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2022 Supreme(Del) 126
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sanjeev Sachdeva, J.
Tata Capital Financial Services Limited - Appellant
Versus
Naveen Kachru Proprieter - Respondent
ARB.P. 295/2021
Decided On : 06-04-2022
Mr. Saryasachi Sahai And Mr. Kushagra Aman, Advocates, for the Appellant, Mr. Ritesh K.Chowdhary, Advocate, for the Respondent.
The court emphasized that the issues involved in the insolvency proceedings and the present proceedings were different, making the embargo of Section 10 CPC inapplicable.
Headnote:
Order 9 Rule 13 CPC - Setting aside of order appointing an arbitral tribunal - Insolvency Act, 1920 - Sections 4 & 5, Section 29 - Judgment of the Supreme Court in Booz Allen and Hamilton Inc v. SBI Home Finance Ltd. & Others (2011) 5 SCC 532 - Section 10 CPC - Proceedings between the same parties - Arbitrable dispute
Fact of the Case:
The respondent seeks setting aside of the order appointing an arbitral tribunal, citing inability to appear due to COVID-19 and ongoing insolvency proceedings. The court examines the defense of the respondent on merits and the applicability of the Insolvency Act, Sections 4 & 5, Section 29, and Section 10 CPC.
Finding of the Court:
The court dismisses the application under Order 9 Rule 13, vacates the interim order, and finds no justification to recall the order appointing an arbitral tribunal, as the respondent failed to show any defense to the petition seeking appointment of the tribunal.
Issues: Inability to appear due to COVID-19, applicability of the Insolvency Act, Sections 4 & 5, Section 29, and Section 10 CPC.
Ratio Decidendi: The court found that the respondent's defense was not sustainable, and the issues involved in the insolvency proceedings and the present proceedings were different, making the embargo of Section 10 CPC inapplicable.
Final Decision: The application under Order 9 Rule 13 is dismissed, and the interim order requesting the arbitral tribunal not to proceed further is vacated.
JUDGMENT
Sanjeev Sachdeva, J. (Oral). - LA. 12308/2021
1. The Supreme Court by its orders 23.03.2020, 27.04.2021 and 10.01.2022 in Suo Motu Writ Petition (Civil) No.3 of 2020 has suspended the period of limitation in view of the ongoing pandemic. Accordingly, there is no delay in filing the application.
2. The application is disposed of. LA. 12306/2021
3. Learned counsel for the respondent/applicant submits that he has filed the rejoinder, however, the same is not on record. A copy of the rejoinder has been handed over in the Court today. The same is taken on record. The Registry is directed to place the rejoinder on record.
4. Respondent/applicant by this application Under Order 9 rue 13 C.P.C., seeks setting aside of order dated 07.05.2021 whereby an arbitral tribunal constituted by a sole arbitrator was appointed to adjudicate the disputes between the parties.
5. Applicant contends that the order is exparty and the applicant could not appear before the Court on 07.05.2021. It is contended that both the respondent as well as the counsel were under the impression that only urgent matters were being taken up as the COVID-19 situation was at its worst in the last week of April and first week of May, 2021.
6. It is further contended that the respondent has already applied for being declared as an insolvent under the Provincial Insolvency Act, 1920 and the insolvency proceedings are pending.
7. By order dated 21.09.2021 when the application under Order 9 Rule 13 CPC was listed before the Court, the predecessor of this Court had directed the arbitrator not to proceed further during the pendency of the subject application.
8. This petition was filed during the period of lockdown in 2021 and notice was issued for 19.03.2021. Counsel for the respondent had appeared on 19.03.2021 and 06.04.2021, however absented on 07.05.2021.
9. The fact that this petition was listed during the lockdown period and respondent had been appearing shows that the plea raised by the respondent for not appearing on 07.05.2021 that he was under an impression that only urgent matter were being taken up, is not sustainable.
10. Learned counsel for the respondent submits that in the last week of April, 2021 respondent along with his family were tested positive and as such he could not appear on 07.05.2021.
11. In view of the above plea that the applicant was tested covid positive and as such could not appear, it was deemed expedient to examine the defense of the respondent on merits to the application for appointment of an arbitral tribunal.
12. In support of the said plea learned counsel for the respondent submits that respondent has already initiated proceedings for being declared as an insolvent under the Provincial Insolvency Act, 1920 (hereinafter referred to as the Insolvency Act).
13. He submits that an order of admission has been passed on 01.11.2019 and as such the proceedings before the arbitral tribunal cannot continue.
14. He further submits that under Sections 4 & 5 of the Insolvency Act, petitioner could have approached the concerned Insolvency Court for appropriate orders for continuance of proceedings. He relies on the decision of the High Court of Judicature at Madras in Ramalingam vs. Radha & Ors to contend that even before final adjudication insolvency Court has inherent powers to pass interim orders.
15. Further reliance is placed on the judgment of the Supreme Court in Booz Allen and Hamilton Inc v. SBI Home Finance Ltd. & Others (2011) 5 SCC 532 to contend that the proceedings of insolvency and winding up matters are beyond the ad judicatory power of an arbitral tribunal.
16. Further it is contended that the proceedings would be hit by Section 10 CPC as the insolvency petition filed by the respondent before the Insolvency Court is a prior petition in point of time.
17. Learned counsel further submits that respondent does not dispute the liability to the petitioner however, contends that respondent does not have any money to pay the amount and is insolvent.
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