Insolvency Process Cannot Be Applied As Proceedings Challenging The Award Amounts To Dispute.

Original Case

Kishan v. Vijay Nirman Company Private Limited.

Practical Implication

The Supreme Court in the present decision considered whether to allow a petition under section 9 of the Insolvency and Bankruptcy code when the debt towards the operational debtor is already disputed. The Supreme Court has laid down guidelines to decide when an operational debt is termed to be disputed. It lays down a precedent that even after the award is passed, the debt cannot be termed as accepted until the final adjudication.

Brief Background

A tripartite Memorandum of Understanding was entered into between Vijay Nirman Company, Ksheerabad Construction Company and SDM Projects Private Limited. Arbitration was invoked as disputes arose out of the tripartite agreement. Two claims were awarded in favour of the Respondent and Three Counter-Claims that were filed before the Tribunal were rejected. Aggrieved by the decision of the arbitrator, the Appellant filed a section 34