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TMI Blog2019 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Section in the context of objects of the Producer Company and its being treated as a class apart. Also taking notice of the fact that the Tribunal has proceeded to return a finding that the dispute alleged in the Company Petition does not fall under the explanation of dispute thereby usurping the jurisdiction vested in the Arbitrator under Section 581ZO (2) of the Act, the impugned order cannot be sustained and is liable to be set aside. The impugned order suffers from legal infirmity and is unsustainable - appeal allowed - decided in favor of appellant. - Company Appeal (AT) No. 341 of 2018 - - - Dated:- 1-8-2019 - Justice Bansi Lal Bhat Member (Judicial) and Balvinder Singh Member (Technical) For Appellants : Dr. K. S. Ravichandran, PCS. For Respondents : Ms. Sreepriya Kalarikkal, PCS. JUDGMENT Appellants, who figure as Respondents in C.P. 38(241/242)/2017 pending consideration before the National Company Law Tribunal, Division Bench Chennai (hereinafter referred to as the Tribunal ) filed I.A. 209/2018 raising objection to the maintainability of the Company Petition as a preliminary issue which came to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding under the Arbitration and Conciliation Act, 1996. It was further of the view that the matter alleged in the Company Petition do not fall within the ambit of dispute contemplated under Section 581-ZO of the Act. Holding that the Company Petition was maintainable before the Tribunal, I.A. 209/2018 was rejected in terms of the impugned order assailed in the instant appeal. 4. We have gone through the record and given a patient hearing to the Authorized Representatives of the parties, who, having regard for the piquant situation arising out of continued application of Part IX-A of the repealed Companies Act of 1956, were granted enough opportunity to make elaborate submissions. Before noticing their respective submissions, we would like to make a few observations about the concept of Producer Companies as a distinct entity and the ambit and scope of Part IX-A of the Act dealing with the same. 5. A glance at the Act brings it to fore that under Section 2(10) of the Act Company means a company as defined in Section 3. Company , under Section 3 (i) means a company formed and registered under the Act or an existing company formed and registered under any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in essence not refuted is further reinforced by the relevant portion of the provisions of Section 465 of the Companies Act, 2013 which provides as under:- 465. Repeal of certain enactments and savings (1) The Companies Act, 1956 and the Registration of Companies (Sikkim) Act, 1961 (hereafter in this section referred to as the repealed enactments) shall stand repealed: Provided that the provisions of Part IX A of the Companies Act, 1956 shall be applicable mutatis mutandis to a Producer Company in a manner as if the Companies Act, 1956 has not been repealed until a special Act is enacted for Producer Companies: This repealing provision provides in unambiguous terms that while the Act stands repealed, provisions of Part IX-A shall be applicable mutatis mutandis to a Producer Company as if the Act had not been repealed. It also provides for the continued life of Part IX-A by specifically laying down that Part IX-A shall continue to govern Producer Companies until a special Act is enacted for Producer Companies . Thus, it is indisputable that Producer Companies having been treated as a class apart were not intended to be governed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to express provisions of the later Act. In the instant case, Companies Act, 2013 (later Act), expressly provides for keeping intact provisions of Part IX-A of the Act (earlier Act) saving it from repeal and further providing for its retention on the Statute Book until a new legislation is enacted in regard to Producer Companies . Admittedly, Companies Act, 2013 does not make provisions for formation of Producer Company, its registration, management, merger, amalgamation, etc. which continue to be governed by Part IX-A of the Act. Thus, the question of adaptation in the context of mutatis mutandis application of the provisions of the Act in the later Act does not at all arise. The judgment relied upon operates in a different sphere and does not get attracted in the facts and circumstances of the instant case. We find no difficultly in holding that Producer Companies continue to be governed in all respects by Part IX-A of the Act to the entire exclusion of Companies Act, 2013 and this arrangement is to continue until Parliament enacts law to consolidate, amend and modify law relating to Producer Companies. 6. Now coming to the nature of relief claimed in the context o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Arbitration and Conciliation Act, 1996 (26 of 1996) as if the parties to the dispute have consented in writing for determination of such disputes by conciliation or by arbitration and the provisions of the said Act shall apply accordingly. Explanation. - For the purposes of this section, a dispute shall include (a) a claim for any debt or other amount due ; (b) a claim by surety against the principal debtor, where the Producer Company has recovered from the surety amount in respect of any debtor or other amount due to it from the principal debtor as a result of the default of the principal debtor whether such debt or amount due be admitted or not ; (c) a claim by Producer Company against a Member for failure to supply produce as required of him ; (d) a claim by a Member against the Producer Company for not taking goods supplied by him. (2) If any question arises whether the dispute relates to formation, management or business of the Producer Company, the question shall be referred to the arbitrator, whose decision thereon shall be final. A bare perusal of the aforesaid provision would make it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the acts resulting in mismanagement and oppression being essentially integral and proximate to management, jurisdiction to decide the question relating to the dispute being with regard to management falls within the domain of Arbitrator with finality being attached to his decision. Viewed in the aforesaid background, we are of the firm view that provisions of Sections 241-242 of the Companies Act, 2013 cannot be invoked for settlement of disputes regarding oppression and mismanagement of a Producer Company . Such disputes would continue to be resolved through conciliation or arbitration. The Tribunal appears to have narrowed down the definition of dispute for purpose of Section 581ZO by misinterpreting the explanation which only seeks to include certain types of disputes within the ambit of dispute as defined in the aforesaid provision. The explanation cannot be read in a manner so as to restrict the meaning of dispute as contemplated under the Section in the context of objects of the Producer Company and its being treated as a class apart. Viewed in this context and also taking notice of the fact that the Tribunal has proceeded to return a finding that the disput ..... X X X X Extracts X X X X X X X X Extracts X X X X
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