NCLAT Upholds Liquidator's Discretion To Reject Claims Based On Post-Liquidation Arbitral Awards

The National Company Law Appellate Tribunal (NCLAT) upheld the liquidator's discretion in rejecting claims that are based on arbitral awards passed after the initiation of liquidation proceedings. The Tribunal ruled that the liquidator is not bound to entertain such claims, as liquidation aims to maximize the value of assets and ensure an equitable distribution among stakeholders. The decision was significant as it clarified the boundaries for creditors attempting to enforce post-liquidation claims through arbitration. This ruling reinforces that the liquidation process under the Insolvency and Bankruptcy Code (IBC) takes precedence over arbitration awards passed post-liquidation, ensuring that any post-liquidation claims cannot disrupt the orderly and prioritized disbursement of a company’s assets.