Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Rakesh Kumar Jain (Judicial Member), Justice Mohammad Faiz Alam Khan (Judicial Member), and Mr. Naresh Salecha (Technical Member), has held that an Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC) has jurisdiction to enforce an arbitral award upon an application filed by the Resolution Professional (RP) under Section 60(5) of the Code. The ruling came in Jindal Lifestyle Ltd. v. Satyendra Sharma, Resolution Professional of Arkin Creations Pvt. Ltd. (Company Appeal (AT) (Insolvency) No. 1180 of 2024), decided on August 21, 2025, arising out of an order of the National Company Law Tribunal (NCLT), Chandigarh Bench, which had allowed an application by the Resolution Professional seeking enforcement of an arbitral award in favor of the corporate debtor.

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Background

The corporate debtor, Arkin Creations Pvt. Ltd., had initiated arbitration proceedings under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, against Jindal Lifestyle Ltd., for non-payment of dues amounting to ₹21,50,332 plus interest for the supply of goods. The proceedings culminated in an Arbitral Award dated January 23, 2017, passed ex parte by the sole arbitrator appointed by the Haryana Micro and Small Enterprises Facilitation Council (HMSEFC). During the Corporate Insolvency Resolution Process (CIRP), the RP filed an interlocutory application (IA No. 792/2023) before the NCLT seeking enforcement of the arbitral award. The Adjudicating Authority allowed the application, prompting the appellant to approach the NCLAT.

Appellant’s Contentions

The appellant, Jindal Lifestyle Ltd., argued that:

• The arbitral award was merely a report on findings referred to arbitration and was not enforceable under the MSME Act, 2006.

• The award was issued beyond the 90-day limit prescribed under Section 18(5) of the MSME Act and was, therefore, a nullity.

• The Adjudicating Authority lacked jurisdiction to enforce the award, as enforcement could only be done under Section 36 of the Arbitration and Conciliation Act, 1996, by a civil court of competent jurisdiction.

• The claim was barred by limitation under Article 136 of the Limitation Act, 1963, as no enforcement action had been initiated for more than five years after the award.

• The arbitral proceedings were ex parte, and the appellant’s erstwhile entity, JSL Architecture Ltd., had not received any proper notice under Section 21 of the Arbitration Act.

• The award was insufficiently stamped and thus unenforceable under Section 35 of the Indian Stamp Act, 1899.

Respondent’s Submissions

On behalf of the Resolution Professional, it was argued that:

• The IBC prevails over the Arbitration Act by virtue of Section 238, and the NCLT, being the Adjudicating Authority, is empowered under Section 60(5) to enforce the award during CIRP.

• The RP was justified in approaching the NCLT for enforcement since all claims of or against the corporate debtor fall within its jurisdiction.

• Relying on K.S. Oils Ltd. v. The State Trade Corporation of India Ltd. (2018), it was submitted that the IBC overrides the Arbitration Act.

• Citing Ugro Capital Ltd. v. Bangalore Dehydration & Drying Equipment Co. Pvt. Ltd. (2020), it was contended that a final decree or award forms a valid basis for initiating insolvency proceedings.

• The limitation for enforcement runs for 12 years from the date the award becomes enforceable, as held in MBL Infrastructures Ltd. v. Manish Kumar Bhagat (2023) and U.P. State Sugar Corporation v. Jain Construction Co. (2007) 8 SCC 601.

• The 90-day period under Section 18(5) of the MSME Act is directory, not mandatory, as clarified in Avery Cycle Industries Ltd. v. Parkash Metal Industries (2019) and Kerala State Electricity Board v. Principal, MSME-TDS (2020).

• The issue of insufficient stamping was curable and could not invalidate the award.

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Findings of the NCLAT

The Appellate Tribunal framed the key issue as whether the Adjudicating Authority could entertain and enforce an arbitral award under Section 60(5) of the IBC during the pendency of the CIRP. The Bench held that the IBC is a self-contained and time-bound code, and requiring the Resolution Professional to approach a civil court for enforcement of the award would frustrate the object of timely resolution. It observed that Section 60(5) expressly empowers the NCLT to entertain any claim by or against the corporate debtor and to adjudicate any issue “arising out of or in relation to the insolvency resolution proceedings.”

Referring to Section 238 of the IBC, the NCLAT reiterated that the provisions of the Code have overriding effect over other laws. Citing K.S. Oils Ltd. (supra), the Bench emphasized that the IBC would prevail over the Arbitration and Conciliation Act, 1996, in case of any conflict. The NCLAT further noted that since the arbitral award dated January 23, 2017, had not been challenged by the appellant, it had attained finality, and the RP was well within his rights to seek enforcement of the award for the benefit of the corporate debtor’s revival.

On the issue of limitation, the Bench agreed with the RP that the enforcement of an arbitral award is governed by Article 136 of the Limitation Act, which allows 12 years for execution from the date the award becomes enforceable. Thus, the RP’s application was well within the limitation period.

Rejecting the argument that the 90-day period under the MSME Act was mandatory, the Tribunal affirmed that the provision is only directory in nature, and any delay in passing the award does not render it void. Regarding the issue of insufficient stamping, the NCLAT accepted the RP’s submission that such defect is curable and does not invalidate the award’s enforceability, especially in insolvency proceedings before a quasi-judicial forum like the NCLT.

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The Appellate Tribunal upheld the order of the NCLT, Chandigarh Bench, and dismissed the appeal, holding that: “Once the Adjudicating Authority has taken up any matter within the domain of the Code, the jurisdiction of all other forums to entertain such proceedings ceases. Hence, the Adjudicating Authority is the proper forum to entertain an IA seeking enforcement of an arbitral award under Section 60(5) of the IBC.” Accordingly, the NCLAT confirmed that the Resolution Professional was entitled to enforce the arbitral award through the NCLT and that such enforcement was within limitation and jurisdictionally valid.The appeal was dismissed as devoid of merit, with the impugned order affirmed.

Appearance

For Appellant: Mr. Sarad Kumar Sunny & Mr. Madhan Binzani, Advocates.

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

Cause Title: Jindal Lifestyle Ltd. Vs. Mr. Satyendra Sharma, RP of Arkin Creations Pvt. Ltd. and Ors.

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

Coram: Justice Rakesh Kumar Jain (Judicial Member), Justice Mohammad Faiz Alam Khan (Judicial Member), Mr. Naresh Salecha (Technical Member)