1994 (9) TMI 313 - HC - Companies Law

Board of directors - Certain powers to be exercised by board only at meeting Arbitration agreement - Application to file in court

Summary

Issues:
- Validity of hire purchase agreement
- Enforcement of arbitration clause
- Compliance with Companies Act for agreement binding on the company

Analysis:
1. The judgment deals with multiple civil revision petitions arising from a dispute between two parties over a hire purchase agreement. The respondent filed a petition under section 20 of the Indian Arbitration Act, 1940, seeking reference of the dispute to an arbitrator. The petitioner contested the petition, alleging the agreement was forged and lacked consideration.

2. The Trial Court initially allowed the petition, referring the dispute to the arbitrator. However, the petitioner appealed, and the order was set aside, remanding the case for re-decision. The Trial Court framed issues including the execution of the agreement and the liability for arbitration. Eventually, the Trial Court ruled in favor of the respondent, referring the dispute to the arbitrator, which was upheld on appeal.

3. The High Court analyzed the hire purchase agreement and voucher, finding no challenge to their execution. The petitioner's argument of lack of consideration and invalidity of the arbitration clause was dismissed. The Court emphasized the limited scope of inquiry under section 20, focusing on the existence of a valid agreement and arising disputes, leaving the merits for the arbitrator to decide.

4. The petitioner also raised concerns regarding the agreement's compliance with the Companies Act, alleging lack of evidence for valid resolution authorizing the agreement. The Court noted the petitioner's failure to provide evidence from its records, leading to an adverse inference against them. Citing precedent, the Court emphasized the company's obligation to prove the absence of authorization for the agreement.

5. Ultimately, the High Court found no merit in the revision petitions and dismissed them with costs. The judgment underscores the importance of establishing the validity of agreements, compliance with statutory requirements, and the limited role of the court in arbitration matters, leaving substantive issues for the arbitrator's determination.