Case: Alchemist Asset Reconstruction Company Ltd Vs. Hotel Gaudavan Pvt. Ltd. and Ors

1. Leave granted. 2. Heard the learned Senior Counsel/Counsel appearing for the parties. 3. The facts of the present case disclose a very sorry state of affairs. Several proceedings had been taken and ultimately a petition filed under the Insolvency and Bankruptcy Code, 2016 was admitted on 31.03.2017 by the National Company Law Tribunal, Principal Bench, New Delhi. As a result, the moratorium that is imposed by Section 14 came into effect on that date and Respondent No. 3 has been appointed as the Interim Resolution Professional (IRP). A Writ Petition was filed against this order, which was admitted only to the extent of the challenge to the vires of the Insolvency Code, is pending. A Special Leave Petition against this order was dismissed on 26.04.2017. Meanwhile, despite the moratorium, a letter was issued by Respondent No. 1 to Respondent No. 2 invoking the arbitration clause between the parties and Shri Pankaj Garg, an Advocate, was appointed as Sole Arbitrator. Shri Garg entered upon the reference. In another order dated 31.05.2017, the National Company Law Tribunal, Principal Bench, New Delhi referred to Section 14(1)(a) of the Insolvency Code and stated that given the moratorium that is imposed, no arbitration proceedings could go on. A notice was issued on 29.06.2017 by the National Company Law Tribunal, Principal Bench, New Delhi in C.A. No. 186(PB) of 2017. 4. A First Appeal was filed before the District Judge, Jaisalmer, Rajasthan Under Section 37 of the Arbitration and Conciliation Act, 1996 and by the impugned order dated 06.07.2017, the appeal was asked to be registered and notice was issued awaiting a reply. 5. The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect Under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against Corporate Debtors. 6. This being the case, we are surprised that an arbitration proceeding has been purported to be started after the imposition of the said moratorium and appeals Under Section 37 of the Arbitration Act are being entertained.

Decision:
1[ds]The mandate of the new Insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect Under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against Corporate DebtorsThis being the case, we are surprised that an arbitration proceeding has been purported to be started after the imposition of the said moratorium and appeals Under Section 37 of the Arbitration Act are being entertained.