1999 (11) TMI 799 - HC - Companies Law

Summary

Issues:
- Petition under section 9 of the Arbitration and Conciliation Act seeking injunction or direction for deferring arbitral proceedings pending adjudication of specific cases before the Supreme Court.
- Claim for reimbursement of cess collected by State Government under the Orissa Cess Act, 1962.
- Constitutional validity of levy of cess and its reimbursement under the Cess and Other Taxes on Minerals (Validation) Act, 1992.
- Maintainability of petition under section 9 of the Act after a similar prayer was declined under section 17 by the arbitrators.
- Scope of interim protection under section 9 of the Act and the discretion of the Court to grant stay of proceedings pending before arbitrators.

Analysis:
1. The petitioner, Steel Authority of India, filed a petition under section 9 of the Arbitration and Conciliation Act seeking to defer arbitral proceedings pending the adjudication of specific cases before the Supreme Court related to the reimbursement of cess collected under the Orissa Cess Act, 1962. The respondent claimed that the cess amounts paid were reimbursable, citing the validation of the levy under the Cess and Other Taxes on Minerals (Validation) Act, 1992.

2. The petitioner argued that previous Supreme Court judgments had held the levy of cess as unconstitutional, leading to the Validation Act. The petitioner sought a stay on arbitral proceedings pending a decision by a larger Bench of the Supreme Court on the legality of the cess levy. The respondent questioned the maintainability of the petition under section 9, arguing that a similar prayer was declined under section 17 by the arbitrators.

3. The Court noted that the main issue before the arbitrators was the claim for reimbursement of cess in terms of the contract. The petitioner opposed the claim based on grounds like limitation and contractual liability. The Court emphasized that the arbitrators needed to decide if the cess was reimbursable before any payment obligation arose for the petitioner.

4. After considering the arguments, the Court found it unnecessary to stay the arbitral proceedings based on the pending reference to a larger Bench of the Supreme Court regarding the Validation Act. As the previous judgment upholding the Act was not stayed, the Court saw no grounds to halt the arbitral proceedings, which had already been adjourned once. The petitioner was advised to present all opposing pleas before the arbitrators during the proceedings.

5. Ultimately, the petition was dismissed, with the Court emphasizing that the arbitrators should continue their proceedings to decide the reimbursement claim based on the contract terms and relevant legal considerations, without the need for a stay at that juncture.