Bombay High Court
Masusmi Sa Investment Llc vs Keystone Realtors Pvt. Ltd on 6 November, 2012
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMPANY APPEAL (L) NO. 47 OF 2012
IN
COMPANY LAW BOARD NO. 57 OF 2012
ALONGWITH
COMPANY APPLICATION (L) NO. 53 OF 2012
IN
COMPANY APPEAL (L) NO. 47 OF 2012
WITH
COMPANY APPLICATION (L) NO. 56 OF 2012
IN
COMPANY APPEAL (L) NO. 47 OF 2012
Masusmi SA Investment LLC
a company duly organized and existing
under the laws of Mauritius with its
principal office at IFS Court, Mauritius ... Appellant
Versus
1. Keystone Realtors Pvt. Ltd.
A company duly incorporated under the
provisions of the Companies Act, 1956, having
its registered office at 702, Natraj, M.V. Road
Junction, Western Express Highway,
Andheri (East), Mumai 400 069.
2. Mr. Boman R. Irani,
An India Inhabitant of Mumai,
residing at 1601, La Solita, 16th Road,
TPS-III, Off Turner Raod, Bandra (West),
Mumai 400 050.
3. Mr. Chandresh D. Mehta,
An Indian Inhabitant of Mumbai.
Residing at 10th Floor, Buena Vista,
St. Alexium Road, Bandra (West),
Mumbai 400 050.
4. Mr. Percy S. Chowdhary,
An Indian Inhabitant of Mumbai,
residing at Flat No. 1, Rati Manzil, Parsee Colony,
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639, Opp. Girls School, Dadar (East),
Mumbai 400 014.
5. Enigma Constructions Pvt. Ltd.
A company duly incorporated under the
Companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway,
Andheri (East), Mumbai 400 069.
6. Kapstone Constructions Pvt. Ltd.
A Company duly incorproted under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
7. Credence Property Developers Pvt. Ltd.
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
8. Gemstone Developers Private Limited,
A Company duly incorporated under the
Companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
9. Montage Developers Private Limited,
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
10. Nouveau Developers Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
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Mumbai 400 069.
11. Panchagani Real Estate Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
12. Paradigm Builders Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
13. Rustomjee Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
14. Sanguinity Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
15. Suranjan Holdings & Estate Developers Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
16. Xcellent Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
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Western Express Highway, Andheri (East).
Mumbai 400 069.
17. Rustomjee Constructions Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
18. Mausmi Ventures Ltd.
A Company duly organized and existing under the
laws of Cyprus with its principal office at
Kritonos, 21, Lakatamia, P.C. 2325, Nicosla,
Cyprus. .. Respondents
WITH
COMPANY APPLICATION (L) NO. 56 OF 2012
IN
COMPANY APPEAL (L) NO. 47 OF 2012
Masusmi SA Investment LLC
a company duly organized and existing
under the laws of Mauritius with its
principal office at IFS Court, Mauritius ... Appellant
Versus
2. Keystone Realtors Pvt. Ltd.
A company duly incorporated under the
provisions of the Companies Act, 1956, having
its registered office at 702, Natraj, M.V. Road
Junction, Western Express Highway,
Andheri (East), Mumai 400 069.
2. Mr. Boman R. Irani,
An India Inhabitant of Mumai,
residing at 1601, La Solita, 16th Road,
TPS-III, Off Turner Road, Bandra (West),
Mumai 400 050.
3. Mr. Chandresh D. Mehta,
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An Indian Inhabitant of Mumbai.
Residing at 10th Floor, Buena Vista,
St. Alexium Road, Bandra (West),
Mumbai 400 050.
4. Mr. Percy S. Chowdhary,
An Indian Inhabitant of Mumbai,
residing at Flat No. 1, Rati Manzil, Parsee Colony,
639, Opp. Girls School, Dadar (East),
Mumbai 400 014.
5. Enigma Constructions Pvt. Ltd.
A company duly incorporated under the
Companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway,
Andheri (East), Mumbai 400 069.
6. Kapstone Constructions Pvt. Ltd.
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
7. Credence Property Developers Pvt. Ltd.
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
8. Gemstone Developers Private Limited,
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
9. Montage Developers Private Limited,
A Company duly incorporated under the
companies Act, 1956 having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
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Mumbai 400 069.
10. Nouveau Developers Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
11. Panchagani Real Estate Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
12. Paradigm Builders Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
13. Rustomjee Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
14. Sanguinity Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
15. Suranjan Holdings & Estate Developers Private Limited,
A Company duly incorporated under the
companies Act having their office at
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702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
16. Xcellent Realty Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
17. Rustomjee Constructions Private Limited,
A Company duly incorporated under the
companies Act having their office at
702, Natraj, M.V. Road Junction,
Western Express Highway, Andheri (East).
Mumbai 400 069.
18. Mausmi Ventures Ltd.
A Company duly organized and existing under the
laws of Cyprus with its principal office at
Kritonos, 21, Lakatamia, P.C. 2325, Nicosla,
Cyprus. .. Respondents
AND
Evershine Developers,
a partnership firm registered under the
Indian Partnership Act, 1932 , Veena Beena
Shopping Centre, 2nd Floor, Guru Nanak Road,
Bandra (West), Mumbai 400 050 ... Respondent
(Third party)
WITH
COMPANY APPEAL (L) NO. 25 OF 2012
IN
CLB/CA/123/2011
IN
CLB/CP/48/2011/MUMBAI BENCH
WITH
COMPANY APPLICATION (L) NO. 322 OF 2012
IN
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COMPANY APPEAL (L) NO. 25 OF 2012
IN
CLB CA NO. 123 OF 2011
IN
CLB/CP/48/2011/MUMBAI BENCH
1. Ruchit Gangar,
residing at 301/248, Leela Baug,
Telang Road, Matunga (CR),
Mumbai 400 019.
2. Mrs. Kavita Kishore Gangar,
w/o. Shri. Kishore Gangar
3. Shri Kishore Gangar,
Both are residing at 502, Amrut Dhara
Heights, Plot No. 591, Jame Jamshed Road,
Matunga (CR), Mumbai 400 019. ... Appellants
Versus
1. M/s. Bialetti Industries S.P.A.
Having its registered office at Via,
Fogliano, N.1, Coccaglio,
(Brescia), Italy.
2. M/s. Triveni Bialetti Industries,
having its registered office at 231,
Kardi, Shahpur, Thane 421 304.
3. Mr. Giuseppe Servidori, residing at
Via Porta, Dipinta 38, 24129,
Bergamo, Italy.
4. Mr. Roberto Serra, residing at
Via Manzoni 34, 15067, Novi Ligure (AL),
Italy.
5. Shri. Venkataraman Rajagopalan,
having his office at 231, Khardi, Shahpur,
Thane 421 304.
6. M/s. Girmi SPA, having its registered
office at Plaza Siro Collini, Omegna,
VB, Italy 2887 ... Respondents
WITH
COMPANY APPEAL (L) NO. 4 OF 2011
IN
CLB/CA/139/2009
IN
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CLB/69/2009
Ares Investment,
A company incorporated under the
laws of Mauritius, having its registered
office at IFS Court, 28, Cyber City, Ebene,
Mauritius ..... Appellant
Versus
1. Mr. R.S. Sandhu
2. Mrs. G.R. Sandhu
3. Mr. B.S. Sandhu,
4. Mr. N.S. Sandhu,
5. Mrs. Simran Sandhu,
6. Mrs. Gunjan Sandhu,
all adults, Indian Inhabitants,
having their office at 2,
Swaroop Chambers, Opp. AAI Import
Warehouse, Sahar Pipeline Road,
Andheri (East),
Mumbai 400 099
7. Wilson Sandhu Logistics (India) Ltd.
A company incorporated under the provisions of
the Companies Act, 1956 having its registered office
at 2, Swaroop Chambers, Opp. AAI Import Ware House,
Sahar Pipeline Road, Andheri (East),
Mumbai 400 099.
8. Mr. Muneesh Chawla,
Adult, Indian Inhabitant, having
his office at Blue River Capital
Advisors (India) Private Limited,
97, 3rd North Avenue Maker,
Maxity, Bandra Kurla Complex,
Mumbai 400 051.
9. Blue River Captial,
Advisors (India) Private Limited,
a Company incorporated under the
provisions of the Companies Act, 1956,
having its registered office at 97,
3rd North Avenue Maker, Maxity,
Bandra Kurla Complex, Mumbai 400 051 ... Respondents
Appearance in Company Appeal (L) No. 47 of 2012, Company Application
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(L) No. 53 of 2012 and Company Application (L) No. 56 of 2012.
Mr.Janak Dwarkadas, Senior Advocate, a/w. Mr. F. D'vitre, Senior Advocate,
Mr.Zal Andhiyarujinia, Mr.Sharan Jagtiani, Mr.Sujit Suvarna, Mr.Chirag
Mody, Mr.Samit Shukla, Mr.Mujaf Virjee, Ms.Anushka Sarda, i/b. DSK Legal
for Applicant/Appellant in Company Appeal (L) No. 47 of 2012.
Mr.S.U.Kamdar, Senior Advocate, Ms.Pooja Patil, i/b. J.Sagar Associates for
Respondent No.1.
Mr.Virag Tulzapurkar, Senior Advocate, Mr.Dhawal Mehta, Mr.Denzil
Arambhan, Ms.Jasmine Seth, Mr.Krishna B. Moorthy, Ms.Helina Desai,
Mr.Gautam Sahni, i/b. Wadia Ghandy & Co. for Respondent No.2.
Mr.Aspi Chinoy, Senior Advocate, Mr.Nikhil Sakhardane, Mr. Dhawal Mehta,
Mr.Denzil Arambhan, Ms.Jasmine Seth, Mr.Krishna B. Moorthy, Ms.Helina
Desai, Mr.Gautam Sahni, i/b. Wadia Ghandy & Co. for Respondent No.3.
Mr.Pravin Samdhani, Senior Advocate, Mr.Dhawal Mehta, Mr.Denzil
Arambhan, Ms.Jasmine Seth, Mr.Krishna B. Moorthy, Ms.Helina Desai,
Mr.Gautam Sahni, i/b. Wadia Ghandy & Co. for Respondent No.4.
Mr.Ravi Kadam, Senior Advocate, Mr.Shyam Mehta, Senior Advocate,
Mrs.Tanmayi Rajadhyaksha, Mr. Suraj Iyer, i/b. Ganesh & CO. for Respondent
Nos. 5, 6 and 13.
Mr.Simil Purohit, i/b. Mr.Kalpesh Joshi for Respondent Nos. 7, 8, 9, 10, 14,
15, 16 and 17.
Ms.Ankita Singhania, Mr.Ashok Purohit, i/b. Ashok Purohit & Co. for
Respondent No.18.
Mr.J.J.Bhatt, Senior Advocate, a/w. Mr.Gaurav Joshi, Mr.N.V.Vimadalal,
Mr.Manish Doshi, i/b. Vimadalal & Co. for Evershine Developers, third party.
Appearance in Company Appeal (L) No. 25 of 2012 and Company Appeal
(L) No. 4 of 2011 with Company Application (L) No. 322 of 2012:
Mr.Gaurav Joshi, a/w. Mr.Chirag Mody, Ms.Anushka Sarda, i/b. DSL Legal for
Applicant in Company Application (L) No. 322 of 2012 and Appellant in
Company Appeal (L) No. 25 of 2012.
Mr.Ankit Lohia, a/w. Ms.Nayna Rane, i/b. D.H.Law for Appellant in Company
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Appeal No. 4 of 2011.
Mr.Rahul Chitnis, Counsel a/w. Mr.Chakrapani Misra, Mr.Devesh Juvekar,
Mr.R.Arunadhri Iyer, Ms.Meghna Rajadhyaksha, i/b. Khaitan & Co. Advocates
for Respondent No.1 in Company Application (L) No. 322 of 2012 and
Company Appeal No. 4 of 2011, Advocate for the Respondents.
Mr.Harish Pandya, Counsel, a/w. Mr.M.K.Banatwala, i/b. M.K.Banatwala,
Advocate for Respondent No.2 in Company Application (L) No. 322 of 2012.
CORAM : R.D. DHANUKA, J.
RESERVED ON :1st NOVEMBER, 2012
PRONOUNCED ON : 6th NOVEMBER, 2012
ORAL JUDGMENT:
1. By consent of parties, all the aforesaid company appeals were heard
together on the preliminary issue raised by the respondents about the
maintainability of appeal and are being disposed off by a common order.
FACTS IN COMPANY APPEAL (L) NO. 47 OF 2012 :
2. By this appeal under section 10F of the Companies Act, 1956, the
appellant challenges the order dated 12th October, 2012 passed by the Company
Law Board (For short "CLB") by which the CLB allowed the company
application filed by respondent No. 2 under section 8 of the Arbitration &
Conciliation Act, 1996 (For short " the Arbitration Act, 1996") and referred
the parties to arbitration as contemplated under Article 58 of the Articles of
Association and clause 20.4 contained in the agreement and as per the
provisions contained in the Arbitration Act, 1996. Respondent no. 2 had filed
application under section 8 in Company Petition No. 57 of 2012 filed by the
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appellant under section 397 and 398 read with section 402 of Companies Act,
1956 alleging certain acts of oppression and mismanagement in the affairs of
the first respondent company and respondent nos. 5 to 7 by the respondents.
3. At the threshold, the learned counsel appearing for the respondent
company in all the three matters raised preliminary objections about
maintainability of the appeals under section 10F of the Companies Act, 1956.
In view of the preliminary issue raised by the respondents, the learned counsel
appearing for parties have addressed this court on the said issue raised by the
respondents and have requested this court to decide the same as preliminary
issue.
4. Some of the relevant facts for the purposes of deciding the issue
involved in these appeals are as under :
(a) It is the case of the appellant that in the year
2009, respondent nos. 2 to 4 approached the
appellant and respondent no. 18 with a proposal to
invest in the first respondent company which was to
be utilized in its subsidiaries. The first respondent
applied to the Foreign Investment Commercial
Board on 20th November, 2008. The said board
accorded its approval on 9th February, 2009 to the
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application made by the first respondent. On 12th
March, 2009, the appellant, respondent no. 18 and
respondent no. 1, respondent nos. 2 to 4 (Promoters)
executed Securities, Subscription and shareholders
agreement.
(b) The appellant company filed company
Petition (57 of 2012) before the CLB, Western
Region Bench under section 397 and 398 read
with section 402 of the companies Act, 1956
alleging certain acts of oppression and
mismanagement in the affairs of respondent no1
and respondent nos. 5 to 7 by the respondents and
sought various reliefs.
(c) In the month of August, 2012, respondent
no.2 filed an application under section 8 of the
Arbitration Act, 1996 (Company Application No.
116 and 120 of 2012) before the CLB relying upon
clause 20.4 of the agreement, Article 58 of the
Articles of Association and section 8 of the
Arbitration Act, 1996. By an order dated 12th
October, 2012, CLB allowed the Company
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Application No. 116 and 120 of 2012 and
referred the parties to arbitration as contemplated
under Article 58 of the Articles of Association
and clause 20.4 contained in agreement and as per
provisions of the Arbitration Act, 1996.
(d) During the pendency of the said application,
CLB granted certain ad interim reliefs on 8 th
August, 2012 in favour of the appellant. The
respondent nos. 1, 2 3, 5 and 7 filed appeal
challenging the said interim order in this court
under section 10F of the Companies Act. By order
dated 14th August, 2012 passed by this court,
interim order passed by CLB on 8th August, 2012
came to be set aside without going into the merits
of the matters and the matter was remanded back
to CLB for passing ad interim orders on all the
applications after completion of the pleadings.
By the said order, this court restrained respondent
nos. 5 and 6 from creating any further third party
rights pending the hearing before CLB. On 24th
and 31st August and 4th October, 2012 this court
modified its earlier order.
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5. Clause 20.4 of the agreement dated 12th March, 2009 reads as follows :
"20.4. Arbitration :
20.4.1 Any dispute arising out of or in connection with this
Agreement (including a dispute regarding the existence, validity
or termination of this Agreement or the consequences of its
nullity) shall be sought to be resolved and settled amicably
within 30 (thirty) days of such dispute arising, failing which it
shall be referred to and finally resolved by arbitration under the
Arbitration and Conciliation Act, 1996.
20.4.2The arbitration shall be conducted as follows :
(a) The parties shall mutually appoint a sole
arbitrator to resolve the aforesaid disputes or
differences. In the event that the parties fail to
mutually appoint a sole arbitrator within 15
(fifteen) days, the promoters and the company
shall jointly appoint one arbitrator and the
Investors shall jointly appoint another arbitrator
and the two arbitrators so appointed shall appoint
the presiding arbitrator.
(b) All proceedings in any such arbitration
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shall be conducted in English.
(c ) The seat of the arbitration proceedings shall
be Mumbai.
(d) The arbitrator shall be free to award costs
as he thinks appropriate.
20.4.3 The arbitration award shall be final and binding on
the parties, and the parties agree to be bound thereby and to act
accordingly.
20.4.4 For the purposes of this ARTICLE the Promoters
and the company shall be deemed to be one party."
6. Some of the relevant provisions of the Arbitration and Conciliation Act,
1996 for the purpose of deciding the issues involved in this matter are
extracted below :-
Section 2 (1) (e)
2 (1) (e) " Court" means the principal Civil Court
of original jurisdiction in a district, and includes the
High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the
questions forming the subject-matter of the
arbitration if the same had been the subject- matter
of a suit, but does not include any civil Court of a
grade inferior to such principal civil Court, or any
Court of Small Causes;
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Section 8
8. Power to refer parties to arbitration where
there is an arbitration agreement.
(1) A judicial authority before which an action is
brought in a matter which is the subject of an
arbitration agreement shall, if a party so applies not
later than when submitting his first statement on
the substance of the dispute, refer the parties to
arbitration.
(2) The application referred to in subsection (1)
shall not be entertained unless it is accompanied by
the original arbitration agreement or a duly
certified copy thereof.
(3) Notwithstanding that an application has been
made under sub- section (1) and that the issue is
pending before the judicial authority, an arbitration
may be commenced or continued and an arbitral
award made.
Section 9
9. Interim measures etc. by Court. A party may,
before, or during arbitral proceedings or at any
time after the making of the arbitral award but
before it is enforced in accordance with section 36,
apply to a court-
(i) for the appointment of a guardian for a minor or
person of unsound mind for the purposes of arbitral
proceedings; or
(ii) for an interim measure of protection in respect
of any of die following matters, namely:-
(a) the preservation, interim custody or sale of any
goods which are the subject- matter of the
arbitration agreement;
(b) securing the amount in dispute in the
arbitration;
(c) the detention, preservation or inspection of any
property or thing which is die subject- matter of the
dispute in arbitration, or as to which any question
may arise therein and authorising for any of the
aforesaid purposes any person to enter upon any
land or building in the possession of any part or
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authorising any samples to be taken or any
observation to be made, or experiment to be tried,
which may be necessary or expedient for the
purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a
receiver;
(e) such other interim measure of protection as may
appear to the Court to be just and convenient, and
the Court shall have the same power for making
orders as it has for the purpose of, and in relation
to, any proceedings before it.
Section 37
37. Appealable orders.
(1) An appeal shall lie from the following orders
(and from no others) to the Court authorised by
law to hear appeals from original decrees of the
Court passing the older, namely :-
(a) granting or refusing to grant any measure
under section 9;
(b) setting aside or refusing to set aside an
arbitral award under section 34.
(2) Appeal shall also lie to a court from an order of
the arbitral tribunal-
(a) accepting the plea referred to in sub-
section (2) or sub- section (3) of section 16; or
(b) granting or refusing to grant an interim
measure under section 17.
(3) No second appeal shall lie from an order passed
in appeal under this section, but nothing in this
section shall affect or take away any right to appeal
to the Supreme Court.
Section 45
45. Power of judicial authority to refer parties
to arbitration. Notwithstanding anything
contained in Part I or in the Code of Civil
Procedure, 1908 (5 of 1908 ), a judicial authority,
when seized of an action in a matter in respect of
which the parties have made an agreement referred
to in section 44, shall, at the request of one of the
parties or any person claiming through or under
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him, refer the parties to arbitration, unless it finds
that the said agreement is mill and void,
inoperative or incapable of bring performed.
Section 50
50. Appealable orders.
(1) An appeal shall lie from the order refusing to-
(a) refer the parties to arbitration under
section 45;
(b) enforce a foreign award under section 48,
to the court authorised by law to hear appeals
from such order.
(2) No second appeal shall lie from an order passed
in appeal under this section, but nothing in this
section shall affect or take away any right to appeal
to the Supreme Court.
Section 10F of The Companies Act, 1956
[10F. Appeals against the order of the Company
Law Board.--
Any person aggrieved by any decision or order of
the Company Law Board [made before the
commencement of the Companies (Second
Amendment) Act, 2002] may file an appeal to the
High Court within sixty days from the date of
communication of the decision or order of the
Company Law Board to him on any question of
law arising out of such order:
Provided that the High Court may, if it is satisfied
that the appellant was prevented by sufficient cause
from filing the appeal within the said period, allow
it to be filed within a further period not exceeding
sixty days.]
7. The learned Senior Counsel Mr.Dwarkadas for the Appellant in
Company Appeal (L) No. 47 of 2012 submits as under :-
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(a) The appeal filed by the appellant is arising
out of the order passed by CLB under Section 8 of
the Arbitration and Conciliation Act, 1996 and is
appealable under Section 10F of the Companies
Act, 1956. The power under Section 8 is
exercisable by the judicial authority before which
the action is brought in the matter which is a
subject of the arbitration agreement.
(b) The expression court is defined under
section 2(1) (e) of the said Act to mean the
principal civil court of original jurisdiction in a
district and includes high court in exercise of its
original civil jurisdiction. Therefore, the
expression 'judicial authority' is wider than
expression 'court' and therefore must be given a
meaning different from the expression "court". A
proceeding under Section 8 is not a proceeding
independently instituted under the said Act but has
necessarily to be made in a pending action brought
before a judicial authority.
(c) Section 37 deals only with appeals from the
order passed in proceedings instituted under the
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Arbitration Act and that too only from orders of a
court [as defined 2(1)(e)] to a court authorised by
law to hear appeals. Since an order passed under
Section 8 of the said Act by a judicial authority is
not an order 'of the court', the question of such an
order not being appealable, in other words the bar
of appealability under section 37 of the said Act,
will not apply to such orders.
(d) The expression "judicial authority" has not
been defined under Arbitration and Conciliation
Act, 1996. Section 37 of the Act would not apply
to the order passed by the Judicial Authority. The
CLB is not a court under Section 2(1)(e) of the Act.
The definition of the court does not include judicial
authority.
(e) The CLB was ceased of the proceedings
filed by the appellant under Sections 397, 398 read
with Section 402 of the Companies Act, 1956. The
CLB by passing impugned order and referring the
dispute to arbitration, has terminated the
proceedings under the provisions of the Companies
Act, 1956. There is no provision in the Arbitration
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Act which takes away the remedy of a party to file
appeal under Section 10F.
(f) There is no provision in the Arbitration Act
which takes away power of this court to exercise
its power to hear the appeal filed under Section
10F arising out of order passed under Section 8 of
the Arbitration Act, 1996.
(g) The CLB ig while deciding the application
under Section 8 filed by the 1st respondent was
exercising the power under Sections 397, 398 read
with Section 402 of the Companies Act, 1956.
The proceedings thus filed by the appellant under
Sections 397, 398 read with Section 402 were put
to an end by passing an order under Section 8 of
the Arbitration Act, 1996. If the CLB would have
refused to refer the matter to arbitration on the
application of the 1st respondent filed under section
8 of the act, the situation would have been
different.
8. In the alternate to the aforesaid submissions, Mr.Dwarkadas, the Learned
Senior Counsel made the following submissions :-
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(a) The judicial authority which exercises
powers under section 8 of the said Act is not
exercising powers under the said Act, but under the
relevant statute, which governs the jurisdiction of
the relevant judicial authority. Unless and until
there is an express bar appearing in the said Act
which takes away the powers of appeal from orders
passed by such a judicial authority in exercise of
the powers conferred by the special statue the bar
under Section 37 of the Act will not apply. An
order of a Judicial Authority referring parties to
arbitration though passed in exercise of powers
under Section 8, would never the less be subject to
discipline/hierarchy of appeals as provided by the
statute under which judicial authority is constituted
and exercises powers.
(b) Section 10F of the Companies Act, 1956
provides for an appeal from any order passed by
the Company Law Board albeit on the question of
law. When the statute uses expression any order,
the appeal shall lie from every order. The learned
counsel placed reliance on the judgment of
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Supreme Court in case of Raj Kumar Shivhare vs.
Assistant Director 1. It is submitted that an order
passed by the CLB under section 8 of the
Arbitration Act would be appealable under Section
10F of the Companies Act.
(c) The consequences of holding that no appeal
would lie from the order passed by the CLB under
Section 10F of the Companies Act would render
the party aggrieved remediless. It is submitted that
on exclusion of a statutory provisions, especially
one dealing jurisdiction to hear appeals must be
expressly excluded and that the language of such
exclusion must be clear and unambiguous. If the
argument of the respondent that the appeal filed by
the appellant is not maintainable is accepted, it
would amount to excluding the court's appellate
jurisdiction without any such express provision in
the Act.
9. Mr. Dwarkadas, the learned senior counsel then invited my attention to
the judgment of the Division Bench of this court in the case of Conros Steel
1 (2010) 4 SCC 772
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Pvt. Ltd. Vs. Lu Qin (Hong Kong) Co. Ltd. and Ors. 2 in which the
judgment of the Supreme Court in the case of Fuerst Day Lawson Limited
Vs. Jindal Exports Limited3 has been considered. It is submitted that the
Division Bench of this court has also considered the judgments of the Supreme
Court in the case of Union of India Vs. Mohindra Supply Company4, the
judgment of the Punjab & Haryana High Court in the case of Smt. Sudarshan
Chopra and Ors. Vs. Vijay Kumar Chopra and Ors. 5, the judgment of the
Division Bench of this court in International Thermal Technology Kircher
Italia, Branch, S.P.A. Vs. Esteem Projects Pvt. Ltd. 6, the judgment in the
case of Rites Ltd. Vs. JMC Projects (India) Ltd.7, Jet Airways (India) Ltd.
Vs. Sahara Airlines Ltd.8 It is submitted that after considering all these
judgments, the Division Bench of this court has held as under :
"5. The question to be considered is "whether against an order
passed by the learned Single Judge of this Court in a civil suit
terminating that civil suit or refusing to terminate the civil suit
because of the provisions of Section 8 of the Arbitration and
Conciliation Act, an appeal under Clause 15 of the Letters
Patent would lie or it can be said that such an appeal is barred
March, 2012
3 (2011) 8 Supreme Court Cases 333
4 AIR 1962 SC 256,
5 2003 Company Cases Vol.117 660
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by the provisions of Section 37 of the Arbitration and
Conciliation Act. Perusal of Section 37 which we have quoted
above shows that that provision provides for an appeal against
final order passed in the proceedings instituted under Sections 9
and 34 of the Arbitration and Conciliation Act. Subsection 3 of
Section 37 lays down that no second appeal shall lie from an
order passed in appeal. In so far as section 8 is concerned,
perusal of that provision shows that the proceedings because of
the provisions of section 8 are not to be instituted necessarily in
the Court, they are to be instituted in a pending suit before a
judicial authority. That judicial authority may be a Court within
the meaning of Section 2(e) of the Arbitration and Conciliation
Act or may not be a Court within the meaning of Section 2(e) of
the Arbitration & Conciliation Act. Perusal of the definition of
term "Court" shows that the Court has been defined to mean a
principal civil Court of original jurisdiction in a district and
includes the High Court which has original civil jurisdiction.
Therefore, in a district, the Court of District Judge would be the
Court of original civil Jurisdiction and where the High Court
has original civil jurisdiction, the High Court will be the Court
of original civil jurisdiction. Perusal of the definition of term
"Court" further shows that any court which is inferior to the
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principal civil Court or any Small Causes Court is not a court
within the meaning of Section 2(e). A civil suit where an
application under section 8 of the Arbitration and Conciliation
Act can be made, therefore, may not be the Court within the
meaning of Section 2(e). For example, if a suit is pending in a
small causes court and in that suit if because there is an
arbitration clause between the parties in relation to the subject
matter of that suit, an application under section 8 is made and an
order passed by such a small causes court on that application,
terminating the suit, will not be the order passed by the Court.
Therefore, such an eventuality would not at all be covered by
the provisions of Section 37 of the Arbitration and Conciliation
Act because section 37 contemplates that the authority which is
passing the order should be "Court" as also the authority which
is hearing the appeal should also be "Court", because it says "an
appeal shall lie to the Court authorised by law to hear appeals
from original decrees of the Court passing the orders. Therefore,
if the order under section 8 is not made by the Court, there is no
question of section 37 being attracted. Perusal of provisions of
section 37 in the scheme of Part I shows that it deals with only
those orders which are passed by the Court. Section 9 confers
power to make interim orders only on Court. Section 34 confers
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power, to entertain an application against an award, only on a
Court. Therefore, at least a general statement cannot be made
that because of Section 37, appeal against all orders passed
under section 8 is barred. Minimum that can be said is that
where an order under section 8 is not made by the Court, section
37 will not be attracted. For example, if in a suit in the Court of
Civil Judge, Junior Division an order terminating that suit is
passed because of section 8 by the Civil Judge, Jr.Division, that
order would be appealable before the District Judge and the
appeal would not be barred by Section 37 because the Court of
Civil Judge, Jr. Division is not "Court" within the meaning of
section 2(e). Thus, appeal against order passed because of the
provisions of Section in some civil suits by some civil Courts
which are not "Court" within the meaning of section 2(e) would
be maintainable while appeals against the orders passed by
those Courts which are "Court" within the meaning of Section
2(e) because of the provisions of Section 8 in the civil suit
would not be maintainable. It appears from section 37 that it
may not be the intention of the legislature to bar appeals against
the orders passed in the proceedings which are not instituted
under the Arbitration and Conciliation Act. As observed above,
the proceedings under section 8 are not independently instituted
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under the Arbitration and Conciliation Act, an application under
section 8 is necessarily to be made in a pending civil suit, and
therefore, an order made on that application would be the
interim or final order made in the civil suits. In case the
application under section 8 is rejected it would be an interim
order or it may be the final order made in civil suit if the
application is granted. The result of the order may be to
terminate the civil suit. From the judgments that have been
pointed out to us, it is only the judgment of the Division Bench
of this Court in the case of "International Thermal Technology
Kircher Italia, Branch, S.P.A. Vs. Esteem Projects Pvt.Ltd.
Passed on 19.3.2009 in Appeal no.485 of 2005" which directly
deals with the maintainability of an appeal against an order
passed under Section 8. Perusal of that judgment, however,
shows that it does not take into consideration that an application
under section 8 is made in a civil suit and may have the effect of
terminating the civil suit itself. The Division Bench relied on
the judgment of Division Bench of this Court in the case of
"State of Maharashtra and anr. Vs. Ramdas Construction Co. &
Anr., 2006(6) Mh.L.J. 678. Perusal of that judgment shows that
that judgment relying on the provisions of section 37 holds that
an order made by the learned Single Judge refusing to condone
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the delay in filing an application under Section 34 is not
appealable. That judgment does not take into consideration the
provisions of the Letters Patent. It merely holds that because
Section 37 does not contemplates an appeal being filed against
an order rejecting an application for condonation of delay in
filing an application under Section 34, the appeal is not
maintainable. It does not examine the question "whether such an
order would be appealable under the Letters Patent because the
learned Single Judge in considering the application for
condonation of delay was exercising original Civil jurisdiction".
In our opinion, therefore, the question of maintainability of an
appeal against an order passed in a Civil suit needs to be
reexamined. Considerable emphasis was placed by the learned
Counsel appearing for respondents on the judgment of the
Division Bench in the case of "Jet Airways (India) Ltd."
referred to above. In that judgment, the Divisions Bench was
considering the question of maintainability of an appeal against
an order passed by a Single Judge in the proceedings instituted
for execution of an Award passed under the Arbitration Act
which has become final. The Division Bench has concluded that
any order passed in the proceedings filed for execution of an
Award made under the Arbitration Act are to be treated as orders
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passed under Section 36 of the Arbitration Act and in view of
the provisions of Section 37 no appeal lies against any order
passed under Section 36. For recording this conclusion, the
Division Bench has entirely relied on the judgment of the
Supreme Court in the case "Fuerst Day Lawson Ltd. Vs. Jindal
Exports Ltd." referred to above. We find from the judgment of
the Division Bench in the case "Jet Airways (India) Ltd." that
the Division Bench has also not taken into consideration the
possibility of the execution proceedings being filed before the
judicial authority which is not a court within the meaning of
Section 2(e) of the Arbitration Act, and therefore, not at all
attracting the provisions of Section 37. Under the Civil
Procedure Code, an application for execution of a decree can be
filed before the Trial Court which can transfer it to the
appropriate Court where the property against which the decree
is to be executed is situated. Now the Court to which the
execution proceedings are transferred may not be the principal
civil court of original jurisdiction and if such a court passes an
order, the provisions of Section 37 may not be attracted at all.
We also find considerable force in the submissions made on
behalf of the petitioner that the observations of the Supreme
Court in the judgment in the case of "M/s.Sundaram Finance
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Ltd. Vs. M/s.NEPC India Ltd." referred to above, have also to
be seen before basing any conclusion in relation to the
provisions of 1996's Act on the conclusion which are recorded
considering the provisions of 1940's Act.
6. Taking overall view of the matter, therefore, in our opinion,
considering that the question frequently arises before this Court
and non maintainability of an appeal against the order which is
passed by the learned Single Judge in a civil suit results in
prejudice to the interest of the litigants, it would be appropriate
if the question is considered by a larger bench. In our opinion,
therefore, the following question can be referred for
consideration to a larger bench:-
"Whether an appeal under the provisions of clause 15 of the
Letters Patent, against an order passed by the learned Single
Judge of this Court in a civil suit in an application filed in that
civil suit because of the provisions of section 8 of the
Arbitration and Conciliation Act, is maintainable or not?"
The office is, therefore, directed to place the papers before the
Hon'ble the Chief Justice for appropriate orders."
10. It is submitted by Mr. Dwarkadas that the Division Bench judgment of
this Court has held that if the order under section 8 of the Arbitration Act is
not made by the court there is no question of section 37 being attracted. The
learned senior counsel emphasized on the observation made by the Division
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bench that the at least a general statement can not be made that because of
section 37, appeal against all orders passed under section 8 is barred and that
where an order under section 8 is made by the court, section 37 will not be
attracted. The learned senior counsel invited my attention to the observations
made by the Division Bench that it cannot be the intension of the legislature to
bar appeals against the orders passed in the proceedings which are not
instituted under the Arbitration Act, 1996. The Division Bench has observed
that the result of the order passed under section
ig 8 may be to terminate the
civil suit. It is submitted that the judgment of the Division Bench of this court
is thus binding on the Single Judge of this court while hearing the present
appeal under section 10F of the Companies Act, 1956.
11. It is submitted by Mr. Dwarkadas, the learned senior counsel that the
reliance placed by the respondents on the judgment of the Supreme Court in
the case of Sumitomo Corporation Vs. CDC Financial Services
(Mauritius) Ltd. and others9, is misplaced. It is submitted that there was no
issue before the Supreme Court in the said matter regarding maintainability
of appeal under section 10F of the companies Act, 1956. According to learned
senior counsel the issue was only in respect of the forum which could hear
appeal from orders of CLB. It is submitted that there was no issue of
termination of the proceedings by virtue of order passed under section 8 of the
Arbitration Act, 1996 before the Supreme Court in the said matter.
9 (2008) 4 Supreme Court Cases 91
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12. Mr. Dwarkadas, the learned senior counsel submits that even where a
question is referred to a larger Bench, the judgment has binding precantial
value. The learned senior counsel placed reliance upon the judgment of this
Court in the case of Madhav Atulchandra Bapat Vs. State of Maharashtra
and Ors.10.
13. The learned senior counsel attempted to distinguish the judgment of the
Supreme Court in the case of Fuerst Day Lawson Limited Vs. Jindal Exports
Limited (supra) on the ground that the Supreme court has recognized that Part
I and Part II of the Arbitration Act are not comparable. The supreme Court was
concerned with the wording of Section 50 in Part II read with section 45 of
Part II of the said Act. Section 50 of Part II does not use expression "of the
Court". Since the words " from the orders" are not qualified by the words "of
the Court" in Part II of Section 50, words "from the orders" would mean
and include judicial authority. However, the same is not so in the case of
section 37 of the Arbitration Act, 1996.
14. The learned senior counsel placed reliance upon the judgment of this
court in the case of Kinetic Engineering Limited Vs. Unit Trust of India
and another11,. The learned counsel submits that the Single Judge of this court
has taken a view that the order passed by the CLB even though not an order
10 2009 (4) Bom. C.R. 32
11 AIR 1995 BOMBAY 194
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under the Companies Act but in exercise of powers under some other statutes
Securities Contract Regulation Act, 1956 would be appealable under section
10F of the Companies Act. It is submitted that the argument of the party that
an appeal under section 10F would not be maintainable since the CLB had
passed an order under section 22A of Securities Contract Regulation Act, 1956
and not under the provisions of the Companies Act was repelled.
15. Mr Dwarkadas the learned senior counsel placed reliance on the
judgment of the Supreme Court in the case of P. Anand Gajapathi Raju and
Ors. Vs. P.V.G. Raju and Ors.12 (2000) 4 Supreme Court Cases 539 in
support of his plea that the application under section 8 of the Arbitration Act,
1996 is merely to bring to the notice of the judicial Authority that the subject
matter of action before it, is subject matter of arbitration agreement and that
would mean that such application was not an application as contemplated
under section 42 of the said Act.
16. Mr. Dwarkadas, learned senior counsel appearing for the appellant
placed reliance on the judgment of the Supreme Court in the case of ITI Ltd.
Vs. Siemens Public Communications Network Ltd13 and more particularly
para 19 in support of his plea that the Supreme Court had considered the
effect of section 5 of the Arbitration Act, 1996 and had held that the right of
second appeal to the High Court had been expressly taken away by sub section
12 (2000) 4 Supreme Court Cases 539
13 (2002) 5 Supreme Court Cases 510
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3 of section 37 of the Arbitration Act, 1996, however, for that reasons it cannot
be held that the right of revision has also been taken away. Para 19 of the
judgment in the case of ITI Ltd. (supra) reads thus :
"19. Revisional jurisdiction of superior court cannot be taken as
excluded simply because subordinate courts exercise a special
jurisdiction under a special act. The reason is that when a special Act
on matters governed by that Act confers a jurisdiction on an
established court, as distinguished from a 'persona designata',
without any words of limitation, then the ordinary incident of
procedure of that Court right of Appeal or revision against its
decision is attracted. The right of Second Appeal to the High Court
has been expressly taken away by Sub-section (3) of Section 37 of
the Act, but for that reason it cannot be held that the right of revision
has also been taken away. "
17. Mr.G.R.Joshi, the learned counsel appearing for the Appellant in
Company Appeal No. 25/2012 adopted the arguments advanced by the Learned
Senior Counsel Mr.Dwarkadas. It is submitted that in the Division Bench
Judgment of this Court in case of Conros Steels Pvt. Ltd. (supra), after
referring to the judgment of Punjab and Haryana High Court in case of
Smt.Sudershan Chopra & Ors. (supra) in para 5 of the judgment, the question
of law has been kept open. It is submitted that in the event of this court
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coming to the conclusion that appeal under Section 10F is not maintainable,
the same can be converted into a writ petition.
18. The Learned Counsel appearing for the appellant in company appeal No.
4 of 2011 submits that in his case, the application filed under Section 8 of the
Arbitration Act came to be rejected by the CLB. The learned counsel placed
reliance on the Division Bench Judgment of this Court in the case of Conros
Steels Pvt. Ltd. (supra). It is submitted that when application under Section 8
of the Arbitration Act is rejected by the Company Law Board, appeal under
section 10F of the Companies Act is maintainable.
19. On the other hand, the learned senior Counsel Mr. Kamdar and Mr.
Aspi Chinoy appearing on behalf of respondent Nos. 1 and 3 respectively
submits that the right of appeal is a creature of statute and not an inherent right
like that of filing a suit. Its nature, ambit and width are to be determined
from the statute itself. It is submitted that the order passed by CLB was on
application filed by respondents under section 8 of the Arbitration Act, 1996.
The CLB while deciding such application filed under section 8 of the
Arbitration Act, 1996 exercises its power as Judicial Authority under the
provisions of Arbitration Act, 1996. It is submitted that the remedy of the party
aggrieved by such order has thus to be located under the provisions of the
Arbitration Act, 1996 and not Companies Act, 1956. It is submitted that on
the plain reading of section 37, it is clear that no appeal lies against the order
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passed by the Judicial Authority under section 8 referring parties to
arbitration or refusing to refer the parties to arbitration. It is submitted that
only such orders which are specifically provided under section 37(1)(a) or (1)
(b) or under section 37(2)(a) or (b) are appealable and no other orders. It is
submitted that the order passed under section 8 by the Judicial Authority is
thus not appealable. It is submitted that under section 37 read with section 5
of the Act, the court had no power to intervene in any of the proceedings
except so provided in Part I of the Act. It is submitted that in view of the bar
under section 37 from entertaining appeal from any other order no provided
therein, the appeal filed under section 10F of the Companies Act, 1956 by the
appellant is not maintainable.
20. Mr. Kamdar and Mr. Chinoy, the learned senior counsel strongly placed
reliance upon the judgment of the Supreme Court in the case of Sumitomo
Corporation (supra) and more particularly on para 13, 14, 24 to 29, 32 and 34
which reads as under :
"13. We have carefully perused all the relevant
materials, Annexures and considered the rival
contentions. The only question to be considered in
the present appeal is whether the order dated
26.09.2006 of the CLB refusing to refer parties to
arbitration under Section 45 of the Arbitration Act
was liable to be challenged to the forum under
Section 50 of the Arbitration Act or to the forum
under Section 10(1)(a) of the Companies Act.
14. It is relevant to point out that in a company
petition filed by the PTL and 4 others (Respondent
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Nos.1-5 herein) before the CLB, Principal Bench,
New Delhi, the second respondent therein
(appellant herein, namely, SC) filed Company
Application No. 259 of 2006 under Section 45 of
the Arbitration Act for referring the parties to
arbitration. The said Section 45 reads thus:
"45. Power of judicial authority to refer parties to
arbitration.- Notwithstanding anything contained in
Part I or in the Code of Civil Procedure, 1908 (5 of
1908), a judicial authority, when seized of an action
in a matter in respect of which the parties have
made an agreement referred to in section 44, shall,
at the request of one of the parties or any person
claiming through or under him, refer the parties to
arbitration, unless it finds that the said agreement is
null and void, inoperative or incapable of being
performed."
24. In the light of the said conclusion, in order to
ascertain the correctness of the same, it is useful to
refer to the provisions of Section 50 of the
Arbitration Act and Section 10(1)(a) and Section
10-F and of the Companies Act. "50. Appealable
orders.- (1) An appeal shall lie from the order
refusing to-
(a) refer the parties to arbitration under section 45;
(b) enforce a foreign award under section 48, to the
court authorized by law to hear appeals from such
order.
(2) xxx xxxx"
"10. Jurisdiction of Courts.- (1) The Court having
jurisdiction under this Act shall be-
(a) the High Court having jurisdiction in relation to
the place at which the registered office of the
company concerned is situate, except to the extent
to which jurisdiction has been conferred on any
District Court or District Courts subordinate to that
High Court in pursuance of sub-section (2); and
(b) where jurisdiction has been so conferred, the
District Court in regard to matters falling within the
scope of the jurisdiction conferred, in respect of
companies having their registered offices in the
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district." "10F. Appeals against the order of the
Company Law Board.- Any person aggrieved by
any decision or order of the Company Law Board
made before the commencement of the Companies
(Second Amendment) Act, 2002 may file an appeal
to the High Court within sixty days from the date of
communication of the decision or order of the
Company Law Board to him on any question of
law arising out of such order:
Provided that the High Court may, if it is satisfied
that the appellant was prevented by sufficient cause
from filing the appeal within the said period, allow
it to be filed within a further period not exceeding
sixty days."
The above provisions make it clear that the forum
shall be court authorized by law to hear the appeals
from such order. In this regard, it is useful to
reproduce the Explanation to Section 47 of the
Arbitration Act which reads thus: "47. Evidence.-
xxx xxxx
Explanation.- In this section and all the following
sections of this Chapter, "Court" means the
principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of
its ordinary original civil jurisdiction, having
jurisdiction over the subject-matter of the award if
the same had been the subject-matter of a suit, but
does not include any civil court of a grade inferior
to such principal Civil Court, or any Court of Small
Causes."
25. As rightly pointed out, it is clear that unlike
the explanation to Section 47, Section 50 uses the
expression "Court" not simpliciter but qualified by
the wording "authorized by law to hear appeals
from such order." It is not the court having
jurisdiction if the subject-matter is a suit where
jurisdiction is determined in accordance with the
provisions of Sections 16-20 of the Code of Civil
Procedure. On the other hand, Section 50 of the
Arbitration Act specifically used the word
"authorized by law" and not the "Civil Procedure
Code" or "suit".
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26.In Smt. Ganga Bai vs. Vijay Kumar and Others,
(1974) 2 SCC 393, while considering relevant
provisions from the Civil Procedure Code in
respect of right of appeal against a finding, res
judicata etc., this Court in para 15 held thus: "15. It
is thus clear that the appeal filed by Defendants 2
and 3 in the High Court was directed originally not
against any part of the preliminary decree but
against a mere finding recorded by the trial court
that the partition was not genuine. The main
controversy before us centres round the question
whether that appeal was maintainable. On this
question the position seems to us well established.
There is a basic distinction between the right of suit
and the right of appeal. There is an inherent right in
every person to bring a suit of a civil nature and
unless the suit is barred by statute one may, at one's
peril, bring a suit of one's choice. It is no answer to
a suit, howsoever frivolous to claim, that the law
confers no such right to sue. A suit for its
maintainability requires no authority of law and it
is enough that no statute bars the suit. But the
position in regard to appeals is quite the opposite.
The right of appeal inheres in no one and therefore
an appeal for its maintainability must have the clear
authority of law. That explains why the right of
appeal is described as a creature of statute."
27.It is clear that if there is no bar in any statute, no
difficulty in filing a suit, on the other hand in the
case of appeals for its maintainability there must be
a specific provision/clear authority of law. In view
of the same, while exercise of original jurisdiction
as provided in Section 47 and other similar sections
of the Arbitration Act should be by the court within
the jurisdiction of which the suit would have been
filed, the appeal shall always be to the appellate
forum which hears appeals from the order of the
forum which passes the order. It is also clear from
Section 37 of the Act dealing with appeals. Here
also the appeal is to the court which hears the
appeal and not the court which exercises original
jurisdiction if the subject-matter had been a suit as
provided in the explanation to Section 47 or
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Section 2(c) of the Arbitration Act.
28.To our mind, the reading of Section 50 clearly
suggests that an appeal shall lie from the order of
the CLB to the court authorized by law to hear the
appeals from such order of the CLB. To make it
clear that in the event the order under Section 45 is
passed by the CLB, the forum which is provided
under law for hearing the appeal from the order of
the CLB, will be the Appellate Forum. In other
words, while Section 50 of the Arbitration Act
provides for the orders which can be made the
subject-matter of the appeal, the forum to hear the
appeal is to be tested with reference to the
appropriate law governing the authority or forum
which passed the original order, that is, in the case
on hand, the CLB. Section 10F read with Section
10(1)(a) of the Companies Act provides for such
forum to hear the appeal from the orders of the
CLB as the High Court within the jurisdiction of
which the Registered Office of the company in
issue is situated.
29.Now let us look into Section 10(1)(a) and
Section 10F of the Companies Act. An appeal
against any order of the CLB including an order
passed refusing reference to arbitration shall lie to
the High Court within the jurisdiction of which the
Registered Office of the company is situated. That
is the reason Section 50 of the Arbitration Act
purposively uses the expression "authorized by law
to hear the appeal". As rightly pointed out, it cannot
be that an order passed by the CLB becomes
appealable to a civil court or a court exercising
civil jurisdiction when Parliament has chosen to
provide for a specific appellate forum which should
hear the appeal from the orders of the CLB.
32. A perusal of the said decision shows that the
Punjab and Haryana High Court was not
considering the issue of territorial jurisdiction on
matters arising out of an order passed by the CLB.
On the other hand, the High Court was considering
the issue whether an appeal is maintainable from an
order passed by the CLB rejecting the application
under Section 8 of the Arbitration Act when Section
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37 of the said Act expressly provides that no appeal
shall lie against orders specifically mentioned in
Section 37 and from no others and Section 8 is not
mentioned in that section. As rightly pointed out by
learned senior counsel appearing for the contesting
respondents in that case the Punjab and Haryana
High Court did not consider the issue that when an
appeal lies which Court will have jurisdiction to
entertain and decide the appeal. This is clear from
the reading of paras 17 and 18 of the judgment of
the Punjab and Haryana High Court.
34. In view of our conclusion, we are satisfied
that the appellant has wrongly based its arguments
on matters such as ouster of jurisdiction, over-
riding effect of special statute over general statute,
over-riding effect of subsequent statute etc. Since
they have no application whatsoever to the matter
in issue, there is no need to refer various decisions
in those aspects. Ouster of jurisdiction arises only
in regard to original jurisdiction and it cannot have
any application to appellate jurisdiction as the one
provided in Section 50 of the Arbitration Act. The
appeal is a statutory remedy and it can lie only to
the specified forum. The appellate forum cannot be
decided on the basis of cause of action as
applicable to original proceedings such as suit
which could be filed in any court where part of
cause of action arises. In such circumstances, we
are unable to accept the lengthy arguments
advanced on the above-mentioned subject by
learned senior counsel for the appellant. Likewise,
the submission of the appellant, namely, the
Arbitration Act being a special and subsequent
statute has no relevance to the present case."
21. Both the learned senior counsel submits that section 10F read with
section 10(1)(a) of the Companies Act provided for forum to appeal from
orders of CLB. It is submitted that appeal under section 10F is not
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maintainable. It is submitted that the appellant could have chosen forum for
filing appeal before the forum provided under section 10F provided such
appeal was maintainable under section 37 of the Arbitration Act, 1996. It is
submitted that the Division Bench Judgment relied upon by the petitioner in the
case of Conros Steel (supra) is contrary to the law laid down by the Supreme
Court in the case of Sumitomo (supra), Union of India Vs Mohindra Supply
(supra), Furest Day Lawson (supra), judgment of division bench of this Court
in case of International Thermal Technology Kircher Italia (supra), Jet Airways
(Supra).
22. The learned counsel for respondents placed reliance on the judgment of
the Supreme Court in the case of Furest Day Lawson (supra) and more
particularly para 60, 61, 62, 85, 86 and 91 which reads thus :
"60. It is also evident that Part I and Part II of the Act are
quite separate and contain provisions that act independently in
their respective fields. The opening words of Section 2 i.e. the
definition clause in Part I, make it clear that meanings assigned
to the terms and expressions defined in that section are for the
purpose of that part alone. Section 4 which deals with waiver
of right to object is also specific to Part I of the Act. Section 5
dealing with extent of judicial intervention is also specific to
Part I of the Act. Section 7 that defines "arbitration
agreement" in considerable detail also confines the meaning of
the term to Part I of the Act alone. Section 8 deals with the
power of a judicial authority to refer parties to arbitration
where there is an arbitration agreement and this provision too
is relatable to Part I alone (corresponding provisions are
independently made in Sections 45 and 54 of Chapters I and II,
respectively of Part II). The other provisions in Part I by their
very nature shall have no application insofar as the two
chapters of Part II are concerned.
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61. Making reference to Sections 47, 26 and 30 of the 1940
Act, in paragraph 26 of the judgment, His Lordship concluded
as follows:
26. I think I am justified in holding, in view of these
provisions, that the Act was intended to be exhaustive of the
law and procedure relating to arbitration. I cannot imagine that
the words "arbitrations" and "awards" could have been used in
such specific provisions without more, specially having regard
to the definition of award, if it was intended to leave it open to
the parties to an award based upon an oral submission to
proceed to enforce it or set it aside by proceedings by way of
suit altogether outside the Act. Let us take it then that the Act
intended that there should be no such proceedings.
62. In paragraph 33, he further said:
If then, as I have held, the Act is intended to be exhaustive, and
contains no provisions for the enforcement of an award based
upon an oral submission, the only possible conclusion is that
the Legislature intended that such an award should not be
enforceable at all, and that no such suit should lie.
85. We have so far seen the decisions of the High Courts
holding that a suit for enforcement of an arbitration award
made on an oral reference was not maintainable, an arbitral
award could only be enforced in terms Section 17 of the
Arbitration Act and a suit for the enforcement of an arbitral
award was not maintainable, and third, that no interest could be
awarded on the amount adjudged in the award beyond the
provisions of Section 29 of the Arbitration Act.
86. It is seen above that, in Mohindra Supply Co. the court
held that a letters patent appeal was not maintainable in view
of section (2) of Section 39 of the 1940 Act. To that extent, the
decision may not have any bearing on the present controversy.
But, in that decision observations of great significance were
made in regard to the nature of the 1940 Act.
91. In light of the discussions made above, it must be held
that no letters patent appeal will lie against an order which is
not appeal able under Section 50 of the Arbitration and
Conciliation Act, 1996."
23. Alternatively, it is submitted that the order passed by the Division
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Bench in the case of Conros Steel does not lay down any law. By the said
judgment, the Division Bench of this Court at most expressed its
disagreement with the judgment of this court in the case of International
Thermal Technology (supra) delivered by another Division Bench and referred
the question as to whether the appeal under the provisions of clause 15 of the
Letters Patent against the order passed by the learned Single Judge of this court
on the application filed in that civil suit on provisions of section 8 of
Arbitration Act is maintainable or not to the larger Bench. It is submitted that
by the said judgment the only question is referred to the Larger Bench and the
said judgment can not be considered laying down any law.
24. Mr. Kamdar and Mr. Chinoy, the learned senior counsel placed reliance
on the judgment of the Supreme Court in the case of Union of India Vs.
Mohindra (supra) delivered by the Four Judges of the Supreme Court and more
particularly para 6, 17 and para 18 which reads thus :
"6. The Punjab High Court in Banwari Lal Ram Dev v. The
Board of Trustees, Hindu College and the Lahore High Court in
Hanuman Chamber of Commerce Ltd., Delhi v. Jassa Ram Hira
Nand , held that the appeals contemplated by section 39 are
appeals to superior courts and not "intra-court appeals" and
therefore the right to appeal under the Letters Patent was not
restricted by sub-sections. (1) and (2). But a little analysis of this
argument is likely to exhibit the somewhat startling
consequences. If the appeal contemplated by section 39(1) is
only an appeal to a superior court, orders passed by a
subordinate court decisions whereof are made appealable to the
same court will not be appealable at all under the Arbitration
Act. For instance, under the Bombay Civil Courts Act, certain
decisions of Assistant Judges are made appealable to the District
Courts. An Assistant Judge is a Judge of the District Court and
under the Bombay Civil Courts Act, appeals against his orders
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and decrees in certain cases lie to the District Court. If the
argument that an appeal under clause (1) of section 39 means an
appeal to a superior court, be accepted, an appeal from an order
under section 39(1) by an Assistant Judge will not lie at all.
There are similar provisions in the Civil Courts Acts in the other
States as well. The qualifying expression "to the court authorised
by law to hear appeals from original decrees of the Court
passing the order" in section 39(1) does not import the concept
that the appellate court must be distinct and separate from the
court passing the order or the decree. The legislature has not so
enacted and the context does not warrant such an interpretation.
The clause merely indicates the forum of appeal. If from the
decision of a court hearing a suit or proceeding an appeal will lie
to a Judge or more Judges of the same court, by virtue of section
39(1) the appeal will lie from the order passed under the
Arbitration Act, if the order is appealable, to such Judge or
Judges of that court. The argument that the right to file an appeal
to the Supreme Court from orders in arbitration proceedings
would be seriously restricted has in our view no substance. If an
order passed in a proceeding on the original side of the High
Court is appealable under section 39(1), an appeal will lie to a
Division Bench of the High Court and from the order passed by
the Division Bench, an appeal, by the express provision
contained in sub-section (2) will lie subject to the restrictions
contained in the relevant articles of the Constitution to the
Supreme Court. If the order is not one falling within section
39(1), no appeal will evidently lie. It is true that against an order
passed in arbitration proceeding, by a Division Bench of a High
Court in an appeal, an appeal to this Court as a matter of right
may lie, if the requirements of Article 133 are fulfilled; but if the
same case is heard by a Single Judge no such appeal will lie. But
the right to appeal is a creature of statute; no litigant has an
inherent right to appeal against a decision of a court. The
anomaly relied upon by the appellant occurs in second appeals,
and revision applications as well. If these proceedings are heard
and disposed of by Single Judges, there is no right of appeal to
this Court but against decisions of Division Benches the right to
appeal may be exercised."
17. Prior to 1940 the law relating to contractual arbitration
(except in so far as it was dealt with by the Arbitration Act of
1899) was contained in the Code of Civil Procedure and certain
orders passed by courts in the course of arbitration proceedings
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were made appealable under the Code of 1877 by section 588
and in the Code of 1908 by section 104. In 1940, the legislature
enacted Act X of 1940, repealing schedule 2 and section 104(1)
clauses (a) to (f) of the Code of Civil Procedure 1908 and the
Arbitration Act of 1899. By section 39 of the Act, a right of
appeal was conferred upon litigants in arbitration proceedings
only from certain orders and from no others and the right to file
appeals from appellate orders was expressly taken away by sub-
section 2 and the clause in section 104 of the Code of 1908
which preserved the special jurisdiction under any other law was
incorporated in section 39. The section was enacted in a form
which was absolute and not subject to any exceptions. It is true
that under the Code of 1908, an appeal did lie under the Letters
Patent from an order passed by a single Judge of a Chartered
High Court in arbitration proceedings even if the order was
passed in exercise of appellate jurisdiction, but the was so,
because, the power of the Court to hear appeals under a special
law for the time being in operation was expressly preserved.
18. There is in the Arbitration Act no provision similar to
section 4 of the Code of Civil Procedure which preserves
powers reserved to courts under special statutes. There is also
nothing in the expression "authorised by law to hear appeals
from original decrees of the Court" contained in section 39(1)
of the Arbitration Act which by implication reserves the
jurisdiction under the Letters Patent to entertain an appeal
against the order passed in arbitration proceedings. Therefore,
in so far as Letters Patent deal with appeals against orders
passed in arbitration proceedings, they must be read subject to
the provisions of section 39(1) and (2) of the Arbitration Act."
25. Relying upon this judgment of the Supreme Court in the case of Union of
India Vs. Mohindra (supra), it is submitted that section 10F thus merely
indicates forum of appeal and does not right of appeal against the order of
CLB passed under section 8 of the Arbitration Act, 1996.
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26. The learned senior counsel for the respondents also placed reliance on
the judgment of Punjab & Haryana High Court in the case of Smt. Sudarshan
Chopra (supra) and more particularly pages 684, 685, 686,. 693 and 694 which
reads thus :
"We shall first make an endeavour to determine on the basis of the
submissions advanced before us whether or not the Arbitration
Act, 1996, is an exclusive, exhaustive and comprehensive code.
For the aforesaid issue, it is not necessary to examine the
differences between the provisions of the Arbitration Act, 1940,
and the Arbitration Act, 1996. It is also not necessary to examine
the scope of any particular provision contained in the aforesaid
statute including Section 8 of the Arbitration Act, 1996. The
Supreme Court in Mohindra Supply Company's case
MANU/SC/0004/1961, supra, had held that the Arbitration Act,
1940, was an exhaustive and comprehensive code, which had
consolidated the law relating to arbitration in this country. Since
the Arbitration Act, 1996, is another effort on the part of the
legislature to further consolidate and amend the provisions of the
Arbitration Act, 1940, it must necessarily follow that the law in
respect of arbitration has been further crystallised, after the
coming into force the Arbitration Act, 1996. It must, therefore,
follow that the amendment in 1996 has taken the process of
consolidation even further. In view of the above stated
consideration, there is no doubt in our mind that the Arbitration
Act, 1996, is, indeed, an exhaustive and comprehensive code.
Section 5 of the Arbitration Act, 1996, makes the Act exclusive
in respect of the subject of domestic arbitration, which has been
dealt with in Part I of the said Act, since by a non obstante clause
it excludes all judicial authorities from intervention in matters
regulated under Part I of the Arbitration Act, 1996."
".......In reference to Section 5 of the Arbitration Act, 1996, the
Apex Court in Konkan Railway Corporation Ltd. and Ors. v.
Mehul Construction Co. : MANU/SC/0523/2000made the
following observations (para 4 at page 278 of Comp LJ):
". . . . A bare comparison of different provisions of the
Arbitration Act of 1940 with the provisions of the
Arbitration and Conciliation Act, 1996, would
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unequivocally indicate that the 1996 Act limits
intervention of court with an arbitral process to the
minimum and it is certainly not the legislative intent that
each and every order passed by an authority under the Act
would be a subject-matter of judicial scrutiny of a court of
law."
In Modi Korea Telecommunication Ltd. v. Appcon
Consultants (P) Ltd. , a Division Bench of the Calcutta
High Court has also in paragraph 28 opined that the term
'judicial authority' expressed in Section 5 of the
Arbitration Act, 1996, refers to a court.
"26. There can be no room for any doubt specially in
view of the judgments referred to above, that 'judicial
authority' is an authority . . . exercising judicial power
of the State . . / and'... discharging judicial
functions ....'. In the aforesaid view of the matter, it is
evident that the term 'judicial authority' will
necessarily include 'court' as defined in Section 2(e) of
the Arbitration Act, 1996, as well as an appellate
court. In such a situation, while interpreting Section 5
of the Arbitration Act, 1996, it is evident that the
remedy of appeal to an appellate court would be
permissible only if so expressed, specifically or by
necessary implication, in Part I of the Arbitration
Act, 1996, and not otherwise.
27. Having arrived at the conclusion that the
Arbitration Act, 1996, is an exclusive, exhaustive
and comprehensive code and further that the mandate
of Section 5 of the Arbitration Act, 1996, does no
permit any judicial authority which as noticed above
would include a court or an appellate court to
intervene in a matter specified under the provisions of
the Arbitration Act, 1996, except where so provided.
It, therefore, becomes imperative to determine whether
or not the Arbitration Act, 1996, provides for a
remedy of appeal against an order passed by a judicial
authority while deciding a claim for reference to an
arbitrator made under Section 8 of the Arbitration
Act, 1996. Reference in this behalf has been made to
Section 37 of the Arbitration Act, 1996, by learned
counsel for the respondents. The aforesaid provision is
reproduced hereunder
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"37. Appealable order. --(1) An appeal shall lie from
the following orders (and from no others) to the court
authorised by law hear appeals from original decrees
of the court passing the order, namely :
(a) granting or refusing to grant any measure under
Section 9;
(b) setting aside or refusing to set aside an arbitral
award under Section 34.
(2) An appeal shall also lie to a court from an order of
the arbitral tribunal --
(a) accepting the plea referred to in Sub-section (2) or
Sub-section (3) of Section 16; or
(b) granting or refusing to grant an interim measure under
Section 17.
(3) No second appeal shall lie from an order passed in
appeal under this section, but nothing in this section shall
affect or take away any right to appeal to the Supreme
Court."
While interpreting Section 37(1) of the Arbitration Act,
1996, learned counsel for the respondents has made out
the following points :
27.1 Firstly, appeals from orders passed under the
provisions of Part I of the Arbitration Act, 1996, are
only permissible against orders specified in Section 37. In
this behalf, it is pointed out that remedy by way of appeal
has not been provided for against an order passed under
Section 8 of the Arbitration Act, 1996.
27.2 Secondly, the expressions used in Sub-section (1) of
Section 37 of the Arbitration Act, 1996, clarifies the
legislative intent to exclude the remedy of appeal against
an order passed by a judicial authority under Section 8 of
the Arbitration Act, 1996. In this behalf, it is pointed out
that any other interpretation would render the words '(and
from no others)' used in Section 37 nugatory.
Striking at the root of the argument, counsel for the
appellants has submitted that a closer examination of the
provisions of Section 37 of the Arbitration Act, 1996,
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reveals that appealable orders referred to in Section 37(1)
can only be such orders which have been passed by a
court; and cannot be an order passed by a 'judicial
authority'. In order to arrive at the aforesaid conclusion,
reliance has been placed by learned counsel for the
appellants on the following words used in Section 37(1)
of the Arbitration Act, 1996 : '. . . from decrees of the
court passing the order...'. Inviting the attention of the
court to Section 2(e) of the Arbitration Act, 1956,
wherein the word 'court' has been defined, learned
counsel for the appellants vehemently argued that the
term 'court/ used in Section 37(1) would include a civil
court of original jurisdiction in a district, and the High
Court in exercise of its original civil jurisdiction, and no
other 'court'. It is submitted that the orders passed by a
'judicial authority' are clearly not within the ambit of
Section 37(1) of the Arbitration Act, 1996. It is,
therefore, suggested that the expression 'orders' used in
Section 37(1) will not include an order passed under
Section 8 of the Arbitration Act, 1996, because an order
passed under Section 8 is not passed by a court as defined
in Section 2(e) of the Arbitration Act, 1996.
35. The aforesaid argument, on first blush, seems to be
attractive. It is, however, clearly misconceived. In our
view, the words relied on by learned counsel for the
appellants (extracted above) are being read out of
context. In order to examine the exact effect of the
aforesaid words, it is necessary to notice the following
words in conjunction with the words relied upon by the
learned counsel for the appellants,' . . to the court
authorised by law to hear appeals from original decrees
of the court passing the order. . .'. It is evident from the
above reproduced extract that the instant portion of
Section 37(1) of the Arbitration Act, 1996, is merely
limited to determine the forum of appeal and not the
authority which passed the orders which are appealable.
In our view, the term order used in Section 37(1) of the
Arbitration Act, 1996, would necessarily include all
orders which can be based under Part I of the
Arbitration Act, 1996. It is not possible for us to accept
the contention of the learned counsel for the appellants
that the impugned order under reference having not been
passed by a court, but having been passed by a 'judicial
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authority', would not be governed by Section 37 of the
Arbitration Act, 1996.
36. Having dealt with all issues canvassed by learned
counsel, we now endeavour to draw conclusions based on
our interpretation of Section 37 of the Arbitration Act,
1996. In the absence of judicial precedent on the pointed
issue, we will embark upon file controversy on first
principles. We have already concluded above that even a
remedy of appeal would not be available unless expressly
provided for, while interpreting Section 5 of the
Arbitration Act, 1996. We have also concluded that the
term 'orders' referred to in Section 37 of the Arbitration
Act, 1996, refers to orders passed under Part I of the
Arbitration Act, 1996. The question then is whether the
remedy of appeal is excluded against an order passed by
a 'judicial authority' under Section 8 of the Arbitration
Act, 1996 ? In our view, it is. The reason for the aforesaid
conclusion are the words 'and from no others' qualifying
the word 'orders' [it] leaves no doubt that Section 37(1) of
the Arbitration Act, 1996, does not delineate an
inclusive list of appealable order, but defines the
exhaustive list of orders from which an appeal under the
provisions of the Arbitration Act, 1996, is competent.
Since the list is exhaustive, and since an order passed by
a 'judicial authority' under Section 8 of the Arbitration
Act, 1996, is not included therein, it would be inevitable
to conclude that the remedy of appeal thereform is
expressly excluded.
27. The learned senior counsel placed reliance upon the judgment of the
Delhi High Court in Vijay Sekhri and anr. Vs. Tinna Oils & Chemicals &
Ors14. Delhi High Court has after considering the judgment of the Punjab &
Haryana High Court in the case of Sudarshan Chopra, Sumitomo Corporation,
Kinetic Engg. Ltd. Union of India Vs. Mohindra Supply Co. and held thus :
14 (2010) 174 DLT 462
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"6. It is admitted case of the parties that the appellants
herein had filed two petitions under Sections 397-398 of
the Companies Act alleging oppression and
mismanagement before the CLB in the affairs of M/s
Tinna Agro Industries Limited and Tinna Oil and
Chemicals Limited. During the pendency of the said
petitions, applications under Sections 8 and 45 of the
Arbitration Act were filed and by the impugned orders
dated 20th July, 2010 passed by the CLB, the applications
have been allowed and the matters have been referred to
arbitration to be conducted in accordance with the rules of
the conciliation and arbitration of the International
Chamber of Commerce in London. What has been
decided by the CLB are the applications filed under
Sections 8 and 45 of the Arbitration Act and not the
petitions under Section 397-398 of the Companies Act.
The disputes raised in the main petitions under Sections
397-398 of the Companies Act have not been adjudicated.
Rights of the parties under the Companies Act have not
been decided. The CLB while passing the impugned
orders dated 20th July, 2010 has adjudicated these
applications under Sections 8 and 45 of the Arbitration
Act and whether in view of the conditions stipulated in
the aforesaid Sections, the applications should be allowed.
While doing so, CLB may have incidentally examined the
provisions of the Companies Act but only for the purpose
of deciding whether or not conditions stipulated in
Sections 8 and 45 of the Arbitration Act are satisfied or
not; and not for deciding the petitions under Sections 397-
398 of the Companies Act.
7. A similar question had arisen before Punjab and
Haryana High Court in In Re. Hind Samachar Limited:
Sudershan Kumar Chopra and Ors. v. Vijay Kumar
Chopra and Ors. 2003 (117) Company Cases 660. In the
said case, the CLB had dismissed an application under
Section 8 of the Arbitration Act, which was made subject
matter of an appeal under Section 10F of the Companies
Act. It was contended that the appeal was maintainable
under Section 10F of the Companies Act in view of the
language of the said section and for this purpose and to
answer to the issue reference must be made to the
provisions of the Companies Act itself and not to Section
37 of the Arbitration Act. These contentions were rejected.
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8. It may be noted that Arbitration Act in Section 37 does
not provide for an appeal against an order rejecting or
accepting an application under Section 8 of the said Act.
Under the said Section, appeals can be filed only against
the orders specified in Section 37 of the Arbitration Act.
Division Bench of the Punjab and Haryana High Court
after examining the provisions of the Companies Act and
the Arbitration Act has opined as under:
8. In our view, in order to adjudicate upon the aforesaid
contention, it would be imperative for us to first
determine the legislative provision under which the
impugned order dated 08.12.2000 has been passed. If in
the aforesaid determination, this Court arrives at the
conclusion that the order was passed by the Company
Law Board in exercise of its jurisdiction to settle a dispute
flowing out of the provisions of the Companies Act, 1956,
then and only then, the instant plea advanced on behalf of
the appellants would merit acceptance. In such an
eventuality, it would have to be concluded that the search
for the appellate forum would have to be restricted to the
Companies Act, 1956. However, if this Court arrives at
the conclusion that the impugned order dated 08.12.2000
had been passed by the Company Law Board in its
capacity of 'judicial authority' in exercise of obligations
flowing out of the Arbitration Act, 1996, in furtherance of
the provisions of the Arbitration Act, 1996, then certainly,
the remedy must be searched for, from within the
provisions of the Arbitration Act, 1996. In such an
eventuality, the contention advanced on behalf of the
appellants would not merit acceptance.
9. Undoubtedly, when the petition was filed by the
respondents (herein) before the Company Law Board, the
Company Law Board was exercising jurisdiction under
the provisions of Sections 397 and 398 of the Companies
Act, 1956. However, when the appellants (herein) moved
an application under Section 8 of the Arbitration Act,
1996, before the Company Law Board, the Company Law
Board while deciding the said application acted in its
capacity as judicial authority' under Section 8 of the
Arbitration Act, 1996. There can be no doubt that the
impugned order determines rights flowing out of the
provisions of the Arbitration Act, 1996, and not the
provisions of the Companies Act, 1956. Since the
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Company Law Board did riot adjudicate the dispute
between the parties under Sections 397 and 398 of the
Companies Act, 1956 (which was really the subject matter
of Company Petition No. 76 of 1999) through the order
impugned before us it is not possible for us to accept the
contention advanced on behalf of the appellants that in
disposing of the application filed under Section 8 of the
Arbitration Act, 1996, the Company Law Board was
exercising jurisdiction vested in it under the Companies
Act, 1956. The conclusion has to be, as noticed in the
foregoing paragraphs, that the right to prefer an appeal
against an order passed by the Company Law Board in its
capacity as 'judicial authority' while deciding an
application filed under Section 8 of the Arbitration Act,
1996, must be searched for, from within the provisions of
the Arbitration Act, 1996, more so, because the impugned
order is not referable to any provision of the Companies
Act, 1956.
10. We find no merit also in the submission relating to
grant of preference to the statute laying down substantive
law over a statute laying down adjective, incidental,
supplemental or procedural law. In our view, there is no
conflict between the provision of the Companies Act,
1956, and the Arbitration Act, 1996, therefore, the
question whether the Companies Act, 1956, would have
an overriding effect over the provisions of the Arbitration
Act, 1996, does not arise. In our view, in order to
ascertain substantive rights, reference must be made to the
statute laying down substantive rights ; and likewise, for
determination of procedural rights, one must resort to the
enactment laying down the procedure. In the absence of
conflict between the two, it is unnecessary to determine
which of the two would have over-riding effect over the
other. By our aforesaid conclusion, it must not be assumed
that we have accepted the submission that the Arbitration
Act, 1996, is merely an adjective, incidental,
supplemental and procedural legislation, when compared
with the Companies Act, 1956. The instant question
simply does not arise and, therefore, need not be gone
into.
9. The Punjab and Haryana High Court also rejected the
contention that the ordinary incident of procedure of the
Court, including right to appeal, where proceedings
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were/are pending would automatically get attached with
the decision. The Punjab and Haryana High Court has
held that the rule of attachment is not applicable in view
of the express provisions and the bar under Section 37 of
the Arbitration Act. It was observed:
15.2 In fact, even the judgment in Vanita M. Khanolkar's
case, supra, which, according to the counsel for the
appellants, completely covers the controversy in the
present case, it is apparent from the extract already
reproduced above that the procedure including the fight of
appeal would not get attached '.. unless the statutory
enactment concerned expressly excludes appeals. '.
Additionally, in Vanita M. Khanolkar's case AIR 1998 SC
424, supra, the observations of the Supreme Court in
respect of the jurisdiction of the High Court must
necessarily be noticed to the limited scope of its
examination by the Supreme Court, namely, whether a
legislative enactment could override the constitutional
power of the High Court In the instant appeal, the
appellants are seeking to invoke Section 10F of the
Companies Act, 1956, in order to substantiate their plea in
respect of the legality of appellant jurisdiction said to be
vested in this Court against the impugned order passed by
the Company Law Board under Section 10F of the
Companies Act, 1956, and not the constitutional authority
vested in this Court under Article 226 of the Constitution
of India. It would be pertinent to notice that despite
suggestions of the counsel representing the respondents to
the appellants, during the proceedings before us, the
appellants did not make a prayer, that the instant appeal
be treated as a writ petition. Therefore, while deciding the
issue of jurisdiction in the present case, we are certainly
not dealing with the constitutional authority vested in this
Court to examine the validity of an order passed by a
judicial authority while deciding a claim under Section 8
of the Arbitration Act, 1996. Since the parameters of the
issue decided in Vanita M. Khanolkar's case, supra, were
clearly different from the issue before us in view of the
fact that constitutional authority of this Court is not an
issue at all, in our view, the aforesaid case is not relevant
for adjudication of the dispute before us. Shorn of the
conclusion drawn by the Supreme Court in Vanita M.
Khanolkar's case, supra, it is clear that the rule of
attachment canvassed on behalf of the appellants would
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be subject to a contrary intention in the referring statute. It
would also be pertinent to mention that the decision
rendered by the apex court in Vanita M. Khanolkar's case,
supra, is under reconsideration in view of the order passed
by the Supreme Court in Orma Impex (P) Ltd. v. Nissai
Asb Pte. Ltd. MANU/SC/0887/1999 : (1999)2 SCC 541,
wherein the court in the short order passed by it noticed as
under:
In State of W.B. v. Gaurangalal Chatterjee
MANU/SC/0509/1993 : (1993) 3 SCC 1, this Court relied
upon an earlier decision of the Court in Union of India v.
Mohindra Supply Co. MANU/SC/0004/1961 : AIR 1962
SC 256. The said decision was rendered with reference to
the appeal ability of an order passed by the High Court in
an appeal from the order of the subordinate court and not
from the order passed by a learned Single Judge sitting on
the original side of the High Court. There is also another
decision of a two-Judge Bench of this Court in Vanita M.
Khanolkar v. Pragna M. Pai MANU/SC/0867/1998 :
(1998)1 SCC 500 which appears to have taken a contrary
view relying upon Clause 15 of the Letter Patent
applicable to the High Court of Bombay. Thus, there
appears to be conflict of decisions on this question.
10. The Punjab and Haryana High Court has further held
that the Arbitration Act is an exclusive, exhaustive and
comprehensive code as the said Act is a consolidating and
an amending Act relating to domestic arbitration,
international commercial arbitration and enforcement of
foreign arbitral awards and for matters connected with or
incidental thereto. The High Court relied upon
observations of the Supreme Court in Union of India v.
Mohindra Supply Co. MANU/SC/0004/1961 : AIR 1962
SC 256 with reference to enactment of Arbitration Act,
1940, which was again a consolidating and an amending
statute. It was accordingly held that the remedy by way of
appeal would be permissible only if expressed,
specifically or by necessary implication in Part I of the
Arbitration Act and not otherwise. The legislative intent is
to provide remedy of appeal in Section 37 against a
limited category of orders and exclude remedy of appeal
against an order not specified in Section 37. Accordingly,
it has been observed by the Punjab and Haryana High
Court in In Re. Hind Samachar Limited (supra) as under:
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38. Based on the issues dealt with above, we have already
recorded our conclusions which we again endeavour to
summaries as under:
38.1 Firstly, the Arbitration Act, 1996, is an exhaustive
and comprehensive code on the Jaw of arbitration in
India, and Section 5 of the Arbitration Act, 1996, makes it
exclusive on matters contained in Part I of the Arbitration
Act, 1996, by excluding intervention of 'judicial
authorities' on matters regulated therein through a non
obstante clause.
38.2 Secondly, Section 37 of the Arbitration Act, 1996,
excludes, by use of the words 'and from no others', the
remedy of appeal, against an order passed by a 'judicial
authority' while deciding the claim for reference to an
arbitrator made under Section 8 of the Arbitration Act,
1996.
38.3 Thirdly, on a conjoint reading and comparison of
Sections 8 and 37 of the Arbitration Act, 1996, on the one
hand, with Sections 54 and 57 of the said Act, on the
other, the legislative intent to exclude the remedy of
appeal against an order passed by a 'judicial authority'
while deciding a claim for reference to an arbitrator under
Section 8 of the Arbitration Act, 1996, is clearly in the
affirmative.
11. Unlike Section 37 of the Arbitration Act which applies
to Part I, Section 50 of the Arbitration Act applies to
international arbitration covered by New York
Convention. Section 50 of the Arbitration Act stipulates
that an appeal shall lie against an order refusing to refer
the parties to arbitration under Section 45 or to enforce an
award under Section 48 of the Arbitration Act. In the
present case we are concerned with Section 50 of the
Arbitration Act. Division Bench of Delhi High Court in
Jindal Exports Ltd. v. Fuerst Day Lawson
MANU/DE/2572/2009 : (170)2010 DLT 628 has
examined Section 50 of the Arbitration Act and has held
that in view of the statutory bar and prohibition a Letters
Patent Appeal would not be maintainable except against
orders mentioned in Section 50 of the Arbitration Act. In
other words, in respect of international awards/arbitrations
covered by New York Convention, an appeal can be filed
against the orders passed by the Trial Court/first forum
only against an order refusing to refer the parties to
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arbitration or an order refusing to enforce an award under
Section 48 of the Arbitration Act and not against other
orders. Section 50 of the Arbitration Act creates the said
bar. Similar view has been taken in Shivnath Rai
Harnarain India Co. V. G.G. Rotterdam
MANU/DE/2802/2009 : 164 (2009) DLT 197 and in Usha
Drager Pvt. Ltd. v. Dragerwerk AG,
MANU/DE/2572/2009 : 2010 (170) DLT 628.
12. In Sumitomo Corporation v. CDC Financial Services
(Mauritius) Limited and Ors. MANU/SC/1101/2008 :
(2008) 4 SCC 91, the CLB had refused to refer the parties
to arbitration under Section 45 of the Arbitration Act. An
appeal was filed before the Delhi High Court under
Section 50 of the Arbitration Act and was registered as
FAO. This FAO was dismissed by the Delhi High Court
for lack of territorial jurisdiction holding that Section
10(1)(a) of the Companies Act will take precedence over
Section 50 of the Arbitration Act. The question, which
arose before the Supreme Court was whether the order
passed by the CLB refusing to refer the parties to
arbitration under Section 45 of the Arbitration Act was
liable to be challenged to the forum under Section 50 of
the Arbitration Act or to the forum under Section 10(1)(a)
of the Companies Act.
13. It was observed that Section 50 uses the expression
'court' but is followed by the words 'authorised by law to
hear appeals from such order'. It was held that the
expression 'court' does not refer to 'court' simplicitor but
has to be construed and interpreted with reference to the
subsequent words. Accordingly, it is not the court having
jurisdiction if the subject matter is a suit, where
jurisdiction is determined in accordance with the
provisions of Sections 16-20 of the Code of Civil
Procedure, 1908. On the other hand, Section 50 of the
Arbitration Act uses the words "authorised by law" and
not Civil Procedure Code or suit. Reference was made by
the Supreme Court to Ganga Bai v. Vijay Kumar
MANU/SC/0020/1974 : (1974) 2 SCC 393 that the right
of appeal inheres in no one and, therefore, an appeal for
its maintainability must have the clear authority of law.
The right to appeal is a creature of statute. The Supreme
Court in Sumitomo Corporation (supra) has held as under:
28. To our mind, the reading of Section 50 clearly
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suggests that an appeal shall lie from the order of CLB to
the court authorised by law to hear the appeals from such
order of CLB. To make it clear that in the event the order
under Section 45 is passed by CLB, the forum which is
provided under law for hearing the appeal from the order
of CLB, will be the appellate forum. In other words, while
Section 50 of the Arbitration Act provides for the orders
which can be made the subject-matter of the appeal, the
forum to hear the appeal is to be tested with reference to
the appropriate law governing the authority or forum
which passed the original order, that is, in the case on
hand, CLB. Section 10-F read with Section 10(1)(a) of the
Companies Act provides for such forum to hear the appeal
from the orders of CLB as the High Court within the
jurisdiction of which the registered office of the company
in issue is situated.
XXX
34. In view of our conclusion, we are satisfied that the
appellant has wrongly based its arguments on matters
such as ouster of jurisdiction, overriding effect of special
statute over general statute, overriding effect of
subsequent statute, etc. Since they have no application
whatsoever to the matter in issue, there is no need to refer
various decisions in those aspects. Ouster of jurisdiction
arises only in regard to original jurisdiction and it cannot
have any application to appellate jurisdiction as the one
provided in Section 50 of the Arbitration Act. The appeal
is a statutory remedy and it can lie only to the specified
forum. The appellate forum cannot be decided on the
basis of cause of action as applicable to original
proceedings such as suit which could be filed in any court
where part of cause of action arises. In such
circumstances, we are unable to accept the lengthy
arguments advanced on the abovementioned subject by
learned Senior Counsel for the appellant. Likewise, the
submission of the appellant, namely, the Arbitration Act
being a special and subsequent statute has no relevance to
the present case.
14. Thus, the Supreme Court has held that Section 50 of
the Arbitration Act stipulates the orders that can be made
subject matter of appeal but does not prescribe or fix the
forum which will hear the appeal. The forum to which an
appeal will lie, is determined and decided with reference
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to appropriate law governing the authority of the forum
which has passed an order which is appealable under
Section 50 of the Arbitration Act. Accordingly, an appeal
will lie under Section 10F of the Companies Act against
an appealable order under Section 50 of the Arbitration
Act passed by the CLB. The aforesaid decision does not
help the appellants but supports the contention raised by
the applicant-respondent No. 2. As per the said decision,
statutory appeal is maintainable if it is permitted under
Section 50 of the Arbitration Act. In such cases an appeal
can be filed under Section 10F of the Companies Act. The
Supreme Court had not held that an appeal under Section
10F would be maintainable even if an appeal is not
maintainable under Section 50 of the Arbitration Act.
15. Decision in the case of In Re. Hind Samachar Limited
(supra) was also referred before the Supreme Court but it
was held that the issue raised before the Supreme Court
was different as the question was whether appeal under
Section 10F should have been filed before the High Court
as specified in Section 10(1)(a) of the Companies Act, i.e.,
Punjab and Haryana High Court and not High Court of
Delhi.
16. Learned Counsel for the appellants has relied upon a
decision of a single Judge of High Court of Bombay in
Kinetic Engineering Limited v. Unit Trust of India
MANU/MH/0037/1995 : AIR 1995 Bombay 194. This
decision was also cited before the Punjab and Haryana
High Court in In Re Hind Samachar Limited (supra) and
was dissented from. I am not expressing any opinion in
this regard as I feel that the decision in the case of Kinetic
Engineering (supra) is distinguishable. In the case before
the Bombay High Court, proceedings were initiated
before the CLB under the Securities Contracts
(Regulation) Act, 1956 on the question whether the Board
of Directors have power to refuse registration of shares
under Section 22A(3) of the said Act. It has been held by
the Bombay High Court that the order passed by the CLB
can be assailed in an appeal under Section 10F as the CLB
while passing the impugned order had exercised
jurisdiction under Section 10E(1A) of the Companies Act.
It was further observed that in the Securities Contract
(Regulation) Act, 1956, there is no provision for appeal.
In other words, the said Act did not bar or prohibit any
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appeal. Accordingly, it was observed that the appeal
would lie under Section 10F of the Act as there was no
express or implied bar under the Securities Contract
(Regulation) Act, 1956. Thus it appears that the Bombay
High Court, had accepted that the doctrine of attachment
was applicable.
17. In view of the aforesaid discussion, the present
applications are allowed and it is held that the appeals
under Section 10F of the Companies Act are not
maintainable against the impugned orders allowing
applications under Section 45 of the Arbitration Act.
18. It is clarified that this Court has not expressed any
opinion on the merits of the impugned orders dated 20th
July, 2010 allowing the applications and referring the
matter to International Arbitration as this Court has no
jurisdiction to entertain the present appeals under Section
10F of the Companies Act. It is clarified that this Court
has not expressed any opinion whether the appellants
have remedy to challenge the said orders by way of writ
petitions or in some other appropriate proceedings. This
question has not been raised and argued before me."
28. The learned senior counsel for the respondents placed reliance upon the
judgment of this court in the case of International Technology Kirchner Italia
Branch, S.P.A. (supra). The Division Bench of this court has interpreted
section 37 of the Arbitration Act and after referring to the judgment of the
Punjab & Haryana High Court in the case of Sudarshan Chopra, has held thus :
"3. Aggrieved thereby, the defendant has filed the present
appeal. Ms Shah, the learned Counsel for the respondent
raised a preliminary objection about the maintainability of
this appeal. According to the learned Counsel for the
respondent, the present appeal is against an order from which
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no appeal lies under section 37 of the Arbitration and
Conciliation Act,1996, which reads as follows:-
"Appealable orders.- (1) An appeal shall lie from the
following orders (and from no others) to the Court authorised
by law to to hear appeals from original decrees of the Court
passing the order, namely:-
(a) granting or refusing to grant any measure under section 9;
(b) setting aside or refusing to set aside an arbitral award
under section 34.
(2) An appeal shall also lie to a Court from an
order granting of the arbitral tribunal.
(a) accepting the plea referred in sub-section
(2) or sub-section (3) of section 16; or
(b) granting or refusing to grant an interim
measure under section 17.
(3) No second appeal shall lie from an order passed in appeal
under this Section, but nothing in this section shall affect or
take away any right to appeal to the Supreme Court On a
plain construction of the provision it is clear that an appeal is
provided only from the orders specified therein i.e. (a)
granting or refusing to grant any measure under section 9 or
setting or refusing to set aside the arbitral award under section
34, (b) from an order accepting plea that the arbitral tribunal
has no jurisdiction and (c) an order granting or refusing to
grant an interim measure under section 17.
4. The words in parenthesis (and from no others), are equally
important. These words are intended to remove any doubt that
might arise about the maintainability of an appeal from any
order other than those specified. The words emphasise that an
appeal only lies from orders specified in the section and no
others. The only thing that needs to be seen therefore is
whether an appeal lies from an order under section 8 of the
Arbitration and Conciliation Act, 1996. It is clear that an
appeal is not provided under section 37. An order refusing to
refer the dispute to arbitration under section 8 is not an order
which falls in any of the categories specified in section 37 and
therefore is not appealable.
5. The view taken by us finds support in a decision of a
Division Bench of the Punjab and Haryana High Court in the
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case of Hind Samachar Limited, Jalandhar - Smt. Sudarshan
Chopra and others V. Vijay Kumar Chopra and others,
reported in (2002) 4 Company Law Journal 1, pointed out by
Ms Shah, the learned Counsel for the respondent. The
Division Bench of Punjab and Haryana High Court observed
in para 36 as follows:-
"Having dealt with all issues canvassed by learned counsel,
we now endeavour to draw conclusions based on our
interpretation of section 37 of the Arbitration Act, 1996. In the
absence of judicial precedent on the pointed issue, we will
embark upon the controversy on first principles. We have
already concluded above that even a remedy of appeal would
not be available unless expressly provided for, while
interpreting section 5 of the Arbitration Act, 1996. We have
also concluded that the term "orders" referred in Section 37 of
the Arbitration Act, 1996, refers to orders passed under Part I
of the Arbitration Act, 1996. The question then is whether the
remedy of appeal is excluded against an order passed by a
"judicial authority" under section 8 of the Arbitration Act,
1996? In our view, it is. The reason for the aforesaid
conclusion are the words 'and from no others' qualifying the
word 'orders' it leaves no doubt that section 37 (1)) of the
Arbitration Act, 1996, does not delineate an inclusive list of
appealable order, but defines the exhaustive list of orders
from which an appeal under the provisions of the Arbitration
Act, 1996, is competent. Since the list is exhaustive, and since
an order passed by a "judicial authority" under section 8 of
the Arbitration Act, 1996, is not included therein, it would
been enevitable to conclude that the remedy of appeal there
from is expressly excluded."
6. Ms Shah further submitted that in the context of an appeal
arising out of another kind of order the Division Bench of this
Court construed the provisions strictly in State of Maharashtra
and another V. Ramdas Construction Co. and another,
reported in 2006 (6) Mh.L.J. 678. An appeal was preferred
against an order refusing to condone the delay in making an
application for setting aside the arbitral award. It was
contended that since the appeal lay against an order setting
aside or refusing to set aside the arbitral award, an appeal
against an order is an application for condonation of delay in
making such application for setting aside the award must be
construed to be tenable. The Division Bench held that section
37 does not permit the appeal against the order rejecting an
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application for condonation of delay even if an order on the
application for condonation of delay would result in an order
on the application for setting aside an award against which an
appeal is tenable. The Division Bench held that an order on an
application for condonation of delay is not an appealable
order. We are in respectful agreement
with the view of the Division Bench.
7. We therefore, conclude that no appeal is provided for in
section 37 of the Arbitration and Conciliation Act, 1996
against the order under section 8 of that Act."
29. The learned counsel submits that the judgment of the Division Bench of
this court holding that
no appeal is provided under section 37 of the Act
against the order passed under section 8 of the Act is binding on this court. It is
submitted that by the said judgment, the law is laid down after interpreting
section 37 and 8 of the Act that no appeal is provided under section 37 against
the order under section 8 of the Act whether referring the parties to arbitration
or refusing to refer the parties to arbitration.
30. The learned senior counsel also placed reliance upon the judgment of
this court delivered by the division Bench of this Court on 8 th August, 2011 in
the case of Jet Airways and another Vs. Subrato Roy in Appeal No. 345 of
2011. This court after considering the judgment of the Supreme Court in
Fuerst Day Lawson Limited (supra) has held that LPA is not maintainable.
Para 21, 22 30 to 34 of the said judgment reads thus :
"21. In Sharda Devi, the Court pointed out that in South Asia
Industries, the Court had examined Sections 39 and 43 of the
Delhi Rent Control Act and held that a combined reading of the
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two sections showed that an order passed by the High Court in
an appeal under Section 39 was to be final. It was held that the
provision of finality was intended to exclude any further appeal.
This decision was, thus, based on interpretation of Sections 39
and 43 of the Delhi Rent Control Act. Section 54 of the Land
Acquisition Act, has no similarity with Sections 39 and 43 of
the Delhi Rent Control Act. Hence, the decision in South Asia
Industries had no relevance to decide the question whether a
letters patent appeal is maintainable against the judgment passed
by a single judge under Section 54 of the Land Acquisition Act.
22. In regard to the Letters Patent jurisdiction of the High
Court, this Court in Sharda Devi made the following
observation in paragraph 9:
9. A Letters Patent is the charter under which the
High Court is established. The powers given to a
High Court under the Letters Patent are akin to the
constitutional powers of a High Court. Thus when a
Letters Patent grants to the High Court a power of
appeal, against a judgment of a Single Judge, the
right to entertain the appeal would not get excluded
unless the statutory enactment concerned excludes
an appeal under the Letters Patent.
30. Having, thus, put the controversy in the historical
perspective, the Court referred to Sections 4 and 104 of the
Code and made the following observation in paragraph 6 of the
judgment:
6. To be immediately noted that now the legislature
provides that the provision of this Code will not affect
or limit special law unless specifically excluded. The
legislature also simultaneously saves, in Section
104(1), appeals under "any law for the time being
in force". These would include letters patent
appeals. (emphasis supplied )
The above is really the kernel of the decision in P.S.
Sathappan and the rest of the judgment is only an elucidation
of this point.
26. In P.S. Sathappan, on a consideration of a number of
earlier decisions, the Constitution Bench concluded that till
1996, the unanimous view of all courts was that Section
104(1) Code of Code of Civil Procedure specifically saved
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letters patent appeals and the bar under Section 104(2) did not
apply to letters patent appeals. Thereafter, there were two
decisions in deviation from the accepted judicial view, one by
a bench of two judges of this Court in Resham Singh Pyara
Singh v. Abdul Sattar MANU/SC/1019/1996 : (1996) 1 SCC
49 and the other by a bench of three judges of this Court in
New Kenilworth Hotel (P) Ltd. v. Orissa State Finance
Corporation MANU/SC/0220/1997 : (1997) 3 SCC 462. P.S.
Sathappan, overruled both these decisions and declared that
Resham Singh Pyara Singh and New Kenilworth Hotel (P)
Ltd. laid down wrong law. It further pointed out that even after
the aforementioned two decisions this Court had continued to
hold that a Letters Patent Appeal is not affected by the bar of
Section 104(2) Code of Code of Civil Procedure. In this
connection, it referred to Vinita M. Khanolkar (supra), under
Section 6 of the Specific Relief Act, Chandra Kanta Sinha v.
Oriental Insurance Co. Ltd. and Ors. MANU/SC/0339/2001 :
(2001) 6 SCC 158, under Section 140 of the Motor Vehicles
Act, 1988, Sharda Devi (supra), under Section 54 of the Land
Acquisition Act and Subal Paul (supra), under Section 299 of
the Indian Succession Act, 1925 and came to the conclusion
that the consensus of judicial opinion has been that Section
104(1) Code of Code of Civil Procedure expressly saves the
letters patent appeal and the bar under Section 104(2) Code of
Code of Civil Procedure does not apply to letters patent
appeals. In paragraph 22 of the judgment, the Court observed
as follows:
22. ...The view has been that a letters patent appeal cannot be
ousted by implication but the right of an appeal under the
Letters Patent can be taken away by an express provision in an
appropriate legislation. The express provision need not refer to
or use the word "letters patent" but if on a reading of the
provision it is clear that all further appeals are barred then
even a letters patent appeal would be barred.
27. Further, analysing the two Sub-sections of Section 104(2)
along with Section 4 Code of Code of Civil Procedure , this
Court in paragraph 30 of the judgment observed as follows:
30. ...Section 104 must be read as a whole and harmoniously.
If the intention was to exclude what is specifically saved in
Sub-section (1), then there had to be a specific exclusion. A
general exclusion of this nature would not be sufficient. We
are not saying that a general exclusion would never oust a
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letters patent appeal. However, when Section 104(1)
specifically saves a letters patent appeal then the only way
such an appeal could be excluded is by express mention in
Section 104(2) that a letters patent appeal is also prohibited...."
31. Mr. Chinoy, learned senior counsel submits that section 37 sub section
(1) is in two parts. First part "appeal shall lie" from the following orders
indicates the orders set out in sub section (a) and (b) of section 37(1) and
sub section (2) which are appellable and no other orders whereas expression
used in second part "court authorised by law to hear appeals from the
original decrees of the court passing order" indicates forum which could hear
such appeals which are provided in the first part of section 37(1). It is
submitted that the court authorised by law to hear the appeal does not mean
the court defined under section 2(e) of the Arbitration Act. It is submitted that
if section 37 of the Act does not apply, the applicant cannot invoke section
10F. Section 10F is not remedy of appeal.
32. Mr. V.V. Tulzapurkar, learned senior counsel appearing for respondent
No.2 submits that section 10F of the Companies Act can only be invoked for
the purpose of finding out the forum and not for substantive right of appeal. It
is submitted that no rights are decided by the CLB under section 397 and 398
of the companies Act while referring the parties to arbitration while allowing
section 8 application filed by the respondent. The learned senior counsel
invited my attention to section 37, 45 and section 50 of the Arbitration Act,
1996. It is submitted that section 45 read with section 50 makes it clear that it
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was intended by the Legislature that if application under section 45 is made
before the Judicial Authority which is seized of the action in the matter in
respect of which parties have made agreement referred to in section 44, at the
request of one of the parties to refer the parties to arbitration is rejected by the
Judicial Authority, such order is specifically appeallable under section 50(1)(a)
of the Act. It is submitted that there is no such provision made by the
legislature under section 37(1) or (2) in respect of the order passed by the
Judicial Authority under section 8 of the Arbitration and Conciliation Act,
1996. The learned counsel submits that the legislative intent of the
Parliament is absolutely clear that no remedy of appeal is provided under
section 37 against the order passed by the Judicial Authority under section 8 of
the Act. It is submitted that the remedy of appeal is provided by the statute and
since no such appeal is provided against the order passed by the Judicial
Authority under section 8, appeal filed by the appellant under section 10F is
not maintainable. The learned senior counsel submits that there is no merit in
the submissions made by Mr. Dwarkadas, that appeal is maintainable as the
proceedings filed by the appellant under section 397 and 398 read with
section 402 are terminated by virtue of order passed by CLB under section
8. The learned senior counsel placed reliance upon the judgment of P. Anand
Gajapati (supra) and more particularly paragraph 8 which reads thus :
"8. In the matter before us, the arbitration agreement covers all
the disputes between the parties in the proceedings before us and
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even more than that. As already noted, the arbitration agreement
satisfies the requirements of Section 7 of the new Act. The
language of Section 8 is per-emptory. It is therefore, obligatory
for the Court to refer the parties to arbitration in terms of their
arbitration agreement. Nothing remains to be decided in the
original action or the appeal arising therefrom. There is no
question of stay of the proceedings till the arbitration
proceedings conclude and the Award becomes final in terms of
the provisions of the new Act. All the rights, obligations and
remedies of the parties would now be governed by the new Act
including the right to challenge the Award. The Court to which
the party shall have recourse to challenge the Award would be
the Court as defined in Clause (e) of Section 2 of the new Act
and not the Court to which an application under Section 8 of the
new Act is made. An application before a Court under Section 8
merely brings to the Court's notice that the subject matter of the
action before it is the subject matter of an arbitration agreement.
This would not be such an application as contemplated under
Section 42 of the Act as the Court trying the action may or may
not have had jurisdiction to try the suit to start with or be the
competent Court within the meaning of Section 2(e) of the new
Act."
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33. Mr. Tulzapurkar, the learned senior counsel submits that in view of the
order passed by CLB referring the parties to arbitration nothing remains to be
decided in Company petition filed by the appellant under section 397 and 398
read with 402 of the Act. All the rights, obligations and remedies of the
parties would now be governed by the Arbitration Act, 1996 including right to
challenge the award. It is submitted that once the conditions provided under
section 8 are satisfied, CLB was bound to refer the parties to arbitration under
section 8 of the Act. Since there is no appeal provided under section 37, the
appellant could not have recourse to section 10F which is only for the
purpose of finding forum provided right of appeal is provided under section 37
of the Act.
34. The learned senior counsel submits that the language of section 37(1) is
very clear that the only orders passed by the court under section 9 or section
34, appeal is maintainable before the court and thus does not include any
order passed by the Judicial Authority. It is submitted that from the perusal of
section 37(2) it is clear that appeal lies to court against the order passed by the
arbitral tribunal under section 16(2) or (3) and against the interim measures
passed under section 17 which also does not include any order passed by the
judicial authority. It is submitted that the legislative intent is very clear that
with a view to minimise judicial intervention of the court, court's intervention
is minimal. The learned senior counsel has adopted the other submissions
made by Mr. Kamdar and Mr. Chinoy. It is submitted that the Judgment of this
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court in Jet Airways and in the case of International Thermal is still in force
and is binding.
35. The learned counsel placed reliance upon the judgment of the Supreme
Court reported in Harbhajan Singh and another Vs. State of Punjab and
another15, and more particularly para 14 and 15. It has been held by the
Supreme Court that merely because the issue is pending before the larger
bench, the court need not wait for its outcome of the decision. Para 14 and 15
reads thus :
"14. In the aforementioned decision, the learned Judges had
referred to a judgment of this Court in the case of Rakesh and
Anr. v. State of Haryana MANU/SC/0390/2001 :
2001CriLJ3511 : (2001) 6 SCC 248 wherein it was held that
even without cross-examination on the basis of a prima facie
material which would enable the Sessions Court to decide
whether the power under Section 319 of the Code should be
exercised or not stating that at that stage evidence as used in
Section 319 of the Code would not mean evidence which is
tested by cross-examination.
15. Even if what is contended by the learned Counsel is correct,
it is not for us to go into the said question at this stage; herein
cross-examination of the witnesses had taken place. The Court
had taken into consideration the materials available to it for the
purpose of arriving at a satisfaction that a case for exercise of
jurisdiction under Section 319 of the Code was made out. Only
because the correctness of a portion of the judgment in the case
of Mohd. Shafi (supra) has been doubted by another bench, the
same would not mean that we should wait for the decision of
the larger bench, particularly when the same instead of
assisting the appellants runs counter to their contention."
36. The learned counsel appearing for the respondents pointed out that the
judgment delivered by the Supreme Court in the case of Fuersday Lawson is
not based on any concession as canvassed by Mr. Dwarkadas, learned senior
15 2009 13 SCC 608
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counsel for the appellant. Attention of this court is invited to para 61 and 62 of
the said judgment which reads thus .
"61. Once it is seen that Part I and Part II of the Act are quite
different in their object and purpose and the respective schemes, it
naturally follows that Section 37 in Part I (analogous to Section 39
of the 1940 Act) is not comparable to Section 50 in Part II of the
Act. This is not because, as Mr. Sundaram contends Section 37 has
the words in parentheses "and from no others" which are not to be
found in Section 50 of the Act. Section 37 and Section 50 are not
comparable because they belong to two different statutory schemes.
Section 37 containing the provision of appeal is part of a much
larger framework that, as seen above, has provisions for the
complete range of law concerning domestic arbitration and
international commercial arbitration. Section 50 on the other hand
contains the provision of appeal in a much limited framework,
concerned only with the enforcement of New York Convention
awards. In one sense, the two sections, though each containing the
appellate provision belong to different statutes.
62. Having come to this conclusion, it would appear that the
decisions rendered by the Court on the interplay between Section 39
of the 1940 Act and the Letters Patent jurisdiction of the High Court
shall have no application for deciding the question in hand. But that
would be only a superficial view and the decisions rendered under
Section 39 of the 1940 Act may still give the answer to the question
under consideration for a very basic and fundamental reason.
37. It is submitted that reliance placed by the appellant on the judgment of
Conros (supra) is totally misplaced. There is no issue arising in this matter as
to whether the appeal under clause 15 of Letters Patent lies or not.
38. Mr. Samdani, learned counsel for respondent no. 4 submits that under
section 37 of the Arbitration Act, the appeal is provided only against the order
of court or arbitral tribunal and not against the orders passed by the judicial
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authority. It is submitted that all other orders which are not specifically
included under section 37(1) and (2) are not appeallable and are barred. It is
submitted that the reliance placed by the appellants on order passed by the
Division Bench in the case of Conros is totally misplaced. It is submitted that
any observations made by the Division Bench in the case of Conros de hors
the question referred to larger bench had to be considered as obiter not ratio.
39. Mr. Rahul Chitnis, the learned counsel for the respondent in Company
Appeal No. 4 of 2011 adopts the argument of Mr. Kamdar, Mr.Chinoy and
Mr. Samdani. It is submitted that there is no appeal provided under section 37
against the order passed by the Judicial Authority under section 8 even if such
application is rejected by the Judicial authority. It is submitted that CLB has
rightly rejected the application made by the appellant under section 8 in view
of the appellant not having satisfied the condition under section 8. It is
submitted that since the appeal is not maintainable under section 37 of the
Arbitration, recourse to section 10F is not permissible. The learned counsel
placed reliance upon the judgment of the Supreme Court and Punjab &
Haryana High Court.
40. In rejoinder Mr. Dwarkadas, learned counsel made attempt to
distinguish the judgment relied upon by Mr. Kamdar, Mr. Chinoy, Mr.
Samdani and Mr. Tulzapurkar, the learned senior counsel appearing for various
respondents. It is submitted that there was no issue of maintainability of appeal
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before the Supreme Court in the case of Sumitomo (supra). It is submitted that
the judgment of the Supreme Court in the case of Fuerstday Lawson is not
applicable as the Supreme Court was seized of the matter arising under Part II
of the Arbitration Act and not Part I. It is submitted that no reliance can be
placed on the judgment of the Punjab & Haryana High Court in the case of
Sudarshan as well as Delhi High Court in the case of Vijay Shekri (supra) as
this court is bound by the judgment delivered by the Division Bench of this
court in the case of Conros. It is submitted that
ig bar under section 5 of the
Arbitration Act, has been considered by the Supreme Court in the case of ITI
Vs. Siemens (supra) and inspite of such bar, it has been held by the Supreme
Court that the revision under section 115 of the Code of Civil Procedure is
maintainable. It is submitted that appeal under section 10F is not expressly or
impliedly taken away under the Arbitration Act and thus appeal filed by the
appellant under Section 10F is maintainable and shall be heard on merits.
41. I have heard the learned counsel appearing for the parties at length on
the issue of maintainability of the present appeal and have given my anxious
consideration to the rival submissions made by the learned counsel.
42. The Supreme Court in the case of Fuerst Day Lawson Limited (supra)
after referring to the decision of the Constitution Bench in the case of P.S.
Sathappan Vs. Andhra Bank Ltd.16, the judgment of the Supreme Court in the
16 (2004) 11 SCC 672
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case of Mohindra Supply Company (supra) held that the Arbitration and
Conciliation Act, 1996 is a self contained and exhaustive code in itself.
Arbitration and Conciliation Act, 1996 consolidates, amends and designs the
law relating to arbitration to bring it as much as possible, in harmony with the
UNCITRAL Model must be held only to be more so. It is observed that once
it is held that he Arbitration Act of 1996 is a self contained code and
exhaustive, then it must also be held that it carries with it a negative import
that only such acts as are mentioned in the Act are permissible to be done and
acts or things not mentioned therein are not permissible to be done. By
laying down these principles, the Supreme Court held that letters Patent Appeal
would be excluded by application of one of the general principles that where
the special Act sets out a self contained code the applicability of the general
law procedure would be impliedly excluded. It has been held that no Letters
Patent Appeal would lie against the order which was not appealable under
section 50 of the Arbitration Act, 1996.
43. The question that arises for consideration of this court is whether the
appeal filed under section 10F of the Companies Act, 1956 against the order
passed by CLB allowing the application made by a party under section 8
who is party to the arbitration agreement and referring the dispute between
the parties filed under section 397 and 398 of the Companies Act to
arbitration is maintainable? The question arises is whether the said order is
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appeallable under section 37 of the Arbitration Act, 1996 or even if not
maintainable, whether appeal can be independently filed under section 10F of
the Companies Act, 1956? Whether appeal u/s. 10F of the Companies Act
provides for forum or provides for substantive right of appeal?
44. Perusal of the order passed by CLB and the pleadings filed by the parties
indicates that the appellant had filed petition under section 397 and 398 read
with 402 of the companies Act, 1956 before CLB on the ground of alleged
oppression and mismanagement in the affairs of the first respondent company
by the other respondents. In the said proceedings one of the respondent had
moved an application under section 8 of the Arbitration Act, 1996 before CLB
under section 8 of the Arbitration Act, 1996. From the perusal of the order it is
clear that CLB while allowing the application filed by the respondent
decided the said application exercising powers under section 8 of the
Arbitration Act as judicial authority and did not exercise any jurisdiction
under section 397 and 398 read with section 402 of the Companies Act, 1956.
It is clear that by the impugned order CLB has determined the rights of the
parties flowing out of the provisions of the Arbitration Act, 1996 and not the
provisions of the Companies Act, 1956. In my view, CLB did not adjudicate
any disputes between the parties under section 397 and 398 of the Companies
Act, 1956 while referring the parties to Arbitration under section 8 of the
Arbitration Act, 1996. In my view, remedy of appeal if any, thus has to be
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traced out from within the provisions of the Arbitration Act, 1996 and not
under any other provisions of law including Companies Act, 1956. From the
perusal of the pleadings including appeal memo in the present proceedings, it
is clear that the order passed by CLB is under section 8 of the Arbitration Act,
1996 and not under the provisions of the Companies Act, 1956. I am of the
view that since the Arbitration Act, 1996 is a self contained, complete and
exhaustive code in all respects, all the remedies from the orders passed and
action taken in Arbitration Act, 1996 must flow from the said statute itself. It
carries negative import and thus only such acts which are mentioned to be
done under the said Act are permissible and all other acts or things not
mentioned are not permissible.
45. The Supreme Court in the case of Union of India Vs. Mohindra Supply
Co. has considered and interpreted section 39 of the Indian Arbitration Act,
which reads thus :
" (1) An appeal shall lie from the following orders passed under this
Act (and from no others) to the Court authorised by law to hear
appeals from original decrees of the Court passing the order :
An order -
(i) superceding an arbitration;
(ii) on an award stated in the for of a special case;
(iii) modifying or correcting a award;
(iv) filing or refusing to file a arbitration agreement;
(v) staying or refusing to stay legal proceedings where there is an
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arbitration agreement;
(vi) setting aside refusing to set aside an award :
Provided that the provisions of this section shall not apply to any
order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under
this section, but nothing in this section shall affect or take away any
right to appeal to the Supreme Court. "
46. In my view section 39 of Indian Arbitration Act is para materia to
section 37 of the Arbitration Act, 1996. Supreme Court has held that the
qualifying expression "to the court authorised by law to hear appeals from
original decrees of the Court passing the order" in Section 39(1) does not
import the concept that the appellate court must be distinct and separate from
the court passing the order or the decree. The legislature has not so enacted
and the context does not warrant such an interpretation. The clause merely
indicates the forum of appeal. The Supreme Court has held that under Code
of Civil Procedure, 1908, right of appeal under the Letters Patent was saved
both by Section 4 and the clause contained in Section 104(1), but by the
Arbitration Act of 1940, the jurisdiction of the Court under any other law for
the time being in force is not saved, the right of appeal can therefore, be
exercised against orders in arbitration proceedings only under section 39, and
no appeal (except an appeal to that Court) will lie from an appellate order. The
Supreme Court held that it is so done with a view to restrict right of appeal
within the strict limits defined by Section 39 and to take away the right
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conferred by other statutes. It has been held that the Arbitration Act which is a
consolidating and amending act being substantially in the form of a code
relating to arbitration must be construed without any assumption that it as not
intended to alter the law relating to appeals. The Supreme Court held that the
Letters Patent Appeal was not maintainable.
47. The Division Bench of this Court in the case of Jet Airways (supra)
after considering the judgments of the Supreme Court
ig and various other
provisions of the Arbitration Act and Letters Patent Act held that perusal of
Arbitration Act, 1996 indicate that it provides for filing of appeal against only
some specified orders and do not provide for appeal against every order
passed in the proceedings under 1996 Act. It has been held that the general
law can not defeat the provisions of special law to the extent to which they are
in conflict; else effort has to be made on reconciling the two provisos by
homogeneous reading. It has been held that the provisions of section 37 (the
relevant portion of which is para materia relevant portion of section 39 of
1940 Act) leave no manner of doubt that the provisions of the special
enactment will prevail over the general law namely, the 1908 Code. It has been
held that statutory scheme of 1996 Act and the Letters Patent Act and the
binding precedents of Supreme Court and this lead the Court to only one
conclusion that clause 15 of the Letters Patent are impliedly excluded by the
1996 Act. The Division Bench in the said judgment after considering the
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judgment of the Supreme Court in Fuerst Day Lawson (supra) held that the
Supreme Court in the case of Fuerst Day Lawson conclusively determines the
question of maintainability and the observations in Paragraphs 70 to 73
constitute a binding precedent even in respect of the maintainability of an
appeal against an order passed in the proceedings arising out of a domestic
award under Part I of the 1996 Act and the submissions of the learned Counsel
for the appellants to the effect that the said judgment of the Supreme Court
determines the issue of only an appeal against proceedings under Part II for
New York Convention foreign awards or the submission that the said judgment
does not constitute a binding precedent cannot be accepted.
48. The Supreme Court in the case of Sumitomo Corporation (supra)
considered the provisions of section 45 of the Arbitration Act, 1996, Section 45
and 50 of the Arbitration Act, 1996 and section 10(1)(a) of the Companies Act,
1956. After considering these provisions, the Supreme Court held that in the
case of appeals for its maintainability, there must be specific provision or clear
authority of law. It is held that while exercising the original jurisdiction as
provided under section 47 and other similar sections of Arbitration Act,
should be by the court within the jurisdiction of which the suit would have
been filed; the appeal shall always be to the appellate forum which hears
appeals from the order of the forum which passes the order. It is held that it
was clear from section 37 of the Act dealing with appeals that the appeal was
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to the court which hears the appeal and not the court which exercises original
jurisdiction, if the subject matter had been a suit as provided in the
explanation to section 47 or section 2(c) of the Arbitration Act. It is held that
reading of section 50 clearly suggests that an appeal shall lie from the order of
CLB to the court authorised by law to hear the appeals from such order of
CLB. In the event the order under section 45 is passed by CLB the forum
which is provided under law for hearing the appeal from the order of CLB, will
be the appellate forum. The Supreme Court held that while section 50 of the
Arbitration Act provides for the orders which can be made the subject matter
of the appeal, the forum to hear the appeal is to be tested with reference to the
appropriate law governing the authority of forum, which passed the original
order, that is, in the case on hand before Supreme Court was CLB. It is held
that section 10F read with section 10(1)(a) of the Companies Act provides for
such forum to hear the appeal from the orders of CLB as the high Court within
the jurisdiction of which the registered office of the company in issue is
situated. It has been held that the appeal is a statutory remedy and it can lie
only to the specified forum. The appellate forum cannot be decided on the
basis of cause of action as applicable to original proceedings such as suit
which could be filed in any court where part of cause of action arises.
49. The Judicial Authority has not been defined in any of the provisions of
Arbitration Act, 1996. In my view the court may in appropriate matter act as
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judicial authority under section 8 whereas the judicial authority may not be the
court as defined under section 2(1)(e). From perusal of section 37 of the
Arbitration Act, 1996 it is clear that section 37(1) is in two parts. First part
indicates the maintainability of appeal against specific orders and not others set
out in section 37(1)(a), (b), 2(a) and 2(b). Second part under section 37(1)
reflects forum which is authorized by law to hear appeals from original
decrees. In my view, only such specified orders passed by the court under
section 9 or under section 34 as set out in 37(1)(a) and (b) and orders passed
by the arbitral tribunal under section 16(2) or (3) or under section 17 are
appealable under section 37 and not other orders. In my view, the order passed
by the judicial authority or even by court whether by such order passed under
section 8 the parties are referred to Arbitration or refuses to refer parties to
arbitration, is not an appealable order under section 37 of the Arbitration Act,
1996.
50. The Division Bench of this court in its judgment dated 19 th March, 2009
in the case of International Technology (supra) has considered the appeal
arising out of the order passed by the Single Judge of this court under section
8 of the Arbitration Act, 1996 refusing to refer the dispute to arbitration. After
considering the judgment of Punjab & Haryana High Court in the case of
Hind Samachar Limited and Smt. Sudarshan (supra), this court took a view
that on above construction of section 37 of Arbitration Act, 1996, it is clear
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that the appeal is provided only from the orders specified therein. The words
in parenthesis (and from no others) emphasizes that the appeal only lies
from the orders specified in the section and not others. The Division Bench
held that the appeal is not provided under section 37 against the order
refusing to refer the dispute to arbitration under section 8 and such order does
not fall in any of the categories specified in section 37 and thus appeal is
not maintainable. In my view the judgment of the Division Bench in the case
of International Technology (supra) holds the field and is binding on this court.
51. In my view on conjoint reading of Section 5 with Section 37 of the
Arbitration Act, 1996, it is clear that judicial authority is barred from
intervening in any proceeding which are not otherwise provided in Part I of the
Arbitration Act, 1996. In my view, the Arbitration Act, 1996 being a self
contained code and the order under Section 8 passed by the judicial authority
or by the court is not appealable under Section 37, the present appeal under
Section 10F is not maintainable. In my view, there is no merit in the
submission of Mr.Dwarkadas, the Learned Senior Counsel that there is no bar
under Section 37 from hearing appeal against any other order nor specifically
mentioned in Sections 37(1) (a) and (b) and 37(2) (a) and (b). In my opinion,
from the expression used "and from no others", it is clear beyond reasonable
doubt that appeal is not maintainable against any other order other than what is
mentioned in Section 37 (1) (a) and (b) and 37 (2) (a) and (b). In my view
there is clear bar under Section 37 restricting right of appeal only against
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specified orders set out therein and no other orders. In my view, Section 5 of
the Arbitration Act, 1996 leave no room for doubt that judicial authorities and
court is restrained from intervening in matters governing domestic arbitration
"except where so provided". In my view, an order passed under Section 8 of
the Arbitration Act, not having been provided as appealable order under under
Section 37, recourse to Section 10F of the Companies Act is not permissible.
52. In my view, the impugned order is passed by the Company Law Board
under Section 8 of the Arbitration Act, 1996 and thus all rights, obligation and
liabilities of the parties are created and/or arising out of Arbitration Act, 1996
and therefore, remedy if any provided under Arbitration Act, 1996 only can be
invoked. In my view, the provisions of the Arbitration Act, 1996 are
exhaustive and it is comprehensive code and in view of non obstinate clause
under Section 5 of the Arbitration Act, 1996, it excludes all judicial authorities
from intervention in matters regulated under Part I of the Arbitration Act, 1996.
The intention of the legislature is clear that the provision of Arbitration Act,
1996 limits intervention of court with an arbitral process to the minimum.
Supreme Court in case of Konkan Railway Corporation Ltd. and others vs.
Mehul Construction Co. (2000) 7 SCC 201 has held that it is not legislative
intent that each and every order passed by the authority under the Act would be
a subject-matter of judicial scrutiny of a court of law. In my view, interpreting
Section 5 of the Arbitration Act, 1996, it is clear that the remedy of an appeal to
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an appellate court would be permissible only if so expressed, specifically or by
necessary implication, in Part I of the Arbitration Act, 1996, and not otherwise.
53. Punjab High Court in case of Smt.Sudershan Chopra (supra) after
considering the judgment of the Supreme Court in case of Mohindra Supply
and others (supra) and other judgments has held that order passed by the
judicial authority under Section 8 of the Arbitration Act is not appealable under
Section 37 (1) of the Arbitration Act, 1996. Delhi High Court in case of Vijay
Sekhri and anr. (supra) after following judgment of the Supreme Court and
after referring the judgment of the Punjab High Court in case of Smt.Sudershan
Chopra & Ors. (supra) has taken a view that appeal under Section 10F of the
Companies Act is not maintainable against the order allowing the application
under Section 45 of the Arbitration Act, 1996.
54. In my view on conjoint reading of Section 45 with Section 50 of the
Arbitration Act 1996, it is clear that order passed by the judicial authority
which is seized of an action which is subject matter of the arbitration
agreement if refuses application under Section 45 to refer parties to arbitration
is expressly appealable under Section 50(1) (a). It is thus clear that in case of
proceedings falling under Part II of the Arbitration Act, 1996, the legislature
had intended clearly to provide for the appeal in case of an order refusing to
refer parties to the arbitration under Section 45 of the Act. If legislature
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intended to provide appeal in case of similar situation in respect of the
proceedings falling under Part I of the Arbitration Act 1996, legislature would
have provided for an appeal also in respect of order passed by the judicial
authority under Section 8 refusing or referring parties to arbitration under
Section 8. It is thus clear that in case of proceedings covered by Part I of the
Arbitration Act, the legislature has intended the minimum interference of court
by not providing any appeal against order passed by the judicial authority or
court under section 8 of the Arbitration Act, 1996.
ig In my opinion, the
legislature has consciously taken away the right to appeal against all other
orders which are not provided in Section 37 of the Arbitration Act, 1996 had so
far as proceedings falling under Part I of the Arbitration Act, 1996 are
concerned.
55. Supreme Court in case of ITI Ltd. vs. Siemens Public Communications
Network Ltd. (supra) has considered the revisional jurisdiction of the superior
court while interpreting Section 37(3) of the Arbitration Act, 1996. The
Supreme Court has held that under Section 37(3) of the Arbitration Act, second
appeal is barred from the order passed in appeal under Section 37(1) or 37(2).
It is held that the supervisory and revisional jurisdiction of the High Court
under Section 115 of the Code of Civil Procedure is neither expressly nor
impliedly barred either by the provisions of Section 37 or Section 19(1) of the
Arbitration Act, 1996. In my view, reliance placed by the Learned Senior
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Counsel Mr. Dwarkadas appearing for the Appellant on this judgment in
support of his proposition that after considering Section 5 of the Arbitration
Act, 1996, the Supreme Court still took a view that though the second appeal is
not maintainable under Section 37(3), the revision under Section 115 of the
Code of Civil Procedure is still maintainable, is misplaced. In my view from
reading of Section 37(3), it is clear that no second appeal is maintainable
against the order passed by the Court under Section 37 (1) or 37(2) of the
Arbitration Act, 1996. In my view the expression "and from no other orders",
used in Section 37(1) of the Arbitration Act, indicates that the court is not
authorised to hear appeals other than which are specifically appealable and
provided under Section 37(1) (a) and (b) and 37(2) (a) and (b). The Supreme
Court was not considering the issue of maintainability of the appeal under
Section 37(1) or (2) in case of ITI Ltd. (supra). In my view, the facts before
the Supreme Court in case of ITI Ltd. are thus clearly distinguishable in the
facts of this case.
56. In my view, there is no merit in the submission made by Mr.Dwarkadas,
the learned Senior Counsel that the Respondents cannot place reliance upon the
judgment of the Supreme Court in case of Mohindra Supply and others (supra)
or any other judgments which have dealt with the provisions of the Indian
Arbitration Act or Arbitration Act, 1940 by referring upon the observations
made by the Supreme Court in case of M/s.Sundaram Finance Ltd. Vs.
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M/s.NEPC. The Supreme Court in case of Fuerst Day Lawson Limited, in para
(62) has held that decisions rendered under Section 39 of the 1940 Act may
still give, the answer to the question under consideration for a very basic and
fundamental reason. In my view, the provisions under Section 39 of the Indian
Arbitration Act is in paramataria with section 37 of the Arbitration Act, 1996.
In my view, the ratio laid down by the Supreme Court in case of Mohindra
Supply and others (supra) would clearly attract to the facts of this case and I
am bound by such precedent.ig
57. In my view, there is no merit in the submission of Mr.Dwarkadas, the
Learned Senior Counsel that by virtue of the order passed by the CLB under
Section 8 of the Arbitration Act, 1996, the proceeding filed by the appellant
under Sections 397, 398 read with Section 402 of the Companies Act, 1956 is
terminated and is put to an end and thus the Appellant would be without any
remedy in law. The Supreme Court in case of P. Anand Gajapathi Raju
(supra) has held that language of Section 8 is peremptory and is thus
obligatory for the Court to refer the parties to arbitration in terms of their
arbitration agreement. Nothing remains to be decided in the original action or
the appeal arising therefrom. It is held that all the rights, obligations and
remedies of the parties would now be governed by the Arbitration Act, 1996
including the right to challenge the award. In my view, once the judicial
authority has referred the matter to arbitration, the judicial authority cannot
continue its jurisdiction over the subject matter of such proceedings and
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nothing remains to be decided in the original action once parties are referred to
arbitration.
58. In case of Conros Steel Pvt. Ltd. (supra) heavily relied upon by the
Appellant in support of the plea that after considering the judgment in Supreme
Court in case of Mohindra Supply (supra), Sudarshan Chopra (supra),
International Thermal Technology Kircher Italia (supra), Jet Airways (India)
Ltd. (supra), Fuerst Day Lawson Limited (supra), the Division Bench has
referred the issue whether Clause 15 against the Letters Patent against the order
passed by the learned single judge of this court in the Civil suit in an
application filed in that civil suit because of Section 8 of the Act can
maintainable or not to the larger bench. Mr. Dwarkadas, the learned senior
counsel submits that Division Bench of this court has already considered and
interpreted various judgments of the Supreme Court and has come to the
conclusion that matter requires reconsideration by a larger bench and thus this
judgment decides the law and is binding on the single Judge of this court. In
my view, the order passed by the Division Bench in case of Conros Steel Pvt.
Ltd. (supra) does not lay down any ratio but by the said order the Division
Bench has expressed its dis-agreement on the issue already decided by the
Supreme Court as well as the Division Bench of this Court and has referred the
issue about maintainability of appeal under clause 15 of the Letters Patent to
the larger bench. In my view, the law already laid down by the Supreme Court
as well as Division Bench of this Court will prevail and is binding on the single
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Judge of this court. In my view, order referring certain issues to be decided by
larger bench does not lay down any law. In any event, in this matter, no issues
arises as to whether any appeal under clause 15 of the Letters Patent is
maintainable against the order passed under Section 8 of the Arbitration Act or
not. In my view, the Division Bench in case of International Thermal
Technology Kircher Italia (supra) has already held that appeal under Section 37
is not maintainable against an order passed under Section 8 of the Arbitration
Act, 1996. I am bound by the said judgment delivered by the Division Bench
of this Court. In my view reliance placed by the Learned Senior Counsel
Mr.Dwarkadas on the order dated 13th March, 2012 in case of Conros Steel
Pvt. Ltd. (supra) is thus misplaced and the said order is of no assistance to the
appellant.
59. In my view, the learned Senior Counsel Mr. Kamdar is appearing for one
of the Respondent is right in placing reliance on the judgment of the Supreme
Court in case of Harbhajan Singh and another (supra) that only because of
the correctness of a portion of the judgment has been doubted by another
bench, the same would not mean that this court should wait for the decision of
the larger bench.
60. In my view, since the order passed by the CLB under Section 8 of the
Arbitration Act referring parties to the arbitration is not appealable order under
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Section 37 of the Arbitration Act, 1996, appellant cannot invoke Section 10F of
the Companies Act, 1956. In my view, Section 10F provides for forum of
appeal, provided an appeal is maintainable under Section 37 of the Arbitration
and Conciliation Act, 1996. I am, therefore, of the opinion that all the
aforesaid appeals filed under Section 10F of the Companies Act are not
maintainable in view of bar under Section 37 of the Arbitration Act, 1996 and
are dismissed.
61.
In view of the order passed in Company Appeals by this Court holding
that appeals under Section 10F of the Companies Act, 1956 is not maintainable,
reliefs claimed in Company Applications does not survive and are accordingly
disposed of. It is made clear that this court has not expressed any views on the
merits of the order passed by the CLB referring and/or refusing to refer parties
to arbitration.
There shall be no order as to costs.
(R.D. DHANUKA, J.)
