Once Arbitral Award Holder Files CIRP Claim, Execution Under Arbitration Law Not Maintainable: Delhi High Court
The Delhi High Court has recently observed that once a decree holder lodges its claim arising out of an arbitral award before the resolution professional during the corporate insolvency resolution process (CIRP), it cannot pursue parallel execution proceedings under the Arbitration and Conciliation Act.
A single bench of Justice Harish Vaidyanathan Shankar delivered the ruling in a petition filed by Paharpur Cooling Towers Ltd, seeking enforcement of an arbitral award dated November 12, 2021 against Sinnar Thermal Power Ltd, while also seeking to proceed against its group entities at the execution stage.
“Once a party lodges a claim before the Resolution Professional seeking satisfaction of an arbitral award, such conduct, in substance and effect, amounts to invoking the enforcement mechanism contemplated under insolvency law. To thereafter pursue execution under Section 36 of the A&C Act would amount to duplicative and impermissible enforcement, which the law does not allow.”, the court observed.
The arbitral award had directed Sinnar Thermal Power to pay approximately Rs. 23.96 crore. During the pendency of a Section 34 challenge filed on April 28, 2022, the company was admitted into CIRP by the NCLT on September 19, 2022.
The decree holder submitted its claim before the resolution professional on October 11, 2022, which was admitted to the extent of about Rs. 23.10 crore
The Section 34 petition was later withdrawn on August 26, 2025 and the resolution plan was approved on November 28, 2025.
The high court observed that by filing its claim in CIRP, the decree holder had invoked the enforcement mechanism under insolvency law. It said if such a holder subsequently pursues execution under Section 36, it would amount to “duplicative and impermissible enforcement.”
Emphasising the “clean slate” doctrine under Section 31 of the Insolvency and Bankruptcy Code, the court held that once a resolution plan is approved, all claims not forming part of the plan stand extinguished. The court said, “Permitting such parallel pursuit would strike at the very core of the “clean slate” doctrine that underpins the insolvency regime.”
Holding the execution petition to be misconceived and legally untenable, the court dismissed the petition and imposed costs of Rs. 1 lakh on Paharpur Cooling.
For Decree Holder: Advocates Siddhartha Datta, Suhani Dwivedi, Nimrah Sameen Alvi, Deepanjan Datta, Adyasha Nanda, Vishal Pathak
For Judgment Debtor: Senior Advocate Rajshekhar Rao with Advocates Meghna Mishra, Nikhil Ratti Kapoor, Yashodhara Gupta, Varun Chandiok, Anubhi Goyal