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TMI Blog1998 (6) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitration clause with one Shri Amitav Kothari being appointed as the sole arbitrator. 3. The petitioner in the instant application who is respondent No. 2 in the main application has stated that the disputes raised by petitioner No. 1 the said Suresh Kumar Jain in his petition under sections 397 and 398 of the Companies Act, 1956, before the Company Law Board are substantially the same disputes on which the arbitrator is required to adjudicate in terms of the agreement dated August 6, 1996. 4. Petitioner No. 1, being the respondent in this application, has opposed this application alleging, inter alia, that the said agreement dated August 6, 1996, is not an arbitration agreement between the parties to the main petition before the Company Law Board, the said Amitav Kothari described as purported arbitrator was required to function only as stake holder or escrow agent and the parties to the said agreement did not confer any power on the person sought to be named as arbitrator to adjudicate any dispute. Petitioner No. 1 by his reply states that the other parties to the said agreement dated August 6, 1996, have not sought to enforce the said purported arbitration agreement, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Article 226 of the Constitution of India to intervene in matters covered by the arbitration agreement. He also referred to Section 42 of the said Act on the jurisdiction aspect. Therefore, according to him, we should not entertain the petition containing matters on which there is an arbitration agreement. 8. Mr. Gupta has further submitted that the subject-matter of the present proceedings under sections 397 and 398 of the Companies Act, 1956, is fully covered by the said arbitration agreement dated August, 6, 1996, and the Company Law Board, being a judicial authority shall under Section 8 of the Arbitration Act, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. He submits that the provisions under Section 8 are of mandatory nature, and there is no scope for any discretion. He further submits that respondent No. 2, the applicant in the instant application, has not submitted his first statement on the substance of the dispute. 9. Mr. Sudipto Sarkar, appearing on behalf of the respondent in the instant application who is the petitioner in the main application, submits that responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any of the interlocutory proceedings contesting the substance of disputes as raised in the main proceeding under sections 397 and 398 of the Companies Act. Mr. Sarkar drew our attention to affidavits wherein respondent No. 2 while raising a preliminary objection as to the maintainability of the main petition, seriously and strenuously contested the case of petitioner No. 1 and others in the main petition as also the suit in the Calcutta High Court. He finally submits that this application should be rejected as not being made in the first instance immediately after the said main proceedings were filed. We have heard counsel for the respective parties. The parties have also submitted written notes of arguments after obtaining our leave. Let us first dispose of the submissions of Mr Gupta on the scope of Section 5 of the Arbitration and Conciliation Act, 1996, which, inter alia, provides that, notwithstanding anything contained in any law for the time being in force, in any matters governed by this part, no judicial authority shall intervene except where so provided in this part . He also relied on the decision of Calcutta High Court in Engineers India Limited's case [199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group known as the AKD group vis-a-vis the company. Some serious allegations Of siphoning off of funds by the AKD group, under invoicing, over invoicing, etc., have been made in the main petition. 14. There is no denying the fact that the applicant herein had definite knowledge of the said agreement to which he was a party, from the day the main petition was filed before the Company Law Board. For thirteen long months the applicant had been silent about this agreement, which according to him was an arbitration agreement and the parties should be held to their bargain, and further when he appeared from time to time before us through his counsel, there was no whisper of this alleged arbitration agreement. Further, he did not take any steps for moving any application for stay of the proceedings before us on the ground of arbitration agreement before submitting any first statement on the substance of the dispute. More so, it will also appear from the said affidavit affirmed in December, 1996, on behalf of respondent No. 2, the applicant herein, that he relied on the said agreement dated August 6, 1996, described by him as an arbitration agreement being annexure R-1 in the said affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India v. Yadav Engineer and Contractor, AIR 1982 SC 1302, to contend that contesting an interlocutory application or filing an application for setting aside interim orders does not constitute taking any other steps in the proceedings and does not entitle the party in question from applying for stay of the suit. The above decision was rendered construing the provision Section 34 of Arbitration Act, 1940. Under Section 8 of the present Arbitration Act, we have to find whether there is any statement on the substance of the dispute made at any stage of the proceedings before taking out the present application under Section 8 of the Arbitration Act, 1996. The above Supreme Court decision has no application in the present context. 17. In the said affidavit in December, 1996, respondent No. 2 had raised a preliminary objection under Section 399 of the Companies Act that petitioner No. 1 did not have the requisite share qualification under Section 399 of the Companies Act and signatures of the other petitioners purporting to have filed this main application are not genuine. Respondent No. 2 in the said affidavit submitted that the subject-matter of the said application was similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, had no opportunity of knowing whether the applicant in the said proceedings, being respondent No. 2 in the proceedings before the Company Law Board had made any application for stay of the proceedings before submitting his first statement on the substance of the dispute. Therefore, in our view, the decision or the finding by the learned District Judge in the said case has no relevance in the proceedings now pending before us. In the said Allahabad case the learned judge had no occasion to find whether the subject-matter of any proceedings pending before any judicial authority was covered by the said arbitration agreement or that by virtue of the said arbitration agreement, the party concerned had applied for the stay of the proceedings at the first instance. 21. We are of the view that any party relying on any arbitration agreement can invoke Section 8 by making an application not later than the date of submitting his first statement on the substance of the dispute. In our opinion, this first statement of dispute need not be filed in the reply to the main proceedings or any written statement to the suit. Such first statement on the substance of the dispute can be ascertaine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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