2018 (3) TMI 78 - Tri - Companies Law

Production of the certificates on completion of the project - Corporate Debtor exercise the right of unpaid vendor lien - Held that - Arbitral Tribunal is conscious of the fact that in case the Corporate Debtor departs with the certificates of the completion of the Project, there may be financial implications. The Arbitral Tribunal while passing the order observed that an interim direction is to avoid any controversy on the aspect, whether all the certificates obtained and in the custody of the claimant are made available. Further, the question whether any condition regarding the payment of the amounts said to be due to the claimant, after the initiation of Arbitration Proceedings, has to be imposed, may have also to be considered . In view of these observations, the Applicant may raise the issue before the Arbitral Tribunal for consideration.

Summary

Issues involved: Application for production of certificates on completion of project before Arbitral Tribunal during Corporate Insolvency Resolution Process (CIRP) under IBC, 2016.

Analysis:
The case involved an Application filed by the Respondent before the Arbitral Tribunal seeking production of certificates on completion of the project. The Applicant, who was under the Corporate Insolvency Resolution Process (CIRP) as per the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), raised a concern that they cannot file any application before a Court due to restrictions under sections 14 and 60 of the IBC, as it would hinder their ability to exercise the 'right of unpaid vendor lien'. The Arbitral Tribunal, in its order dated 09.12.2017, directed the Applicant to produce the certificates in a sealed cover. The Counsel for the Respondent argued that the Arbitral Tribunal had given a detailed order, considering the financial implications if the Corporate Debtor departs with the certificates. The Tribunal, while passing the order, emphasized the importance of avoiding controversy regarding the availability of all certificates and the potential imposition of conditions related to payment amounts due to the claimant after the initiation of Arbitration Proceedings.

The Arbitral Tribunal acknowledged the concerns raised by both parties and made observations to address potential issues that may arise due to the Corporate Debtor's involvement in the CIRP. The Tribunal highlighted the need to ensure transparency and avoid disputes over the certificates related to the project completion. It also indicated that the Applicant could raise any issues before the Arbitral Tribunal for consideration, thus allowing for a proper resolution within the arbitration process. Consequently, the Application for production of certificates on completion of the project was disposed of by the Tribunal, providing a framework for addressing the concerns raised by the parties within the Arbitration Proceedings.