2018 (8) TMI 1704 - AT - Companies Law

Appeal Dismissed: Tribunal's Order on Arbitration Upheld

The appeal under Section 421 of the Companies Act, 2013 was deemed not maintainable as the Tribunal's order was passed under the Arbitration Act, 1996. ... Order passed by the Tribunal in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996 - Arbitration proceedings - Held that:- Under Section 420 of the Companies Act, 2013, the National Company Law Tribunal passes an order as a ‘Tribunal’, whereas under the provisions of Section 7 or Section 9 or Section 10 or sub-section (5) of Section 60, the same very Tribunal passes an order as an ‘Adjudicating Authority’ and the same Tribunal in the capacity of ‘judicial authority’ passes order under Section 8 or Section 45 of the Arbitration Act, 1996. As the Tribunal is empowered to pass orders in different capacities under different provisions of the Act, we are of the view that the appeal will lie before the competent forum under the said very Act under which the Tribunal passes the order. If it passes order under Section 420 of the Companies Act, the appeal will lie under section 421 before the National Company Law Appellate Tribunal. If the Tribunal passes order under the capacity of the ‘Adjudicating Authority’ under the ‘I&B Code’, the appeal will lie under section 61 of the ‘I&B Code’ before the National Company Law Appellate Tribunal. If the Tribunal passes order in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996, the appeal will not lie under Section 421 of the Companies Act but before an appropriate forum. The impugned order dated 20th April, 2017 having passed by the Tribunal in the capacity of ‘judicial authority’ under Section 45 of the Arbitration Act, 1996, the present appeal under Section 421 of the Companies Act, 2013 is not maintainable before this Appellate Tribunal. Issues Involved:1. Maintainability of the appeal under Section 421 of the Companies Act, 2013.2. Jurisdiction of the Tribunal to refer disputes to arbitration under Section 45 of the Arbitration and Conciliation Act, 1996.Detailed Analysis:1. Maintainability of the Appeal under Section 421 of the Companies Act, 2013:The primary issue was whether the appeal filed under Section 421 of the Companies Act, 2013, against the order dated 20th April 2017, passed by the Tribunal, was maintainable. The Tribunal had passed the order under Section 45 of the Arbitration and Conciliation Act, 1996, directing the parties to arbitration in accordance with the Arbitration Agreement. The appeal's maintainability was challenged on the grounds that the impugned order was not passed under the Companies Act, 2013, but under the Arbitration Act, 1996, in the capacity of a 'judicial authority'.2. Jurisdiction of the Tribunal to Refer Disputes to Arbitration:The Tribunal's jurisdiction to refer disputes to arbitration was scrutinized. The Petitioners alleged oppression and mismanagement by the Respondents, which they argued could not be arbitrated. The Tribunal, however, referred the matter to arbitration under Section 45 of the Arbitration Act, 1996, based on the agreements between the parties.Analysis of the Judgment:Maintainability of the Appeal:The Tribunal's order was passed under Section 45 of the Arbitration Act, 1996, which deals with the power of judicial authority to refer parties to arbitration. The Tribunal acted as a 'judicial authority' under the Arbitration Act, 1996, rather than under the Companies Act, 2013. Therefore, the appeal under Section 421 of the Companies Act, 2013, was deemed not maintainable. This conclusion was supported by precedents, including decisions from the High Courts of Punjab and Haryana, Bombay, and the Supreme Court, which clarified that appeals against orders referring parties to arbitration must be sought under the Arbitration Act, 1996, and not under the Companies Act.Jurisdiction to Refer Disputes to Arbitration:The Petitioners' allegations of oppression and mismanagement were based on agreements like the Share Purchase Agreement, Share Subscription Agreement, and Shareholders Agreement. The Tribunal, acting under Section 45 of the Arbitration Act, 1996, referred the disputes to arbitration, as these agreements contained arbitration clauses. The Tribunal’s jurisdiction to refer the matter to arbitration was upheld, as it was exercising its power under the Arbitration Act, 1996, which allows such referrals unless the arbitration agreement is found to be null and void, inoperative, or incapable of being performed.Conclusion:The appeal was dismissed on the grounds of non-maintainability under Section 421 of the Companies Act, 2013. The Tribunal's order was passed in its capacity as a 'judicial authority' under the Arbitration Act, 1996, and any appeal against such an order must be sought under the Arbitration Act. The Tribunal’s jurisdiction to refer the disputes to arbitration was upheld, and the merits of the allegations were not examined due to the dismissal of the appeal. The judgment emphasized the distinct capacities in which the Tribunal operates under different statutes and the corresponding appellate forums.