Interim moratorium under insolvency law can stay arbitration claims as a whole, with limited scope for writ interference.

The High Court reiterated that writ interference in arbitral matters is exceptionally limited and is warranted only where the arbitral order is perverse or shows patent illegality apparent on the face of the record. It further noted that the interim moratorium under Section 96 of the Insolvency and Bankruptcy Code operates in respect of the debt, not merely the debtor, so the arbitration claim cannot be split to continue against some parties while remaining suspended against others. On that basis, the moratorium in favour of the principal borrower and one guarantor extended to the arbitration claim as a whole, and the tribunal acted within jurisdiction in keeping the proceedings in abeyance.

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Issues: Whether the arbitral proceedings could be kept in abeyance on account of the interim moratorium under the Insolvency and Bankruptcy Code, 2016, and whether the impugned orders disclosed such patent illegality or want of inherent jurisdiction as would justify writ interference.

Analysis: The jurisdiction of the High Court in arbitral matters is exceptionally limited, and interference under Article 226 is warranted only where the arbitral order is perverse or suffers from patent illegality apparent on the face of the record. The interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016 operates in respect of the debt and not merely the debtor. The expression used in the Code is wide enough to cover the entire debt claimed in the arbitration, and the debt cannot be split up so as to continue the proceedings against some parties while suspending them against others. The distinction between Section 14 and Section 96 of the Insolvency and Bankruptcy Code, 2016 supports this view, and the moratorium granted in favour of the principal borrower and one guarantor could not be severed from the arbitration claim as a whole. The arbitral tribunal therefore acted within jurisdiction in keeping the proceedings in abeyance during the subsistence of the moratorium.

Conclusion: The impugned orders did not suffer from patent illegality or inherent lack of jurisdiction, and writ interference was not warranted.

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