Gurdeep Singh
LL.M. Student
IEC University, Himachal Pradesh
Dr. Prahalad Gupta
Associate Professor
IEC University, Himachal Pradesh
Abstract
Where a debt arises under a contract containing an arbitration clause, a creditor who invokes insolvency law instead of arbitration forces a choice between two legitimate legal values: the collective, public character of insolvency and the contractual autonomy that arbitration protects. This paper examines how India, Singapore and Hong Kong, with the United Kingdom and the United States as secondary comparators, have resolved that choice. It argues that the Indian position under the Insolvency and Bankruptcy Code, 2016 turns on the default inquiry rather than on any recognition of arbitration agreements, that the Insolvency and Bankruptcy Code (Amendment) Act, 2026 has closed the discretionary route opened by Vidarbha Industries, and that the remaining doctrinal space lies in how ‘default’ and ‘debt due’ are determined where the very maturity or quantum of the debt depends on a genuinely contested, arbitrable question. Drawing on the Privy Council’s test in Sian Participation and the countervailing-factors safeguard in Hong Kong’s Guy Lam line, the paper proposes a narrow, evidence-based “substantial dispute” filter for Section 7 applications, together with anti-abuse guardrails, and tests it against the Code’s statutory timelines.
Keywords: Insolvency and Bankruptcy Code; arbitration; Section 7; Section 9; pre-existing dispute; arbitrability.
I. Introduction
Insolvency law and arbitration law are designed for different purposes. Arbitration rests on consent: the parties choose a private forum and the resulting award binds only them. Insolvency law is statutory and collective: it freezes individual enforcement, displaces management, and distributes the debtor’s assets among all creditors according to a legislated order of priority. The two regimes meet when a creditor whose contract contains an arbitration clause files an insolvency petition for a debt the debtor says it does not owe, or does not owe in the amount claimed.[1]
In India the question is acute because of the speed and consequences of the corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC).[2] Admission of an application triggers the moratorium under section 14, displaces the board and installs a resolution professional, with an outer limit on the process under section 12.[3] The IBC also draws a sharp line between financial creditors (section 7) and operational creditors (section 9): an operational creditor’s application fails if a dispute pre-existed the demand notice, whereas a financial creditor needs only to establish a financial debt and a default.[4] The result is that an arbitration clause may protect a supplier’s debtor but not a lender’s.
Other common law jurisdictions have confronted the same problem and reached different answers. Singapore applies a deliberately low, prima facie standard in favour of arbitration; Hong Kong, after the Court of Final Appeal’s decision in Guy Lam, ordinarily leaves the parties to their chosen forum absent countervailing factors; England, following the Privy Council’s 2024 decision in Sian Participation, requires the debtor to show that the debt is disputed on genuine and substantial grounds; and the United States relies on the core/non-core distinction and an “inherent conflict” inquiry.
This paper makes three contributions. First, it restates the Indian position accurately in the light of the primary authorities, including developments in 2026 that post-date most of the existing commentary: the Supreme Court’s decisions in Power Trust and Elegna, and the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which substitutes “shall” for “may” in section 7(5)(a). Second, it compares the Indian approach with Singapore and Hong Kong, and with the United Kingdom and the United States. Third, it proposes a reform that is compatible with the amended statute: a narrow “substantial dispute” screen operating within the determination of default, not as a free-standing discretion. The methodology is doctrinal and functional-comparative, asking not only what each system’s rules say but what problem they solve and how well.[5]
II. The Conceptual And Statutory Framework In India
A. Rights in rem, rights in personam and arbitrability
The Supreme Court’s approach to non-arbitrability begins with the distinction between actions in rem and rights in personam. Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. treated disputes concerning rights in rem as generally unsuited to private arbitration, and listed insolvency and winding-up among the categories reserved for public fora.[6] Vidya Drolia v. Durga Trading Corpn. restated the position as a fourfold test and applied it expressly to insolvency: a dispute is non-arbitrable where it concerns actions in rem, affects third-party rights or has erga omnes effect, requires centralised adjudication, relates to inalienable sovereign functions, or is made non-arbitrable by statute.[7] The Court noted that insolvency and intra-company disputes need a centralised forum and are actions in rem.[8]
That framework explains why the CIRP itself cannot be arbitrated. It does not answer the narrower question that this paper addresses: whether a pre-existing arbitration agreement concerning the underlying debt should prevent the insolvency forum from being seized in the first place. The in rem character of insolvency attaches, on the Supreme Court’s analysis, at the point of admission, not at the point of filing.[9] Before admission, the proceeding is a contest between two parties about whether a default has occurred; that is the space in which the arbitration agreement competes with the petition.
B. Section 238 and sections 8 and 45 of the Arbitration and Conciliation Act, 1996
Section 238 of the IBC gives the Code overriding effect over inconsistent laws.[10] Section 8 of the Arbitration and Conciliation Act, 1996 requires a judicial authority, on a party’s application made before its first statement on the substance of the dispute, to refer the parties to arbitration unless there is no valid arbitration agreement on a prima facie view.[11] The Supreme Court has not resolved the tension by declaring either provision supreme in the abstract. Instead, Indus Biotech regulates the sequence in which the two are applied, as discussed below. The question for the NCLT is therefore less “which statute prevails?” than “what must be decided first, and on what material?”
III. The Indian Position
A. Section 7: financial creditors and the default inquiry
Innoventive Industries Ltd. v. ICICI Bank established that, once a financial debt is due and unpaid, the adjudicating authority’s task is confined to ascertaining default; it is of no matter that the debt is disputed so long as it is due and payable.[12] The same passage, however, recognises that a corporate debtor may show that no default has occurred “in the sense that the debt is not due”, because a debt may not be payable in law or in fact.[13] That qualification is the doctrinal opening through which later arbitration-related arguments have been made.
Indus Biotech is often cited for the proposition that an arbitration clause is irrelevant to a section 7 petition. A closer reading shows a more structured rule. The dispute turned on the conversion of investor securities and the formula for determining what was repayable. The investors filed a section 7 petition; the company applied under section 8 of the 1996 Act and itself sought appointment of an arbitral tribunal under section 11 before the Supreme Court. The NCLT dismissed the section 7 petition, finding that no default was made out while the conversion and the amount payable remained unresolved.[14] The Supreme Court held that: (i) a section 7 proceeding becomes a proceeding in rem only upon admission, so that before admission the question of arbitrability in the Vidya Drolia sense does not arise;[15] (ii) once the petition has been admitted, a section 8 application is not maintainable;[16] (iii) where a section 8 application is filed before admission, the adjudicating authority must first decide the section 7 petition by recording whether there is a default, even if the section 8 application is kept along for consideration;[17] and (iv) if default and a payable debt are established, the “bogey of arbitration” cannot be used to delay the process, while if there is no default the petition is rejected and the parties are free to arbitrate.[18]
Two features of the judgment matter for the argument developed below. First, the Court instructed the NCLT to take note of the corporate debtor’s version and to examine whether there is substance in the defence, so as to determine whether there is a default, and cautioned against raising a moonshine defence merely to delay.[19] Second, it held that the NCLT could not appropriately find a default merely because a claim had been made on the originally agreed date where the process of conversion had begun and the amount repayable was yet to be determined; an objective assessment of the whole situation was required and a petition could be dismissed where the case was “not yet ripe” as a default.[20] The judgment therefore does not hold that an arbitrable dispute is irrelevant; it holds that the dispute is relevant only through the statutory concept of default, and that arbitration cannot be allowed to pre-empt that determination.
B. The Vidarbha detour and its closure
In Vidarbha Industries Power Ltd. v. Axis Bank Ltd., the Supreme Court read the word “may” in section 7(5)(a) as conferring discretion on the NCLT to refuse admission even where default is established.[21] The debtor in that case had a substantial receivable from a public utility, on which it had obtained a favourable appellate order, and was unable to pay only because of delay in realising it. The Court did not decide an arbitration case; but its reasoning was invoked by debtors, including those relying on arbitration clauses, to resist admission. The Court narrowed the decision within a year: M. Suresh Kumar Reddy v. Canara Bank held that once default is established there is hardly any discretion left to refuse admission, and limited the reach of Vidarbha.[22]
Two recent decisions go further. In Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan, decided on 18 February 2026, the Supreme Court held that the corporate debtor’s ability to repay is not a ground for resisting admission, and that the inquiry at admission is confined to the existence of a financial debt and default.[23] In Elegna Co-op. Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., decided on 25 January 2026, the Court treated Vidarbha as a narrow exception confined to its peculiar facts and held that projected receivables and business viability are not good reasons to refuse admission.[24]
Parliament then legislated. The Insolvency and Bankruptcy Code (Amendment) Act, 2026 substitutes section 7(5)(a) so that the adjudicating authority shall admit the application within fourteen days where it is satisfied that default has occurred, the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, and shall reject it where default has not occurred or the application is incomplete. An Explanation provides that where these requirements are met no other ground shall be considered for rejection.[25] The Bill had been introduced in the Lok Sabha on 12 August 2025 and referred to a Select Committee.[26]
The consequence for the arbitration question is significant. Any proposal that depends on reviving a free-standing judicial discretion under Vidarbha to stay or reject a section 7 application in favour of arbitration is no longer tenable. A solution has to work through the concepts the amended section 7(5)(a) itself preserves: whether a default has occurred and whether the application is complete.
C. Section 9: operational creditors and the pre-existing dispute
For operational creditors, the IBC itself builds in a dispute defence. On receiving a demand notice under section 8(1), the corporate debtor may within ten days bring to the creditor’s notice the existence of a dispute, or the pendency of a suit or arbitration, that pre-dates the notice; if it does, the section 9 application must be rejected.[27] Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. held that the dispute must pre-exist the demand notice and that the adjudicating authority is not to decide the merits: the inquiry is whether there is a plausible contention requiring further investigation, as opposed to a patently feeble legal argument or an assertion of fact unsupported by evidence.[28] This is, in substance, a substantial-dispute test with a low threshold. K. Kishan v. Vijay Nirman Co. (P) Ltd. applied it to arbitral awards, holding that the pendency of a challenge under section 34 of the 1996 Act amounts to a pre-existing dispute for the purposes of section 9.[29]
D. The asymmetry between sections 7 and 9
The asymmetry has a documented rationale. The Bankruptcy Law Reforms Committee (BLRC) reasoned that financial debt is typically documented, verifiable and not subject to the quality-and-delivery disputes that characterise trade debt.[30] Swiss Ribbons (P) Ltd. v. Union of India upheld the classification against an Article 14 challenge.[31] The difficulty is empirical rather than constitutional. Many modern financial instruments, such as convertible securities, redemption formulae, structured and derivative transactions, and syndicated facilities with complex events of default, generate disputes over whether and how much is due that are no simpler than a supplier’s dispute. Indus Biotech itself involved such a dispute. The line between the two kinds of creditor is therefore under-inclusive as a proxy for “debt that is not genuinely disputed”.[32]
E. The existing safeguards against abuse
The Code is not silent on abuse. Section 65 penalises fraudulent or malicious initiation of insolvency proceedings.[33] Courts have also read the Code’s definition of “financial debt” in section 5(8) to require that the transaction have the commercial effect of borrowing against the time value of money, which allows the NCLT to decline applications built on instruments that are in substance equity or investment.[34] These tools are real but limited: they address bad faith and mischaracterisation, not the case of a genuine, arbitrable dispute over whether a debt has fallen due.
IV. Comparative positions
A. The United Kingdom: from Salford Estates to Sian Participation
English law treats a winding-up petition as a collective remedy and has long refused to allow it to be used to enforce a debt that is bona fide disputed on substantial grounds; the court does not try the dispute on a petition.[35] In Salford Estates (No. 2) Ltd. v. Altomart Ltd., the Court of Appeal held that where the debt is subject to an arbitration agreement and is not admitted, a winding-up petition should in the ordinary case be dismissed or stayed; the threshold for the debtor was thus very low.[36]
In Sian Participation Corp. (In Liquidation) v. Halimeda International Ltd., the Privy Council, on appeal from the British Virgin Islands, held that Salford Estates was wrongly decided and directed that it should no longer be followed in England and Wales. The Board (Lord Reed, Lord Lloyd-Jones, Lord Briggs, Lord Hamblen and Lord Burrows; judgment by Lords Briggs and Hamblen) held that a creditor’s winding-up petition or liquidation application is not a “matter” within an arbitration agreement because the court does not thereby resolve the debt claim, and that presenting such a petition does not breach the agreement.[37] The proper test is whether the debt is disputed on genuine and substantial grounds; where it is, the petition is stayed or dismissed in favour of arbitration, and where it is not, there is no reason to require a creditor to arbitrate a debt that is not truly contested.[38]
B. The United States: core/non-core and inherent conflict
The United States has no analogue to section 7 versus section 9, but it has a different structural device. The Federal Arbitration Act reflects a strong policy favouring arbitration, and under Shearson/American Express Inc. v. McMahon an arbitration agreement is enforced unless Congress has shown an intention to preclude a waiver of judicial remedies for the statutory right in issue, a showing that may be derived from an inherent conflict between arbitration and the statute’s underlying purposes.[39] In bankruptcy, courts have tied that inquiry to the distinction between core and non-core proceedings, a distinction that originated in the Third Circuit’s decision in Hays & Co. v. Merrill Lynch, with the discretion to refuse arbitration being strongest where the matter is core and arbitration would jeopardise the objectives of the Bankruptcy Code.[40] The automatic stay under 11 U.S.C. § 362(a) suspends proceedings, including arbitration, and a creditor may seek relief from the stay for cause under § 362(d)(1), a discretionary inquiry in which courts weigh factors such as those listed in In re Sonnax Industries, Inc.[41]
A recent decision illustrates the continuing tension, though it should not be mistaken for a case on derivatives or large commercial claims. In Goldman Sachs Bank USA v. Brown, decided on 18 March 2026 by a divided panel, the Fourth Circuit affirmed the refusal to compel arbitration of debtors’ claims under 11 U.S.C. § 362(k) for wilful violation of the automatic stay, holding that such claims could not be compelled to arbitration because of an inherent conflict with the Bankruptcy Code. The certiorari petition contends that the decision conflicts with the Second Circuit’s approach in MBNA America Bank, N.A. v. Hill.[42] The relevance for present purposes is methodological: United States law resolves the conflict by classifying the claim and asking whether arbitration would interfere with the bankruptcy process, not by classifying the creditor.
C. Singapore
Singapore adopted the pro-arbitration position of Salford Estates in AnAn Group (Singapore) Pte. Ltd. v. VTB Bank (Public Joint Stock Co.), where the Court of Appeal held that when a winding-up application is founded on a debt that is disputed and subject to an arbitration agreement, the court applies a prima facie standard of review, as opposed to the triable-issue standard.[43] The court asks whether there is a prima facie valid arbitration agreement, whether the dispute prima facie falls within it, and whether granting a stay or dismissal would be an abuse of the court’s process; if the answers are yes, yes and no, the application is ordinarily dismissed or stayed.[44]
Singapore has not followed Sian Participation. The High Court in Aryan (SEA) Pte. Ltd. v. Pure Group (Singapore) Pte. Ltd. applied AnAn in 2025, and in Singapore Commodities Group Co., Pte. Ltd. v. Founder Group (Hong Kong) Ltd. (in liquidation) the Court of Appeal revisited and reaffirmed the AnAn principles in 2026.[45] Singapore’s position is therefore the most arbitration-protective of the three common law benchmarks, subject to the abuse-of-process restriction.
A separate Singapore decision is sometimes treated as part of this line, but it concerns a different question. Anupam Mittal v. Westbridge Ventures II Investment Holdings was not an insolvency case. It concerned an anti-suit injunction restraining a founder-shareholder from pursuing a corporate oppression petition before the NCLT, Mumbai, in breach of an arbitration agreement seated in Singapore. The Court of Appeal held that, at the pre-award stage, subject-matter arbitrability is determined by a “composite approach” under which the dispute must be arbitrable under both the law governing the arbitration agreement and the law of the seat, and found the claims arbitrable under Singapore law as the law governing the arbitration agreement.[46] Its relevance to this paper is limited and analogical: it shows that a court can protect an arbitration agreement while still applying a public-policy filter on subject matter. For Indian law, however, that filter is already supplied by Vidya Drolia, and Anupam Mittal does not address how a debt dispute should be treated at the admission stage.
D. Hong Kong
Hong Kong’s traditional rule was that a winding-up petition would be dismissed only if the debt was disputed in good faith on substantial grounds, and the existence of an arbitration clause did not of itself suffice. In Lasmos Ltd. v. Southwest Pacific Bauxite (HK) Ltd., Harris J, drawing on Salford Estates and Singaporean authority, held that a petition should generally be dismissed where the company disputes the debt, the dispute falls within an arbitration clause, and the company takes the steps required under that clause to commence the process.[47]
The Court of Final Appeal’s decision in Guy Lam concerned a bankruptcy petition against a personal guarantor where the underlying agreement contained an exclusive jurisdiction clause (EJC) in favour of New York courts. The Court held that the Hong Kong court’s bankruptcy jurisdiction cannot be ousted by agreement but that the parties’ agreement informs the exercise of the court’s discretion; in an ordinary case, the petition should be dismissed and the dispute left to the chosen forum, absent countervailing factors such as a risk of the debtor’s insolvency affecting third parties, or a defence that is frivolous or an abuse of process.[48] The Court left open whether the same approach applies to arbitration clauses. The Court of Appeal subsequently held in Re Simplicity & Vogue Retailing (HK) Co. Ltd. and in Re Shandong Chenming Paper Holdings Ltd. that the Guy Lam approach applies to arbitration agreements and to cross-claims subject to arbitration.[49]
Hong Kong has so far not followed Sian Participation either. The Court of First Instance in Re Shift Energy Asia Ltd. declined to apply it and followed the Court of Appeal’s approach in Simplicity & Vogue.[50] The result is that Hong Kong and Singapore now stand together as pro-arbitration jurisdictions, with the Hong Kong rule expressed in terms of discretion and countervailing factors and the Singapore rule in terms of a prima facie standard and abuse of process.
E. A comparative summary
| India (s. 7 IBC) | Default only; debt not “due” if not payable in law or in fact (Innoventive; Indus Biotech). Admission mandatory after 2026 Amendment. | No stay or discretion; arbitration relevant only through the default inquiry. | S. 65 IBC; mischaracterised “financial debt”. |
| India (s. 9 IBC) | Pre-existing dispute: plausible contention requiring investigation (Mobilox; K. Kishan). | Pending arbitration or dispute before notice bars application. | Statutory bar on dispute. |
| United Kingdom | Genuine and substantial grounds (Sian Participation, 2024). | Petition not a breach of the clause; stay or dismissal if genuine dispute. | Creditor not made to arbitrate undisputed debt. |
| Singapore | Prima facie standard (AnAn; reaffirmed 2026). | Dismiss or stay if prima facie valid clause and dispute within it. | Abuse of process. |
| Hong Kong | Discretion; ordinary case dismiss absent countervailing factors (Guy Lam; Lasmos; Simplicity & Vogue). | Parties’ chosen forum ordinarily respected. | Third-party risk; frivolous defence or abuse. |
| United States | Core/non-core; inherent conflict (McMahon; Hays; National Gypsum); § 362 stay. | Enforced unless it conflicts with the Bankruptcy Code’s purposes. | Court’s discretion; relief from stay for cause. |
V. Evaluation: Autonomy, Speed And Abuse
A. Party autonomy
On party autonomy, the Indian position at the section 7 stage is the weakest and the Singapore position the strongest. A lender who has agreed to arbitrate a valuation or conversion dispute may nevertheless take the borrower to the NCLT, with consequences (moratorium, loss of management control, public proceedings) that the arbitration agreement was meant to avoid. But the Indian position is not as absolute as it is sometimes described: Indus Biotech itself dismissed a section 7 petition where the amount due depended on an unresolved conversion formula and left the parties to arbitrate.[51]
B. Speed and the time-bound design of the Code
The Code’s strongest claim to priority is speed. The CIRP is subject to an outer limit of 330 days, including time spent in legal proceedings, introduced by the 2019 amendment; the Supreme Court, in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, upheld the amendment but struck down the word “mandatorily”, so that the limit is the general rule from which exceptional departures are possible.[52] A pre-admission process that required every disputed financial debt to be arbitrated to completion before an application could be heard would undermine that design, as would the Singapore AnAn standard if transplanted without modification. Conversely, Hong Kong’s and Singapore’s models make the debtor’s task easy and leave the creditor to wait through arbitration, with the attendant risk of dissipation of assets that Hong Kong’s countervailing-factors safeguard is meant to meet.
C. Abuse in both directions
Each regime is vulnerable to the abuse the other guards against. The Indian rule invites creditors to use the CIRP as a lever for disputed claims; the Singapore and Hong Kong rules invite debtors to manufacture a dispute and invoke arbitration to delay. Sian Participation is in effect a reaction to the second risk, and the Indian section 7 jurisprudence to the first. A sound design must therefore filter on the quality of the dispute, not on the identity of the creditor or on the mere existence of an arbitration clause. The Privy Council’s “genuine and substantial grounds” test and the Indian Mobilox test are both attempts to do that, at different thresholds. Notably, Mobilox sets the lower threshold (a plausible contention requiring investigation) and applies only to operational creditors, while Sian Participation sets a higher threshold and applies to all creditors.
VI. A proposal compatible with the 2026 amendment
A. Why the earlier routes are closed
Two routes might previously have been proposed. The first was judicial: reviving the Vidarbha discretion so that the NCLT could stay a section 7 application in favour of arbitration. That route has been closed by Suresh Kumar Reddy, Power Trust and Elegna, and by the amended section 7(5)(a) with its Explanation barring other grounds of rejection. The second was a legislative provision allowing a general stay for arbitration with a “strong cause” exception for creditors. That would sit uneasily with a statute that has just made admission mandatory within fourteen days and with the Supreme Court’s insistence that solvency and viability are irrelevant at admission.
B. The doctrinal opening: default and debt “due in law or in fact”
The amended section 7(5)(a) preserves the requirement that the NCLT be satisfied that default has occurred. “Default” means non-payment of a debt that has become due and payable, and a debt is not due if it is not payable in law or in fact.[53] This is not a discretion; it is an element of the statutory test, and Indus Biotech confirms that a petition fails where the amount payable depends on an unresolved question that the parties have agreed to arbitrate and which, on an objective assessment of the material, is genuinely open.[54] The proposal is to give that element structure.
First, the inquiry should be confined to cases in which the maturity or quantum of the debt depends on a contractual question, such as a valuation, conversion formula, condition precedent or set-off, that falls within a valid arbitration agreement on a prima facie view. It should not extend to debts that are verified by an information utility record or otherwise not contested, or to disputes that go only to the debtor’s capacity or willingness to pay, which Power Trust has excluded from the admission inquiry.[55]
Second, the debtor should bear the burden of showing, on documentary material available at the admission stage (including pre-filing correspondence, notices invoking arbitration, valuation reports and the contract terms), that the dispute is genuine and raised on substantial grounds. This is the Sian Participation threshold, which is higher than Mobilox and lower than a trial, and it is consistent with the Supreme Court’s own instruction in Indus Biotech to examine whether there is substance in the defence.[56] The NCLT would not decide the dispute; it would decide only whether the dispute is serious enough that default cannot yet be said to have occurred.
Third, a Hong Kong-style safeguard is needed. Even where a dispute meets the threshold, the NCLT should proceed if there are countervailing factors: evidence of dissipation or diversion of assets, a risk of harm to other creditors who are not parties to the arbitration agreement, or an attempt to raise the dispute only after the demand or petition. These factors are drawn from the Guy Lam approach and, being directed at the integrity of the collective process, are consistent with the in rem rationale accepted in Vidya Drolia.[57] Section 65 remains available to deter both the filing of petitions in bad faith and the invention of disputes.
Fourth, to protect the time-bound design, a finding that default has not yet occurred because of an arbitrable dispute should be conditional on the debtor’s having invoked arbitration and on timely progress of the arbitral process, with the creditor free to re-file on the award or on failure to prosecute the arbitration.
C. Legislative option
If the NCLT is to apply the filter uniformly, a short clarification is preferable to reliance on Indus Biotech alone. An illustrative formulation, to be refined by the drafters, would be an Explanation to the definition of “default” or to section 7(5): a debt shall not be treated as due and payable for the purposes of default where its existence or quantum depends on the determination of a dispute that is prima facie within a valid arbitration agreement and that the Adjudicating Authority is satisfied is genuinely disputed on substantial grounds, unless the record of default has been authenticated by an information utility and is not so disputed, or the Adjudicating Authority is satisfied that there is a risk of dissipation of assets or of prejudice to creditors who are not parties to the arbitration agreement. Because the 2026 Amendment’s Explanation bars “any other ground”, the clarification should be placed within the concept of default so that it is a component of the statutory test and not an additional ground of rejection.
D. Objections
Three objections should be addressed. The first is that the proposal re-imports a dispute defence for financial creditors, contrary to the BLRC’s design. The response is that the proposal is narrower than a dispute defence: it is confined to maturity and quantum questions of the Indus Biotech type, excludes uncontested and information-utility-verified debt, and is subject to the countervailing-factors safeguard. The second is delay. The response is that the screen is document-based, that the NCLT is not to try the dispute, and that the fourteen-day timeline in the amended section 7 can accommodate a summary assessment. The third is that debtors will manufacture disputes. The response is that the burden is on the debtor, the threshold is Sian Participation’s, not AnAn’s, and section 65 applies. These responses are tentative; the reform should be tested against the actual composition of section 7 filings, which this paper has not been able to survey empirically.
VII. Conclusion
Contrary to a common picture, India is neither purely “pro-insolvency” nor Singapore and Hong Kong purely “pro-arbitration” in a way that makes the systems incommensurable. India’s approach to financial creditors resolves the conflict by making default the sole gateway, and Indus Biotech shows that this gateway can accommodate genuinely arbitrable questions of maturity and quantum; Singapore and Hong Kong resolve it by deferring to arbitration unless abuse or third-party prejudice is shown; the United Kingdom, after Sian Participation, resolves it by requiring a genuine and substantial dispute. The 2026 Amendment forecloses the discretionary route and returns the matter to the meaning of default. Within that constraint, a narrow substantial-dispute screen, borrowed in threshold from Sian Participation and in safeguards from Guy Lam, offers a way to respect arbitration agreements where the dispute is real without sacrificing the speed that justifies the Code. Whether it works in practice is an empirical question for the NCLT’s dockets, and further research on the incidence and outcomes of section 7 petitions involving arbitration clauses would be the natural next step.
[1]For the conceptual tension between contract-based dispute resolution and collective insolvency procedure, see Kristin van Zwieten, Goode on Principles of Corporate Insolvency Law (Sweet & Maxwell, London, 5th edn., 2018); Thomas H. Jackson, The Logic and Limits of Bankruptcy Law (Harvard University Press, Cambridge, Mass., 1986).
[2]The Insolvency and Bankruptcy Code, 2016 (Act 31 of 2016).
[3]Ibid., ss. 12, 14.
[4]Ibid., ss. 7, 8(2)(a), 9(5)(ii)(d).
[5]On the functional method, see Konrad Zweigert and Hein Kötz, An Introduction to Comparative Law (Oxford University Press, Oxford, 3rd edn., 1998) (trans. Tony Weir).
[6]Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532.
[7]Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, paras 76–77.
[8]Ibid., para. 77.
[9]Indus Biotech (P) Ltd. v. Kotak India Venture (Offshore) Fund, (2021) 6 SCC 436, para. 17.
[10]supra note 2, s. 238.
[11]The Arbitration and Conciliation Act, 1996 (Act 26 of 1996), s. 8; see also s. 45 (reference in international commercial arbitration).
[12]Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, paras 27–30.
[13]Ibid., para. 28.
[14]supra note 9.
[15]Ibid., paras 17, 26.
[16]Ibid., para. 27.
[17]Ibid.
[18]Ibid., paras 25–26.
[19]Ibid., para. 25.
[20]Ibid., paras 20–21, 32.
[21]Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352.
[22]M. Suresh Kumar Reddy v. Canara Bank, (2023) 8 SCC 387 ; see also E.S. Krishnamurthy v. Bharath Hi-Tecch Builders (P) Ltd., (2022) 3 SCC 161.
[23]Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan (Interim Resolution Professional of Hiranmaye Energy Ltd.), (2026) 5 SCC 38 : 2026 INSC.
[24]Elegna Co-op. Housing and Commercial Society Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., 2026 SCC OnLine SC 82 , as discussed in Sharan Kukreja and Akshaya K, “Vidarbha: The Final Chapter”, Cyril Amarchand Mangaldas Dispute Resolution Blog (13 July 2026) https://disputeresolution.cyrilamarchandblogs.com/2026/07/vidarbha-the-final-chapter/ (last visited 22 October 2026).
[25]The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (Act no. 6 of 2026), amending s. 7(5)(a), IBC; see Kukreja and Akshaya K, “Vidarbha: The Final Chapter”, Cyril Amarchand Mangaldas Dispute Resolution Blog (13 July 2026), citing Notification S.O. 2625(E), Ministry of Corporate Affairs, Gazette of India, Extraordinary (22 May 2026). The Act number and the exact commencement date of the amended s. 7 should be confirmed against the Gazette text before submission.
[26]The Insolvency and Bankruptcy Code (Amendment) Bill, 2025 (introduced in the Lok Sabha on 12 August 2025), as reported in “India: Judicial Interplay with Legislation – Analysing the Insolvency and Bankruptcy Amendment Bill 2025 (Part I)”, Conventus Law (2025) https://conventuslaw.com/report/india-judicial-interplay-with-legislation-analysing-the-insolvency-and-bankruptcy-amendment-bill-2025-part-i/ (last visited 22 October 2026).
[27]supra note 2, ss. 8(2)(a), 9(5)(ii)(d).
[28]Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353.
[29]K. Kishan v. Vijay Nirman Co. (P) Ltd., (2018) 17 SCC 662.
[30]Ministry of Finance, Government of India, The Report of the Bankruptcy Law Reforms Committee, Vol. I: Rationale and Design (November 2015).
[31]Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17.
[32]This is the central critique of the creditor-identity distinction; see the discussion in Part VI below.
[33]supra note 2, s. 65.
[34]Ibid., s. 5(8).
[35]Mann v. Goldstein, [1968] 1 WLR 1091; Insolvency Act 1986, c. 45, ss. 122(1)(f), 123(1)(a) (England and Wales).
[36]Salford Estates (No. 2) Ltd. v. Altomart Ltd. (No. 2), [2014] EWCA Civ 1575 : [2015] Ch 589 (England and Wales).
[37]Sian Participation Corp. (In Liquidation) v. Halimeda International Ltd., [2024] UKPC 16 : [2025] AC 1321 (Privy Council, judgment of 19 June 2024), paras 88–89. The BVI provisions in issue were ss. 162(1) and 167(1) of the Insolvency Act 2003 (British Virgin Islands).
[38]Ibid., para. 93 (policy: creditors are more willing to agree to arbitration clauses if they do not impede a liquidation where there is no genuine and substantial dispute). For commentary, see Maples Group, “Sian of the Time: Privy Council Rejects Salford Estates Approach to Arbitration and Insolvency” (July 2024); Norton Rose Fulbright, “Insolvency and arbitration: A landmark judgment in Sian Participation Corp v Halimeda International Ltd [2024] UKPC 16”.
[39]Shearson/American Express Inc. v. McMahon, 482 U.S. 220 (1987).
[40]Hays & Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149 (3d Cir. 1989); In re National Gypsum Co., 118 F.3d 1056 (5th Cir. 1997); In re U.S. Lines, Inc., 197 F.3d 631 (2d Cir. 1999); 28 U.S.C. § 157(b)(2).
[41]11 U.S.C. § 362(a), (d)(1); In re Sonnax Industries, Inc., 907 F.2d 1280 (2d Cir. 1990).
[42]Goldman Sachs Bank USA v. Brown, No. 25-1439 (4th Cir. 18 March 2026) (2–1); MBNA America Bank, N.A. v. Hill, 436 F.3d 104 (2d Cir. 2006).
[43]AnAn Group (Singapore) Pte. Ltd. v. VTB Bank (Public Joint Stock Co.), [2020] SGCA 33 : [2020] 1 SLR 1158 (Singapore); the application was made under the Companies Act (Cap. 50), s. 254(1)(e) (Singapore).
[44]Ibid.; Founder Group (Hong Kong) Ltd. (in liquidation) v. Singapore JHC Co. Pte. Ltd., [2023] SGCA 40 : [2023] 2 SLR 554 (Singapore).
[45]Aryan (SEA) Pte. Ltd. v. Pure Group (Singapore) Pte. Ltd., [2025] SGHC 99 (Singapore); Singapore Commodities Group Co., Pte. Ltd. v. Founder Group (Hong Kong) Ltd. (in liquidation), [2026] SGCA 24 (Singapore), as summarised in Allen & Gledhill, “Singapore Court of Appeal Clarifies Treatment of Disputed Debts in Winding Up Applications Involving Arbitration Agreements” (13 May 2026) https://www.allenandgledhill.com/sg/perspectives/articles/32918/sgkh-singapore-court-of-appeal-clarifies-treatment-of-disputed-debts-in-winding-up-applications-involving-arbitration-agreements (last visited 22 October 2026).
[46]Anupam Mittal v. Westbridge Ventures II Investment Holdings, [2023] SGCA 1 (Singapore), affirming Westbridge Ventures II Investment Holdings v. Anupam Mittal, [2021] SGHC 244 (Singapore).
[47]Lasmos Ltd. v. Southwest Pacific Bauxite (HK) Ltd., [2018] HKCFI 426 : [2018] 2 HKLRD 449 (Hong Kong).
[48]Guy Kwok-Hung Lam v. Tor Asia Credit Master Fund LP, [2023] HKCFA 9 : (2023) 26 HKCFAR 119 (Hong Kong) , affirming [2022] HKCA 1297 (Hong Kong); the Bankruptcy Ordinance (Cap. 6), s. 97 (Hong Kong). See Herbert Smith Freehills, “Clearing Up The Cloud? Perhaps Partly, As The Court Of Final Appeal Affirms The Approach To Dismissing Bankruptcy Proceedings In Favour Of The Parties’ Agreed Forum” (22 May 2023).
[49]Re Simplicity & Vogue Retailing (HK) Co. Ltd., [2024] HKCA 299 : [2024] 2 HKLRD 1064 (Hong Kong); Re Shandong Chenming Paper Holdings Ltd., [2024] HKCA 352 (Hong Kong).
[50]Re Shift Energy Asia Ltd., [2025] HKCFI 6415 (HCCW 405/2025) (Hong Kong).
[51]supra note 9, paras 20–21, 32.
[52]Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, para. 79; supra note 2, s. 12.
[53]supra note 2, s. 3(12); supra note 12, para. 28.
[54]supra note 9, paras 20–21, 32.
[55]supra note 23.
[56]supra note 37, para. 93; supra note 9, para. 25.
[57]supra note 48; supra note 7, paras 76–77.
