1986 (9) TMI 376 - HC - Companies Law

Issues Involved:
1. Jurisdiction of the winding-up court under Section 446 of the Companies Act.
2. Concurrent vs. exclusive jurisdiction under Section 446(2) of the Companies Act and Section 31(4) of the Arbitration Act.
3. Necessity of leave from the winding-up court under Section 446(1) of the Companies Act.
4. Validity and effect of orders passed by the winding-up court.
5. Nature of the application for setting aside the arbitration award (defensive vs. offensive action).

Issue-wise Detailed Analysis:

1. Jurisdiction of the winding-up court under Section 446 of the Companies Act:

The court held that the winding-up court has the jurisdiction to entertain all applications, suits, or proceedings regarding any claim for or against the company in liquidation. The jurisdiction conferred on the winding-up court under Section 446 is not "exclusive" but concurrent with other competent courts. This was supported by the cases of Osler Electric Lamp Mfg. Co. Ltd. (In liquidation), In re [1967] and Narendra Nath Saha v. Official Receiver [1969].

2. Concurrent vs. exclusive jurisdiction under Section 446(2) of the Companies Act and Section 31(4) of the Arbitration Act:

The court analyzed Section 31(4) of the Arbitration Act, which states that the court's exclusive jurisdiction will be confined to that particular reference and arbitration proceedings only. It does not extend beyond its scope or include other references arising out of the same contract. Therefore, the winding-up court had the exclusive jurisdiction in respect of the second, third, fourth, and fifth references as the first application relating to these references under Section 5 of the Arbitration Act was made before the winding-up court.

3. Necessity of leave from the winding-up court under Section 446(1) of the Companies Act:

The court examined whether leave of the winding-up court was necessary for making the application to set aside the arbitration award. It was determined that the application for setting aside the award is a continuation of the same arbitration proceedings and not a new or fresh application. Therefore, no fresh leave of the winding-up court was necessary for making this application.

4. Validity and effect of orders passed by the winding-up court:

The court noted that the winding-up court had entertained the application relating to the second, third, fourth, and fifth private references in exercise of its special jurisdiction under Section 446 of the Companies Act. The winding-up court's orders, including the revocation of the umpire's authority and the direction to continue the arbitration proceedings, were valid and binding.

5. Nature of the application for setting aside the arbitration award (defensive vs. offensive action):

The court discussed whether the application for setting aside the award was a defensive or offensive action. It concluded that such an application is not meant to be instituted against the party but targets the arbitrator or umpire. Therefore, it is neither completely defensive nor offensive. The court emphasized that the nature of the application does not change the requirement of jurisdiction and leave under Section 446 of the Companies Act.

Conclusion:

The court concluded that the winding-up court had exclusive jurisdiction to entertain the application for setting aside the arbitration awards under Section 31(4) of the Arbitration Act and Sections 446(2) and 446(3) of the Companies Act. The application was returned to the petitioner for filing before the proper court, i.e., the winding-up court.

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