Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
BHARAT PETRORESOURCES LIMITED – Petitioner
Versus
JSW ISPAT SPECIAL PRODUCTS LIMITED – Respondent
Arb. Pet. No. 1154 of 2021
Decided On : 11-02-2022
Arbitration and Conciliation Act, 1996 - Section 11(6), 12(1), 12(5) and 21 - Insolvency and Bankruptcy Code, 2016 - Joint Operating Agreement - Corporate Insolvency Resolution Process - Appointment of arbitrators - Appointment procedure agreed upon by parties - Whether liability sought to be enforced by BPRL against respondent stands extinguished is a contentious issue - Members of consortium [BPRL, GAIL (India) Limited, Engineers India Limited, BF Infrastructure and respondent] entered into Agreement for carrying out joint operations under PSC - BPRL claims that operations were required to be conducted in conformity with an approved work program and within approved budget - Finances for operations were to be provided by consortium partners including respondent - Alleged failure on part of respondent to comply with Cash Calls and payment of its dues, non-defaulting consortium partners have assumed respondent’s 10% participating interest.
Finding of the Court:
It is apparent from the above that NCLAT was of the view that BPRL’s appeal was in respect of claims arising post the ICD and could not be accepted by the Resolution Professional. Therefore, its grievance that the same had not been considered was not sustainable - Court is unable to accept that the controversy involved in the present case falls within the standards of examination under Section 11 of the A&C Act - Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable - This Court is not required to examine and adjudicate any contentious issue and the parties must be relegated to the forum of their choice for adjudication of their disputes.
Result: Petition is allowed.
JUDGMENT :
VIBHU BAKHRU, J.
1. The petitioner (hereafter ‘BPRL’) has filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereafter ‘the A&C Act’) inter-alia, praying that the nominee arbitrator be appointed on behalf of the respondent, to enable constitution of an Arbitral Tribunal for adjudication of the disputes that have arisen between the parties in relation to the Joint Operating Agreement dated 05.04.2013 (hereafter ‘the Agreement’).
2. BPRL, GAIL (India) Limited, Engineers India Limited, BF Infrastructure Limited and the respondent (then known as Monnet Ispat and Energy Limited) had entered into a Production Sharing Contract dated 30.08.2012 (hereafter the ‘PSC’) with the Government of India in respect of the Contract Area identified as Block: CB-ONN-2010/8.
3. Thereafter, the members of the consortium [BPRL, GAIL (India) Limited, Engineers India Limited, BF Infrastructure and the respondent] entered into the Agreement for carrying out joint operations under the PSC. BPRL and GAIL (India) Limited were jointly designated as Operators with BPRL being accepted as the Lead Operator to carry out the joint operations pursuant to the Agreement.
4. BPRL claims that the operations were required to be conducted in conformity with an approved work program and within approved budget. The finances for the operations were to be provided by the consortium partners including the respondent.
5. BPRL raised various Cash Calls on the consortium partners including the respondent. BPRL claims that the respondent failed to comply with the Cash Call of Rs. 12,11,62,887/- (Cash Call No. 12) and the Cash Call of Rs. 17,03,72,749/- (Cash Call No. 14). As a consequence of the aforesaid defaults, BPRL issued a Default Notice dated 15.07.2016 notifying the respondent as a defaulting partner, in terms of Article 7.6.1 of the Agreement and further called upon the respondent to cure the default. Thereafter, BPRL issued a further Cash Call being Cash Call Nos. 16, 17 and 18. BPRL claims that the respondent failed to comply with the said Cash Calls as well.
6. In view of the alleged failure on the part of the respondent to comply with the Cash Calls and payment of its dues, the non-defaulting consortium partners have assumed the respondent’s 10% participating interest.
7. In the meanwhile, the respondent was admitted to Corporate Insolvency Resolution Process (hereafter ‘CIRP’) under the Insolvency and Bankruptcy Code, 2016 (hereafter ‘IBC’). On becoming aware of the same, BPRL filed its claim as an operational creditor with the Insolvency Resolution Professional (hereafter ‘IRP’) and claimed an amount of Rs. 9,58,88,886/- as due and payable prior to 18.07.2017 (the Insolvency Commencement Date - hereafter ‘ICD’). BPRL also furnished a proof of claim of an amount of Rs. 9,92,86,982/- in respect of future claims accruing after the ICD. While the IRP admitted the claim prior to the insolvency commencement date, it rejected BPRL’s future claim of Rs. 9,92,86,982/-.
8. BPRL claims that further Cash Calls were made after the ICD (Cash Call Nos. 19, 20, 22, 22 Revised, 23, 24 and 25). BPRL claims that the respondent is liable to pay a total amount of Rs. 4,84,61,360.30/- in respect of the said Cash Calls.
9. A final resolution plan in respect of the respondent company was approved by the Committee of Creditors on 09.04.2018. Thereafter, the National Company Law Tribunal, Mumbai (hereafter ‘NCLT, Mumbai’) passed an order dated 24.07.2018 approving the Resolution Plan in respect of the respondent company, submitted by the consortium of AION Investment II Private Limited and JSW Steel Limited.
10. In view of the above, the CIRP in respect of the respondent was concluded on 24.07.2018 and the moratorium was lifted with effect from the said date.
11. The disputes between the parties essentially relates to the respondent’s liability to pay its share of the Cash Calls.
12. The respondent has, in terms of its various communications, dispu
The Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable.
Point of law: The Court by default would refer the matter when contentions relating to non-arbitrability are plainly arguable.
The initiation of arbitration is impermissible due to an existing moratorium that restrains all legal proceedings, including arbitration, until the related insolvency matters are resolved.
Once a resolution plan is approved under the IBC, all claims not part of the plan are extinguished, and the tribunal lacks jurisdiction to adjudicate on such claims.
Disputes concerning alleged payments are referable to arbitration despite claims of prior resolution efforts, where the existence of disputes was upheld.
IBC is a time bound process – Plea of not being aware of newspaper pronouncements is not one which should be available to a commercial party.
Resolution plan approved despite 99.92% haircut; unclaimed pre-CIRP claims extinguished upon section 31 approval; NCLT limits reliefs to IBC/Companies Act; new management shielded under section 32A; ....
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
