Indian Oil Corporation Ltd vs Era Infra Engineering Ltd on 27 April, 2022

[Cites 4, Cited by 1]

Delhi High Court - Orders

Indian Oil Corporation Ltd vs Era Infra Engineering Ltd on 27 April, 2022

1. Mr Dewan, the learned counsel appearing for the Resolution Professional appointed in respect of the respondent company (hereafter 'ERA') states that a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 (hereafter the 'IBC') is in place and therefore, the present proceedings under Section 34 of the A&C Act [OMP(COMM) 261/2021] cannot continue. He has referred to the judgment dated 01.03.2021 of the Supreme Court in Civil Appeal No.10355/2018 captioned P. Mohanraj & Ors. v. M/s Shah Brothers Ispat Pvt. Ltd. and drew the Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:29.04.2022 attention of this Court to paragraph 74 of the said judgment, which reads as under: -

"74. Shri Mehta then relied upon Power Grid Corporation of India Ltd. v. Jyoti Structures Ltd., 2017 SCC OnLine Del 12189: (2018) 246 DLT 485, in which the Delhi High Court held that a Section 34 application to set aside an award under the Arbitration and Conciliation Act, 1996 would not be covered by Section 14 of the IBC. This judgment does not state the law correctly as it is clear that a Section 34 proceeding is certainly a proceeding against the corporate debtor which may result in an arbitral award against the corporate debtor being upheld, as a result of which, monies would then be payable by the corporate debtor. A Section 34 proceeding is a proceeding against the corporate debtor in a court of law pertaining to a challenge to an arbitral award and would be covered just an appellate proceeding in a decree from a suit would be covered. This judgment does not, therefore, state the law correctly."

2. Mr. Koura, learned counsel appearing for the petitioner (IOCL), submits that a moratorium would be in place only in respect of proceedings where any amounts have to be recovered from a corporate debtor and not in respect of the proceedings for resisting the claims of a corporate debtor. He submits that although the present proceedings have been instituted by IOCL, they are, essentially, because the impugned award allows the claims made by ERA

3. The said contention is unmerited. The language of Section 14 of the IBC is unambiguous. As explained by the Supreme Court in P. Mohanraj & Ors. v. M/s Shah Brothers Ispat Pvt. Ltd. (supra), the moratorium applies to any proceedings against a corporate debtor. Indisputably, proceedings under Section 34 of the Arbitration & Conciliation Act, 1996 (hereafter the 'A&C Act') are also proceedings contemplated under Section 14 of the IBC.

Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:29.04.2022

4. Mr Dewan further submits that although the petitioner's challenge under Section 34 of the A&C Act to the arbitral award cannot be proceeded with, there is no impediment in ERA proceeding to enforce the said arbitral award. ERA is entitled to recover the amounts as awarded in its favour and therefore, the proceedings in OMP (ENF.) (COMM.) 177/2021 should not be deferred.

5. Prima facie, the aforesaid contention is also unmerited. It is difficult to accept that while IOCL's challenge to the arbitral award is subsisting and not concluded, ERA would be entitled to enforce the arbitral award, which in, one sense, has not attained finality.

6. The learned counsel appearing for ERA seeks further time to advance arguments on this aspect.

7. List on 19.10.2022.

VIBHU BAKHRU, J APRIL 27, 2022 'gsr' Click here to check corrigendum, if any Signature Not Verified Digitally Signed By:Dushyant Rawal Signing Date:29.04.2022

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Delhi High Court - Orders