2018 (8) TMI 1869 - AT - Insolvency and Bankruptcy

Whether a counter claim can proceed during the period of Moratorium while the Adjudicating Authority (National Company Law Tribunal) allowed the Corporate Debtor to pursue the claim before the Arbitral Tribunal? - HELD THAT - As the claim of the Corporate Debtor can be determined only after determination of counter claim made by the Appellant in the same very arbitral proceeding and if counter claim or part of it is set off with the claim made by the Corporate Debtor, we are of the view that both the claim and the counter claim of parties should be heard together by the Arbitral Tribunal in absence of any bar under Insolvency and Bankruptcy Code, 2016. On determination, if it is found that the Corporate Debtor is liable to pay certain amount, in such case, no recovery can be made during the period of moratorium. Appeal disposed off.

Summary

Issues:
- Whether a counter claim can proceed during the period of Moratorium while the Adjudicating Authority allowed the Corporate Debtor to pursue the claim before the Arbitral Tribunal.

Analysis:
The judgment delves into the issue of whether a counter claim can be pursued during the Moratorium period while the Adjudicating Authority permits the Corporate Debtor to pursue a claim before the Arbitral Tribunal. The Appellant argued that the determination of the counter claim during the Moratorium should have been decided by the Adjudicating Authority instead of being left open for the Arbitral Tribunal to decide. The Tribunal issued notices to the Respondents, allowing the Arbitral Tribunal to proceed with both the claim and counter claim of the parties during the pendency of the appeal and proceedings before the Adjudicating Authority. The Resolution Professional had no objection to the counter claim being decided by the Arbitral Tribunal.

Furthermore, the judgment emphasizes that the claim of the Corporate Debtor can only be determined after the counter claim is decided in the same arbitral proceeding. The Tribunal opined that both the claim and counter claim should be heard together by the Arbitral Tribunal in the absence of any bar under the Insolvency and Bankruptcy Code, 2016. However, it was highlighted that if the Corporate Debtor is found liable to pay a certain amount, no recovery can be made during the Moratorium period. Ultimately, the appeal was disposed of with the aforementioned observations, and no costs were awarded in this matter.