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2010 (11) TMI 846 - HC - Companies LawCommon order passed by the Company Law Board ( CLB ) challenged allowing the applications filed by the Respondents under section 45 of the Arbitration & Conciliation Act, 1996 Held that - In regard to the submissions as well, this Court finds no reason to differ from the reasoning and conclusions arrived at by the CLB discussing the provisions of sections 8 and 45 of the AC Act and correctly concluding that the essential requirements of reference of a dispute to arbitration was that the action should be brought before the judicial authority which CLB undoubtedly was. Secondly, the two SHAs had to contain an arbitration clause which, in fact, they did. One of the parties to the SHAs in each matter had applied to the CLB and these applications were made even before submitting a first statement on the merits of the disputes to the CLB. Appeal dismissed.
Issues:
- Challenge to a common order passed by the Company Law Board allowing arbitration applications under the Arbitration & Conciliation Act, 1996. - Interpretation of Shareholders Agreements (SHAs) dated 21-4-2004 and 28-2-1998. - Disputes arising out of CP Nos. 78 and 79 of 2009 concerning Tinna Agro Industries Ltd. and Tinna Oils & Chemicals Ltd. - Validity of reference of disputes to arbitration under sections 397, 398, 402, and 409 of the Companies Act, 1956. - Signatories to the SHAs and their binding nature on subsequent transferees. - Jurisdiction of the Arbitrator to exercise powers under section 402 of the Companies Act. Detailed Analysis: 1. The judgment involves a challenge to a common order passed by the Company Law Board (CLB) allowing arbitration applications under the Arbitration & Conciliation Act, 1996, regarding disputes arising from Tinna Agro Industries Ltd. and Tinna Oils & Chemicals Ltd. The disputes were referred to arbitration as per the Shareholders Agreements (SHAs) dated 21-4-2004 and 28-2-1998. 2. The interpretation of the SHAs was crucial in determining the validity of the reference of disputes to arbitration. The SHAs contained clauses specifying conditions for share transfers and binding terms for the parties involved, which formed the basis of the disputes between the parties. 3. The petitions filed under sections 397, 398, 402, and 409 of the Companies Act, 1956 raised questions regarding the actions of one of the parties, which were alleged to be in violation of the SHAs. The respondents sought arbitration under the Arbitration & Conciliation Act, leading to the challenge before the High Court. 4. The issue of signatories to the SHAs and their binding nature on subsequent transferees was extensively analyzed. The Court examined the relationship between the signatories and non-signatories to the SHAs, concluding that subsequent transferees were bound by the terms of the SHAs, including the arbitration clauses. 5. The jurisdiction of the Arbitrator to exercise powers under section 402 of the Companies Act was also a point of contention. The Court referred to a Supreme Court decision to clarify that while the Arbitrator cannot order for winding up of a company, they can adjudicate on the functional status, assets, liabilities, and appropriate remedies. 6. Ultimately, the High Court dismissed the petitions, finding them without merit. It upheld the CLB's decision to refer the disputes to arbitration based on the valid SHAs and concluded that the disputes were arbitrable. The interim order was vacated, and the applications were disposed of accordingly.
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