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TMI Blog1986 (9) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain counter-claims in that reference. 3.In July, 1964, the respondent started the third reference claiming Rs. 39,00,000 and the Union of India made certain counter-claims therein. 4.In October, 1969, the fourth reference was started by the respondent claiming Rs. 1,73,63,850 and the Union of India made certain counter claims therein. 5.In January, 1972, the fifth reference was started by the respondent company claiming Rs. 1,01,25,000 and the Union of India also made certain counter-claims therein. The award in the first reference was made on August 18, 1967, in favour of the Union of India and the same was filed in thi9 court. The respondent company had filed an application for setting aside the said award but by order dated August 9, 1968, the said application was dismissed and a judgment upon the said award was passed. The Union of India thus became a decree-holder and/or a creditor of the respondent company. During the pendency of the second, third, fourth and fifth references, one Bibhuti Bhushan Dutta P. Ltd., a creditor of the respondent company, took out Company Petition No. 203 of 1975 on June 4, 1973, for winding up of the respondent company. In that applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Arbitration Act for revocation of the authority of the umpire. On that application, by an order dated March 7, 1978, the winding up court revoked the authority of the umpire and superseded all the four pending references by directing that the arbitration agreement would cease to have effect with respect to the differences referred. The Saurashtra Agency (P.) Ltd. again preferred an appeal from the order dated March 7, 1978, being Appeal No. 81 of 1978. It was contended in the appeal that Saurashtra Agency (P.) Ltd., being a total stranger to the arbitration agreement between the Union of India and the respondent company, had no locus standi to appeal from the order dated March 7, 1978, disposing of the application under section 5 of the Arbitration Act. It was further contended that an order under section 5 of the Act was not appealable. Negativing both these contentions, the appeal court held that Saurashtra Agency (P.) Ltd., being a creditor of the company in liquidation in the winding-up proceeding, has sufficient interest in these matters. The order of revocation of the authority of the umpire and the supersession of the arbitration proceedings had affected its said rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether leave of the winding up court would be necessary under section 446(1) of the Companies Act for making this application in this court. The parties took time to consider the same. Counsel for the petitioner, Union of India, submits that under section 446(2) of the Companies Act, the jurisdiction conferred on the winding up court is not an "exclusive" jurisdiction. He submits that our courts have repeatedly held that section 446(2) of the Companies Act contemplated concurrent jurisdiction of courts. Reliance is placed on Osier Electric Lamp Mfg. Co. Lid.(In liquidation ) , In re [1967] 37 Comp. Cas. 306 ; AIR 1967 Cal 61 and Narendra Nath Saha v. Official Receiver, Calcutta High Court, AIR 1968 Cal 394 ; [1969] 39 Comp. Cas. 258 . In Osier Electric Lamp Manufacturing Co. Ltd. {In liquidation ) , In re [1967] 37 Comp. Cas. 306 ; AIR 1967 Cal 61 the court in paragraph 26 construed section 446(2) of the Companies Act and held (at page 311 of 37 Comp Cas): "Hence, sub-clause ( d ) of clause 2 proceeding as it does, that suits, claims, questions and applications may be filed or raised in a court other than the winding up court even after the commencement of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present application and this court is also vested with the exclusive jurisdiction and as such the present application can only be made and be entertained by this court. On the question of "leave", counsel for the Union of India submits that by order dated September 2, 1975, the appeal court in the winding-up proceeding, granted leave to the official liquidator to proceed with all the pending references. This order was further modified by the appeal court by its order dated February 9, 1976. Moreover, the appeal court in Appeal No. 81 of 1978 preferred from the order of the winding up court revoking the authority of the umpire, passed an order on September 19, 1979, directing continuation of the references. The present application is for setting aside one of the awards made in those references. This application is the continuation of the same arbitration proceedings. Hence, no fresh leave of the winding up court is necessary for making this application. Further, by the present application, the Union of India is trying to get rid of the award passed against it. It wants to get itself absolved from the liabilities fastened on it by this award and as such it is a defensive action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter. Counsel for the respondent submits that the non obstante clause contained in section 31(4) of the Arbitration Act was enacted in 1940, whereas the non obstante clause contained in section 446(2) of the Companies Act, 1956, came into force in 1960 when the Act was amended. Hence, the later non obstante clause in section 446(2) of the Companies Act will prevail over the earlier non obstante clause in section 31(4) of the Arbitration Act. In support of his contention, he relies on Sarwan Singh v. Kasturi Lal [1977] 1 SCC 750 ; AIR 1977 SC 265 and Shri Ram Narain v. Simla Banking and Industrial Co. Ltd. [956] 26 Comp. Cas. 280 ; AIR 1956 SC 614. He submits that the winding up court alone thus has the jurisdiction to entertain this application. He further submits that the principle of the proposition of concurrent jurisdiction as laid down in Osler Electric Lamp Mfg. Co. Ltd. (In liquidation ) , In re [1967] 37 Comp. Cas. 306 ; AIR 1967 Cal 61 or Narendra Nath Saha v. Official Receiver [1969] 39 Comp. Cas. 258 ; AIR 1968 Cal 394, strongly relied on by the petitioner's counsel, cannot be accepted because in these two cases the courts did not deal with section 446 (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the date of the leave, if granted. Therefore, if leave is now obtained, the application will be barred by limitation. The respondent's counsel relie3 on Bansidhar Sankarlal v. Md. Ibrahim [1971] 41 Comp. Cas. 21 ; AIR 1971 SC 1292 ; [1971] Tax LR 740 in support of his contention. He further submits that the present application cannot be treated as a defensive action as submitted by the petitioner's counsel. The award in favour of the company would enure to the benefit of the entire body of the creditors of the company. Therefore, an attack on the award virtually amounts to challenging the company's claims allowed by the umpire and crystallised by the award. It is really an offensive action disputing the company's right to recover the money which could not have been and/or should not have been instituted without the leave under section 446(1) of the Act. This application is, therefore, bound to be rejected even if it is held that this court has concurrent jurisdiction to entertain this application under section 31 of the Arbitration Act. Under section 33 of the Arbitration Act, the parties have the right to challenge the existence and validity of the award or to have its e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject-matter of Sp. Suit No. 20 of 1969 which was withdrawn by the respondent. Now, on a proper construction of the provisions of sections 31 and 31(4) of the Arbitration Act, can it be said that on account of the fact that the first award in the first reference was challenged in this court, this court was vested with exclusive jurisdiction over the entire arbitration agreement and/or the contract between the parties so as to have exclusive jurisdiction in respect of all other future disputes and references which would arise out of that contract in future ? To find out what is the correct position, the provisions of section 31(4) of the Arbitration Act have to be analysed carefully : "31. (4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference, any application under this Act has been made in a court competent to entertain it, that court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that court and in no other court." The portions underlined will clearly indicate that the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exclusive jurisdiction under section 31(4) of the Arbitration Act and the winding up court, in exercise of its special concurrent jurisdiction, entertained this application and passed its order on 7th March, 1978. Moreover, even if the matter is considered from the point of view of the provisions of the Companies Act, it will be found that the winding up court has the exclusive jurisdiction to entertain the present application. The second, third, fourth and fifth references were between the petitioning creditor, the Union of India, and the company in liquidation. Under section 446(3), the winding up court had the jurisdiction to get any matter pending anywhere by or against the company in liquidation, transferred to itself and try the same. On account of making this application under section 5 of the Arbitration Act before the winding up court, all the four private references, mentioned above, stood transferred to the winding up court by the conduct of parties and the winding up court entertaining the same by passing the order dated March 7, 1978. There is no provision in the Companies Act to retransfer that matter to any other court having concurrent jurisdiction to try the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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