2010 (11) TMI 61 - HC - Companies Law

Whether the impugned orders dated 20-7-2010 passed by the CLB allowing the applications and referring the parties to arbitration can be assailed and challenged in an appeal under the said section 10F of the Companies Act? Whether section 50 of the Arbitration Act bars/prohibits the present appeals? Held that - It has been held by the Bombay High Court that the order passed by the CLB can be assailed in an appeal under section 10F as the CLB while passing the impugned order had exercised jurisdiction under section 10E(1A) of the Companies Act. It was further observed that in the Securities Contract (Regulation) Act 1956 there is no provision for appeal. In other words the said Act did not bar or prohibit any appeal. Accordingly it was observed that the appeal would lie under section 10F of the Act as there was no express or implied bar under the Securities Contracts (Regulation) Act 1956. Thus it appears that the Bombay High Court had accepted that the doctrine of attachment was applicable. The present applications are allowed and it is held that the appeals under section 10F of the Companies Act are not maintainable against the impugned orders allowing applications under section 45 of the Arbitration Act.

Summary

Issues Involved:
1. Jurisdiction and scope of Section 50 of the Arbitration Act.
2. Applicability of Section 10F of the Companies Act.
3. Appealability of orders passed by the Company Law Board (CLB) under Section 45 of the Arbitration Act.

Issue-wise Detailed Analysis:

1. Jurisdiction and Scope of Section 50 of the Arbitration Act:
The primary contention is whether the impugned orders dated 20-7-2010 passed by the CLB, which referred the parties to arbitration under Section 45 of the Arbitration Act, can be challenged under Section 10F of the Companies Act. The respondent argued that such appeals are barred by Section 50 of the Arbitration Act, which only allows appeals against orders refusing to refer parties to arbitration or enforce a foreign award. The court emphasized that Section 50 of the Arbitration Act creates a statutory bar against appeals for orders other than those specified within it.

2. Applicability of Section 10F of the Companies Act:
The appellants contended that any order of the CLB, including those referring disputes to arbitration, can be appealed under Section 10F of the Companies Act. They argued that Section 50 of the Arbitration Act should not limit the scope of Section 10F. However, the court clarified that the CLB's decision to refer the matter to arbitration was made under the Arbitration Act, not the Companies Act. Therefore, the appeal must conform to the provisions of the Arbitration Act, specifically Section 50, which does not permit appeals against orders referring parties to arbitration.

3. Appealability of Orders Passed by the CLB under Section 45 of the Arbitration Act:
The court examined whether the CLB, while deciding applications under Sections 8 and 45 of the Arbitration Act, was acting under its jurisdiction as per the Companies Act or the Arbitration Act. It concluded that the CLB, in this context, acted as a judicial authority under the Arbitration Act. Thus, the appealability of its orders should be determined by the Arbitration Act. The court referenced the Punjab and Haryana High Court's decision in Hind Samachar Ltd. v. Vijay Kumar Chopra, which held that orders passed by the CLB under the Arbitration Act are not appealable under the Companies Act.

The court also noted that the Arbitration Act is an exhaustive code governing arbitration proceedings and the appeal process. The legislative intent, as interpreted by the court, is to restrict appeals to those expressly provided for in the Arbitration Act, thereby excluding other appeals.

Conclusion:
The court concluded that the appeals under Section 10F of the Companies Act are not maintainable against the CLB's orders referring matters to arbitration under Section 45 of the Arbitration Act. The court did not express any opinion on the merits of the CLB's orders or whether the appellants could seek other legal remedies, such as writ petitions. The interim stay orders were extended for 15 days to allow the appellants to pursue appropriate steps.

Summary:
The judgment thoroughly analyzed the jurisdictional boundaries between the Arbitration Act and the Companies Act, concluding that appeals against CLB orders referring matters to arbitration under Section 45 of the Arbitration Act are not maintainable under Section 10F of the Companies Act. The court emphasized the exhaustive nature of the Arbitration Act and the specific appeal provisions within it, thereby upholding the statutory bar against such appeals.