NCLT Mumbai Orders Reference To Arbitration In An Insolvency Petition Under The IBC

In a significant judgment dated 9 June 2020 titled 'Indus Biotech Private Limited v. Kotak India Venture Fund-I', the National Company Law Tribunal, Mumbai Bench-IV (NCLT) allowed an application filed by the corporate debtor, Indus Biotech Private Limited, (corporate debtor) under Section 8 of the Arbitration & Conciliation Act, 1996 (Arbitration Act) seeking reference to arbitration for settlement of the disputes between the parties, while dismissing the Company Petition filed by the financial creditor, Kotak India Venture Fund-I (financial creditor) under Section 7 of the Insolvency & Bankruptcy Code 2016 (IBC).

Brief Facts

• In 2007-08, Kotak India Private Equity Group, including the financial creditor, entered into a Share Subscription and Shareholders Agreement (agreement) with the corporate debtor. The financial creditor subscribed to equity shares and Optionally Convertible Redeemable Preference Shares (OCRPS).