The Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday cited the ongoing bankruptcy resolution process to suspend arbitration proceedings on a credit transaction involving the debt-laden Monnet IspatBSE 2.88 % and an overseas vendor.
Monnet owed about Rs 2.5 crore to a foreign supplier, and an arbitration tribunal had ruled that the proceedings could continue simultaneously.
Referring to this ruling, Monnet moved the NCLT to seek a clarification on whether the arbitration proceedings could continue while the company was facing insolvency resolution.
“The arbitration tribunal is not expected to proceed with its proceedings where a claim has been made against the corporate debtor,” Justice BSV Prakash Kumar said while announcing his order in favour of Monnet Ispat, adding that the arbitration proceedings are governed by the moratorium.
Kumar said all cases for credit transactions will come before one forum — itself (NCLT) — to balance out the conflict of interests.
Monnet Ispat was admitted by the Mumbai bench of NCLT on July 18. It owes more than Rs 12,000 crore to banks.
