TaxTMI 
TaxTMI 
2026 (7) TMI 1180
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....ut contend that the petitioner must wait till the final award is passed by the arbitrator and thereafter invoke the remedy under Section 34 of the Act, if so advised. This Court is called upon to resolve this short issue. 2. The facts in the case are not seriously disputed and are as follows:- A.R No.169/2024 was filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an Arbitrator to arbitrate upon the dispute between respondents 1 and 2. This Court by order dated 21.01.2025 appointed Smt. K.P. Prasanna Kumari, Retired District Judge, as sole Arbitrator. Accordingly, the 1st respondent filed Ext.P2 claim petition. The relief sought for in Ext.P2 claim petition is basically to record the division of assets and liabilities of the companies as per Memorandum of Understanding (MOU) dated 17.09.2021. The MOU pertains to certain division of assets and liabilities in respect of three companies namely Pioneer Cars India Private Limited, Pioneer Motors (Kannur) Private Limited and Wayanad Vehicles Private Limited, which are companies registered under the provisions of the Companies Act, 2013. The MOU also contained certain arrangements between the resp....
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....onal Company Law Tribunal retains the jurisdiction. In support of his contention, relied on the various decisions of the Hon'ble Supreme Court in Vidya Drolia and Others v. Durga Trading Corporation [(2021) 2 SCC 1], Booz Allen and Hamilton INC. v. SBI Home Finance Limited and Others [(2011) 5 SCC 532], R. Subbulakshmi and Others v. R. Venkitapathy and Others [2023 SCC OnLine Mad 5303], Haryana Telecom Limited v. Sterlite Industries (India) Limited [(1999) 5 SCC 688], IDFC First Bank Limited v. Hitachi MGRM Net limited [ (2023) 3 High Court Cases(Del 660)], Surender Kumar Singhal and others v. Arun Kumar Bhalotia and others [(2021) SCC Online Del 3708], Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Limited and Another [(2022) 1 SCC 75] and Deep Industries Limited v. Oil and Natural Gas Corporation Limited and Another [(2020) 15 SCC 706]. 5. Per contra, Shri. P. V. Vinod(Bengalam), the learned counsel appearing for the 1st respondent contended that the Arbitrator has not decided based on the respective claims and therefore the present original petition is highly premature. Merely because th....
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....ection (2)(a) of Section 37 of the Act, states that an appeal shall lie to a court from an order of the Arbitral Tribunal, accepting the plea under Sub-Section (2) or Sub-Section (3) of Section 16 of the Act. In the present case, the Arbitrator had not accepted the plea of the petitioner under Sub-Section (2) of Section 16 of the Act. Therefore, it is beyond doubt that the order impugned in the original petition is not appealable under Section 37 of the Act, before the District Court. 8. The further question before this Court is whether the petitioner should await a final Award being passed to avail his remedy under Section 34 of the Act or can come before this Court in proceedings under Article 227 of the Constitution of India. 9. Section 5 of the Act limits the extent of Judicial Intervention. It reads as under. Sec- 5- Extent of Judicial Intervention- Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided under this Part. Before moving forward, this court must decide whether the powers of this Court under Articles 226 and 227 of th....
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....rned Counsel for the 1st respondent placed heavy reliance on the above decisions to contend that the petitioner must wait for the final award to be passed by the arbitrator. 16. However, this Court is unable to agree with the above submission. In a given case where the arbitral tribunal or the arbitrator acts beyond its jurisdiction or for that matter a claimant initiates an arbitration on a dispute which is not arbitrable or governed by a separate mechanism provided under a statute, the opposite party is certainly entitled to raise the question of jurisdiction and if it is rejected, can certainly approach this Court under Article 226 and 227 of the Constitution of India as the case may be. In such cases, this Court can examine the case to find out whether the dispute is arbitrable or a separate mechanism to resolve the dispute is provided under a statute. Hence this Court is inclined to hold that the present original petition under Article 227 of the Constitution of India is maintainable. 17. Next, it is to be decided whether the dispute now raised by the 1st respondent is arbitrable or not. This in turn will enable this Court to decide whether it must exercise its jurisdict....
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....pute through arbitration. Merely because the respondents 1 and 2 reduced their bargain into writing in the form of MOU which contains the clause for arbitration, will not lead to an inference that the subject matter is arbitrable. Russel on Arbitration (22nd Edn) page 28 para 2.007) observed- " Not all matters are capable of being referred to arbitration. As a matter of English law certain matters are reserved for the court alone and if a tribunal purports to deal with them the resulting award will be unenforceable. This include matters where the type of remedy required is not one which an Arbitral Tribunal is empowered to give". 22. In Booz Allen and Hamilton INC v. SBI Home Finance Limited and others [(2011) 5 SCC 532], the Hon'ble Supreme Court recognised the examples of non arbitrable disputes as (i) disputes relating to rights and liabilities which give rise out of criminal offences, (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody, (iii) guardianship matters, (iv) insolvency and winding up matters (v) testamentary matters (grant of probate, letters of administration and succession certificate) (vi) eviction o....
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....s as under:- 241. Application to Tribunal for relief in cases of oppression, etc.-(1) Any member of a company who complains that- xxxxxxxxx (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the management or control of the company, whether by an alteration in the Board of Directors, or manager, or in the ownership of the company's shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company will be conducted in a manner prejudicial to its interests or its members or any class of members, may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter. If an application under Section 241 of the Companies Act, 2013 is received, the same must be dealt with by the tribunal in exercise of powers under Section 242 of the Companies Act, 2013. Section 242 of the Companies Act, 2013 reads as under; 242. Powers of Tribunal.-(1) If, on any applicati....
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....as such and the manner of utilisation of the recovery including transfer to Investor Education and Protection Fund or repayment to identifiable victims; (j) the manner in which the managing director or manager of the company may be appointed subsequent to an order removing the existing managing director or manager of the company made under clause (h); (k) appointment of such number of persons as directors, who may be required by the Tribunal to report to the Tribunal on such matters as the Tribunal may direct; (l) imposition of costs as may be deemed fit by the Tribunal; (m) any other matter for which, in the opinion of the Tribunal, it is just and equitable that provision should be made. (3) A certified copy of the order of the Tribunal under sub-section (1) shall be filed by the company with the Registrar within thirty days of the order of the Tribunal. (4) The Tribunal may, on the application of any party to the proceeding, make any interim order which it thinks fit for regulating the conduct of the company's affairs upon such terms and conditions as appear to it to be just and equitable. (4A) At the conclusion of th....
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....rroneously rejected the objection. Therefore, when it is evident from records that, the claim before the Arbitrator touches upon functioning and restructuring of the companies, which falls under the exclusive jurisdiction of the National Company Law Tribunal under Section 241 read with Section 242 of the Companies Act, 2013, it is inevitable for this Court to hold that process of restructuring and re-division of the assets of the companies is statutory in nature and cannot be the subject matter of the personal contract. 26. Albeit, this Courts finds that the dispute before the arbitrator qua the companies is essentially an intra-company dispute. Pertinently, the companies are not signatories to the MOU, whereas it is between two brothers. Moreover, the presence of a specialized statutory forum like National Company Law Tribunal which is given exclusive power to adjudicate on the dispute touching upon the restructuring of the companies and the rights of a minority shareholder, is a clear indication that the subject matter of the dispute is non- arbitrable. Further, it is undeniable that the disputes raised in the claim petition constitute an action in rem and not in personam 2....