# In the matter of Sirpur Paper Mills Limited Vs. I.K. Merchants Pvt. Ltd. A.P. 550 of 2008

> HC judgment dated 2021-05-07. Citation: TCN-2021-HC-00029. The case involves an application to set aside an arbitral award dated July 7, 2008, passed by a…

- **Court:** HC
- **Order date:** 7 May 2021
- **Citation:** TCN-2021-HC-00029
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-chandigarh-bench/sirpur-paper-mills-limited-vs-ik-merchants-pvt-ltd-ap-550-of-2008-4bd5b89f

## Summary

### Background

The case involves an application to set aside an arbitral award dated July 7, 2008, passed by a sole arbitrator in proceedings between I.K. Merchants Pvt. Ltd. (the respondent/claimant) and Sirpur Paper Mills Limited (the petitioner/award-debtor). The petitioner argues that the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, have become infructuous because the management of the petitioner company was taken over by a new entity following the approval of a Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The petitioner contends that the application to set aside the award is no longer maintainable due to subsequent developments after the award.

## Facts

Sirpur Paper Mills Limited (the petitioner) filed an application to set aside an arbitral award dated July 7, 2008, in favor of I.K. Merchants Pvt. Ltd. (the respondent). The petitioner argued that the proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, had become infructuous because a Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC), had been approved, leading to a new entity taking over the management of the petitioner company. The petitioner relied on Section 31 of the IBC, which states that an approved Resolution Plan is binding on the corporate debtor and its stakeholders. The petitioner cited Supreme Court decisions, including Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta, to support the

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## Issues and analysis

### Issue 1: Whether the claim of an award-holder can be frustrated on the approval of a Resolution Plan under …

**Ratio:** The legal principle is that an approved Resolution Plan under Section 31 of the IBC is

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**Reasoning:** The court reasons that the Supreme Court's decisions in Essar and Ghanshyam Mishra

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**Interpretation:** This means that the IBC aims to provide a mechanism for resolving insolvency

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**Application:** In this case, the respondent's claim as an award-holder was not included in the

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## Parties

- **Judges:** Moushumi Bhattacha…
- **Respondents:** Sirpur Paper…; I.K. Merchants…
- **Advocates:** Jishnu…; Sakabda…; +4 more

## Timeline

- **2008-07-07 — Arbitral Awa…**: Date of the arbitral award passed by a learned Sole Arbitrator in arbitration proceedings…
- **2008-10-31 — Filing of Section 34…**: The Award was challenged by the Award-debtor/petitioner in this Court on 31st October,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(11) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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