Recently, the Hon’ble Supreme Court allowed an operational creditor of a company under insolvency proceedings to continue the process of arbitration despite a Corporate Insolvency Resolution Plan that was approved by the Committee of Creditors & the top court itself.
A bench of Justices AM Khanwilkar & Dinesh Maheshwari was hearing a petition challenging the order of the National Company Law Appellate Tribunal (NCLAT) refusing to consider an appeal which arose from the order of the National Company Law Tribunal, Mumbai.
According to the plea, the respondent Ricoh owed Rs. 511 crores to the appellant, i.e., Fourth Dimension Solutions Ltd. It was stated that despite the appellant being the highest operational creditor of the respondent company, the NCLAT approved a resolution plan rejecting the appellant’s claim. The Court had also approved the resolution plan despite the challenges by the appellant to the same being pending before the NCLAT. However, while approving the plan, the court directed the NCLAT to make a decision on the appellant’s challenge to the resolution plan on a merit. Whereas the NCLAT said that since the Supreme Court approved the resolution plan, it wouldn’t be possible for the tribunal to take a stand contrary to the court & rejected the appellant’s challenge. This prompted the appellant to challenge the decision at the Supreme Court.
The court, after hearing the parties, continued to dispose of the appeal with liberty to the parties to pursue all contentions available to them in the proceedings pending at the relevant time. The court, further, ordered that the arbitration proceedings can be decided on its own merits according to the law established.