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IBC Resolution Plan Extinguishes Arbitral Award Rights

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judgment dated 17.12.2025 of the High Court of Bombay in Interim Application (L) No.9646 of 2024 (OS) in Arbitration Petition No.1755 of 2015 with Chamber Summons NO.539 of 2019 in the matter of Reliance Naval and Engineering Ltd  and Reliance Defence & Engineering Limited   Vs.   Afcons Infrastructure Ltd.

The petitioner had filed section 34 petition challenging the arbitral award dated 31.8.2015 for Rs.49.11 crores in favour of the respondent Afcons.  In the said petition and as per the order dated 20.2.2017 of the Single Bench, the amount of Rs.12.76 crores deposited by the petitioner was withdrawn by Afcons on giving bank guarantee valid till 30.4.2026.

 

Thereafter, CIRP was initiated against the petitioner Reliance. The resolution plan was approved on 23.12.2022 and the debt of arbitral award was written down from Rs.49.11 crores to Re.1.  Thus, the right of Afcons to the arbitral award amount had extinguished under the Resolution Plan.

 

In this background, the petitioner filed application for return of the deposited amount and withdrawn by Afcons.

 

In that context, this judgment assumes significance that “the right to receive the amount awarded in the Arbitral Award is nothing but a “claim” of Afcons validly held against the debt declared as being payable by Reliance to Afcons, the creditor.

Thus, section 34 petition has become infructuous since the amount owed by Reliance – corporate debtor to Afcons (judgment creditor) has been effaced by the approved RP.

 

 

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