Tecpro Systems Limited Vs Reliance Infrastructure Limited (Bombay High Court)
Summary: The Bombay High Court considered an application under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an Arbitrator pursuant to an arbitration clause contained in a Purchase Order dated 17th January 2018. The Applicant Company was under liquidation, and its Liquidator issued a notice dated 10th March 2022 under Section 21 of the Arbitration and Conciliation Act, 1996 invoking arbitration against the Respondent. The National Company Law Tribunal, New Delhi, had subsequently granted post facto approval under Section 33(5) of the Insolvency and Bankruptcy Code, 2016 on 23rd December 2022. The Section 11 application was filed on 10th January 2024.
The Respondent submitted that Section 33(5) requires prior approval of the Adjudicating Authority before a Liquidator can institute legal proceedings on behalf of a corporate debtor. Since the Section 21 notice preceded the NCLT’s approval, it was contended that the arbitration proceedings were incompetent and void ab initio. Reliance was placed on Bajaj Hindustan Limited v. State of Uttar Pradesh & Ors and Union of India v. Vinod Kumar.
The Applicant submitted that the notice issued without approval was merely ineffective and would acquire legal efficacy from the date on which approval was granted. Reliance was placed on Erach Boman Khavar V. Tukaram Shridhar Bhat & Anr. and Slimline Realty Pvt,. Ltd. Vs. Mr. Jigar Bhatt. The Applicant also submitted that this construction was consistent with the object of maximising the liquidation value of the corporate debtor.
