K. Kishan Vs Vijay Nirman Company Pvt Ltd (Civil Appeal Nos. 21824 & 21825 of 2017) - Synopsis
Team SoOLEGAL 27 Oct 2020

In K. Kishan Vs Vijay Nirman Company Pvt Ltd (Civil Appeal Nos. 21824 & 21825 of 2017) the brief fact is that, between Vijay Nirman Group, Ksheerabad Construction Company and SDM Projects Private Limited, a tripartite Memorandum of Understanding was signed. When issues and disputes resulted from the tripartite agreement, arbitration was put down. Two claims in favour of the respondent were awarded and three counter-claims brought before the Tribunal which were dismissed. Aggrieved by the arbitrator's ruling, the claimant lodged a petition questioning the grant under section 34 on the basis that the plaintiffs had dismissed the counterclaim without sufficient reason. At the same time, a petition was lodged by the respondent before the NCLT under section 9 of the Insolvency and Bankruptcy Code. The NCLT and the Appellate Tribunal also ruled that the Arbitration Act was overridden by the non-obstante provision of section 238 of the statute.
The Supreme Court depended on the English Decision Victory House General Partner v. RGB P & C Ltd. In order to determine whether a debt ought to be recognized, the Singapore Law case Lim PohYeoh v. TS Ong Construction was depended on in deciding whether an operational creditor would begin proceedings against an operational debtor under section 9 of the Code. The court does not rely on the decision of LKM Investment Holdings Pte Ltd. v. Cathay Theatres Pte Ltd. passed by the Singapore court of law on the basis that the scenario of both laws is distinct unless there is a bona fide circumstance of the conflict under those laws.
Thus, the Supreme Court concluded finally that, as far as operating debt is concerned, it can only be seen that whether or not the debt is challenged and that the filing of the petition pursuant to section 34 represents a pre-existing controversy and that it does not stop here, but even after the award has been transferred to the final adjudicatory process, the court has made it plain that insolvency proceedings can be initiated.


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