TMI Blog2008 (2) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... cable to original proceedings such as suit which could be filed in any court where part of cause of action arises. Thus unable to accept the lengthy arguments advanced on the above-mentioned subject by the appellant. Likewise, the submission of the appellant, namely, the Arbitration Act being a special and subsequent statute has no relevance to the present case. - CIVIL APPEAL NO. 1496 OF 2008 - - - Dated:- 22-2-2008 - TARUN CHATTERJEE AND P. SATHASIVAM, JJ. C.A. Sundaram, Krishnan Venugopal, Rahul P. Dave, Ms. Rohini Musa, Dinesh Mathur and Rohit Mahajan for the Appellant. Sudipto Sarkar, Jaideep Gupta, M.G. Ramachandran, Sanjay Sen, Rana S. Biswas, Sarla Chandra, Rudreshwar Singh, Kaushik Poddar, Kumar Ranjan, Gopal Kumar Jha, Saurabh Jain, Sanjay Jain and Rameshwar Prasad Goyal for the Respondent. JUDGMENT P. Sathasivam, J. - Leave granted. 2. This appeal is directed against the judgment and order dated 21-2-2007 passed by the High Court of Delhi in F.A.O. No. 305 of 2006 by which the High Court dismissed the appeal filed by the appellant herein for lack of territorial jurisdiction holding that section 10(1)( a ) of the Companies Act, 1956 will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.A. No. 259 of 2006 seeking reference to arbitration under section 45 and alternatively under section 8 of the Arbitration Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act ). On 26-9-2006, the Company Law Board passed an order refusing to refer the parties to arbitration under section 45 of the Act. Against the said order, the appellant filed an appeal being F.A.O. No. 305 of 2006 under section 50 of the Act on 30-10-2006 in the High Court of Delhi. On 21-2-2007, the High Court delivered the judgment dismissing the appeal not on merits but for lack of territorial jurisdiction holding that section 10(1)( a ) of the Companies Act will take precedence over section 50 of the Arbitration Act. Aggrieved by the said order, the appellant - SC filed this appeal before this Court. 4. We heard Mr. C.A. Sundaram, learned senior counsel appearing for the appellant and Mr. Sudipto Sarkar and Mr. Jaideep Gupta, learned senior counsel appearing for the contesting respondents. 5. According to Mr. C.A. Sundaram, learned senior counsel for the appellant, the High Court whilst noticing that it was the forum under section 50 of the Arbitration Act has committed an er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CLB refusing to refer parties to arbitration under section 45 of the Arbitration Act was liable to be challenged to the forum under section 50 of the Arbitration Act or to the forum under section 10(1)( a ) of the Companies Act. 7. It is relevant to point out that in a company petition filed by the PTL and 4 others (Respondent Nos.1-5 herein) before the CLB, Principal Bench, New Delhi, the second respondent therein (appellant herein, namely, SC) filed Company Application No. 259 of 2006 under section 45 of the Arbitration Act for referring the parties to arbitration. The said section 45 reads thus : "45. Power of judicial authority to refer parties to arbitration. Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed." By pointing out the provisions of the Joint V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Arbitration Act. section 2( h ) of the Arbitration Act mentions that the party means a party to an arbitration agreement. To put it clear the party to the judicial proceeding should be a party to the arbitration agreement. As rightly observed by the CLB, the proceeding under section 397/398 of the Companies Act always relates to the affairs of the company. Insofar as the arbitration clause in the JVA is concerned, to bind the company it has to be a party to the arbitration agreement. It was pointed out that even though the company is a party to the JVA, no arbitration has been provided for disputes between the shareholders and the company or in relation to allegations in the affairs of the company. A perusal of the agreement show that the arbitration clause contained in JVA has provided for resolution of disputes through arbitration classifying the company and/or PTL as one party and Mazda or SC as another party. In other words, no arbitration has been envisaged in the JVA if dispute arises even with reference to the terms of the JVA between PTL on the one hand and the company on the other. It is relevant to mention that the provisions of section 397/398 of the Companies A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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." "10F. 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 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 appellants 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 authorized 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 prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the case of appeals for its maintainability there must be a specific provision/clear authority of law. In view of the same, while exercise of original jurisdiction as provided in section 47 and other similar sections of the Arbitration Act should be by the court within the jurisdiction of which the suit would have been filed, the appeal shall always be to the appellate forum which hears appeals from the order of the forum which passes the order. It is also clear from section 37 of the Act dealing with appeals. Here also the appeal is to the court which hears the appeal and not the court which exercises original jurisdiction if the subject-matter had been a suit as provided in the Explanation to section 47 or section 2( c ) of the Arbitration Act. To our mind, the reading of section 50 clearly suggests that an appeal shall lie from the order of the CLB to the court authorized by law to hear the appeals from such order of the CLB. To make it clear that in the event the order under section 45 is passed by the CLB, the forum which is provided under law for hearing the appeal from the order of the CLB, will be the Appellate Forum. In other words, while section 50 of the Arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court which has jurisdiction in relation to the place at which the registered office of the company concerned is situate and not the Delhi High Court merely because the order was made by the Company Law Board at Delhi. This appeal is allowed and the impugned order made by the Delhi High Court is set aside resulting in acceptance of the preliminary objection raised by the appellants in the Delhi High Court. The Delhi High Court will now make the consequential order. No costs." (p. 44) As per the ratio decidendi , the appeal under section 50 of the Arbitration Act from an order passed by the CLB on matters concerning Swaraj Mazda whose Registered Office is in Punjab is maintainable in the High Court of Punjab and Haryana and not to the High Court of Delhi. Reliance placed by the appellant on the decision of the High Court of Punjab and Haryana in Hind Samachar Ltd. v. Smt. Sudarshan Chopra [2002] 4 Comp. LJ 1 to contend that an appeal from an order passed by the CLB sitting in Delhi should be to the Delhi High Court notwithstanding the Registered Office of the company concerned is in Punjab is not sustainable. A perusal of the said decision shows that the Punjab and Haryan ..... 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