Company may continue arbitration despite approval of CIRP : Supreme Court
The issue whether a company involved in arbitration proceedings may continue the arbitration proceedings even after CIRP has been been approved by COC of the company was considered by the division bench of Supreme Court consisting of Justice AM Khanwilkar and Dinesh Maheswari in the matters between  Fourth Dimension Solutions Ltd. v. Ricoh India Ltd. Civil Appeal No. –5908 of 2021 decided on 21.1.2022. The facts of this are defendant Ricoh owed the appellant Rs.511 crores. It is stated that NCLT has approved a resolution plan that dismisses the appellant’s (Fourth Dimension Solutions Ltd.) claims, even though the appellant is the highest operational creditor of the respondent company Ricoh India. The Supreme Court also upheld the resolution plan, despite the appellant’s objection that the same decision was pending before NCLAT. However, while the higher court approved the plan, it directed NCLAT to decide on the merits of appellant’s objection to the substantive resolution plan. Despite this, NCLAT said it would be impossible for the court to do so, as the Supreme Court approved the resolution plan. The NCLAT took a contrary position and rejected the appellant’s objection to the resolution plan. Thus forcing the appellant approached the Supreme Court. The counsel on behalf of the Appellant contended  that they would be left with no “recourse to satisfy his legitimate claims” even though it is the highest operational creditor and has Rs. 511 crores owed to it. It has also invoked arbitration proceedings against Ricoh but it was adjourned sine die after filing insolvency petition. The counsel on behalf of the Respondent contended  that the operational creditors of the company seek permission under the insolvency proceedings to continue the arbitration proceedings even though the COC of the company have already approved the CIRP. The Supreme Court held continuance of arbitration proceeding is permitted and dismissed the appeal, giving the parties the freedom to pursue all claims brought to them in the proceedings pending at the relevant time. It was stated that arbitration proceeding are continuing between the parties. If so, all disputes available to both parties will be settled on its own merits in accordance with the law in the proceedings in question.
IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 5908 OF 2021 FOURTH DIMENSION SOLUTIONS LTD. Appellant(s VERSUS RICOH INDIA LTD. & ORS. Respondent(s O R D E R Heard learned counsel for the parties. It is indisputable that the Resolution Plan approved by the Committee of Creditors has been finally upheld by this Court vide judgment dated 10.03.2021 in Civil Appeal Nos. 2943 29420 titled as "Kalpraj Dharamshi & Anr. vs. Kotak Investment Advisors Ltd. Anr.” and connected cases reported in 2021 SCC During the hearing of the stated appeal it was brought to the notice of the Court that the appellant had preferred some appeal before the National Company Law Appellate Tribunal and it was still pending at the relevant time. This Court in paragraph 160 of the judgment therefore directed that the said appeal shall proceed on merits. Pursuant to that liberty the concerned appeal has now been decided by the NCLAT vide impugned judgment. In our opinion it was sufficient for the NCLAT to dispose of the appeal before it by restating the factual position noted while considering the Plan submitted for approval before the Committee of Creditors. In paragraph 48 of the impugned judgment the NCLAT has noted thus "... The name of the Appellant was mentioned in the list of Operational Creditors. On 29.11.2018 the RP published updated list of Creditors of the Corporate Debtor wherein the admitted claims of the Appellant was indicated as Nil with an appended note: "2. The claims pertaining to FDSL have been disputed and are proceedings before the Arbitrators Appellate Authorities. The liability is subjected to outcome of these proceedings". In light of this factual position in our opinion the appeal needs to be disposed of by restating the said fact with liberty to the parties to pursue all contentions available to them in the proceedings pending at the relevant time if any. It is stated that some arbitration proceedings were pending between the parties. If so all contentions available to both sides be decided in the said proceedings on its own merits in accordance with The civil appeal is disposed of accordingly. Pending applications if any stand disposed of SECTION XVII S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS Civil Appeal No(s). 5908 2021 FOURTH DIMENSION SOLUTIONS LTD. Appellant(s VERSUS RICOH INDIA LTD. & ORS. Respondent(s IA No.122022 2021 EXEMPTION FROM FILING C C OF THE IMPUGNED JUDGMENT and IA No.122020 2021 EX PARTE STAY and IA No.122021 2021 Date : 21 01 2022 This appeal was called on for hearing today CORAM : HON BLE MR. JUSTICE A.M. KHANWILKAR HON BLE MR. JUSTICE DINESH MAHESHWARI For Appellant(s) Mr. Kapil Sibal Sr. Adv Mr. P.P. Chaudhary Sr. Adv Mr. David Rao Adv Mr. M.S. Vishnu Sankar Adv Mr. Koshy John Adv Mr. Sanjeet Purohit Adv Mr. Sriram Parakkat Adv Ms. Athira G. Nair Adv Mr. Atul Sharma Adv Mr. Michael Rao Adv M S Lawfic AOR Ms. Ruby Singh Ahuja Adv Ms. Hancy Maini Adv Mr. Ashutosh P. Shukla Adv M S. Karanjawala & Co. AOR For Respondent(s) Mr. Mukul Rohatgi Sr. Adv M S. Khaitan & Co. AOR UPON hearing the counsel the Court made the following O R D E R The civil appeal is disposed of in terms of the signed order. Pending applications if any stand disposed of DEEPAK SINGH) COURT MASTER (NSH Signed order is placed on the file