Indus Motor Company Private Limited Vs T.P. Anilkumar (NCLAT Delhi)
NCLAT Delhi held that reliefs prayed for in the Company Petition against ‘Oppression and Mismanagement’ could only be adjudicated by a Court/Tribunal of competent jurisdiction, which in the present case is the NCLT/NCLAT under Sections 241 & 242 of the Act.
Facts- Aggrieved by the Impugned Order whereby and where under the NCLT (National Company Law Tribunal, Kochi Bench, Kochi) has dismissed the Application filed by the Applicant/Appellant/`M/s. Indus Motor Company Private Limited’, for referring the matter to an Arbitral Tribunal, the Appellants preferred this Appeal under Section 421 of the Companies Act, 2013
It is submitted that the Respondents/the minority Shareholders of the first Appellant Company filed a Company Petition before the NCLT seeking various reliefs. In the said Company Petition, the Appellants have filed an Application u/s. 8 of the Arbitration and Conciliation Act, 1996, seeking a direction to refer all disputes inter se the Appellants and Respondents to Arbitration in terms of the `Arbitration Clause’ as contained in Clause 18 of the Memorandum of Understanding (`MoU’) and accordingly dismiss the Company Petition as the Impugned Order was passed without taking into consideration that this MoU covers all the issues raised in the Company Petition.
In the instant case, The disputes raised by the Respondents in the Company Petition are concerning alleged acts of `Oppression and Mismanagement’.
It was vehemently argued that mere allegations of fraud will not make a dispute fall outside the ambit of an Arbitration Clause and that all disputes arising out of the breach of Clauses of the 2007 MoU should be referred to and decided by Arbitration and that there should not be any bifurcation.
Conclusion- Held that an Arbitrator is a creature of a contract and jurisdiction of NCLT cannot be divested in these facts of the matter. Therefore, we hold that the reliefs prayed for in the Company Petition could only be adjudicated by a Court/Tribunal of competent jurisdiction, which in the present case is the NCLT/NCLAT under Sections 241 & 242 of the Act.
Held that since an Application was moved under Section 8 of the Arbitration and Conciliation Act, 1990, I.A. No.44/KOB/2020, NCLT ought to have directed the party to get their disputes resolved through Arbitration as per MoU dated 31.03.2007. Without delving deep into the merits of the matter, keeping in view the factual matrix together with the observations of this Tribunal in App. (AT) No.204/2020, we are of the considered view that NCLT was justified in granting the interim reliefs keeping in view the Report of the Advocate Commissioner and the fact that the Petition was filed under Sections 241 & 242 of the Act.
Further, the Appellants had filed an interim Counter to the Company Petition dated 03.06.2020; though Orders were reserved by NCLT as the Appellant has prayed for some more time to file the Counter to the Company Petition, an opportunity was given to the Appellants herein to file it before 05.06.2020; finally on 03.06.2020, the Appellant filed their interim Counter and also moved an Application dated 13.05.2020 under Rule 11 of the NCLT Rules, 2016, requesting the Tribunal to conduct a virtual hearing. We are of the considered view that sufficient opportunity was given by the NCLT to the Appellant herein and there is complete adherence to Principles of Natural Justice by the NCLT, specifically having regard to the fact that there was a direction to file a Counter to the Company Petition in the Interim Orders dated 17.01.2020 and 17.02.2020.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. Aggrieved by the Impugned Order dated 15.09.2020, passed in I.A.44/KOB/2020 in CP/02/KOB/2020 whereby and where under the NCLT (National Company Law Tribunal, Kochi Bench, Kochi) has dismissed the Application filed by the Applicant/Appellant/`M/s. Indus Motor Company Private Limited’, for referring the matter to an Arbitral Tribunal, the Appellants preferred this Appeal under Section 421 of the Companies Act, 2013 (hereinafter referred to as `The Act’). The NCLT, while dismissing I.A. No.44/2020 has observed as follows:
“43. In this case, the CP is filed for oppression and mismanagement in the Company. In addition to that serious fraud has also been alleged by the petitioners.
Since those questions cannot be considered by an Arbitral Tribunal, the relief prayed for reference to an Arbitral Tribunal cannot be accepted.
44. In my opinion, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action that is to say the subject matter of the CP or in some cases bifurcation of the CP between the parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation on the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before the judicial authority is not allowed. Such bifurcation of a suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by this Tribunal would inevitably delay the proceedings. The whole purpose of speedy disposal of the dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.”
2. Submissions of the Learned Sr. Counsel appearing on behalf of the Appellants:
