TaxTMI 
TaxTMI 
2006 (12) TMI 234
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....e crores) by way of an Inter- Corporate Deposit (ICD) was advanced by appellant to respondent-company. It committed a default in the payment thereof. The agreement contained an arbitration clause which was invoked. The learned Arbitrator made an award on or about 6-5-2004 in favour of the appellant for a sum of Rs. 6,72,63,015, directing : "I, therefore, in the circumstances, make the following Award : (i)The claimant is entitled to receive from the respondents and the respondents are jointly and severally liable to pay Rs. 6,72,63,015 up to the date of reference; (ii)The claimant will also be entitled to interest at the contractual rate of 21 per cent p.a. from the date of reference i.e. 15-4-2002 till the date of Award and thereafter i.e. from the date of Award till the date of payment with simple interest @ 18 per cent p.a. However, if the entire amount is paid within three months from the date of the award, the rate of interest from the date of Award till the date of payment shall stand reduced to 12 per cent p.a. (iii)The claimant will also be entitled to costs of arbitration which are fixed at Rs. 2,00,000. In the course of the proceedings I had passed two inte....
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....regarding the offer for ACEL shares but in view of the orders of the various Courts/Tribunals restraining the company from disposing of its assets including AAIFR's order dated 13-5-2005 to maintain status quo, the Board finds it difficult to agree to the proposal to sell the shares as prayed by MRL." 6. Questioning the legality of the said order, a writ petition, which was marked as Writ Petition (Civil) No. 10284 of 2005, was filed by the respondent before the Delhi High Court. By reason of the impugned judgment, a Division Bench of the High Court allowed the said writ petition. 7. It is not in dispute that pursuant to or in furtherance of the said judgment of the High Court, the shares had been sold and the sale proceeds had been deposited with the Board. Submissions : 8. Mr. C.A. Sundaram, the learned senior counsel appearing on behalf of the appellant, inter alia, submitted that the provisions of SICA could not have been taken recourse to as no scheme had been framed and, thus, the High Court committed a serious error in passing the impugned judgment relying, inter alia, on or on the basis of section 22(3) of SICA. 9. Section 5 of the 1996 Act having an overridi....
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....ces, inquires and schemes. Section 15 empowers the Board of Directors of a company to make a reference to the Board for determination of the measures which shall be adopted with respect to the company. The Board on receipt of such an application may make an inquiry into the working of the sick industrial company in exercise of its power conferred under section 16 thereof, for determining whether the company has become a sick industrial company or not. For the said purpose it may require an operating agency to inquire into and to make a report to it. The Board or the operating agency, as the case may be, is required to complete the enquiry as expeditiously as possible and an endeavour is to be made, to do so within sixty days from the commencement thereof. The Board may during the pendency of the said inquiry appoint Special Directors. Section 17 empowers the Board to make suitable orders on the completion of inquiry if it is found to be practicable for a sick industrial company to make its net worth exceed the accumulated losses within a reasonable time. The Board is also required to make an order in writing and subject to such restrictions or conditions as may be specified therein....
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....rial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under sections 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority. ****** (3) Where an inquiry under section 16 is pending or any scheme referred to in section 17 is under preparation or during the period of consideration ....
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....date and amend the law relating to domestic, international and commercial arbitration and enforcement of the arbitral awards. 22. 1996 Act is in four parts. Part I provides for the matter relating to domestic arbitration; whereas Part II refers to enforcement of certain foreign awards. Part III provides for conciliation; whereas Part IV provides for supplementary provisions. We are concerned with the provisions contained in Part I of the Act. Chapter I, which begins with the interpretation clause, provides for the general provisions. Section 2(c) defines "arbitration award" to include an interim award. Section 5 provides for a non obstante clause in the matters governed by Part I stating that no judicial authority shall intervene except where so provided for therein. Section 16 provides for the power of Arbitral Tribunal to rule on its own jurisdiction. 23. Chapter VII provides for recourses available against the arbitral awards. Section 34 of the Act provides that the Court may be approached against an arbitral award by way of an application for setting aside the same in terms of sub-section (2) or sub-section (3) thereunder. Section 36 provides for enforcement of award in t....
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....n incidental power so as to enable it to direct preservation of property during the pendency of a proceeding before it, it is doubtful whether such incidental power can be exercised for sale of the assets of the company. 28. When a reference is made before the Board, certain consequences ensue, the proceedings for the winding up of a company or for execution of distress or the like against the property of the company or for the appointment of a receiver would not continue. Even, no suit for recovery of money or for the enforcement of any security or of any guarantee shall lie or be proceeded with further, save and except with the consent of the Board or the appellate authority. 29. Section 22A, however, permits the Board to pass certain conditional orders. Upon receipt of a reference, the Board has no other option but to make an inquiry, of course, therefor the reference is to be registered, upon scrutiny thereof. The imperative character of an inquiry at the hands of the Board is inherent in the scheme of the Act. The legislative intention therefor is clear and explicit. The consequences flowing from registration of a reference necessarily would mean initiation of an inquiry....
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....olution of disputes between the parties where com- pany is a party, is envisaged. Even a 'settlement' arrived at by and between the parties thereto would be binding, inter alia, in terms of the provisions of section 18 of the Industrial Disputes Act, 1947. 35. Submission of Mr. Sundaram that sub-section (3) of section 22 would be attracted only in a case where a scheme has been made, in our opinion, does not stand a close scrutiny. Sub-section (3) of section 22 contemplates four different regimes : (i) where an inquiry under section 16 is pending; or (ii) where any scheme referred to in section 17 is under preparation; or (iii) during the period of consideration of any scheme under section 18; or (iv) where any such scheme is sanctioned thereunder. 36. The expression "for due implementation of the scheme" would refer only to the scheme which has been sanctioned under section 18 and not any stage prior thereto. If the submission of Mr. Sundaram is accepted, the other provisions contained in sub-section (3) of section 22 cannot be given effect to, as a result whereof the same would become otiose. 37. What, however can be directed to be suspended were the matters which were e....
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....Act or the Memorandum or Articles of Association of an industrial company or any other instrument in force under the said Act, but also of other laws. 47. SICA furthermore was enacted to give effect to a larger public interest so as to secure the principles specified in Article 39 of the Constitution of India. Sub-section (1) of section 22 must be construed having regard to the aforementioned principles in mind. It seeks to restrain the Court from entertaining and/or proceeding with any court proceeding if the lis is before it. 48. The provisions contained in sub-section (1) of section 22, however, appear to be clear and unambiguous. Sub-section (3) of section 22, on the other hand, does not speak of automatic suspension of the proceedings or bar the jurisdiction of the Court in entertaining any application. The provision empowers the Board to make a declaration in terms whereof, inter alia, operation of a settlement or award, not only where the industrial company is a party, but also where the same would be applicable thereto, would remain suspended. It envisages suspension of not only operation of any contract of assurances of property, agreement, settlement, award, standin....
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....Power (P.) Ltd. [2006] 1 SCC 540^2 , Ramdev Food Products (P.) Ltd. v. Arvindbhai Rambhai [2006] 8 SCALE 631 and M. Gurudas v. Rasaranjan [2006] 9 SCALE 275. Judicial Authority 51. The 1996 Act does not define the term 'Judicial Authority'. What is defined in section 2(e) thereof is 'Court'. In its ordinary parlance 'judicial authority' would comprehend a court defined under the Act but also courts which would either be a civil court or other authorities which perform judicial functions or quasi-judicial functions. 52. In SBP & Co. v. Patel Engineering Ltd. [2005] 8 SCC 618, a Seven Judge Bench of this Court although did not have the occasion to deal with the question directly; but while overruling the decisions in Konkan Railway Corpn. Ltd. v. Mehul Construction Co. [2000] 7 SCC 201^3 and Konkan Railway Corpn. Ltd. v. Rani Construction (P.) Ltd. [2002] 2 SCC 388^4 opined: "...A judicial authority as such is not defined in the Act. It would certainly include the court as defined in section 2(e) of the Act and would also, in our opinion, include other courts and may even include a special Tribunal like the Consumer Forum [see Fair Air Engineers (P.) Ltd. v. N.K. Modi [19....
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....e Commission under the Consumer Protection Act are included in the term 'judicial authority' for the purpose of section 34 of the Arbitration Act, 1940. 56. In Canara Bank v. Nuclear Power Corpn. of India Ltd. [1995] 4 SCL 42 (SC), it was held : "8. Sub-section (1) of section 9A empowers the Special Court to exercise the jurisdiction, powers and authority exercisable by a civil court. It so empowers the Special Court in relation to any matter or claim, inter alia, that arises out of transactions in securities entered into between the stated dates in which a notified person is involved. The words "civil court" are used in the context of the jurisdiction, powers and authority that the Special Court may exercise. The Special Court is empowered to exercise such jurisdiction, powers or authority in relation to the matters or claims therein specified. These matters or claims include those arising out of transactions in securities entered into between the stated dates in which a notified person is involved. Sub-section (2) of section 9A deals with the transfer of certain suits, claims or other legal proceedings (other than an appeal) to the Special Court. Every suit, claim or other ....
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....otwithstanding anything inconsistent therewith contained in any other law including the Standing Orders made under the Industrial Employment (Standing Orders) Act, but it will have no application in a case where something different is envisaged in terms of the statutory scheme. A beneficial statute, as is well known, may receive liberal construction but the same cannot be extended beyond the statutory scheme...." (p. 653) 61. In Shri Sarwan Singh v. Shri Kasturi Lal [1977] 1 SCC 750, this Court opined : "...When two or more laws operate in the same field and each contains a non obstante clause stating that its provisions will override those of any other law, stimulating and incisive problems of interpretation arise. Since statutory interpretation has no conventional protocol, cases of such conflict have to be decided in reference to the object and purpose of the laws under consideration...." (p. 760) 62. The endeavour of the court would, however, always be to adopt a rule of harmonious construction. 63. In NGEF Ltd. v. Chandra Developers (P.) Ltd. [2005] 8 SCC 219, interpreting sub-section (4) of section 20 of SICA, it was held : "It is difficult to accept the submis....
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....6] 67 SCL 383 (SC) the law is stated in the following terms : "The non obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. Only because the dues of the workmen and the debt due to the secured creditors are treated pari passu with each other, the same by itself, in our considered view, would not lead to the conclusion that the concept of inter se priorities amongst the secured creditors had thereby been intended to be given a total go-by. A non obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same." (p. 398) 65. Section 5 of the 1996 Act also provides for a non obstante clause. It has, however, a limited application aiming at the extent of judicial intervention. Its application would be attracted only when an order under sub-section (3) of section 22 is required to be passed. If the said provision is to be given effect to, the Board would not intervene in the matter of the implementation of the award. It would merely suspend the operation of it. It may even pass an order suspending the liabilities or obligations of the industrial....
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....tion proceedings may continue during the pendency of an inquiry pursuant to a reference made under SICA. 71. Yet again in Saurabh Kalani v. Tata Finance Ltd. [2003] 3 Arb. LR 345 (Bom.), the Bombay High Court took the same view. Conclusion 72. In this case, the shares have been sold. The sale proceeds have been deposited before the Board. It is, thus, futile to interfere with the impugned order at this stage. However, we thought it necessary to lay down the law for future guidance of the Board while deciding a similar case. 73. For the reasons aforementioned, we do not intend to interfere with the impugned judgment of the High Court. It is dismissed accordingly having become infructuous. No costs. P.K. Balasubramanyan, J. - While, I agree with the conclusion of my learned Brother on the interplay of the Sick Industrial Companies (Special Provisions) Act, 1985 ('SICA') and the Arbitration and Conciliation Act, 1996 on the question of law formulated while issuing notice on the Petition for Special Leave to Appeal to this Court, and his final order, I think it necessary to express my reservation on the propriety of the order passed by the Division Bench of the High Cour....