9911796707
TMI Blog2010 (4) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Respondent. JUDGMENT R. V. Raveendran, J. - The respondent is a company incorporated on 9-4-2003, under the Companies Act, 1956. The appellant (Andhra Pradesh Tourism Development Corporation Ltd., APTDC ) is a "Government company" within the meaning of that expression in section 617 of the Companies Act, 1956. 2. According to the respondent, the parties had entered into two agreements in regard to a property known as Hill View Guest House, Alipiri, Tirupathi, measuring 1.08 acres. The first was a lease agreement under which APTDC granted a lease of the said property to the respondent for a term of 33 years ; and the second was a development and management agreement under which APTDC entrusted to the respondent, the development of a three-star hotel in Hill View Guest House property on construction, operation and management basis. According to the respondent, both agreements contained a provision for disputes resolution (clause 17 of the lease agreement and article 18 of the management agreement) providing that in the event of disputes, best efforts shall be made to resolve them by mutual discussions, amicably ; and in the event of the parties not finding an acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving regard to the decisions in Konkan Railway Corpn. Ltd. v. Mehul Construction Co. [2000] 7 SCC 201 1 and Konkan Railway Corpn. Ltd. v. Rani Construction (P.) Ltd. [2002] 2 SCC 388, 2 he had only a limited administrative role under section 11 of the Act, that is, to appoint the arbitrator as per the agreed procedure, leaving all contentious issues including whether there was any arbitration agreement or not, to be decided by the arbitrator. The said order is challenged in this appeal by special leave. 6. On the contentions urged, two questions arise for consideration : "( i )where the party seeking arbitration is a company which was not in existence on the date of the signing of the contract containing the arbitration agreement, whether it can be said that there is an arbitration agreement between the parties ? ( ii )whether the question as to the existence or validity of the arbitration agreement, has to be decided by the Chief Justice/designate when considering the petition under section 11 of the Act or by the arbitrator ?" Re : Question (i) 7. Section 7 of the Act defines an arbitration agreement. Sub-section (1) thereof provides that an arbitratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict, represented by its managing director Shri Jayarama Chowdary), the applicant in the application under section 11 of the Act, was incorporated only on April 9, 2003. The certificate of registration issued by the Registrar of Companies shows the date of its incorporation as April 9, 2003. Section 34(2) of the Companies Act, 1956, provides that from the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persons, as may from time to time be members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company. Sub-section (3) of section 149 provides that the Registrar shall, on the filing of declaration/statement as stated therein, certify that the company is entitled to commence business. Section 149(4) of the Companies Act provides that any contract made by a company (which is already registered) before the date at which it is entitled to commence business shall be provisional only, and shall not be binding on that company until that date, and on that date it shall become binding. A certificate under section 149 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides as follows : "Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by. . . . ( h )when the promoters of a company have, before its incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company: Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract." 14. It is evident from section 15( h ) of the Specific Relief Act, 1963, that if the lease agreement and the management agreement had been entered into by the promoters of the company stating that they are entering into the contract for the purpose of the company to be incorporated, in their capacity as promoters and that such contract is warranted by the terms of the incorporation of the company, the agreement would have been valid; and the term regarding arbitration therein could have been enforced. But for reasons best known to themselves, the agreement was entered not by the promoters of Pampa Hotels Ltd., on behalf of a company proposed to be incorporated by them, but by a non-existing company claiming to be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made based on the position adopted in that decision, we clarify that appointments of arbitrators or arbitral Tribunals thus far made, are to be treated as valid, all objections being left to be decided under section 16 of the Act. As and from this date, the position as adopted in this judgment will govern even pending applications under section 11(6) of the Act." [Emphasis supplied] 17. This Court in Sarwan Kumar v. Madan Lal Aggarwal [2003] 4 SCC 147, observed : "The doctrine of prospective overruling was initially made applicable to the matters arising under the Constitution but we understand the same has since been made applicable to the matters arising under the statutes as well. Under the doctrine of prospective overruling the law declared by the court applies to the cases arising in future only and its applicability to the cases which have attained finality is saved because the repeal would otherwise work hardship to those who had trusted to its existence. Invocation of the doctrine of prospective overruling is left to the discretion of the court to mould with the justice of the cause or the matter before the court." [Emphasis supplied]. 18. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the appellant that this case should be treated as a pending application. In fact we may mention that in Maharshi Dayanand University v. Anand Co-op. L/C Society Ltd. [2007] 5 SCC 295, this Court held that if any appointment has been made before October 26, 2005, that appointment has to be treated as valid even if it is challenged before this Court. 21. In view of the above, we are not in a position to accept the contention of the appellant. But the arbitrator will have to decide the issue as to whether there is an arbitration agreement, with reference to the legal position explained by us in regard to the existence of arbitration agreement. Though such an exercise by the arbitrator will only be an academic exercise having regard to our decision in this case, such an exercise becomes inevitable in view of the peculiar position arising out of the specific direction contained in paragraph 47( x ) of the decision in SBP Co. s case ( supra ) and the subsequent decision in Maharshi Dayanand University s case ( supra ). 22. We accordingly dispose of the appeal without interfering with the appointment but with a direction to the arbitrator to decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
