Girdhar Gopal Bajoria
M/s. J.J. Distilleries and Beverages P. Ltd.
At the outset, learned counsel for the respondents has raised an objection with regard to maintainability of the appeal on the ground that the Company Law Board by the impugned order has allowed the application under Section 8 of the Arbitration and Conciliation Act, 1996 (in short ‘the 1996 Act’) and, therefore, the instant appeal under Section 10 F of the Companies Act, 1956 (hereinafter referred to as ‘the 1956 Act’) is not maintainable. It is further submitted that a Bench of this Court vide order dated 7.3.2014 allowed the application under Section 11(6) of the 1996 Act and objection raised therein that the dispute between the parties cannot be adjudicated by an arbitrator, was rejected. It is further submitted that the order passed by a Bench of this Court in exercise of power under Section 11(6) of the 1996 Act is a judicial order and therefore findings contained therein operate as res judicata. It is also submitted that the Special Leave Petition preferred against the aforesaid order has been dismissed by the Supreme Court vide order dated 18.7.2014. Learned counsel for the respondents has also referred to the notification by which Section 8 of the Act has been amended.
On the other hand, learned senior counsel for the appellants submitted that the appellants had filed a petition under Sections 397/398 of the 1956 Act before the Company Law Board which was required to be adjudicated by it. It is further submitted that Section 10 F of the 1956 Act does not bar an appeal against the order passed by the Company Law Board. It is also submitted that the arbitration clause is contained in the Share Holders Agreement and, therefore, the issues raised in the petition under Section 397/398 of the 1956 Act cannot be adjudicated by the arbitrator. It is contended that by consent of the parties, jurisdiction cannot be conferred. It is also submitted that the principle of res judicata has no application to the fact situation of the case.
I have considered the respective submissions made by learned counsel for the parties. Admittedly, the appellants had filed petition under Sections 397/398 of the 1956 Act before the Company Law Board. It is also not in dispute that the arbitration clause is contained in Share Holders Agreement which reads as under:
All the disputes in relation to the interpretation of any term and condition of this agreement and the rights, the liabilities of any party or any dispute arising out of this agreement shall be referred to Arbitration of a Sole Arbitrator to be appointed by mutual consent and this agreement shall be deemed to be an agreement to submit to the arbitration. If the parties do not agree upon the name of the Arbitrator then the Arbitrator shall be appointed as per the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification thereto. The venue of the Arbitration shall be at the place of business only and all the provisions of the Arbitration and Conciliation Act, 1996 will apply. The Agreement would be subject to the jurisdiction of the Courts at the place of business only.”
Thus, it is evident that arbitration clause pertains to the dispute which may arise between the parties in relation to the share holders agreement. Learned counsel for the respondents prays for and is granted three weeks' time to file reply to the aforesaid interlocutory application.