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TMI Blog2022 (5) TMI 1122X X X X Extracts X X X X X X X X Extracts X X X X ..... court to carry out any adjudicatory exercise in respect of any contentious issue. The question whether the liability sought to be enforced by BPRL against the respondent stands extinguished is a contentious issue. This Court is unable to accept that the controversy involved in the present case falls within the standards of examination under Section 11 of the A C Act. The Supreme Court in its recent decision in MOHAMMED MASROOR SHAIKH VERSUS BHARAT BHUSHAN GUPTA ORS. [ 2022 (2) TMI 134 - SUPREME COURT] while referring to the decision in VIDYA DROLIA AND OTHERS VERSUS DURGA TRADING CORPORATION [ 2020 (12) TMI 1227 - SUPREME COURT] held that the Court by default would refer the matter when contentions relating to nonarbitrability are plainly arguable. This Court is not required to examine and adjudicate any contentious issue and the parties must be relegated to the forum of their choice for adjudication of their disputes - Petition allowed. - ARB.P. 1154/2021 - - - Dated:- 11-2-2022 - HON BLE MR JUSTICE VIBHU BAKHRU Advocates who appeared in this case: For the Petitioner: Mr. Jayant K. Mehta, Senior Advocate with Mr. Varghese Thomas, Mr. Divyam Agarwal, Ms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent to comply with the Cash Calls and payment of its dues, the non-defaulting consortium partners have assumed the respondent s 10% participating interest. 7. In the meanwhile, the respondent was admitted to Corporate Insolvency Resolution Process (hereafter CIRP ) under the Insolvency and Bankruptcy Code, 2016 (hereafter IBC ). On becoming aware of the same, BPRL filed its claim as an operational creditor with the Insolvency Resolution Professional (hereafter IRP ) and claimed an amount of ₹9,58,88,886/- as due and payable prior to 18.07.2017 (the Insolvency Commencement Date - hereafter ICD ). BPRL also furnished a proof of claim of an amount of ₹9,92,86,982/- in respect of future claims accruing after the ICD. While the IRP admitted the claim prior to the insolvency commencement date, it rejected BPRL s future claim of ₹9,92,86,982/-. 8. BPRL claims that further Cash Calls were made after the ICD (Cash Call Nos. 19, 20, 22, 22 Revised, 23, 24 and 25). BPRL claims that the respondent is liable to pay a total amount of ₹4,84,61,360.30/- in respect of the said Cash Calls. 9. A final resolution plan in respect of the respondent com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom such dispute is raised, along with a Statement, specifying therein the facts, issues claims for appointment of an Arbitrator to the Arbitral Tribunal under the provisions of Art. 19, along with a copy of the said notice to the Operator. 19.3.3 The arbitral tribunal shall consist of odd number of Arbitrators in total. Each Party to the dispute shall appoint one arbitrator and the Party or Parties shall so advise the other Parties to the dispute. However, in the case of even number of Parties to the dispute, the Arbitrators so appointed shall appoint another Arbitrator, in order to make the total number of Arbitrators to the Arbitral Tribunal odd in number. 19.3.4 If any Party fails to appoint an Arbitrator within thirty (30) days of receipt of the written request to do so, or if the Arbitrators, so appointed by or on behalf of the Parties fail to agree on the appointment of the next Arbitrator within thirty (30) days of the appointment of the last arbitrator to the Arbitral Tribunal and if the Parties do not otherwise agree, at the request of either Party, the next arbitrator shall be appointed in accordance with Arbitration and Conciliation Act, 1996. 19.3.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions 17. Mr Ratnanko Banerji, learned senior counsel appearing for the respondent referred to Clause 1(e)(ii) of the Resolution Plan, which reads as under: (e) Proposal for other stakeholders (including other creditors) (ii) Any and all claims or demands in connection with or against the Company (other than against the Existing Promoters or any existing or former members of the management of the Company) and all liabilities or obligations of the Company to any other stakeholder (including from GAIL (India) Private Limited or any other actual or potential creditor, if any or any counter-party, including any subsidiary, joint venture or associate) whether under law, equity or contract, whether admitted or not, due or contingent, crystallised or uncrystallised, known or unknown, secured or unsecured, disputed or undisputed, present or future, whether or not set out in the AIL Statement, the balance sheets of the Company or the profit and loss account statements of the Company or the February 21 Creditor List, in relation to any period prior to the Acquisition or arising on account of the Acquisition, will be written off in full and will be deemed to be permanently ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... binding on the parties. 19. He submitted that the liability under Clause 7.6.5 of the Agreement which is a subject matter of the dispute sought to be raised by BPRL, had arisen on the date of default being 07.03.2016. Merely because the Cash Call notices were issued subsequently, did not in any way indicate that the liability to pay the same had arisen after the ICD, that is 18.07.2017. 20. He also submitted that in terms of Section 3(6) of the IBC, the expression claim is defined in broad terms and would include the claims raised by BPRL. 21. Next, Mr Banerji submitted that BPRL had challenged the order dated 24.07.2018 passed by the NCLT, Mumbai, approving the Resolution Plan, by filing an appeal before the National Company Law Appellate Tribunal (NCLAT). He submitted that one of the grounds for preferring the appeal was that the Resolution Plan did not accept BPRL s claim. BPRL had contended that it was left remediless in respect of its claims and had prayed that the order approving the Resolution Plan be set aside. He pointed out that BPRL had made an alternative prayer praying that the claim submitted by it to the IRP, be provided for in the Resolution Plan. He subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merle Textile Limited: Company Appeal (AT) (Insolvency) No. 61 of 2018, decided on 13.07.2018 in support of his contention that the claims arising after the ICD would not be automatically extinguished. 25. He also referred to the decision of this Court in Nitin Fire Protection Industries Limited v. Gail (India) Limited: OMP (COMM) 332/2017, decided on 05.09.2017 in support of his contention that forfeiture of the participating interest of the respondent did not absolve the respondent of its liability. He further submitted that in terms of Article 7.8 of the Agreement, the forfeiture of the respondent s participating interest in the PSC is without prejudice to other remedies. Reasons and Conclusion 26. It is well settled that in terms of sub-section (6A) of Section 11 of the A C Act, the scope of examination under Section 11 of the A C Act is limited to the existence of an arbitration agreement between the parties. Notwithstanding the same, in cases where it is ex facie clear that the disputes cannot be entertained, the courts would refrain from entertaining the petition to appoint an arbitrator as the same would be an exercise in futility. (See: Vidya Drolia v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passage was also referred by the Supreme Court in Vidya Drolia v. Durga Trading Corporation (supra). 30. In a recent decision of the Supreme Court in Inter-Continental Hotels Group (India) Pvt. Ltd. Anr. v. Waterline Hotels Pvt. Ltd: Arbitration Petition (Civil) No. 12 of 2019, decided on 25.01.2022, the Supreme Court had highlighted that as a matter of default, the parties must be referred to arbitration and it is only in cases where it is clear that the disputes are deadwood that the courts would refrain from appointing an arbitrator. The court had once again reiterated the principle when in doubt refer . 31. The controversy in the present petition is required to be considered bearing the aforesaid principle in mind. 32. In Andhra Bank v. M/s. F.M. Hammerle Textiles Limited (supra), the NCLAT had observed that the debt which the Corporate Debtor owes for payment in future, if not taken into consideration in the Resolution Plan does not extinguish automatically and the creditors, including the Financial Creditor or Operational Creditor or Secured Creditor or Unsecured Creditor has rights to claim the same. 33. It is relevant to refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not sustainable. 35. Thus, the question whether the liability sought to be enforced by BPRL against the respondent stands extinguished is a contentious issue. 36. In view of the above, this Court is unable to accept that the controversy involved in the present case falls within the standards of examination under Section 11 of the A C Act. The Supreme Court in its recent decision in Mohammed Masroor Shaikh v. Bharat Bhushan Gupta Ors: Civil Appeal No. 874 of 2022, decided on 02.02.2022 while referring to the decision in Vidya Drolia v. Durga Trading Corporation (supra) held that the Court by default would refer the matter when contentions relating to nonarbitrability are plainly arguable. 37. As noticed above, this Court is not required to examine and adjudicate any contentious issue and the parties must be relegated to the forum of their choice for adjudication of their disputes. 38. In view of the above, the present petition is allowed. Justice (Retired) Pankaj Naqvi, former Judge of the Allahabad High Court (Mobile No. 9415236770) is appointed as the Arbitrator on behalf of the respondent. 39. This is subject to the learned Arbitrator making the n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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