2024 (11) TMI 1009 - AT - Companies Law

Oppression and Mismanagement - invocation of provisions contained under Section 96, 173, 241, 244 of the Companies Act of 2013 - Applicability of Section 8 of the Arbitration and Conciliation Act, 1996 - Appellant/ Respondent, had not produced the Original Copy of the Agreement, nor the Appellant has supplied the certified copy of the said agreement - whether the Authenticated copy of the agreement as filed by the appellant in support of IA No.65/2019, could at all be read in parlance to the certified copy of the Arbitration Agreement or the Original of the Arbitration Agreement? - HELD THAT - Obviously, under law the certification of a document has to be in accordance with the provisions of Registration Act to be read with Section 76 of Evidence Act, and particularly in the context of the provisions contained under Section 17 of the Registration Act, where certain documents will be inclusive of the present agreement as it dealt with the Subscription of the Shareholders, which itself is a property under law, which had to be mandatory required to be registered and if that be so, in that eventuality when the application under Section 8 of the Act of 1996, was preferred by the Appellant, it ought to have been accompanied with the certified copy of the agreement at the stage, when the initial objection of 10th October 2018 was filed by the Appellant/Respondent, in opposition to the Company Petition. In that view of the matter and for the said reasons, the authenticated copy cannot be treated as to be a certified copy , which could have been read in evidence under Section 47 of the Registration Act for the purposes to satisfy the restrictions imposed by Sub-Section (2) of Section 8 of the Arbitration and Conciliation Act, 1996. No such application under Section 8 of the Act of 1996, was filed before National Company Law Tribunal, Amravati Bench, to derive an objection with regards to the maintainability of the proceedings of the Company Petition, under Sections 96, 173, 241 to 244 of the Companies Act. The aforesaid principle literally and in its legal terms, as to what derivation could be made with regards to the certified copy in fact, has been prescribed under the National Company Law Tribunal Rules, where a certified copy would be a copy which has been obtained after compliance of the provisions contained under Section 76 of the Evidence Act . Since the same has not been complied with, the application under Section 8 was held to be not maintainable because it will not be falling to be, a certified copy under Sub Rule (9) of Rule 2 of the National Company Law Tribunal Rules, which deals as to what would be the certified copy. There is another logic and which has been rightly attracted by the Learned Adjudicating Authority, at the stage of considering the application under Section 8, by drawing an inference from the Judgment reported in Booz Allen Hamilton Inc. v. SBI Home Finance Ltd., Ors. 2012 (10) TMI 459 - SUPREME COURT , where it has been observed that since the Arbitration Proceedings, being a consented chosen forum between the consenting parties for the redressal of the dispute, it will not be taken as to be Judicial Proceedings so as to create an embargo for filing of a Company Petition, as it would be relatively a Private Forum , which cannot deceive the objective of the Procedural Law under the Companies Act, to be read with Insolvency and Bankruptcy Code. The Application thus preferred being IA No.65/2019, by the Appellant in the Company Petition, didn t satisfy the parameters prescribed under Section 8 of the Act of 1996, and the legislative bar was created in even entertaining the Application in the absence of satisfying the parameters to sustain the proceedings because the certified copy or the original copy of the Agreement was not filed. Therefore no such proceedings could have been even entertained by the National Company Law Tribunal, Amravati Bench by way of IA No.65/2019 and in these circumstances, when the Law creates a bar in even entertaining of any such Application under Section 8 of Act of 1996, the same would not be maintainable. The Company Appeal lacks merit and the same is dismissed.

Summary

Issues Involved:

1. Maintainability of the Company Petition in light of the Arbitration Clause.
2. Applicability of Section 8 of the Arbitration and Conciliation Act, 1996.
3. Requirement of submitting the original or certified copy of the Arbitration Agreement.
4. Waiver of the right to object under Section 8 due to delay.
5. Jurisdiction of the National Company Law Tribunal (NCLT) vis-`a-vis Arbitration Proceedings.

Issue-Wise Detailed Analysis:

1. Maintainability of the Company Petition in light of the Arbitration Clause:
The core issue was whether the Company Petition filed by the Respondents was maintainable given the existence of an Arbitration Clause in the Subscription and Shareholders Agreement dated 21st July 2014. The Appellants argued that the proceedings were intended to override this clause, which mandated disputes to be resolved through arbitration. However, the Tribunal found that the Appellants did not initially object to the maintainability of the petition on these grounds when they first appeared in the proceedings, thus weakening their later objections.

2. Applicability of Section 8 of the Arbitration and Conciliation Act, 1996:
Section 8 mandates that a party must apply for arbitration not later than the date of submitting their first statement on the substance of the dispute. The Tribunal noted that the Appellants failed to invoke Section 8 at the earliest opportunity, specifically when they first filed an objection on 10th October 2018. Instead, they raised the issue belatedly on 9th January 2019, which was contrary to the legislative intent of Section 8 aimed at ensuring prompt referral to arbitration.

3. Requirement of submitting the original or certified copy of the Arbitration Agreement:
The Tribunal emphasized that an application under Section 8 must be accompanied by the original or a duly certified copy of the arbitration agreement. The Appellants failed to provide the original or a certified copy of the agreement, submitting only an authenticated copy, which did not meet the legal requirements. The Tribunal cited Section 76 of the Evidence Act, which defines certified copies, underscoring that the failure to provide such documentation rendered the application under Section 8 unsustainable.

4. Waiver of the right to object under Section 8 due to delay:
The Tribunal held that by not raising the arbitration objection at the first opportunity, the Appellants effectively waived their right to do so later. The Tribunal highlighted that the Appellants engaged with the merits of the case without invoking Section 8, which constituted a waiver of their right to object based on the arbitration clause.

5. Jurisdiction of the National Company Law Tribunal (NCLT) vis-`a-vis Arbitration Proceedings:
The Tribunal addressed the jurisdictional conflict between NCLT proceedings and arbitration. It was noted that while arbitration is a consensual private forum, it does not entirely oust the jurisdiction of statutory bodies like the NCLT, especially in matters involving actions in rem versus actions in personam. The Tribunal cited precedents to affirm that the NCLT retained jurisdiction over the Company Petition despite the arbitration clause, as the proceedings involved broader statutory issues under the Companies Act.

In conclusion, the Tribunal dismissed the appeal, affirming that the Company Petition was maintainable before the NCLT, and the Appellants' application under Section 8 was not tenable due to procedural lapses and the absence of requisite documentation. The Tribunal's decision underscored the importance of adhering to procedural requirements and the legislative intent behind arbitration provisions.