Dinesh Chand Jain & Ors. v. Fantastic Buildcon (P) Ltd. & Ors.

INSOLVENCY AND BANKRUPTCY CODE, 2016,

--Initiation of corporate insolvency resolution process by financial creditor--Non-payment of outstanding debt Effect of arbitration clause on insolvency proceedings--Whether section 7 application admissible --Where corporate debtor had defaulted in repayment of financial debt, the presence of an arbitration clause in the share purchase agreement would not cause any impediment with regard to initiation of CIRP as no such bar was provided under section 7 of the Code, therefore, application for initiation of CIRP against the corporate debtor was to be admitted. --Financial creditors advanced loan to the corporate debtor as per terms of Share Purchase Agreement entered into between them. However, the corporate debtor failed to make payment to the financial creditors in terms of the said agreement. Therefore, financial creditors filed an application under section 7 for initiation of CIRP against the corporate debtor. Corporate debtor raised objection that the share purchase agreement contained arbitration clause, therefore, the agreement could not be adjudicated under the I&B Code. Held: The presence of an arbitration clause in the share purchase agreement would not cause any impediment with regard to initiation of CIRP because under section 7 of the Code, the mentioning of an arbitration clause in the disputed agreement is no bar to the admission of the petition and initiation of CIRP unlike sections 8 and 9 of the Code. Further, corporate debtor had committed default in repayment of debt and the application under section 7(2) was complete and no disciplinary proceedings were pending against the proposed interim resolution professional. Therefore, application for initiation of CIRP was admitted.

Insolvency and Bankruptcy Code, 2016, Section 7

REFERRED :

FAVOUR : In favour of applicant.

A.Y. :