1996 (3) TMI 400 - HC - Companies Law

Summary

Issues:
1. Application under section 20 of the Arbitration Act for appointment of an arbitrator and a receiver.
2. Application under sections 442 and 446 of the Companies Act, 1956, for stay of proceedings due to winding up order.
3. Application under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, for stay of proceedings.

Analysis:

1. The plaintiff filed a petition under section 20 of the Arbitration Act seeking the filing of an agreement with an arbitration clause and the appointment of an arbitrator. Additionally, an application under Order 40, rule 1 of the Arbitration Act was filed for the appointment of a receiver for leased equipment. The court appointed a receiver to take possession of the equipment. The defendant filed an application under sections 442 and 446 of the Companies Act, claiming that proceedings should be stayed due to a winding up order against the defendant-company. The court noted that the winding up order was conditional and did not come into operation due to a mutual agreement between the parties to extend the payment deadline. As a result, the appointment of a provisional liquidator did not occur, and the conditions of section 446 were not satisfied. The court dismissed the application, finding it without merit and mala fide.

2. The defendant filed an application under section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, seeking a stay of proceedings in the suit. The plaintiff had initiated proceedings under section 20 of the Arbitration Act for the appointment of an arbitrator and a receiver. The court observed that section 22 of SICA applies when proceedings relate to the properties of the industrial company. In this case, the leased equipment was not considered the property of the company as per the lease agreement, where ownership remained with the lessor. Citing a Supreme Court decision, the court dismissed the application, stating that leasehold rights do not constitute the property of the sick industrial company.

This judgment clarifies the legal implications of arbitration agreements, winding up orders, and the applicability of provisions under the Companies Act and SICA in specific circumstances.