Upon expiry of moratorium period, whether MSME Facilitation Council has jurisdiction to resumed the arbitral proceedings which were initiated prior to CIRP & suspended during the moratorium period, and pass arbitral award after approval of the Resolution Plan under Section 31 of IBC – Electrosteel Steel Ltd. (now M/s ESL Steel Ltd.) Vs. Ispat Carriers Pvt. Ltd. – Jharkhand High Court
July 26, 2023
Hon’ble High Court held that:
(i) If the decree/arbitral award has been passed by court which has no jurisdiction to the extent that it can be held to be void-ab-initio/nullity/suffering from inherent lack of jurisdiction on the fact of the record, such objection can be raised and entertained under Section 47 of the Code of Civil Procedure.
(ii) Having not challenged the arbitral award under section 34 of the A&C Act, the law does not contemplate second opportunity to challenge the award particularly when the A&C Act is a self-contained code which prescribes the specific grounds and specific mode of challenge to an arbitral award.
(iii) Award which suffers from inherent lack of jurisdiction in the eyes of law, cannot be said to be award and therefore would fall outside the provision of Arbitration and Conciliation Act, 1996 and can certainly be declared as a nullity in an appropriate proceeding including under section 47 of CPC at the stage of execution of the award.
(iv) Irrespective of maintainability of the objection to arbitral award under section 47 of the CPC, on facts, the Facilitation Council did not lose its jurisdiction to proceed and pronounce the arbitral award on account of approval of the insolvency resolution plan of the petitioner under section 31 of the IBC. This is on account of the reason that the arbitral proceedings were initiated prior to insolvency resolution date, suspended during the moratorium period, resumed upon expiry of the moratorium period and the approved resolution plan did not determine the claim of the respondent as nil whose pending litigation before the west Bengal facilitation council was taken note of in the resolution plan.
