HIND SAMACHAR LIMITED, JALANDHAR Vs. XYZ

JUDGEMENT

(1.) The respondents (herein) on the basis of a dispute, which had arisen between them and the appellants, filed Company Petition No. 76 of 1999 before the Company Law Board, Principal Bench, New Delhi, under Sections 397 and 398 of the Companies Act, 1956 praying for relief on account of alleged oppression/mismanagement at the hands of the appellants. During the course of the proceedings before the Company Law Board, the appellants, on 24.08.1999, sought permission of the Company Law Board to move an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'Arbitration Act 1996') for reference (of the controversy raised by the respondents in Company Petition No. 76 of 1999) to arbitration. On the aforesaid request, the Company Law Board granted the appellant time up to 04.09.1999 to move an application under Section 8 of the Arbitration Act, 1996. No such application was, however, filed within the allotted time. After all efforts made by the parties to settle their dispute amicably during the subsistence of proceedings before the Company Law Board proved futile, the appellants, on 16.05.2000, presented an application under Section 8 of the Arbitration Act, 1996, before the Company Law Board. It is not necessary for the purposes of this order to refer to any further details of the proceedings before the Company Law Board. It is not necessary for the purposes of this order to refer to any further details of the proceedings before the Company Law Board.

(2.) The Company Law Board, Principal Bench, New Delhi, while deciding the application moved by the appellants (herein) under Section 8 of the Arbitration Act, 1996, vide its order dated 8.12.2000, arrived at two conclusions ; firstly, that there was no binding arbitration agreement between the parties in the instant case satisfying the provisions of Section 7 of the Arbitration Act, 1996 ; and, secondly, that reference under Section 8 of the Arbitration Act, 1996, can be sought by a party only if it seeks reference before submitting its first statement of defence on the substance of the dispute, and since the application for reference of the dispute (to arbitration under Section 8 of the Arbitration Act, 1996) had been filed by the appellants after they had placed before the Company Law Board their first statement of defence on the substance of the dispute (by way of an interim reply, and also, by way of interlocutory applications), the application was not sustainable. On the aforesaid two counts, the Company Law Board declined to refer the dispute to arbitration.

(3.) Dissatisfied by the order passed by the Company Law Board, Principal Bench, New Delhi, dated 08.12.2000 [Vijay Kumar Chopra v. Hind Samachar Ltd. (2001) 2 Comp LJ 133 (CLB)], the appellants (herein) have challenged the same through the instant appeal. On 22.08.2001, this court passed the following order --