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2022 (8) TMI 1509 - AT - Companies LawAppealability u/s 421 of the Companies Act 2013 - Contempt application - oppression and mismanagement - application filed under Section 241 and 242 of the Companies Act is a valid order passed in accordance with the law or not - Section 8 of the Arbitration and Conciliation Act 1996 - HELD THAT - The issue is concluded by Judgment of Hon ble Supreme Court in INDUS BIOTECH PRIVATE LIMITED VERSUS KOTAK INDIA VENTURE (OFFSHORE) FUND (EARLIER KNOWN AS KOTAK INDIA VENTURE LIMITED) OTHERS 2021 (3) TMI 1178 - SUPREME COURT . In the above case an Appeal was filed against the Order dated 26th March 2021 passed by the NCLT allowing an Application under Section 8 of the Arbitration and Conciliation Act 1996. While considering challenge to said order the Hon ble Supreme Court has observed that against the Order passed by NCLT Appellant ought to have availed remedy before NCLAT as provided under Section 61 of the Code. The above judgment is clearly applicable with regard to the Appeal provided under Section 421 of the Companies Act 2013 against an Order of NCLT. The above Judgement clears all doubts with regard to the maintainability of the Appeal against the Order under Section 421 of the Companies Act 2013 - appeal filed against the Order is maintainable and hence had to be decided on merits. Whether the Application CA 533 of 2020 in C.P. No. 144 of 2016 filed under Section 241/242 of the Companies Act by the Respondent No.1 could have been allowed by the NCLT? - HELD THAT - Company Petition No. 144 of 2016 was an Application alleging oppression and mismanagement. The remedy provided under Section 241 to any Member of a Company is a statutory remedy which has been provided to serve particular Objectives. The Tribunal has been conferred with ample power under Section 242 wide enough which encompasses expression make such order as it thinks fit . Sub-Section 2 of Section 242 as extracted above provides for without prejudice to the generality of the powers different orders which can be passed; The power under Section 242 entrusted to the Tribunal by statute are statutory powers which cannot be exercised by any arbitrator which is appointed in pursuance of any agreement between the parties. Hon ble Supreme Court in the matter of A. Ayyasamy Vs. A. Paramasivam Ors. 2016 (10) TMI 1147 - SUPREME COURT again considered the question as to which disputes are arbitrable and which disputes are not arbitrable. Dr. Justice D. Y. Chandrachud in his separate opinion held that the basic principle which must guide judicial decision making is that arbitration is essentially a voluntary assumption of an obligation by contracting parties to resolve their disputes through a private tribunal. When there is a clear bar of jurisdiction to be exercised by the Civil Court in respect of any matter which the Tribunal is empowered to determine under the Companies Act the bar is implicit to the arbitration proceeding on the subject which is covered under Section 241 and 242 - the remedy provided under the Companies Act 241 and 242 is a specific statutory remedy which has to be decided by the Tribunal in accordance with law. The issues which has been raised in Application under Section 241 and 242 are issues which are not arbitrable and the Adjudicating Authority committed error in allowing Section 8 Application filed by the Respondent No. 1. We thus find the Order dated 31st May 2021 unsustainable due to this reason - There are no infirmity in the Order rejecting the impleadment application of the Appellant. The Company Petition No. 144 of 2016 be decided by the Adjudicating Authority on merits at an early date preferably within six months of the date on which copy of this order is produced before the Adjudicating Authority. Both the parties are retrained from filing any Company Application Affidavit or Interlocutory Application in the Company Petition No. 144 of 2016 henceforth - The Adjudicating Authority shall decide the Company Petition No. 144 of 2016 on the basis of materials already on record. Contempt petition dismissed.
Issues Involved:
1. Jurisdiction of the NCLT Bench. 2. Validity of the NCLT's order allowing Section 8 application under the Arbitration and Conciliation Act, 1996. 3. Impleadment of Vineet Khosla as Petitioner No. 7. 4. Initiation of proceedings under Section 340 of CrPC and Section 425 of the Companies Act, 2013. 5. Contempt allegations for violating NCLAT orders. Detailed Analysis: 1. Jurisdiction of the NCLT Bench: The Appellant challenged the order dated 31st May, 2021, arguing it was passed without jurisdiction. The NCLT Principal Bench had directed that the matter be heard by a Bench headed by Dr. Deepti Mukesh. The Acting President's order confirmed that the Bench comprising Dr. Deepti Mukesh and Mr. Hemant Kumar Sarangi was competent to hear the matter. The Tribunal found that the same Bench had been hearing the case since September 2019, and there was no valid ground for re-assignment. The appeal against the Acting President's order was dismissed. 2. Validity of the NCLT's Order Allowing Section 8 Application: The NCLT allowed the Section 8 application, referring the parties to arbitration based on an agreement containing an arbitration clause. The Appellant argued that disputes under Sections 241 and 242 of the Companies Act, 2013, alleging oppression and mismanagement, are not arbitrable as they involve statutory remedies. The Tribunal agreed, citing precedents that statutory remedies under Sections 241 and 242 are not arbitrable. The order allowing the Section 8 application was set aside, and the NCLT was directed to decide the Company Petition No. 144 of 2016 on merits based on existing materials. 3. Impleadment of Vineet Khosla as Petitioner No. 7: Vineet Khosla sought to be impleaded as Petitioner No. 7, claiming he was a shareholder and director. The NCLT rejected the application, noting that the validity of his directorship and shareholding was still under dispute and pending adjudication. The Tribunal upheld the NCLT's decision, finding no prejudice in prosecuting the application under Sections 241 and 242 without his impleadment. The appeal was dismissed. 4. Initiation of Proceedings under Section 340 of CrPC and Section 425 of the Companies Act, 2013: Contempt Case (AT) No. 05 of 2019 and Contempt Case (AT) No. 12 of 2019 sought initiation of proceedings for perjury and criminal contempt based on alleged falsehoods in affidavits and submissions. The Tribunal noted that the contentious issues were yet to be resolved in the pending Company Petition. It found no grounds to initiate proceedings under Section 340 of CrPC or Section 425 of the Companies Act. Both contempt applications were dismissed. 5. Contempt Allegations for Violating NCLAT Orders: Contempt Case (AT) No. 08 of 2021 alleged violation of NCLAT orders dated 22.12.2016 and 12.04.2017 by filing a Section 8 application in Company Petition No. 144 of 2016. The Tribunal found no directions in the orders restraining the Respondent from filing such an application. The contempt application was dismissed. Conclusion: The Tribunal dismissed Company Appeal (AT) No. 31 of 2022 and Company Appeal (AT) No. 33 of 2022. It allowed Company Appeal (AT) No. 32 of 2022, setting aside the order allowing the Section 8 application and directing the NCLT to decide the Company Petition No. 144 of 2016 on merits within six months without permitting any further affidavits or applications. Contempt Case No. 05 of 2019, 12 of 2019, and 08 of 2021 were dismissed, and the names of the advocates were directed to be deleted from the contempt applications.
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