Arbitration clause cannot be invoked during moratorium

National Company Law Appellate Tribunal: In the judgment delivered by S.J. Mukhopadhaya (Chairperson), A.I.S. Cheema (Judicial Member) and Balvinder Singh (Technical Member) dismissed all the appeals arising out of the Corporate Insolvency Resolution Process initiated against the appellants (corporate debtors).

National Company Law Tribunal had admitted the application against the appellants under Section 7 of the Insolvency and Bankruptcy Code, 2016 and passed an order of moratorium and had further appointed an ‘Interim Resolution Professional’ with certain directions.

The corporate debtor thereafter filed a writ before the Rajasthan High Court, but the High Court refused to look into the merits, so he then moved before the Supreme Court challenging the order passed by the Adjudicating Authority, but the Apex Court also dismissed it, and then further moved before the Appellate Tribunal which was withdrawn later. In the end, the Corporate Debtor, moved before the Arbitral Tribunal and against this action the Insolvency Resolution Professional moved NCLT which decided the matter against the corporate debtor. The Financial Creditor moved before the Supreme Court which allowed the appeal and stated that the arbitration clause cannot be invoked during the period of moratorium.

This Tribunal held the judgment of the Supreme Court to be final and imposed a cost of Rs 25,000 each on the appellants in the present case, to be paid by bank draft in favour of the Registrar, National Company Law Appellate Tribunal within thirty days of the receipt of this order. [M/s. Hotel Gaudavan Pvt. Ltd. v. Alchemist Asset Reconstruction Co. Ltd., 2017 SCC OnLine NCLAT 439, decided on 30- 11-2017]

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