Judgment Summaries (NCLT) – Chemizol Additives

  December 22, 2021

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

 

Facts

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. 

Order

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.

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