL&FS and its 348 Group Companies. The petitioner argued that this moratorium was not a statutory moratorium under Section 14 of the IBC but under Sections 241 and 242 of the Companies Act, 2013. However, the court held that the NCLAT's order, akin to a statutory moratorium, restrained the initiation of any proceedings, including arbitration, regardless of the period to which the claims pertain.3. Claims Post Cut-off Date of October 15, 2018:The petitioner contended that claims arising after October 15, 2018, should be referred to arbitration as they lie outside the resolution framework of IL&FS. The court, however, noted that the NCLAT's order did not distinguish between claims before and after the cut-off date. It restrained the initiation of any proceedings to protect the assets of IL&FS and its group companies, ensuring the effectiveness of the resolution process. Accepting the petitioner's plea would contradict the intent of the NCLAT's order, potentially leading to further liabilities for the company.Conclusion:The petition was dismissed, with the court holding that the NCLAT's moratorium order effectively restrained the initiation of arbitration proceedings. The petitioner was advised to await the Supreme Court's adjudication on the NCLAT's order and was granted liberty to apprise the Claims Management Advisor (CMA) of this decision for consideration of claims already submitted.