NCLAT Delhi Stays Insolvency Proceedings Of Container Corporation Of India Ltd., A Navratna Enterprise

Background Facts

Container Corporation of India Ltd. (CONCOR/Corporate Debtor) is a public sector company and one of the Navratna enterprises. It is engaged in transportation and handling of containers and is listed with the NSE and BSE on stock exchange.

The Corporate Debtor had issued a Tender for manufacture, supply and commissioning of Reach Stacker Machines. Roadwings International Pvt. Ltd. & Anr. (“Operational Creditor”) emerged as the successful bidder. Accordingly, an Agreement was executed between the Parties in 2010 which also contained an Arbitration Clause.

When certain disputes arose between the Parties, the matter was referred to arbitration. On 01.06.2022, the Arbitral Tribunal passed an Award directing the Corporate Debtor to pay Rs. 81,36,73,181/- to the Operational Creditor alongwith interest.

The Corporate Debtor approached the High Court challenging the Award under Section 34 of the Arbitration and Conciliation Act, 1996 and notice was issued by the Court. Therefore, the Operational Debt stood disputed. The Operational Creditor filed execution proceedings in respect of the Award which is pending adjudication.

The Operational Creditor also filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor, in respect of the sum payable under the Arbitral Award.

On 12.07.2023, the NCLT admitted the petition and initiated CIRP against the Corporate Debtor.

The Corporate Debtor challenged the order dated 12.07.2023 before NCLAT. It was submitted that the proceedings whereby the Award has been challenged are pending before the High Court and the next date is on 29.08.2023.

The Operational Creditor claimed that the proceedings under Section 34 of Arbitration Act was barred by limitation and hence NCLT has correctly initiated CIRP under IBC.

NCLAT Verdict

The Bench observed that the High Court has taken cognizance of the Section 34 proceedings under Arbitration & Conciliation Act, 1996 and heard the submission of parties. The High Court being seized off of the matter, the Bench has stayed the NCLT order dated 12.07.2023. However, the stay of CIRP proceedings would have no bearing on the proceedings before the High Court.

“The submissions made by counsel for the appellant makes out a prime facie case for entertaining the appeal and grant of interim relief. In the meantime, the order passed by Adjudicating Authority dated 12.07.2023 shall remain stayed…..We make it clear that the stay of insolvency proceedings has no bearing on the proceedings pending in the High Court which may be preceded in accordance with law.”

Case Title: Container Corporation of India Ltd. (CONCOR) v Roadwings International Pvt. Ltd. & Anr.

Case No.: Company Appeal (AT) (Ins.) No. 887 of 2023

Counsel for Appellant: Mr. Tushar Mehta, Solicitor General, Ms. Lalit Mohini Bhat, Ms. Hetu Arora Sethi, Ms. Saumya Tandon, Mr. Rahul Jain, Mr. Siddharth Agarwal, Mr. Anirudh Bhat, Mr. Arjun Basra, Mr. Samarth Chaudhary, Advocates.

Counsel For the Respondent: Mr. Abhijeet Sinha, Mr. Abhishek Swarup, Mr. Akash Chatterjee, Advocates for R-1. Mr. Manish Jain, Advocate & Mr. Vivek Sharma, IRP (in-person) for R-2.

Click Here To Read/Download Order