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Public sector insurer Oriental Insurance Company lost to HCL Infosystems at Delhi High Court after failing to convince the court that the arbitration tribunal’s order directing it to pay HCL ₹2.24 crore, arbitration fees and other charges was incorrect.
In a 2016 tender floated by Oriental Insurance for an ‘enterprise content management’ solution, HCL was the successful bidder, quoting ₹15.98 crore. Oriental Insurance withheld 10 per cent for ‘liquidated damages’ over a delay in service.
The arbitration tribunal ordered Oriental Insurance to pay HCL the withheld amount with 18 per cent interest, apart from the arbitrator’s fee of ₹10.87 lakh.
Oriental Insurance approached Delhi High Court, arguing that it was the injured party and that the 18 per cent interest was unconscionably high.
However, Justice Chandra Dhari Singh disagreed and dismissed Oriental Insurance’s petition.
IOC’s debt in dispute
Indian Oil Corporation has won an insolvency case filed against it by Satec Envir Engineering (India) Pvt Ltd, an operational creditor, which claimed that IOC owed it ₹5.82 crore.
Delivering their verdict, Kishore Vemulapali (judicial member) and Prabhat Kumar (technical) of the National Company Law Tribunal, Mumbai Bench, underscored a key aspect of the Insolvency and Bankruptcy Code (IBC), namely insolvency proceedings can only be triggered by the existence of debt and not if the debt itself is in dispute. Nor does an insolvency court get into the adjudication of the dispute.
The judges said, “We consider that there exists a dispute requiring adjudication thereof and we cannot go into adjudication of dispute, whatsoever it may be, under the code.”
Dismissing Satec Envir’s petition filed under Section 9 of IBC, the tribunal said: “We cannot hold that there is default by the corporate debtor in payment of debt amount as existence of such debt is itself in dispute in view of various correspondence(s) placed on record.”
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