The Calcutta High Court held that neither the Arbitration and Conciliation Act, 1996 nor the Insolvency and Bankruptcy Code, 2016 allows a party's request to halt the publication of an arbitral award to the extent of its reliance on another party's counter-clam and the notion of splitting an arbitral award for this purpose is unnatural and unsupported by law.
Brief Facts:
The petitioner filed applications under Sections 29-A(4) and (5) of the Arbitration and Conciliation Act, 1996 seeking an extension of the Arbitrator's mandate.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner contended that the present application was filed before the mandate terminated, first online on 22nd December 2023 and thereafter physically on 2nd January 2024 and further the issue before the Court is not with regard to termination of the mandate or whether the application for extension was made within time.
Observations of the court:
The court noted that section 14(1)(a) of the IBC applies to the institution or continuation of suits and proceedings against the corporate debtor, including arbitration proceedings, however, the Respondent, who was also the claimant in the arbitration, cannot rely on Section 14(1)(a) to impede the publication of the arbitral award.
The court stated that Section 14(1)(a) could only be invoked in two specific scenarios: if the corporate debtor had been the subject of arbitration initiated by the petitioner before the Court, and if such arbitration had persisted after the respondent entered CIRP on 20th December, 2023 and since the arbitral award was already passed, the High Court held that the Respondent could not use Section 14(1)(a) to obstruct the publication of the award to the extent of the use of Petitioner's counterclaim and it was noted that the Arbitrator already made and published the award on 28th December 2023.
The court found no legal basis, neither in Section 14(1)(a) nor in the Arbitration Act to halt the publication of an already made and ready-for-delivery award and further held that the notion of splitting the award, allowing the Respondent's portion to be published while stopping the part concerning the Petitioner's counter-claim, was unnatural and unsupported by law or equity.
The decision of the Court:
The court granted the Petitioner's request and extended the mandate of the Arbitrator for one month from 28th December 2023, to facilitate the publication of the award.
Case Title: R S Fuel Pvt Ltd. vs. Ankit Metal and Power Ltd.
Coram: Hon’ble Ms. Justice Moushumi Bhattacharya
Case No.: AP-COM/23/2024
Advocate for the Petitioner: Mr. Rakhi Purnima Paul and Ms. Vedika Sureka
Advocate for the Respondent: Mr. Snehashis Sen and Mr. Danyal Ahmed
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