Splitting Of An Arbitral Award For Publication Is Unnatural And Unsupported By Law, Calcutta High Court Allows Extension Of Arbitrator's Mandate
The Calcutta High Court bench comprising Justice Moushumi Bhattacharya held that neither the Arbitration and Conciliation Act, 1996 nor the Insolvency and Bankruptcy Code, 2016 allows a party's request to halt the publication of an arbitral award to the extent of its reliance on another party's counter-clam. The bench noted that the notion of splitting an arbitral award for this purpose...
The Calcutta High Court bench comprising Justice Moushumi Bhattacharya held that neither the Arbitration and Conciliation Act, 1996 nor the Insolvency and Bankruptcy Code, 2016 allows a party's request to halt the publication of an arbitral award to the extent of its reliance on another party's counter-clam. The bench noted that the notion of splitting an arbitral award for this purpose is unnatural and unsupported by law.
Brief Facts:
R S Fuel Pvt Ltd. (“Petitioner”) filed applications under Sections 29-A(4) and (5) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) in the Calcutta High Court (“High Court”) seeking an extension of the Arbitrator's mandate. However, the central issue before the High Court was not the timing of the extension application but rather whether Ankit Metal And Power Ltd. (“Respondent”), who initiated the Corporate Insolvency Resolution Process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”) before the expiry of mandate of the Arbitrator, can oppose the arbitral award passed to the extent of the counter-claim of the Petitioner. The Respondent relied on Section 14 of the IBC to support its contention.
Decision of the High Court:
The High Court noted that Section 14(1)(a) of the IBC applies to the institution or continuation of suits and proceedings against the corporate debtor, including arbitration proceedings. However, the High Court noted that the Respondent, who was also the claimant in the arbitration, cannot rely on Section 14(1)(a) to impede the publication of the arbitral award.
The High Court clarified that Section 14(1)(a) could only be invoked in two specific scenarios: if the corporate debtor had been the subject of arbitration initiated by the petitioner before the Court, and if such arbitration had persisted after the respondent entered CIRP on 20th December, 2023. Since the arbitral award was already passed, the High Court held that the Respondent could not use Section 14(1)(a) to obstruct the publication of the award to the extent of the use of Petitioner's counterclaim. Additionally, the High Court noted that the Arbitrator already made and published the award on 28th December 2023.
Moreover, the High Court found no legal basis, neither in Section 14(1)(a) nor in the Arbitration act to halt the publication of an already made and ready-for-delivery award. It held that the notion of splitting the award, allowing the Respondent's portion to be published while stopping the part concerning the Petitioner's counter-claim, was unnatural and unsupported by law or equity.
Consequently, the High Court granted the Petitioner's request and extended the mandate of the Arbitrator for one month from 28th December 2023, to facilitate the publication of the award.
Case Title: R S Fuel Pvt Ltd vs Ankit Metal And Power Ltd
Case Number: AP-COM/1/2024 and Connected Matters
Advocates for the Applicant: Rakhi Purnima Paul and Vedika Sureka
Advocate for the Respondent: Snehashis Sen and Danyal Ahmed
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