Whether mere filing of a proceeding under Section 7 of the IBC, 2016, would amount to any embargo on the Court considering an application under Section 11 of the Arbitration and Conciliation Act,1996, to appoint an Arbitral Tribunal? – Jasani Realty Pvt. Ltd. Vs. Vijay Corporation – Bombay High Court
Hon’ble High Court held that the observations as made by the Supreme Court in Indus Biotech Pvt. Ltd. Vs. Kotak India Venture (Offshore) Fund & Ors. (2021) ibclaw.in 52 SC would lead this Court to come to an inevitable conclusion that mere filing of the proceedings under Section 7 of the IBC cannot be treated as an embargo on the Court exercising jurisdiction under Section 11 of the ACA, for the reason that only after an order under sub-section (5) of Section 7 of the IBC is passed by the NCLT, the Section 7 proceedings would gain a character of the proceedings in rem, which would trigger the embargo precluding the Court to exercise jurisdiction under the ACA, and more particularly in view of the provisions of Section 238 of the IBC which would override all other laws. In the facts of the present case as the CIRP as initiated by the respondent under Section 7 of the IBC is yet to reach a stage of the NCLT passing an order admitting the said proceedings, the Court would not be precluded from exercising its jurisdiction under Section 11 of the ACA, when admittedly, there is an arbitration agreement between the parties and invocation of the arbitration agreement has been made, which was met with a refusal on the part of the respondent to appoint an arbitral tribunal.
