2002 (4) TMI 870 - HC - Companies Law

Summary

Issues Involved:
1. Whether there was a binding arbitration agreement between the parties.
2. Whether the application for reference to arbitration was filed within the permissible time.
3. Whether the appeal against the order of the Company Law Board (CLB) is maintainable under the Companies Act, 1956, or the Arbitration and Conciliation Act, 1996.
4. Whether the Arbitration and Conciliation Act, 1996, is an exhaustive and comprehensive code.
5. Whether the term "judicial authority" includes appellate courts.
6. Whether section 37 of the Arbitration and Conciliation Act, 1996, excludes the remedy of appeal against an order passed under section 8.

Detailed Analysis:

1. Binding Arbitration Agreement:
The CLB concluded that there was no binding arbitration agreement between the parties satisfying the provisions of section 7 of the Arbitration Act, 1996. This conclusion was one of the grounds for rejecting the application for reference to arbitration.

2. Timeliness of Application for Reference to Arbitration:
The CLB also determined that the appellants sought reference to arbitration after submitting their first statement of defense on the substance of the dispute. According to section 8 of the Arbitration Act, 1996, a party must seek reference to arbitration before submitting its first statement of defense. Since the appellants did not comply with this requirement, the application was deemed unsustainable.

3. Maintainability of Appeal:
The main contention was whether the appeal against the CLB's order should be governed by the Companies Act, 1956, or the Arbitration and Conciliation Act, 1996. The appellants argued that since the CLB's order was passed under the Companies Act, 1956, the appeal should be maintainable under section 10F of the Companies Act. Conversely, the respondents contended that the Arbitration Act, 1996, which excludes the remedy of appeal from an order passed under section 8, should govern the issue of jurisdiction.

4. Exhaustiveness of the Arbitration Act, 1996:
The court concluded that the Arbitration Act, 1996, is an exhaustive and comprehensive code on the law of arbitration in India, as it consolidates and amends the law relating to domestic arbitration, international commercial arbitration, and enforcement of foreign arbitral awards. Section 5 of the Arbitration Act, 1996, explicitly limits judicial intervention to the extent provided within the Act itself.

5. Definition of "Judicial Authority":
The term "judicial authority" was interpreted to include courts and appellate courts. The court referred to previous judgments to assert that "judicial authority" encompasses any authority exercising judicial power of the State and discharging judicial functions.

6. Exclusion of Appeal Remedy under Section 37:
Section 37 of the Arbitration Act, 1996, was interpreted to provide an exhaustive list of appealable orders. The phrase "and from no others" in section 37 indicates that appeals are only permissible against orders explicitly listed in the section. Since an order under section 8 is not included, the remedy of appeal is expressly excluded.

Conclusion:
The court concluded that the appeal against the CLB's order was not maintainable under section 10F of the Companies Act, 1956, as the order was passed under the Arbitration Act, 1996. The Arbitration Act, 1996, being an exhaustive code, excludes the remedy of appeal against an order passed under section 8. Consequently, the appeal was dismissed as not maintainable.