Surinder Mehta & Ors vs Prime Meiden Ltd. & Ors

Surinder Mehta & Ors. ...Appellants

Versus

Prime Meiden Ltd. & Ors. ...Respondents

Present: For Appellants : Mr. Krishnendu Dutta, Mr. Ramanjit Singh and Mr. Sagar Chawla, Advocates

For Respondent : Mr. Ramji Srinivasan, Senior Advocate with Mr. Lalit Bhasin, Mr. Abhijit Sinha, Mr. Inder Raj Gill, Ms. Anuradha Sharma, Mr. Avichal Prasad and Mr. Lakshya Khanna, Advocates

ORDER

06.02.2020 The Appellant moved an application under Section 45 of the

'Arbitration and Conciliation Act, 1996' before the Judicial Authority (National

Company Law Tribunal) in the pending proceedings under Section 241 and 242

of the Companies Act, 2013. The Judicial Authority (National Company Law

Tribunal), New Delhi Bench by impugned order dated 10th September, 2018

refused to refer the matter for arbitration.

2. Being aggrieved, the Applicant/Appellant preferred the appeal under

Section 421 of the Companies Act, 2013, which reads as under:

"421. Appeal from orders of Tribunal

(1) Any person aggrieved by an order of the Tribunal

may prefer an appeal to the Appellate Tribunal. 2

(2) No appeal shall lie to the Appellate Tribunal from

an order made by the Tribunal with the consent

of parties.

(3) Every appeal under sub-section (1) shall be filed

within a period of forty-five days from the date on

which a copy of the order of the Tribunal is made

available to the person aggrieved and shall be in

such form, and accompanied by such fees, as

may be prescribed:

Provided that the Appellate Tribunal may entertain

an appeal after the expiry of the said period of

forty-five days from the date aforesaid, but within

a further period not exceeding forty-five days, if it

is satisfied that the appellant was prevented by

sufficient cause from filing the appeal within that

period.

(4) On the receipt of an appeal under sub-section (1),

the Appellate Tribunal shall, after giving the

parties to the appeal a reasonable opportunity of

being heard, pass such orders thereon as it thinks

fit, confirming, modifying or setting aside the order

appealed against.

(5) The Appellate Tribunal shall send a copy of every

order made by it to the Tribunal and the parties to

appeal."

Company Appeal (AT) No. 350 of 2018 3

3. The question arises for consideration in this appeal is whether the order

of refusal passed by the Judicial Authority (National Company Law Tribunal)

under Section 45 of the 'Arbitration and Conciliation Act, 1996' is appealable

under Section 421 of the Companies Act, 2013.

4. Similar issue fell for consideration before this Appellate Tribunal in 'Thota

Gurunath Reddy & Ors. vs. Continental Hospitals Pvt. Ltd. & Ors.' -

'Company Appeal (AT) No. 160 of 2017' decided on 18th July, 2018' - [(2018) 209

Comp Case 518 ]. In the said case, this Appellate Tribunal observed and held :

"30. Similarly, the NCLT though constituted under

Section 408 of the Companies Act, 2013, while

passes an order under Sections 43 (sic - Section 8)

and 45 of the Arbitration Act, 1996, such order is

not passed as a Tribunal constituted under Section

408 but in the capacity of 'judicial authority'.

31. From the aforesaid provisions, it is clear that under

Section 420 of the Companies Act, 2013, the

National Company Law Tribunal passes an order

as a 'Tribunal', whereas under the provisions of

Section 7 or Section 9 or Section 10 or sub-section

(5) of Section 60, the same very Tribunal passes an

order as an 'Adjudicating Authority' and the same

Tribunal in the capacity of 'judicial authority'

passes order under Section 8 or Section 45 of the

Arbitration Act, 1996. As the Tribunal is

Company Appeal (AT) No. 350 of 2018 4

empowered to pass orders in different capacities

under different provisions of the Act, we are of the

view that the appeal will lie before the competent

forum under the said very Act under which the

Tribunal passes the order. If it passes order under

Section 420 of the Companies Act, the appeal will

lie under section 421 before the National Company

Law Appellate Tribunal. If the Tribunal passes

order under the capacity of the 'Adjudicating

Authority' under the 'I&B Code', the appeal will lie

under section 61 of the 'I&B Code' before the

National Company Law Appellate Tribunal. If the

Tribunal passes order in the capacity of 'judicial

authority' under Section 45 of the Arbitration Act,

1996, the appeal will not lie under Section 421 of

the Companies Act but before an appropriate

forum.

32. In view of the aforesaid observations, we hold that

the impugned order dated 20th April, 2017 having

passed by the Tribunal in the capacity of 'judicial

authority' under Section 45 of the Arbitration Act,

1996, the present appeal under Section 421 of the

Companies Act, 2013 is not maintainable before

this Appellate Tribunal."

Company Appeal (AT) No. 350 of 2018 5

5. Referring to the decision of the Hon'ble Supreme Court in 'Sumitomo

Corporation vs. CDC Financial Services (Mauritius) Ltd. & Ors.' - (2008) 4

SCC 91, learned counsel for the Appellant submits that the appeal under Section

421 of the Companies Act is maintainable before this Appellate Tribunal.

6. In the aforesaid case 'Sumitomo Corporation' (Supra) heard by the Hon'ble

Supreme Court on the issue of jurisdiction it was observed that in the event

order under Section 45 of the 'Arbitration and Conciliation Act, 1996' is passed

by the Company Law Board under the Companies Act, 1956, the power to hear

the appeal against the order of the Company Law Board is vested with the

Hon'ble High Court under Section 10-F of the Companies Act, 1956.

7. Since promulgation of the Companies Act, 2013, the power of the Hon'ble

High Court vested under different provisions stands transferred to 'National

Company Law Tribunal' in terms of Section 434 of the Companies Act, 2013 and

the appeal power is not vested with the Hon'ble High Court but before this

Appellate Tribunal.

8. Even in 'Sumitomo Corporation' (Supra), the Hon'ble Supreme Court,

while dealing with the question of jurisdiction, observed :

"24. In the light of the said conclusion, in order to ascertain the

correctness of the same, it is useful to refer to the

provisions of Section 50 of the Arbitration Act and Section

10(1)(a) and Section 10-F of the Companies Act:

"50. Appealable orders.--(1) An appeal shall lie from the

order refusing to--

(a) refer the parties to arbitration under Section 45;

(b) enforce a foreign award under Section 48;

Company Appeal (AT) No. 350 of 2018 6

to the court authorised by law to hear appeals from

such order.

(2)***"

"10. Jurisdiction of courts.--(1) The court having

jurisdiction under this Act shall be--

(a) the High Court having jurisdiction in relation to the

place at which the registered office of the company

concerned is situate, except to the extent to which

jurisdiction has been conferred on any District Court

or District Courts subordinate to that High Court in

pursuance of sub-section (2); and

(b) where jurisdiction has been so conferred, the District

Court in regard to matters falling within the scope of

the jurisdiction conferred, in respect of companies

having their registered offices in the district.

***

10-F. Appeals against the order of the Company Law

Board.--Any person aggrieved by any decision or

order of the Company Law Board made before the

commencement of the Companies (Second

Amendment) Act, 2002 may file an appeal to the

High Court within sixty days from the date of

communication of the decision or order of the

Company Appeal (AT) No. 350 of 2018 7

Company Law Board to him on any question of law

arising out of such order:

Provided that the High Court, may, if it is satisfied that the

appellant was prevented by sufficient cause from filing the

appeal within the said period, allow it to be filed within a

further period not exceeding sixty days."

The above provisions make it clear that the forum shall be

court authorised by law to hear the appeals from such

order. In this regard, it is useful to reproduce the

Explanation to Section 47 of the Arbitration Act which

reads thus:

"47. Evidence.--(1)-(2)***

Explanation.--In this section and all the following sections

of this Chapter, 'court' means the Principal Civil Court of

Original Jurisdiction in a district, and includes the High

Court in exercise of its ordinary original civil jurisdiction,

having jurisdiction over the subject-matter of the award if

the same had been the subject-matter of a suit, but does

not include any civil court of a grade inferior to such

Principal Civil Court, or any Court of Small Causes."

9. The Hon'ble Supreme Court further observed in paragraph 25 of the said

judgment that the expression 'court' not simpliciter but qualified by the wording

"authorised by law to hear appeals from such order". The order having passed

Company Appeal (AT) No. 350 of 2018 8

by the Judicial Authority under Section 45 of the 'Arbitration and Conciliation

Act, 1996' and in absence of any power delegated under the 'Arbitration and

Conciliation Act, 1996', we hold that the appeal is not maintainable. The case

is covered by this Appellate Tribunal's decision in 'Thota Gurunath Reddy & Ors.'

(Supra), we also hold that the appeal is not maintainable. However, this order

will not come in the way of the applicant to move an application before the

appropriate Court/Court authorised under the law under Section 50 of the

'Arbitration and Conciliation Act, 1996'.

The appeal stands disposed of with aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/gc/

Company Appeal (AT) No. 350 of 2018