Content Provider | Supreme Court of India |
---|---|
e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 2016: s.9 Insolvency and Bankruptcy Code |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Act(s) Referred | Insolvency and Bankruptcy Code, 2016 (31 of 2016) |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Insolvency and Bankruptcy Code, 2016: s.9 – Invocation ofthe Code in respect of an operational debt where an arbitral awardhas been passed against the operational debtor which has not yetbeen finally adjudicated upon – Arbitration award in favour ofrespondent – Notice under s.8 of the Code sent to KCPL to pay theaward amount – Within 10 days, KCPL disputed the invoice andfiled s.34 petition – Thereafter, respondent filed petition under s.9of the Code – Held: Under the Code, insofar as an operationaldebt is concerned, all that has to be seen is whether the said debtcan be said to be disputed – Filing of s.34 petition against an ArbitralAward shows that a pre-existing dispute which culminates at thefirst stage of the proceedings in an Award, continues even after theAward, at least till the final adjudicatory process under ss.34 and37 has taken place – Operational creditors cannot use theInsolvency Code either prematurely or for extraneousconsiderations or as a substitute for debt enforcement procedures –The Code cannot be used in terrorem to extract an amount eventhough it may not be finally payable as adjudication proceedingsin respect thereto are still pending – The object of the Code, at leastinsofar as operational creditors are concerned, is to put theinsolvency process against a corporate debtor only in clear caseswhere a real dispute between the parties as to the debt owed doesnot exist – A reading of s.9(5)(ii)(d) of the Code shows that anapplication under s.8 must be rejected if notice of a dispute hasbeen received by the operational creditor – In the instant case, theentire basis for the notice under s.8 of the Code was the fact that anArbitral Award was passed against the appellant and reply to thenotice was given within 10 days, raising the existence of a dispute –The counter claims were rejected by the Arbitral Tribunal, whichrejection was also the subject-matter of challenge in s.34 petition –Unlike counter claim nos. 1 and 2, which were rejected by the Arbitral Tribunal for lack of evidence, counter claim no.3 whichraised huge amount was rejected on the basis of a price adjustmentclause on merits – Therefore, it cannot be said at this stage of theproceedings, that no dispute existed between the parties.Insolvency and Bankruptcy Code, 2016: s.238 – Non-obstanteclause – Held: s.238 of the Code would apply in case there is aninconsistency between the Code and the Arbitration Act – In theinstant case, there is no such inconsistency – On the contrary, theaward passed under the Arbitration Act together with the steps takenfor its challenge would only make it clear that the operational debthappens to be a disputed one – Appellate Tribunal, when it reliedupon Form V Part 5 of the 2016 Rules to state that the operationaldebt would, therefore, be said to have been proved, missed the vitalsub-clause (iii) in para 34 of Mobilox Innovations case – Arbitrationand Conciliation Act, 1996. |
Judge | Hon'ble Mr. Justice R.F. Nariman |
Neutral Citation | 2018 INSC 710 |
Petitioner | K.kishan |
Respondent | M/s Vijay Nirman And Company Pvt. Ltd. |
SCR | [2018] 10 S.C.R. 959 |
Judgement Date | 2018-08-14 |
Case Number | 21824 |
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