Arbitration and Conciliation Act Section 41 — Provisions in case of insolvency
CHAPTER X — Miscellaneous
Civil
Summary
Sub-section (1) deals with a situation where a contract involving an insolvent person contains a clause that says any dispute arising from that contract must go to arbitration. If the receiver (the person managing the insolvent person's affairs) decides to adopt or take on that contract, then that arbitration clause becomes enforceable both by and against the receiver, but only in relation to disputes covered by that clause.
Sub-section (2) covers a different scenario. If a person who has been declared insolvent had, before the insolvency proceedings began, already signed an arbitration agreement, and a matter covered by that agreement needs to be decided as part of the insolvency proceedings, then—provided sub-section (1) does not apply—either the other party to the agreement or the receiver can ask the judicial authority handling the insolvency case to order that the matter be sent to arbitration. The judicial authority can make such an order if it believes, looking at all the circumstances, that the matter should be resolved through arbitration.
Sub-section (3) simply clarifies that in this section, the term "receiver" also includes an Official Assignee.
Official Text
(1) Where it is provided by a term in a contract to which an insolvent is a party that any dispute arising there out or in connection therewith shall be submitted to arbitration, the said term shall, if the receiver adopts the contract, be enforceable by or against him so far as it relates to any such dispute.
(2) Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, become a party to an arbitration agreement, and any matter to which the agreement applies is required to be determined in connection with, or for the purposes of, the insolvency proceedings, then, if the case is one to which sub-section (1) does not apply, any other party or the receiver may apply to the judicial authority having jurisdiction in the insolvency proceedings for an order directing that the matter in question shall be submitted to arbitration in accordance with the arbitration agreement, and the judicial authority may, if it is of opinion that, having regard to all the circumstances of the case, the matter ought to be determined by arbitration, make an order accordingly.
(3) In this section the expression “receiver” includes an Official Assignee.