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2018 (7) TMI 1396 - AT - Companies LawArbitration proceedings - main plea of the appellant in these appeals is that there is MOU dated 20.7.2011 between the parties and the clause 19 of the MOU clearly provides that the dispute can be referred to arbitration whereas the respondents argued that the so called MOU has already been cancelled vide letter dated 10.11.2011 and as on date it is not in existence - Held that - A chart has been filed showing that who are the party to the MOU and the company petition. We have verified from the chart that some of the Company Appeal (AT) No.319, 320 and 321 of 2017 respondents are not party to the MOU but they are party in appeal. It shows that all the members are not signatory to the MOU. We find that neither all Members of the companies are party to the said MOU, nor the Companies were party to the MOU, nor the Companies adopted the MOUs. Even if it is assumed that the arbitration clause survives even after cancellation, as all respondents are not party to the MOU, therefore, the Arbitral Tribunal has no jurisdiction to pass an award in favour of a third party who is not party to the arbitration agreement. Further the appellants has not been able to produce the original agreement or a duly certified copy of the same as per Section 8(2) of the Arbitration and Reconciliation Act, 1996. Again, the scope of petition under Section 397, 398 of the Old Act is much wider than what can be subject of arbitration. Appeal dismissed.
Issues Involved:
- Appeal against the order passed by the National Company Law Tribunal dismissing applications for arbitration. - Interpretation of the validity and enforceability of a Memorandum of Understanding (MOU) with an arbitration clause. - Dispute regarding cancellation of the MOU and its impact on arbitration proceedings. - Jurisdiction of the Arbitral Tribunal over parties not signatory to the MOU. - Requirement of producing original agreement or certified copy as per Section 8(2) of the Arbitration and Conciliation Act, 1996. - Comparison between the scope of arbitration and the wider scope of petitions under Sections 397/398 of the Companies Act, 1956. Detailed Analysis: 1. The appeals were filed against the order of the National Company Law Tribunal dismissing applications for arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The dispute arose from a Memorandum of Understanding (MOU) dated 20.07.2011 between the parties, which included an arbitration clause in Clause 19 for dispute resolution. The respondents contended that the MOU was cancelled, and the arbitration agreement was not enforceable. 2. The Tribunal held that the parties to the MOU were different from the parties in the main petitions, and the cause of action differed. The absence of the original MOU or a certified copy was deemed fatal to the applicants' case. The respondents claimed the MOU was cancelled, and the Tribunal rejected the prayers for arbitration based on these grounds. 3. The appellants argued that the arbitration proceedings had commenced as per the MOU's arbitration clause. They contended that the respondents could not cancel the MOU without a termination clause. However, the respondents maintained that the MOU was cancelled and not challenged, and no steps were taken under the Arbitration Act. 4. The main issue revolved around the validity of the MOU and its arbitration clause. The appellants failed to produce the original agreement or a certified copy as required by law. Additionally, the jurisdiction of the Arbitral Tribunal over parties not part of the MOU was questioned, as the scope of arbitration differed from the wider scope of petitions under the Companies Act, 1956. 5. The Tribunal dismissed the appeals, stating that the cancellation of the MOU had achieved finality, making arbitration proceedings unviable. It was noted that not all parties were signatories to the MOU, and the companies involved were not party to the MOU. Therefore, the Arbitral Tribunal lacked jurisdiction over parties not part of the arbitration agreement. 6. The Tribunal directed the expeditious disposal of the company petitions under Section 422 of the Companies Act, 2013, emphasizing the distinction between the scope of arbitration and the broader scope of petitions under the Companies Act. The appeals were dismissed, with no costs awarded to either party.
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