TaxTMI 
TaxTMI 
2008 (2) TMI 627
X X X X Extracts X X X X
X X X X Extracts X X X X
....n a nutshell, are :- On 5-10-1984, a Joint Venture Agreement was entered into between Sumitomo Corporation (appellant herein), Punjab Tractors Pvt. Ltd. (respondent No. 5 herein) and Swaraj Mazda Limited (Respondent No. 6 herein) comprehensively specifying the respective rights and obligations of the parties including the management control of the affairs of the company. The Joint Venture Agreement, which is filed as Annexure P-1, contains in Article XVI, arbitration agreement between the parties. In the beginning of 2005, the shareholding pattern of the appellant - Sumitomo Corporation ('SC') and respondent No. 5 - Punjab Tractors Pvt. Ltd. ( in short 'PTL') and respondent No. 6 - Swaraj Mazda Ltd. (in short 'SML') was : respondent No. 5 - PTL - 29.04 per cent, respondent No. 6 - SML - 15.66 per cent, appellant - SC - 10.44 per cent and respondent No. 1 - CDC Financial Services (Mauritius) Ltd., respondent No. 2 - South Asia Regional Fund, Mauritius, respondent No. 3 - CDC - PTL Holdings Ltd. and respondent No. 4 - ACTIS Agri Business Ltd. - 17.45 per cent. On 30-6-2005, an agreement (Annexure P-2) was entered into between PTL, SC and SML for purchase by the SC, appellant he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and the appeal was liable to be filed in forum contemplated under section 10(1)(a) of the Companies Act. He further submitted that in view of the fact that the appellant herein filed an application under section 45 of the Arbitration Act though in a petition filed under sections 397, 398, 402 etc., of the Companies Act for oppression and mis-management, in the light of the language used, namely, 'judicial authority' under section 45 of the Arbitration Act, the order dated 26-9-2006 having been passed by the Company Law Board ('CLB') in its capacity as a judicial authority under the Arbitration Act, the appeal against the order lies under the Arbitration Act. He also submitted that the source of jurisdiction of the CLB exercising powers in passing the order impugned in the High Court is section 45 of the Arbitration Act and not any provision of the Companies Act. According to him, the Arbitration Act has been held to be a complete code as regards the law of arbitration and the same being a special statute has overriding effect than the Companies Act in the light of the language used in section 50 of the Arbitration Act. The Delhi High Court is the appropriate Court authorized by la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sen from the terms of the arbitration agreement, the same has to be necessarily determined only by the arbitral Tribunal, hence the CLB is bound to refer the parties to arbrtration. It is not in dispute that as held by this Court in Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums [2003] 6 SCC 503, if there is an arbitration clause, in terms of section 8, the Court has a mandatory duty to refer the disputes arising between the contracting parties to arbitrator. It is also not in dispute that in Bhatia International v. Bulk Trading S.A. [2002] 4 SCC 105, it has been held that Part 1 of the Act applies to international arbitration held outside India also. On the other hand, it was submitted on behalf of the respondents that the appellant invoked the provisions of the Arbitration Act on the ground that both JVA and Share Purchase Agreement ('SPA') provide for arbitration, in the JVA arbitration has been provided only in case of disputes between the company (SVL/PTL on the one hand and Mazda/SC on the other), there is no provision for an arbitration in case of disputes between the company and the contesting respondents. It was also pointed out that in the two agreements, n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a company. In the company petition, the composition of the board of directors is in the affairs of the company and the contesting respondents herein have alleged that the company is not complying with the provisions of article 87 in the matter of composition of the board. The CLB, on analyzing those relevant aspects, concluded that the grievances of the petitioners therein (contesting respondents) falls squarely in the affairs of the company and since no arbitration has been provided in regard to the disputes between PTL and the company, there is no arbitration agreement at all between the company and PTL in the JVA to refer the parties to arbitration. The CLB has also concluded that petitioner Nos. 2 to 5 therein are not parties to either of the two agreements. Based on the above factual aspects, the CLB has concluded that there is no commonalities of parties and considering all the relevant aspects arrived at a conclusion that the application deserves to be dismissed on the main ground that the company in the affairs of which application has been filed, is not a party to the arbitration agreement in the JVA and petitioner Nos. 2 to 5 therein were not parties to the JVA or SPA c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction, 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." 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 to 20 of the Code of Civil Procedure. On the other hand, section 50 of the Arbitration Act specifically used the words 'authorized by law' and not the 'Civil Procedure Code' or 'suit'. In Smt. Ganga Bai v. Vijay Kumar [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 Defendant Nos. 2 and 3 in the High Court was directed originally not against any part of the preliminary decree but against a mere fin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 10. 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. 11. In Stridewell Leathers (P.) Ltd. v. Bhankerpur Simbhaoli Beverages (P.) Ltd. [1994] 1 SCC 34, the main question for decision relates to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 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. It is also brought to our notice that in Sudarshan Chopra v. Company Law Board 2004 (2) Arb. LR 241 referring to various authorities, the very same Punjab and Haryana High Court has ruled that the jurisdiction of the Company Law Board under sections 397 and 398 is not in any way affected by the existence of arbitration clause and, therefore, the CLB which exercises power under those sections and passes orders as per the provisions of section 402 of the Companies Act can proceed with....