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TMI Blog2003 (3) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Company Law Board. It has been further averred that contesting an interlocutory application, would amount to acquiescence and it would be a step in the direction of the first statement. 4. The "Hind Samachar Limited" was incorporated by the Indian Companies Act, 1930 with an authorised capital of Rs. 35 lakhs. The main objects of the Company are publishing of Newspapers, Journals, Magazines etc. This Company was formed to take over Hind Samachar, the Urdu Daily Newspaper. 5. Late Lala Shri Jagat Narain was the father-in-law of petitioner No. 1 and grand-father of petitioner Nos. 2 and 3. He was assassinated in September 1981. After his death, Shri Ramesh Chander, husband of petitioner No. 1 and father of petitioner Nos. 2 and 3, took over as Chief Executive of the Company. Shri Ramesh Chander was assassinated on May 12, 1984. 6. Petitioner Nos. 1 to 3 are/were Directors of the Company. Petitioner No. 1 is the widow of Shri Ramesh Chander. Petitioner Nos. 3 and 4 are the sons of petitioner No. 1. Petitioner Nos. 4 to 6 are HUF of petitioner Nos. 1 to 3. 7. Respondent No. 2 Shri Vijay Kumar Chopra son of late Shri Jagat Narain, is a shareholder of the Company. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os. 2 to 6, in this petition, made allegations that the affairs of the Company were being conducted by Group A to the prejudice of the public and the share holders. It has been further stated in the Company Petition, that a deadlock had arisen and thus the jurisdiction of the Company Law Board, Principal Branch, New Delhi was invoked. 14. The parties appeared before the Company Law Board (for short "the C.L.B.") (respondent No. 1). Company Petition No. 76 of 1999 was hotly contested, by both the parties. After hearing both the parties, the C.L.B. passed an order dated December 8, 2000 (Annexure P-1). 15. Notice of motion was issued. 16. Respondent Nos. 2 to 6 in the written statement, have stated that there can be no challenge to the impugned order of the C.L.B. The parties were heard and then the order dated December 8, 2000 (Annexure P-1) was passed. 17. Learned counsel for the petitioners has stated that the C.L.B. has erred in rejecting the application filed by the petitioners, under section 8 of the 1996 Act. He has further stated that there is an application under section 34 of the Arbitration Act, 1940 (hereinafter called the "1940 Act") for staying the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the word "may" has been used for one party and once a party chooses to go for arbitration, there is no other alternative left. 20. Learned counsel has further stated that C.L.B. has wrongly held, that the petitioners had dealt with the main issue in the reply filed to the application for interim relief and also in the subsequent application filed by the respondents therein. It could not be said, that respondents therein had not submitted the "first statement on the substance of the dispute". The C.L.B. has gravely erred, as giving replies to the applications, or even filing the application for interim relief cannot preclude a party, from invoking jurisdiction to arbitration. In none of the applications, or the reply to the application for interim relief, touched the merits of the controversy between the parties. The petitioners had sought time to file an application under section 8 of the 1996 Act as early as on August 24, 1999. He has further contended that once intention to refer the matter to arbitration had been given, it could not be held that a "first statement on the substance of the dispute" was not submitted. The statement dated September 17, 1999 is not a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Petition was moved by the present respondent Nos. 2 to 6. The matter came up for hearing in August 20, 1999. The present petitioners appeared and were directed to file reply to the interim prayer. The matter was adjourned to August 27, 1999. The petitioners did not, mention anything about the existence of an arbitration agreement. On August 24, 1999, the petitioners stated before the C.L.B. that they wanted to file an application under section 8 of the Act. The C.L.B. granted them 10 days time and adjourned the case to September 10, 1999. 10 days time expired on September 4, 1999 and no application was filed by the petitioners till then. On September 4, 1999, counsel for respondent Nos. 2 to 6, wrote three letters to the counsel for the petitioners, reminding them of order dated August 24, 1999. No reply was received to the letters, nor was any application filed by the petitioners. 26. On September 13, 1999, the petitioners filed a detailed reply to the interim application. The matter came up for hearing on September 14, 1999. Arguments had taken place and the matter was adjourned to September 17, 1999. The petitioners did not mention anything before the C.L.B. at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d six days, filed an appeal, against the aforesaid order of the C.L.B., before this Court under section 10F of the Companies Act, 1956. During the pendency of the aforesaid appeal, the petitioners, while asserting that there existed an arbitration agreement and they were wanting the reference of the petition before the C.L.B. to be put before the arbitrator, filed a civil suit before the Hon ble Delhi High Court. This civil suit was filed relating to the Share Holders Agreement and Articles of Association of the Company. 31. On April 24, 2002, this Court dismissed the appeal of the petitioners by passing an order that it was not maintainable and directed the parties to appear before the C.L.B. on May 1, 2002. 32. On July 15, 2002, petitioners filed the instant writ petition before this Court, challenging the order dated December 8, 2000 (Annexure P-1), passed by the C.L.B., dismissing their application under section 8 of the 1996 Act. In the petition, it was averred, that in view of the appeal under section 10F of the Companies Act, having been dismissed, as not maintainable, the petitioners had no remedy other than filing the writ petition. 33. In August 2002, the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is an arbitration agreement. (1) A Judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement; or a duly certified copy thereof. (3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made." 39. Section 34 of the Arbitration Act, 1940, is reproduced as under: " Power to stay legal proceedings where there is an arbitration agreement. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on agreement - Agreement containing Arbitration Clause for dispute to be referred to arbitration and also for jurisdiction of court to refer the dispute - Application under section 34 for stay of proceedings of suit on ground of territorial jurisdiction - Applicability of - Arbitration Clause on which application predicated duly reproduced verbatim and in extenso in the application itself - Objection taken at the very thresh hold of proceedings - Copy of arbitration agreement not required to be filed - Mere on fact that reference made to old Act whereas new Act applies, application not to be rejected - Application to be allowed." 46. In Food Corpn. of India s case ( supra ). The Hon ble Supreme Court has made the following observations: "Arbitration Act, 1940 (10 of 1940) - Section 34 - What Constitute steps in the proceedings which if taken before making stay application would disentitle a party to the arbitration agreement to the stay of the proceedings under - Test to determine - Appearing and contesting petition or notice of motion for interlocutory order and appearing and seeking to vacate an ex parte ad interim injunction granted by the Court or to discharge a Rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51. The petitioners had abandoned their claim for arbitration. The petitioners were very much aware of the arbitration agreement. They were granted 10 days time by the C.L.B. to file an application under section 8 of the Act. They did not file an application within 10 days, nor did they apply for extension of time, for filing of the application. No reply was given to the letters written by the counsel for respondent Nos. 2 to 6. They filed their "first statement on the substance of the dispute" on September 13, 1999. On September 17, 1999, the petitioners made a statement before the C.L.B. that the matter in dispute be finally heard by the C.L.B. It would have been the right and appropriate time to convey to the C.L.B., that they would like to have an arbitrator appointed, but they chose not to do so. The petitioners, on September 17, 1999 and in May 2000 invoked the jurisdiction or the C.L.B. under the Companies Act, to get various reliefs including appointment of an administrator. Never during the hearings before the C.L.B., i.e., between August 24, 1999 and 12/16 May, 2000, did the petitioners mention, that the matter should be referred to an arbitrator under the arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority for reference of the matter to arbitration, before it submits its "first statement on the substance of the dispute. 58. None of the ingredients of section 8 of the 1996 Act have been fulfilled by the petitioners. The "first statement on the substance of dispute" can be contained in any interlocutory application or any reply to any interlocutory application. The Legislature in its wisdom intended that the first statement was not the "Written Statement". If it meant the written statement, the word "Written Statement" would have been included for the word "First Statement". In fact, the Legislature omitted the expression "Written Statement" and used the expression "First Statement" in section 8 of the 1996 Act. The word "Written Statement" is used in the repealed Arbitration Act, 1940. 59. Learned counsel for respondent Nos. 2 to 6 has relied on the decisions rendered in the cases of Wankanner Jain Society v. Jugal Kishore [2001] 3 Arb. LR 623; Manna Lal Kedia v. State of Bihar AIR 2000 Pat. 91; Suresh Kumar Jain v. Hindustan Ferro Industries Ltd. [1998] 3 C.L.J. 501 1 and Architecture Innovation v. Rajasthan Co-operative 1999 (1) Arb. LR 337. 60. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute" means the "Written statement" and another judgment rendered by the Apex Court in Food Corpn. of India s case ( supra ), do not apply to the case in hand, as the facts in this petition and the facts in these cases cited, are not similar. 66. The question of "first statement on the substance of the dispute" was not an issue before the Hon ble Delhi High Court. The question in issue was that whether an application for reference of the dispute to the arbitration, could be entertained, when an application had not been moved under section 8 of the 1996 Act, but had been filed under section 34 of the Arbitration Act, 1940, which had stood repealed. 67. The other question to be answered by the Hon ble Delhi High Court was that whether non-filing of agreement along with an application for reference of the dispute to arbitration would defeat the purpose of filing application and whether the application for reference under section 34 of the 1940 Act or under section 8 of the 1996 Arbitration Act, must set out the dispute to be referred to the arbitrator. 68. It is clear from the judgment of Jonson Rubber Industries case ( supra ) that "the first statement on the subst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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