Supreme Court allows arbitration to continue despite approval of corporate insolvency resolution plan

The Supreme Court recently gave permission to an operational creditor of a company under insolvency proceedings, to continue arbitration proceedings despite approval of corporate insolvency resolution plan by the Committee of Creditors and the top court itself [Fourth Dimension Solutions Ltd. v. Ricoh India Ltd]..A Bench of Justices AM Khanwilkar and Dinesh Maheshwari was hearing a challenge against an order of the National Company Law Appellate Tribunal (NCLAT) refusing to entertain an appeal arising form the order of the National Company Law Tribunal, Mumbai..As per the plea, the respondent Ricoh owed ₹511 crores to the appellant. It was stated that the NCLT had approved a resolution plan rejecting the appellant’s (Fourth Dimension Solutions Ltd.) claims despite the appellant being the highest operational creditor of the respondent company, Ricoh India.The Supreme Court had also approved the resolution plan despite the appellant’s challenge to the same being pending before the NCLAT. The top court while approving the plan had, however, directed the NCLAT to decide the appellant's challenge to the resolution plan on merits.Despite that, the NCLAT said that since the Supreme Court approved the resolution plan, it would be impossible for the tribunal to take a contrary stand and rejected the appellant's challenge to the resolution plan. This prompted the appellant to move the Supreme Court."The consequence of the above observation is that the appellant has been left to hang dry without any recourse to satisfy its legitimate claims being the highest single operational creditor of respondent with dues of approximately Rs. 511 crores owed to it," the petition said..The appellant also pointed out that it had invoked arbitration against Ricoh but the same had been adjourned sine-die on the admission of the insolvency petition..After hearing the parties, the Court proceeded 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.Further, the Court also ordered that the arbitration proceedings can be decided on its own merits in accordance with law.“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 law,” the order recorded while disposing of the appeal..Senior Advocates Kapil Sibal and PP Chaudhary appeared for the appellant briefed by law firm Lawfic.The respondent was represented by Senior Advocate Mukul Rohatgi briefed by Karanjawala & Co..[Read Order]