2002 (5) TMI 725 - HC - Companies Law

Summary

Issues:
1. Refusal to suspend arbitration proceedings pending BIFR decision under SICA.
2. Jurisdiction of the High Court under Article 226 of the Constitution.
3. Alternative remedy of appeal under section 37 of the Arbitration and Conciliation Act, 1996.

Issue 1: Refusal to suspend arbitration proceedings pending BIFR decision under SICA:
The writ petition challenged the order of the Arbitral Tribunal refusing to suspend arbitration proceedings pending the final decision of the Board for Industrial and Financial Reconstruction (BIFR) in reference made by the petitioner under section 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). The petitioner contended that the arbitration proceedings could not proceed in view of section 20 of the SICA. The Tribunal relied on a previous judgment stating that SICA provisions do not apply to arbitration proceedings. The High Court noted that the Arbitration and Conciliation Act is a self-contained code, and any application before the Arbitral Tribunal must be made under the Act, not SICA. The Tribunal's order was appealable under section 37 of the Act, which allows appeals from orders granting or refusing interim measures under section 17. The High Court held that the petitioner should have exhausted the alternative remedy of appeal under section 37 before seeking writ jurisdiction.

Issue 2: Jurisdiction of the High Court under Article 226 of the Constitution:
The respondent argued that the petitioner wrongly invoked the jurisdiction of the High Court under Article 226 of the Constitution, as no cause of action arose within the territorial jurisdiction of the Court. The respondent pointed out that the agreement and project were executed in a different district and that the petitioner had approached other courts previously. The High Court observed that the petitioner had filed applications in different courts challenging jurisdiction and had recognized the jurisdiction of those courts. The respondent contended that the application for suspension of arbitration proceedings, though under SICA, was essentially one under section 17 of the Arbitration and Conciliation Act. The High Court emphasized that the petitioner should not keep filing proceedings in different courts without exhausting available remedies.

Issue 3: Alternative remedy of appeal under section 37 of the Arbitration and Conciliation Act, 1996:
The High Court highlighted that the petitioner had an alternative remedy of appeal under section 37 of the Arbitration and Conciliation Act. The impugned order of the Arbitral Tribunal, which refused to suspend proceedings, was appealable under section 37. The Court emphasized that the petitioner should have resorted to the remedy provided under section 37 before seeking writ jurisdiction. As the petitioner failed to exhaust the alternative remedy of appeal, the High Court dismissed the writ petition.

In conclusion, the High Court dismissed the writ petition challenging the order of the Arbitral Tribunal, emphasizing the importance of exhausting available remedies such as the alternative remedy of appeal under the Arbitration and Conciliation Act before seeking writ jurisdiction. The Court clarified the jurisdictional aspects and the need to adhere to the procedural requirements of the relevant laws governing arbitration proceedings.