Judgment Summaries (NCLT) – Chemizol Additives

  December 22, 2021

In the matter of Chemizol Additives Pvt. Ltd. (Bengaluru Bench (08.06.2020))



In this case, the OC filed an application under Section 9 of the Code seeking initiation of CIRP against the CD on the ground of failure of payment of employment dues. The tribunal noted that the Employment Agreement between the parties stated that any dispute or controversy arising out of the agreement would be resolved by Arbitration according to the Arbitration and Conciliation Act, 1996. 


The tribunal held that the party must exhaust the alternative remedy available by virtue of the agreement(s) and knock at the doors of the judiciary as the last resort. In the present case, as per the agreement, both the parties agreed to settle the issue by resorting to the Arbitration and Conciliation Act, 1996. Thus, the Petitioner cannot selectively choose to insist payment in terms of the agreement, without invoking provisions of alternative remedy. The tribunal noted that “it is a settled position of law that the provisions of the Code cannot be invoked to settle the dispute(s) or to recover the alleged outstanding amount.” 

Further, the tribunal held that “the mere acceptance of the debt in question by the Respondent would not automatically entitle the Petitioner to invoke the provisions of the Code, unless the debt and default is undisputed and proved it to the satisfaction of the AA.” Disposing off the petition, the tribunal directed the Respondent to settle the issue amicably, failing which, the Petitioner would be at liberty to invoke the arbitration clause. It further held – if the Petitioner is further aggrieved by the proceedings passed during arbitration, it can invoke appropriate remedy.


Full text of the order accessible here.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Posts

“In adherence to the rules and regulations of Bar Council of India, Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Institute of Cost Accountants of India and any other professional bodies (whether mentioned or not herein), this website has been designed only for the purposes of circulation and exchange of information, and not for advertising.
Your use of ibc16.com’s services are completely at your own risk. Readers and subscribers should seek proper advice from an expert professional before acting on the information mentioned herein. The content on this website is general information and none of the information contained on the website is in the nature of a legal opinion, or otherwise amounts to any legal advice. The user is requested to use their judgment, and exchange of any such information shall be solely at the user’s risk.
ibc16.com does not take responsibility for the actions of any member registered on the site, and is not accountable for any decision taken by the reader based on information/commitment provided by the registered member(s). By clicking ‘ENTER’, the visitor acknowledges that the information provided on the website (a) does not amount to advertising or solicitation, and (b) is meant only for his/her understanding about our activities and who we are.”