Insolvency proceedings does not prevent Corporate Debtor from filing an application under Section 11 of Arbitration and Conciliation Act, 1996 against another party – Godavari Projects (J.V) Vs. Union of India – Delhi High Court.

In the case of Godavari Projects (J.V) Vs. Union of India, heard in the Delhi High Court, the proceedings revolved around the question of whether insolvency proceedings prevent a corporate debtor from filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 against another party.

The Delhi High Court ruled that insolvency proceedings do not bar a corporate debtor from filing such an application under Section 11 of the Arbitration and Conciliation Act, 1996 against another party. This means that even if a company is going through insolvency proceedings, it can still seek recourse through arbitration against another party.

The judgment underscores the principle that insolvency proceedings and arbitration are separate legal processes, and one does not necessarily preclude the other. This decision clarifies the rights of corporate debtors to pursue arbitration proceedings even during insolvency proceedings, ensuring that they have access to alternative dispute resolution mechanisms.

Section 11 of the Arbitration and Conciliation Act, 1996 deals with the appointment of arbitrators.

It outlines the procedure for appointing arbitrators when parties to a dispute are unable to agree on the selection process. This section empowers the Courts to intervene and appoint arbitrators if:

• The parties have not agreed on a method for appointing arbitrators.
• The agreed method fails, or the chosen arbitrator fails to act effectively.
• The arbitrator is unable to perform their functions or there are justifiable doubts about their impartiality or independence.

There are two types of arbitration:

1. Domestic arbitration refers to the resolution of disputes between parties that are located within the same country or jurisdiction.
2. International arbitration refers to the resolution of disputes between parties from different countries through arbitration. It is a method of dispute resolution commonly used in cross-border commercial transactions and international contracts.

In accordance with the nature of the case, the appointment process differs: for domestic arbitration cases, the appointment is carried out by the High Court; whereas for international arbitration cases, it is done by the Supreme Court of India.