The Kolkata Bench of the National Company Law Tribunal ( NCLT ) held that the NCLT is not empowered to set aside arbitral award passed during moratorium period under Section 14 of the Insolvency and Bankruptcy Code, 2016 ( IBC ).
The Applicant Resolution Professional of Hindustan Controls and Equipment Private Limited, the Corporate Debtor has preferred the application seeking the relief that an order be passed for setting aside of the impugned Arbitral Award passed by the sole arbitrator in an Arbitration Case between M/s. Steel Authority of India – Versus – Hindustan Controls & Equipment Private Limited and Amiya Commerce & Construction Co Private Limited.
It was the contention of the RP that the Arbitral Award was passed after initiation of Resolution Process against the Corporate Debtor and ignoring the provisions of moratorium under Section 14 of the IBC and that the Arbitrator was aware of the order admitting the Corporate Debtor into Insolvency, yet it did not stay its hands off and went on with the Arbitration proceedings to pass its award during the course of Moratorium.
The sole Respondent contended that a challenge to the award cannot be made under Section 60(5) of the IBC and that the Interlocutory Application is therefore, is not maintainable. The application seeking setting aside of the Arbitration has to be preferred under Section 2(1)(e ) of the Arbitration and Conciliation Act, 1996.
A Two-Member Bench comprising D. Arvind Member (Technical) and Bidisha Banerjee, Member (Judicial) observed that “NCLT cannot derive its power from the sprit and object of the IBC. The NCLT has a wide residuary jurisdiction, under Section 60 (5) of the IBC to adjudicate question of law a fact arising out of Insolvency Proceedings nonetheless it is defined by the text of IBC. The NCLT cannot do what the IBC consciously did not provide the power to do.”
“In as much as, the Arbitration Award has been challenged in this application, whereas this Tribunal lacks jurisdiction to set aside an Arbitral Award, although it was passed in course of moratorium under Section 14 of IBC, we dispose of the IA with liberty to the Resolution Professional to initiate appropriate proceedings to challenge the said Award” the Tribunal noted.
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