Insolvency resolution plan bars arbitration of post-insolvency claims outside the approved plan

A prior judicial role in a related insolvency proceeding did not, by itself, create disqualifying previous involvement or a disclosure-based bias concern, because the earlier decision addressed only the permissibility of post-insolvency claim collation and not the merits of the claims. However, once a resolution plan is approved under the insolvency law, claims not covered by that plan stand extinguished and cannot be pursued in arbitration. The arbitral tribunal therefore could not sustain post-insolvency claims outside the approved plan, and the award was set aside.

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Issues: (i) Whether the Presiding Arbitrator was disqualified for want of disclosure and previous involvement in the case under the arbitration law. (ii) Whether claims arising after the insolvency commencement date and outside the approved resolution plan were arbitrable and could be sustained in arbitration.

Issue (i): Whether the Presiding Arbitrator was disqualified for want of disclosure and previous involvement in the case under the arbitration law.

Analysis: The statutory scheme requires written disclosure of circumstances that may give rise to justifiable doubts as to independence or impartiality. The expression "previous involvement in the case" denotes involvement in the very dispute in some advisory or other capacity, and not merely prior adjudication as a judge or arbitrator in a related proceeding. The earlier appellate decision before the insolvency forum concerned only the legal permissibility of collating post-insolvency claims and did not decide the merits of those claims. Mere participation in that adjudicatory process did not create de jure ineligibility.

Conclusion: The challenge based on nondisclosure and previous involvement was rejected.

Issue (ii): Whether claims arising after the insolvency commencement date and outside the approved resolution plan were arbitrable and could be sustained in arbitration.

Analysis: Once a resolution plan is approved under the insolvency law, the claims provided for in the plan bind all stakeholders, and claims not forming part of the plan stand extinguished. The overriding effect of the insolvency code prevents continuation of proceedings on such extinguished claims. The claims awarded in arbitration were post-insolvency claims not included in the approved plan, and therefore could not survive as enforceable claims or be referred to arbitration.

Conclusion: The claims were held to be extinguished and non-arbitrable.

Final Conclusion: The arbitral award was set aside, and the challenge to the award succeeded on the ground that the tribunal could not entertain claims outside the approved insolvency resolution plan.

Ratio Decidendi: A prior judicial determination in a related insolvency matter does not by itself amount to disqualifying previous involvement in the case, but once a resolution plan is approved, claims not forming part of it stand extinguished and cannot be pursued in arbitration.

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