Jindal Lifestyle Limited vs Satyendra Sharma (Resolution ...

(Arising out of the Order dated 30.04.2024 passed by the National Company Law Tribunal, Chandigarh Bench in I.A. No. 792 of 2023 in C.P. (IB) 94/Chd/Hry/2020)

IN THE MATTER OF:

Jindal Lifestyle Limited (Company registered under the Companies Act, 2013) Through Authorised Representative Mr. Puran Singh. Having its office at: Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram - 122001, Haryana E-Mail ID: contact@jindallifestyle.com ...Appellant

Versus

1. Mr. Satyendra Sharma Resolution Professional of Arkin Creations Pvt Ltd. Having office at: M-3, Block No. 51, Anupam Plaza - II, First Floor, Above Axis Bank, Sanjay Place, Agra - 282002, Uttar Pradesh, India E-mail ID: satyendrasirp@gmail.com, cirp.arkincreations@gmail.com ...Respondent No. 1

2. Ms. Deepika Jindal, Director of Appellant Having office At: Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram, Haryana - 122001. E-Mail ID: jindallifestylelimited@gmail.com ...Respondent No. 2

3. Mr. Abhishek Poddar, Director of Appellant. Having office At: Comp. App. (AT) (Ins.) No. 1180 of 2024

Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram, Haryana - 122001. E-Mail ID: jindallifestylelimited@gmail.com ...Respondent No. 3 4. Mr. Vijar Kumar Sharma, Director of Appellant Having office At: Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram, Haryana - 122001. E-Mail ID: jindallifestylelimited@gmail.com ...Respondent No. 4

5. Ms. Sangeeta Prasad, Director of Appellant. Having office At: Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram, Haryana - 122001. E-Mail ID: jindallifestylelimited@gmail.com ...Respondent No. 5

6. Mr. Rajesh Mohata Having office At: Stainless Centre, Plot No. 50, 6th Floor, Sector 32, Gurugram, Haryana - 122001. E-Mail ID: jindallifestylelimited@gmail.com ...Respondent No. 6 Present For Appellant: Mr. Sarad Kumar Sunny & Mr. Madhan Binzani, Advocates.

For Respondents: Mr. D. Pathak, Ms. Shweta Sharma, Ms. Vaibhavi Pathak, Mohd. Nazim Khan & Mr. Satyendra Sharma, for RP

JUDGEMENT

(21.08.2025)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by the Appellant i.e. Jindal Lifestyle

Limited under Section 61 of the Insolvency and Bankruptcy Code, 2016 ('Code') Page 2 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

against the Impugned Order dated 30.04.2024 passed by the National Company

Law Tribunal, Chandigarh Bench ('Adjudicating Authority') in I.A. No. 792 of

2023 in C.P.(IB) No. 94/CHD/HRY/2020).

2. Mr. Satyendra Sharma, who is the Resolution Professional of Arkin

Creations Pvt. Ltd. is the Respondent No. 1 herein.

3. The Corporate Insolvency Resolution Process ("CIRP") was initiated

against the Corporate Debtor, Arkin Creations Private Limited, on 07.10.2022

vide order in CP (IB) No. 94/Chd/Hry/2020.

4. The Appellant submitted that, prior to CIRP, the Corporate Debtor initiated

arbitration against the Appellant under the Micro, Small and Medium Enterprises

Development Act, 2006 ("MSME Act, 2006") for alleged non-payment towards

supply of goods, claiming a principal amount of Rs. 21,50,332 plus interest. The

Appellant contended that the arbitration was referred to Shri P.P. Chhabra as Sole

Arbitrator on 17.06.2016 by the Haryana Micro and Small Enterprises

Facilitation Council ("HMSEFC"), as the Corporate Debtor was registered as a

small-scale industry under the MSME Act, 2006.

5. The Appellant submitted that the arbitration proceeded ex-parte against the

Appellant's erstwhile company, JSL Architecture Limited, culminating in an

Arbitral Award dated 23.01.2017 ("Arbitral Award"). The Appellant contended

that JSL Architecture Limited never received a copy of the Arbitral Award at the

time it was made or thereafter.

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Comp. App. (AT) (Ins.) No. 1180 of 2024

6. The Appellant submitted that from 23.01.2017 until the initiation of CIRP

on 07.10.2022, the Corporate Debtor took no steps to enforce or execute the Said

Award. The Appellant contended that the Appellant first received the Said Award

as an enclosure to Respondent No. 1's demand notice dated 18.01.2023 under

Section 60(5) of the code, seeking payment of Rs. 44,99,365 comprising the

principal amount of Rs. 21,50,332 and interest of Rs. 23,49,033. The Appellant

contended that the Appellant replied to the demand notice on 23.01.2023,

disputing the claims.

7. The Appellant submitted that the Adjudicating Authority erred in giving

effect to the purported Arbitral Award dated 23.01.2017, as it was merely a report

on findings referred to arbitration and not an enforceable award under the MSME

Act, 2006. The Appellant contended that the Sole Arbitrator failed to submit the

report to the Haryana Micro and HMSEFC as required by Rule 4(16) of the

Haryana Micro, Small and Medium Enterprises Facilitation Council Rules, 2007,

vesting the Facilitation Council with sole authority to make a final award, thereby

rendering the purported award non-binding.

8. The Appellant submitted that the Adjudicating Authority failed to

appreciate that, per Section 18(3) of the MSME Act, 2006, the Arbitral Award

dated 23.01.2017 is governed by the Arbitration and Conciliation Act, 1996, and

enforcement lies exclusively before a civil court of competent jurisdiction under

Section 36 of the Arbitration and Conciliation Act, 1996, not the Adjudicating

Authority.

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Comp. App. (AT) (Ins.) No. 1180 of 2024

9. The Appellant submitted that the Adjudicating Authority overlooked that

the Arbitral Award dated 23.01.2017 is a nullity under Section 18(5) of the

MSME Act, 2006, as it was not made within 90 days from the reference date of

17.06.2016, which required completion by 18.09.2016, but was issued on

23.01.2017, violating the mandatory timeline.

10. The Appellant submitted that the Adjudicating Authority could not take

cognizance of the Arbitral Award dated 23.01.2017 under Section 35 of the

Indian Stamp Act, 1899, due to insufficient stamping, yet proceeded to enforce it

despite this finding, constituting a legal error. The Appellant submitted that the

prayers in IA No. 152/2023, allowed by the impugned order, do not fall within

Section 60(5) of the Code, as recovery of Rs. 21,50,332 plus interest does not

constitute a question "arising out of" or "in relation to" the Corporate Debtor's

CIRP.

11. The Appellant submitted that the Adjudicating Authority failed to

recognize that the Arbitral Award dated 23.01.2017 is unenforceable under

Section 36 of the Arbitration and Conciliation Act, 1996, as no execution

proceedings were initiated by the Corporate Debtor pre-CIRP. The Appellant

submitted that the demand notice dated 18.01.2023 under Section 60(5) of the

Code is invalid, as the claim for Rs. 21,50,332 plus interest does not "arise out

of" the CIRP but stems from a pre-CIRP award.

12. The Appellant submitted that the ex-parte nature of the Arbitral Award

dated 23.01.2017 is invalid due to lack of proper service of notices on JSL

Page 5 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

Architecture Limited's registered office, violating procedural fairness. The

Appellant submitted that no notice under Section 21 of the Arbitration and

Conciliation Act, 1996, was served, rendering the proceedings void ab initio.

13. The Appellant submitted that the Arbitral Award dated 23.01.2017 was

not served until the demand notice dated 18.01.2023, preventing timely challenge

or execution. The Appellant submitted that enforcement of the Arbitral Award

dated 23.01.2017 is barred by limitation under Article 136 of the Limitation Act,

1963.

14. The Appellant submitted that the Corporate Debtor abandoned the claim

by not enforcing the Arbitral Award dated 23.01.2017 for over five years,

estopping revival by the Resolution Professional. The Appellant submitted that

the Arbitral Award dated 23.01.2017 remains unenforceable under Section 36 of

the Arbitration and Conciliation Act, 1996, as no steps were taken to make it

executable.

15. Concluding his arguments, the Appellant requested this Appellate Tribunal

to set aside the Impugned Order and to allow the appeal.

16. Per contra, the Respondent No. 1 denied all averments made by the

Appellants as misleading and baseless.

17. The Respondent No. 1 submitted that the Appellant's contention that the

Resolution Professional should have approached a civil court under Section 36 of

the Arbitration and Conciliation Act, 1996, for execution is misconceived. The

Page 6 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

Respondent No. 1 contended that this ignores the Code's overriding effect under

Section 238, designed to expedite insolvency resolution.

18. The Respondent No. 1 submitted that the Adjudicating Authority gets

jurisdiction under Section 60(5) of the Code to enforce awards during CIRP. The

Respondent No. 1 submitted that the Appellate Tribunal's judgment dated

30.01.2018 in K.S. Oils Ltd. Vs. The State Trade Corporation of India Ltd. &

Anr. (Company Appeal (AT) (Insolvency) No. 284 of 2017) held that the Code

prevails over the Arbitration and Conciliation Act, 1996. The Respondent No. 1

further submitted that this Appellate Tribunal's judgment dated 22.01.2020 in

Ugro Capital Ltd. Vs. Bangalore Dehydration & Drying Equipment Company

Pvt. Ltd. (Company Appeal (AT) (Insolvency) No. 984 of 2019) recognizes the

right to initiate IBC proceedings on final decrees or awards.

19. The Respondent No. 1 submitted that the arbitral award dated 23.01.2017

is enforceable as a decree under Section 36 of the Arbitration and Conciliation

Act, 1996 as the 12-year limitation period for execution under Article 136 of the

Limitation Act, 1963, runs from when the award becomes enforceable, expiring

on 23.01.2029. The Respondent No. 1 submitted that the Supreme Court's

judgment dated 04.10.2007 in U.P. State Sugar Corporation Vs. Jain

Construction Co. (2007) 8 SCC 601 holds that limitation for execution starts from

the date the award becomes enforceable.

20. The Respondent No. 1 submitted that the NCLAT's judgment dated

14.02.2023 in MBL Infrastructures Ltd. Vs. Manish Kumar Bhagat (Company

Page 7 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

Appeal (AT) (Insolvency) No. 769 of 2020) confirms that awards are enforceable

within 12 years under Article 136. Further, the Respondent No. 1 submitted that

the Hon'ble Supreme Court's judgment dated 16.09.2020 in Govt. of India Vs.

Vedanta Ltd. (2020) 10 SCC 1 affirms that limitation for execution commences

when the award is final and enforceable.

21. The Respondent No. 1 submitted that limitation for enforcement starts

from the date the award becomes enforceable, not from knowledge or receipt.

The Respondent No. 1 contended that the Appellant's argument of first receiving

the award via demand notice dated 18.01.2023 is irrelevant, as limitation runs

from the award date of 23.01.2017. it is further submitted by the Respondent No.

1 that the Hon'ble Supreme Court's judgment dated 13.09.2019 in P. Radha Bai

Vs. P. Ashok Kumar (2019) 13 SCC 445 holds that limitation for execution

begins when the award is enforceable, regardless of knowledge.

22. The Respondent No. 1 submitted that the arbitral award dated 23.01.2017

is enforceable despite being unstamped, which in any case is curable. The

Respondent No. 1 submitted that this Appelate Tribunal's judgment dated

18.03.2020 in M/s. Siemens Gamesa Renewable Power Pvt Ltd Vs. Ramesh

Muthangi (Company Appeal (AT) (Insolvency) No. 1196 of 2019) holds that the

NCLT can entertain unstamped documents in IBC proceedings.

23. The Respondent No. 1 submitted that the Supreme Court's judgment dated

20.07.2011 in M/s SMS Tea Estates Pvt. Ltd. Vs. M/s Chandmari Tea Co. Pvt.

Ltd. (2011) 14 SCC 66 clarifies that unstamped documents are admissible in

Page 8 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

evidence if impoundment and duty payment occur. Further, the Respondent No.

1 submitted that the Supreme Court's judgment dated 10.04.2019 in Garware

Wall Ropes Ltd. Vs. Coastal Marine Constructions & Engineering Ltd. (2019)

4 SCC 201 holds that unstamped agreements are not enforceable under Section

11 of the Arbitration Act but does not extend to IBC proceedings.

24. The Respondent No. 1 submitted that the Supreme Court's judgment dated

25.04.2023 in N.N. Global Mercantile Pvt. Ltd. Vs. Indo Unique Flame Ltd.

[(2023) 7 SCC 1] reinforces that unstamped instruments are inadmissible under

Section 35 of the Stamp Act, but the NCLT's tribunal status exempts it from this

bar.

25. The Respondent No. 1 submitted that Section 18(5) of the MSME Act,

2006, is directory, not mandatory, and non-compliance does not render the award

a nullity. The Respondent No. 1 contended that the 90-day timeline is procedural,

and awards issued beyond it remain valid if no prejudice is caused. The

Respondent No. 1 submitted that the Delhi High Court's judgment dated

18.11.2019 in Avery Cycle Industries Ltd. Vs. Parkash Metal Industries (FAO

(COMM) 71/2019) holds that Section 18(5) of the MSME Act, 2006 is directory

and not mandatory. The Respondent No. 1 further submitted that the Kerala High

Court's judgment dated 02.11.2020 in Kerala State Electricity Board Vs.

Principal, MSME-TDS (OP (C) No. 2518 of 2018) affirms the directory nature

of Section 18(5) of the MSME Act, 2006. The Respondent No. 1 submitted that

the Allahabad High Court's judgment dated 05.01.2021 in M/s Bins

Page 9 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

International Vs. U.P. Micro and Small Enterprises Facilitation Council (Writ

- C No. 19385 of 2020) supports that non-compliance does not invalidate awards.

26. Concluding his arguments, the Respondent No.1 requested this Appellate

Tribunal to dismiss this appeal with exemplary cost.

Findings

27. A short point in the present appeal is regarding power of the Adjudicating

Authority to deal with claims of the Corporate Debtor under CIRP against the

Appellant arising out of an Arbitral Award. The Arbitral Award is amounting to

Rs. 44,99,365/- comprising the principal amount of Rs. 21,50,332/- and interest

of Rs. 23,49,032/-. It is the case of the Appellant that he received the Arbitral

Award for the first time along with demand notice dated 18.01.2023 sent by the

Respondent No.1 which he disputed. The Appellant has also taken several legal/

technical grounds in his defence including that Arbitral Award dated 23.01.2017

was merely a report on finding referred to Arbitrations and further the sole

arbitrator did not submit it report to HMSEFC, thus, the alleged Arbitral Award

is not binding.

28. The Appellant has also taken a plea that Arbitral Award is covered by

Arbitration and Reconciliation Act, 1996 and enforcement could be done only

before civil court under Section 36 of Arbitration and Reconciliation Act, 1996

and Adjudicating Authority does not have any role.

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Comp. App. (AT) (Ins.) No. 1180 of 2024

29. The Appellant further argued that the award is a nullity (under Section

18(5) of MSME Act, 2006) as the same was not made within 90 days from

reference dated 17.06.2016 and finally the Appellant has pleaded that the Arbitral

Award was not sufficiently stamped.

30. Now, we shall take up the various points raised by the Appellant as noted

above since we have already noted contention of Respondent No. 1 while

recording his pleadings.

31. The first issue is regarding whether the Respondent No. 1 could have

initiated the IA No. 792/ 2023 in CP (IB) No. 94/Chd/Hry/2020 before the

Adjudicating Authority for enforcing the Arbitral Award or Respondent No. 1

should have gone to relevant civil court as pleaded by the Appellant. It is pertinent

to understand that IBC is a self-contained code which intend for timely resolution

of the Corporate Debtor. It is further well settled principal that the proceedings

under the Code are time bound and several judicial fora including this Appellate

Tribunal and Hon'ble Supreme Court of India have held in catena of judgements

that strict timelines are lifelines for revival of the Corporate Debtor. Prima-facie,

if the contentions of the Appellant are accepted that the Respondent No. 1 should

have gone to the civil court, then no one can assess as to how much time the whole

process is going to take before the Arbitral Award is implemented and finally the

decree which is challengeable at several layers of the judicial fora is executed in

favour of the Corporate Debtor.

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Comp. App. (AT) (Ins.) No. 1180 of 2024

32. At this stage, we take into consideration that Section 60(5) of the Code,

which categorically contains the non-obstante clause. The 60(5) of the Code

reads as under: -

"Section 60: Adjudicating Authority for corporate persons. (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdictionJ1 to entertain or dispose of--

(a) any application or proceeding by or against the corporate debtor or corporate person;

(b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and

(c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code."

(Emphasis Supplied)

33. From above reading of Section 60(5) of the Code, it becomes clear that

once the Adjudicating Authority is required to deal any matter brought before it,

which is within the domain of the Code, no other forum have any jurisdiction to

entertain such proceedings. Taking into this consideration, we find that the

Adjudicating Authority was well within rights to entertain the relevant IA filed

Page 12 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

by the Respondent No. 1 regarding enforcing the Arbitral Award, we noted

earlier.

34. In this connection, we would like to refer to Section 238 of the Code which

clearly mandate that in situation where the Code is in conflict with any other

prevailing law, the code will prevail and override other laws. In this connection,

we note that there are several judgments supporting this ratio. We will refer to

this Appellate Tribunal's earlier judgement in the matter of K.S. Oils Limited. Vs.

The State Trade Corporation of India Limited and Anr. passed in Comp. App.

(AT) (Ins.) No. 284 of 2017 where same principals has been confirmed. The

relevant para No. 12 & 13 of this judgment reads as under: -

"12. As per Section 238, the I & B Code override other laws, as quoted below:

"238. Provisions of this Code to override other laws. -The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.

13. Thereby, the I & B Code will prevail over the Arbitration and Conciliation Act,1996"

(Emphasis Supplied)

35. It is admitted fact that the Arbitral Award was indeed issued and the same

has not been challenged by the Appellant, thus, the Arbitral Award has attained

the finality and the same need to be prosecuted by Respondent No. 1 being

Page 13 of 15 Comp. App. (AT) (Ins.) No. 1180 of 2024

Resolution Professional of the Corporate Debtor in order to help in revival of the

Corporate Debtor. The Adjudicating Authority is also required to exercise its

powers under section 60(5) of the Code to direct the judgment debtor in respect

of Arbitral Award to pay the determined amount under the Arbitral Award.

36. The Appellant has also taken pleading that Arbitral Award dated

23.01.2017 is a nullity as the Corporate Debtor was not registered as a MSME on

the date of supply of goods to the Appellant. In this connection, the Respondent

No. 1 has brought to our notice that the Corporate Debtor was registered as

MSME at all time and has enclosed the certificate of registration.

37. Another point has been pleaded by the Appellant is regarding insufficient

stamp by the Sole Arbitrator making the award itself nullity. In this connection,

we do agree with the reasoning of Respondent No. 1 that the same, in any case,

curable as the Hon'ble Supreme Court of India clarified in the judgment dated

25.04.2023 in NN Global Market Limited (Supra).

38. We also find the merit in the contentions of the Respondent No. 1 that 90

days' timelines prescribed under MSME Act, 2006 for Arbitrator is not

mandatory and non-compliance and delayed submission of Arbitral Award

cannot be a ground to treat the Arbitral Award a nullity and we tend to agree with

the same. In this connection, we find that the Hon'ble High Court of Delhi has

also stipulated the same ratio in case of Avery Cycle Industries Ltd. (Supra).

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Comp. App. (AT) (Ins.) No. 1180 of 2024

39. We have also gone through the Impugned Order on the subject and do not

find any error in the Impugned Order allowing IA No. 792/2023 filed by the

Respondent No. 1 before the Adjudicating Authority.

40. In fine, we are not convinced on any of the pleadings and legal or technical

grounds taken by the Appellant before us.

41. We reiterate that based on above detailed observations, we do not find any

error in the Impugned Order. The Appeal devoid of any merit stand rejected. No

cost. I.A., if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim

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