Initiation Of Arbitration Proceedings Before Issuance Of Demand Notice Is Sufficient To Reject Application U/S 9 Of IBC: NCLAT

The NCLAT held that initiating arbitration proceedings before issuing a demand notice is insufficient to reject an application under Section 9 of the Insolvency and Bankruptcy Code (IBC). The ruling came in the context of a creditor’s application to initiate CIRP, where arbitration was invoked before a formal demand notice. The Tribunal clarified that the presence of arbitration proceedings does not invalidate the application for CIRP if the conditions under IBC are otherwise met, strengthening the legal position of creditors in insolvency matters.