NCLAT Rules Section 7 Application Takes Precedence Over Arbitration; Corporate Debtor's Appeal Dismissed.

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....Corporate debtor filed a reply to the financial creditor's Section 7 application in December 2023, but moved an application u/s 8 for reference to arbitration only on March 7, 2024. The financial creditor had initiated arbitration proceedings by unilaterally appointing an arbitrator in July 2019, but the arbitrator terminated the proceedings in October 2021, holding the appointment contrary to law. The NCLAT held that if an application u/s 8 is filed, the adjudicating authority must first decide the Section 7 application by recording satisfaction regarding default. The pendency or initiation of arbitration proceedings after filing the Section 7 application is immaterial. Allowing the Section 8 application would defeat the IBC's purpose by a.........