1999 (12) TMI 876 - Board - Companies Law

Summary

Issues Involved:
1. Scope and Applicability of Section 45 of the Arbitration and Conciliation Act, 1996.
2. Application for referring the matter to arbitration (C.A. No. 248 of 1999).
3. Application for staying the arbitration proceedings before the ICC (C.A. No. 254 of 1999).

Summary:

Issue 1: Scope and Applicability of Section 45 of the Arbitration and Conciliation Act, 1996
The judgment explores whether Section 45 of the Arbitration Act applies to proceedings under Section 397/398 of the Companies Act, 1956. The petitioner argued that invoking the jurisdiction of the Company Law Board (CLB) in cases of oppression is a statutory right that cannot be overridden by arbitration agreements. The respondents contended that any disputes arising from agreements containing arbitration clauses should be referred to arbitration as mandated by Section 45. The CLB concluded that proceedings under Section 397/398 are not outside the purview of Section 45, provided the disputes arise out of or in connection with an arbitration agreement and the arbitrator can grant appropriate reliefs.

Issue 2: Application for Referring the Matter to Arbitration (C.A. No. 248 of 1999)
The first respondent filed an application under Section 45 of the Arbitration Act to refer the matter to arbitration, arguing that the disputes arise from agreements with arbitration clauses. The petitioner countered that there was no commonality of parties to the arbitration agreements and the present proceedings, as the company was not a party to the Joint Venture Agreement (JVA). The CLB found that there was no commonality of parties in the agreements relied upon by the respondent and the present proceedings. Consequently, the application for referring the matter to arbitration was dismissed.

Issue 3: Application for Staying the Arbitration Proceedings before the ICC (C.A. No. 254 of 1999)
The petitioner sought to stay the arbitration proceedings before the ICC to avoid conflicting decisions. The respondents argued that the CLB lacked the statutory power to stay the arbitration proceedings and that such an action would be contrary to the principles of the Arbitration Act. The CLB, referencing the Supreme Court's decision in Dresser Rand SA v. Bindal Agro Chemicals Ltd., concluded that it could not stay the proceedings before the ICC. The application to stay the arbitration proceedings was dismissed.

Conclusion:
Both applications, C.A. No. 248 of 1999 and C.A. No. 254 of 1999, were dismissed. The respondents were directed to file their replies to the application C.A. No. 237 of 1999 by January 20, 2000, with the rejoinder to be filed by February 5, 2000. The application will be heard on February 15, 2000. The CLB also noted that the written submissions provided by both sides after the hearing were not considered in the order as they contained additional arguments and citations.