# In the matter of Alchemist Asset Reconstruction Company L. Vs. Hotel Gaudavan P. L.&Ors. Civil A No.16929-2017

> SC judgment dated 2017-10-23. Citation: TCN-2017-SC-00010. The case involves a civil appeal arising out of a Special Leave Petition. A petition was filed…

- **Court:** SC
- **Order date:** 23 Oct 2017
- **Citation:** TCN-2017-SC-00010
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/alchemist-asset-reconstruction-company-l-vs-hotel-gaudavan-p-lors-civil-a-no1692-15b2a36b

## Summary

### Background

The case involves a civil appeal arising out of a Special Leave Petition. A petition was filed under the Insolvency and Bankruptcy Code, 2016, and was admitted by the National Company Law Tribunal (NCLT), Principal Bench, New Delhi on 31.03.2017. A moratorium was imposed under Section 14 of the Insolvency and Bankruptcy Code. Despite the moratorium, the Respondent No.1 issued a letter to Respondent No.2 invoking the arbitration clause, and an arbitrator was appointed. The NCLT stated that no arbitration proceedings could continue given the moratorium. A First Appeal was filed before the District Judge, Jaisalmer, Rajasthan under Section 37 of the Arbitration and Conciliation Act, 1996, and the appeal was asked to be registered.

## Facts

Alchemist Asset Reconstruction Company Ltd. filed a petition under the Insolvency and Bankruptcy Code, 2016. The petition was admitted on 31.03.2017 by the NCLT, leading to a moratorium under Section 14. Despite the moratorium, Hotel Gaudavan Pvt. Ltd. invoked arbitration. The NCLT stated that no arbitration could proceed due to the moratorium. A First Appeal was filed before the District Judge, Jaisalmer. A criminal proceeding (F.I.R. No. 0605 dated 06.08.2017) was initiated, allegedly to obstruct the IRP. The key fact is the conflict between the moratorium under the IBC and the attempt to initiate/continue arbitration proceedings. The criminal proceeding is also a relevant fact, indicating an attempt to undermine the insolvency process.

## Issues and analysis

### Issue 1: Whether the initiation or continuation of arbitration proceedings is permissible during the …

**Ratio:** The moratorium under Section 14(1)(a) of the Insolvency and Bankruptcy Code expressly

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**Reasoning:** The court reasoned that the mandate of the Insolvency Code is that once an insolvency

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**Interpretation:** Section 14(1)(a) is interpreted to mean that once a moratorium is in place due

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**Application:** In this case, since the arbitration was instituted after the moratorium was

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## Parties

- **Judges:** ROHINTON FALI…; SANJAY KISH…
- **Appellants:** ALCHEMIST ASSET…
- **Respondents:** M/s. Hotel…

## Timeline

- **2017-03-31 — Insolvency Petition…**: The National Company Law Tribunal (NCLT) admitted the petition filed under the Insolvency…
- **2017-03-31 — Moratorium…**: A moratorium was imposed under Section 14 of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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