TaxTMI 
TaxTMI 
2018 (4) TMI 275
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....y & Bankruptcy Code. 2. The story of the Petitioner is that there was a company called Idcol Cement Ltd. subsidiary of IDC Orissa Ltd., both were fully owned by Government of Orissa. The Petitioner company formerly known as Crompton Greaves Ltd. was awarded two contracts for supply of equipment and for erection and commissioning of 132/11 KV Sub-station work by it, in pursuance of being successful bidder, formal contracts were signed in between the Petitioner and Idcol Ltd. for supply of equipment and erection for value of Rs. 3.91crores and Rs. 36.37lakhs. Those contracts were executed for a period of one year, thereafter extension was given up to 31.10.1993 for completion of the contracts. For there was a delay in completing the contractual work, as there was a liquidated damages clause for the delay in supply and erection, Idcol Ltd. realized those damages by invoking Bank Guarantees furnished by the Petitioner. On having Idcol Cements wrongfully levied liquidated damages by invoking Performance Bank Guarantee, a dispute arose between the parties, by virtue of which, the Petitioner invoked arbitration vide its letter dated 05.07.1997. Thereafter, this Petitioner sent an advoc....
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....the subject matter being in relation to supply of goods and services, the Petitioner filed this Company Petition u/s 9 of Insolvency & Bankruptcy Code after giving Section 8 notice on 4.10.2017. 6. On the Company Petition filed by the Petitioner, the Corporate Debtor Counsel has sought dismissal of this Company Petition on the ground since the Arbitration proceedings u/s 37 of The Arbitration and Conciliation Act, 1996 ('The Act') on the same subject matter being pending before the Hon'ble High Court of Orissa, the claim made by the Petitioner is liable to be dismissed, because the impugned claim falls under the caption of 'existence of dispute' as on the date of giving notice u/s 8 of the Code and also on the ground that this claim is barred by limitation. 7. To which, the Petitioner's Counsel Mr. Andyarjinaha tried to give justification to the point raised by the Corporate Debtor Counsel by saying that the proceedings pending before Appellate Authority u/s 37 of the Arbitration and Conciliation Act, 1996 will not fall within the ambit of "existence of dispute" as envisaged u/s 5(6) of IBC whereby, the Counsel has sought for rejection of the point raised by the Corporate Deb....
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....bitration Act. 30. Learned counsel appearing on behalf of the respondent referred to the decision of the Hon'ble Supreme Court in Paramjeet Singh Patheja v. ICDS Limited - [2006 (13) SCC 322 J wherein interpreting Section 9(2)(a) and (b) of the Presidency Towns Insolvency Act, 1909, the Apex Court held an arbitral award is "decree" or "order" for the purpose of insolvency notice under Section 9(2) of the Presidency Towns Insolvency Act, 1909. 31. The aforesaid decision is not applicable in the present context, the Presidency Town Insolvency Act, 1909 having superseded by Insolvency and Bankruptcy Code, 2016 and for the purpose of 'dispute' as 'existence of dispute', only the pendency of arbitral proceeding has been accepted as one of the ground of dispute. On the other hand, as apparent from Form 5 of Rules, 2016 for the purpose of I&B Code, and Arbitral Award has been held to be a document of debt and non-payment of awarded amount amounts to 'default' debt. Therefore, the aforesaid decision referred by learned counsel for the respondent is of no help to the respondent. 32. What has been held by the learned Adjudicating Authority that a dispute has been p....
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....hat without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability. ...... 57. The aforesaid finding has been given by Hon'ble Supreme Court extending the existence of dispute to any dispute in pre-existence before issuing notice u/s 8 of the Code notwithstanding the pendency of suit or arbitration proceeding whereby today law of the land is whenever any plausible dispute is in existence before issual of section 8 notice, it has to be taken into consideration as dispute is in existence without going into merit of the disputes. Therefore, now this Bench is constrained to proceed on the premise that when any plausible dispute is in pre- existence before issual of section 8 notice it has to be construed as dispute in....
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.... part in obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (3) Subject to section 33 and sub-section (4) of section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings. 35. Finality of arbitral awards: -Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively. 17. If we see the design of the Arbitration & Conciliation Act, 1996, it has been divided into IV Parts, which are - Part I) Arbitration with 10 Chapters covering general provisions (Sec. 2- 6), composition of Arbitral Tribunal (Sec. 10-15), Jurisdiction of arbitral tribunals (Sec. 16-17), conduct of arbitral proceedings (Sec. 18-27), making of arbitral award and the termination proceedings (Sec. 28-33), recourse against arbitral award (Sec. 34), finality and enforcement of arbitral awards (Sec. 35-36), Appeals (Sec. 37), Miscellaneous (Sec. 38-43). Part II) Enforcement of certai....
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....other aspects having regard to arbitration proceedings, but it cannot be exceeded to say that once arbitral proceedings are terminated, dispute between the parties also terminated. The perception that has been given in respect to demarcating arbitral proceedings from arbitration proceedings under the Arbitration and Conciliation Act, 1996 cannot be stretched out to say that the right of assertion of dispute available to the Corporate Debtor is written off. 22. To find out logic in the arbitral proceedings, we must again examine sections 21 and 32 from a different facet of the legislation for two reasons - (1) As to whether dispute has come into existence by commencement of arbitral proceedings on request for a particular dispute to be referred to arbitration received by the respondent as envisaged under section 21 of The Act or commencement of arbitral proceedings happened owing to preexistence of dispute between the parties. (2) As to whether it is to be construed that by termination of arbitral proceedings u/s 32 of The Act amounts to termination of existence of dispute between the parties. 23. First point: For answering first point, if we read section 21,....
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.... the stage for termination of arbitral proceedings, it is evident that arbitral proceedings can terminate in two ways, one by passing final arbitral award, two by an order of the Arbitral Tribunal under sub-section (2) of section 32 of the Act. Under first limb, passing of arbitral award is the termination, in second limb, one, it could be terminated on withdrawal of proceedings, that too only on no objection from other side, two, when parties agree for termination of the proceedings, three, when the Tribunal felt continuation of proceedings would become unnecessary or impossible. It is understandable in second limb; one or two situations may warrant for saying dispute has come to closure, but certainly not under first limb, because upon passing an arbitral award, it is open to the aggrieved to file application u/s 34 and then appeal u/s 37. May be, it is correct to the extent of termination of arbitral proceedings, but not in respect to the existence of dispute when appeal is filed u/s 37 of The Act. In section 21, it is said about dispute, when it has come to section 32, it has not been said anything to say dispute has come to end. When it has been held that existence of dispute ....
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....rules of the game will automatically will be different. Just because a claim under the Act is permitted to proceed for enforcement of award u/s 34, it cannot be said that the Corporate Debtor conceded that there is no dispute between the parties. If appeal is not filed, no doubt it can be construed that the petitioner is entitled to proceed under IB Code basing on the award which in all fours has become final. Let us see a converse situation, if the Appellate Authority u/s 37 reversed the arbitral award, what this Corporate Debtor would do if by that time get liquidated under IB Code? Is there any procedure to undo this damage? To get over this kind of predicament, the definition of operational debt has been further safe guarded by including another essential element i.e. existence of dispute in addition to elements of existence of debt and default which are sufficient enough under section 7 of the Code. 29. By looking all these provisions of the Code as well as 'The Act', the dispute includes pendency of arbitration proceedings, since the Arbitration and Conciliation 1996 Act includes appeal u/s 37, obviously it will become Part-I of the proceedings of the 'The Act' meaning the....
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....t are elements necessary to admit cases, therefore whatever concepts that are established under old Companies Act cannot be bodily lifted, because the criteria and cause of action for filing money recovery suit and IB Petition are, almost same. Under I & B, Can we go into ability or solvency of the company for either allowing or rejecting IB Petition? It can't, of course effect of admission is different, and thereby the adjudicating authority shall be more cautious in admitting the petition because consequences are beyond the relief of recovery of money. The petitioner relied upon A.S.K.Krishnappa Chettiar v. S.B.V. Somaiya (AIR 1964 SC 227) to canvass the same proposition held in other two cases above discussed. 33. However, this Bench having already stated that the dispute is in existence and having stated that termination of arbitral proceeding will not amount to arbitration proceeding, we don't think we are under obligation to deal with limitation aspect. Because this bench having already decided dispute is still in existence, even if this limitation point is assumed as held in favor of the petitioner, then also this petition is liable to be dismissed. In view of the same th....
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.... such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and (d) such other information as may be specified. (4) An operational creditor initiating a corporate insolvency resolution process under this section may propose a resolution professional to act as an interim resolution professional. (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order- (i) admit the application and communicate such decision to the operational creditor and the corporate debtor if, - (a) the application made und....