Arbitrator to Assess CIRP Plan’s Effect on Applicant’s Claim, as CIRP Was Approved During Arbitration Pendency | HC

Case Details: PME Power Solutions (India) Ltd. v. Airen Metals (P.) Ltd. [2024] 169 taxmann.com 465 (HC-Rajasthan)

Judiciary and Counsel Details

• Sudesh Bansal, J.
• Ms Ankita Kedia & Naman Jain for the Petitioner.
• Rajesh Gautam & Ajay Kumar Agarwal for the Respondent.

Facts of the Case

In the instant case, the Applicant Company had entered into a purchase agreement with the respondent-corporate debtor for the supply of copper. As per the said agreement, in case of dispute, parties agreed to resolve it same through the arbitration.

The applicant claimed that an excessive payment was made and, hence, the applicant was entitled to a refund of the excessive amount with the interest from respondent company.

Since the dispute of claiming refund/repayment could not be resolved amicably, the instant arbitration application was filed seeking the appointment of a sole Arbitrator for the resolution of such dispute.

The Respondent Company resisted for appointment of an Arbitrator on the ground that after approval of the CIRP plan by the NCLT, the claim of the applicant company had been extinguished and, thus, the appointment of an arbitrator for resolution was not warranted.

It was noted that the CIRP plan had been approved during the pendency of the arbitration application, which had been filed much prior thereto. Thus, on the date of filing of the arbitration application, the claim of the applicant put forth qua respondent company had obviously survived.

High Court Held

The High Court held that the effect of approval of CIRP against the respondent company by the NCLT, on the claim of the Applicant Company, could be seen and decided by the arbitration tribunal, taking into consideration the provision of sections 31(1) and 32A of IBC.

Further, since the dispute between the parties had not been resolved amicably and the arbitration clause contained in the purchase agreement came into play, the instant arbitration application was to be allowed, and the Arbitrator was to be appointed.

List of Cases Referred to

• Mayavati Trading Private Limited v. Pradyuat Deb Burman 2019 8 SCC 714 (para 12).