9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 537 - HC - Insolvency and BankruptcyExtinguishment of claims - approval of the Resolution Plan results in an extinguishment of all claims that the Petitioner could enforce against Arcelor Mittal or not - arbitration of disputes which are sought to be referred for the consideration of an AT. - eye of the needle test. HELD THAT - The legislative intent and command of Sections 30 and 31 of the IBC is an issue which is no longer res integra - In Ghanashyam Mishra 2021 (4) TMI 613 - SUPREME COURT as well as the host of judgments rendered in that context and which were duly noticed by the Supreme Court in that decision, the underlying theme has been the recognition of the right of the successful Resolution Applicant to take over the corporate debtor on a clean or fresh slate. Those decisions lay primordial importance of the successful Resolution Applicant being enabled to take over the corporate debtor without being burdened by any uncertainties or a specter of irresolution. The approval of the Resolution Plan is statutorily recognised as conferring a closure upon all claims that persons or entities may have had against the corporate debtor. The claims or liabilities which could have been enforced against the corporate debtor are duly considered in the course of the CIRP with the Adjudicating Authority undertaking a detailed exercise with respect to identification of the various creditors of the corporate debtor, including the classes thereof, the scrutiny of claims received and the ultimate apportionment of the amounts deposited by the successful Resolution Applicant amongst the creditors inter se. However, once the aforesaid process has been completed and the Resolution Plan comes to be approved, no fresh claims can be laid or enforced against the successful Resolution Applicant. The successful Resolution Applicant is only bound to meet the claims as may have been accepted and ultimately form part of the approved Resolution Plan. This issue assumes seminal importance since the successful Resolution Applicant cannot be left open to defend or oppose claims which are either not factored in the Resolution Plan nor can it be left to fend off actions that may be brought with respect to alleged or asserted dues of the corporate debtor which were not admitted. The Court is of the considered opinion that approval of the Resolution Plan in terms given clearly amounts to the extinguishment of all debts that were owed by the corporate debtor except to the extent as was admitted in the Resolution Plan. The IBC and the resolution process does not contemplate matters being left inchoate. In fact, and to the contrary it exhorts one to accept the seal of finality and quietitude which stands attached to the approval of a Resolution Plan. While the Court is conscious of the Section 11 power contemplating a prima facie view being formed and a first review alone being undertaken, the decisions handed down on the scope of that jurisdiction also bids High Courts to ensure that dead disputes are not revived and parties forced to undertake arbitration. Thus, where issues which are canvassed on a Section 11 petition are found to be contested or even arguable, the High Court would desist from delving into the merits of the rival claims. Once it is accepted that the approval of the Resolution Plan results in the extinguishment of all claims that the petitioner may have had, the dispute which is now sought to be canvassed cannot be permitted to be urged again before the AT. That would clearly amount to rewriting upon the clean slate based upon which the respondent took over the corporate debtor. A reference of the disputes as sought by the petitioner would clearly amount to a reopening of the Resolution Plan and which is clearly impermissible - Empowering the AT to adjudicate or rule upon these disputes would also be contrary to the principles which were enunciated by the Supreme Court in Ghanashyam Mishra. The Court thus comes to conclude that on due application of the eye of the needle test, it is manifest that the disputes which are spoken of in the Section 11 petition are non-arbitrable and thus no reference to the AT is warranted - petition dismissed.
Issues Involved:
1. Constitution of an Arbitral Tribunal under Section 11 of the Arbitration & Conciliation Act, 1996. 2. Interpretation of "Take or Pay" obligation in the Gas Supply Agreement (GSA). 3. Impact of Corporate Insolvency Resolution Proceedings (CIRP) on arbitration claims. 4. Validity and effect of the Resolution Plan under the Insolvency and Bankruptcy Code (IBC). Summary: 1. Constitution of an Arbitral Tribunal under Section 11 of the Arbitration & Conciliation Act, 1996: Indian Oil Corporation Ltd. (IOCL) sought the constitution of an Arbitral Tribunal for disputes arising from a Gas Supply Agreement (GSA) with Essar Steel Ltd. (ESL), later assigned to Essar Oil Limited (EOL). The disputes primarily revolved around the "Take or Pay" obligation under Article 14 of the GSA, which required ESL to take remedial steps for payment if it failed to lift the entire Adjusted Annual Contract Quantity (AACQ). 2. Interpretation of "Take or Pay" obligation in the Gas Supply Agreement (GSA): The dispute arose when IOCL placed ESL on notice for failing to comply with the AACQ for the Contract Year 2015, invoking Article 14.1 of the GSA. ESL issued a notice of termination under Article 19.1 of the GSA, which IOCL disputed, asserting that Article 19.1 could only be invoked if there had been a failure to provide the cumulative Properly Nominated Daily Contract Quantity (PNDCQ) for over 180 days. IOCL subsequently issued a notice of dispute and invoked arbitration. 3. Impact of Corporate Insolvency Resolution Proceedings (CIRP) on arbitration claims: The National Company Law Tribunal (NCLT) admitted petitions under Section 7 of the Insolvency and Bankruptcy Code (IBC) against ESL, initiating Corporate Insolvency Resolution Proceedings (CIRP). An Interim Resolution Professional (IRP) was appointed, who later admitted IOCL's claim at a notional amount of INR 1 due to pending disputes. The Resolution Plan framed by the Resolution Professional (RP) and approved by the Committee of Creditors (COC) extinguished all claims against the Corporate Debtor, except those provided for in the Resolution Plan. 4. Validity and effect of the Resolution Plan under the Insolvency and Bankruptcy Code (IBC): The Supreme Court, in the case of Committee of Creditors of Essar Steel India Ltd. vs Satish Kumar Gupta, upheld the admission of claims at a notional value of INR 1 and affirmed the finality of the Resolution Plan. The Court emphasized the "clean slate" doctrine, stating that all claims must be submitted and decided by the resolution professional to avoid any "undecided" claims post-approval of the Resolution Plan. The approval of the Resolution Plan results in the extinguishment of all claims against the Corporate Debtor, rendering the disputes non-arbitrable. Conclusion: The High Court dismissed the petition, concluding that the approval of the Resolution Plan extinguished all claims that IOCL could enforce against Arcelor Mittal, and referring the disputes to arbitration would amount to reopening the Resolution Plan, which is impermissible. The disputes were deemed non-arbitrable, and the petition was dismissed.
|
