2012 (11) TMI 607 - HC - Companies Law

Appeals Dismissed: Arbitration Act Prevails Over Companies Act

Masusmi SA Investment LLC Versus Keystone Realtors Pvt. Ltd. & Others

The appeals filed under Section 10F of the Companies Act, 1956, against orders of the CLB referring parties to arbitration under Section 8 of the ... Oppression and mismanagement - whether against an order passed by the learned Single Judge of this Court in a civil suit terminating 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 is barred by the provisions of Section 37 of the Arbitration and Conciliation Act - Held that:- As per the order in UOI Versus MOHINDRA SUPPLY COMPANY [1961 (9) TMI 41 - SUPREME COURT] Section 39 of Indian Arbitration Act is para materia to section 37 of the Arbitration Act, 1996. 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 clause merely indicates the forum of appeal. As 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. 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. 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. 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). As 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). There is clear bar under Section 37 restricting right of appeal only against specified orders set out therein and no other orders. 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”. Thus 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. Thus on interpreting Section 5 of the Arbitration Act, 1996, it is clear that the remedy of an 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. Section 10F provides for forum of appeal, provided an appeal is maintainable under Section 37 of the Arbitration and Conciliation Act, 1996. Therefore that all the aforesaid appeal 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. Issues Involved:1. Maintainability of appeal under Section 10F of the Companies Act, 1956.2. Jurisdiction and authority of the Company Law Board (CLB) under Section 8 of the Arbitration and Conciliation Act, 1996.3. Applicability of Section 37 of the Arbitration and Conciliation Act, 1996 concerning appealable orders.4. Interpretation of 'judicial authority' under the Arbitration and Conciliation Act, 1996.5. Relationship and precedence between the Arbitration and Conciliation Act, 1996, and the Companies Act, 1956.Issue-Wise Detailed Analysis:1. Maintainability of Appeal under Section 10F of the Companies Act, 1956:The primary issue was whether an appeal under Section 10F of the Companies Act, 1956, is maintainable against an order passed by the CLB under Section 8 of the Arbitration and Conciliation Act, 1996. The court concluded that since the Arbitration Act, 1996 is a self-contained and exhaustive code, the remedies from orders passed under it must flow from the Arbitration Act itself. Section 10F of the Companies Act merely provides the forum for appeal, not the substantive right to appeal. Therefore, the appeal filed under Section 10F is not maintainable when the order is passed under Section 8 of the Arbitration Act, 1996.2. Jurisdiction and Authority of the CLB under Section 8 of the Arbitration and Conciliation Act, 1996:The CLB, while deciding an application under Section 8 of the Arbitration Act, acts as a 'judicial authority' and not under its jurisdiction under Sections 397 and 398 of the Companies Act, 1956. The CLB's decision to refer parties to arbitration under Section 8 is based on the arbitration agreement and does not adjudicate the disputes under the Companies Act.3. Applicability of Section 37 of the Arbitration and Conciliation Act, 1996 Concerning Appealable Orders:Section 37 specifies certain orders from which an appeal can be made, explicitly stating that appeals can be made from orders granting or refusing interim measures under Section 9, setting aside or refusing to set aside an arbitral award under Section 34, and certain orders of the arbitral tribunal under Sections 16 and 17. The court emphasized that the phrase 'and from no others' in Section 37 clearly indicates that only the specified orders are appealable, and no appeal lies from an order passed under Section 8 of the Arbitration Act, 1996.4. Interpretation of 'Judicial Authority' under the Arbitration and Conciliation Act, 1996:The term 'judicial authority' is broader than 'court' as defined under Section 2(1)(e) of the Arbitration Act. The CLB, when acting under Section 8, is considered a judicial authority. The court highlighted that the legislative intent was to minimize judicial intervention in arbitration matters, limiting appeals to those explicitly provided under Section 37.5. Relationship and Precedence Between the Arbitration and Conciliation Act, 1996, and the Companies Act, 1956:The court concluded that the Arbitration Act, 1996, being a special and subsequent statute, takes precedence over the Companies Act, 1956, concerning arbitration matters. The Arbitration Act's provisions are exhaustive and intended to limit court intervention, as evidenced by Section 5, which restricts judicial authorities from intervening except where expressly provided. The court held that appeals under Section 10F of the Companies Act are not maintainable for orders passed under Section 8 of the Arbitration Act, as the latter does not provide for such appeals.Conclusion:The appeals filed under Section 10F of the Companies Act, 1956, against the orders of the CLB referring parties to arbitration under Section 8 of the Arbitration Act, 1996, were dismissed as not maintainable. The court reaffirmed that the Arbitration Act, 1996, is a self-contained code, and appeals must be explicitly provided within it. The judgment emphasized the legislative intent to minimize judicial intervention in arbitration matters, thereby upholding the integrity and efficiency of the arbitration process.