Application u/s 9 of IBC can be Rejected on Initiation of Arbitration Proceedings before Issuance of Demand Notice: NCLAT

The National Company Law Appellate Tribunal (NCLAT) has ruled that applications under Section 9 of the Insolvency and Bankruptcy Code (IBC) can be rejected if arbitration proceedings have been initiated before the issuance of a demand notice. This decision reinforces the importance of following the prescribed processes under IBC for initiating corporate insolvency resolution. The ruling clarifies that the existence of arbitration proceedings can impede the IBC process, emphasizing that parties must exhaust the arbitration route before approaching the insolvency resolution process. This decision helps ensure that the IBC framework is used appropriately and in line with other dispute resolution mechanisms.