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M/s. Empee Sugars & Chemicals Limited, Versus M/s. Paharpur Cooling Towers Limited,

2014 (2) TMI 1317 - TELANGANA AND ANDHRA PRADESH HIGH COURT

Arbitration and conciliation - winding up petition - Held that:- As in Supreme Court in Amalgamated Commercial Trades (P) Ltd Vs.Krishnaswami(A.C.K.) 1965 (1) TMI 16 - SUPREME COURT OF INDIA) wherein it was held that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company, opined that there is no overwhelming public interest to continue the winding up proceedings and deny the opportunity to the parties to settle their dis .....

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It is one thing to dismiss the Company Petition on its own merits if the Court feels that there is a bona fide dispute, while it is quite another thing to refer the parties to arbitration on an application made under Section 8 of the Arbitration Act, merely because the debt is disputed. - In the face of the authoritative pronouncements of the Apex Court as referred above, the High Court while dealing with a Company Petition filed under the Companies Act cannot entertain an application unde .....

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Arbitration Act') read with Section 89 of the Code of Civil Procedure, 1908, and Rule 9 of the Companies (Court) Rules, 1959, for reference of the disputes to arbitration. Heard Sri N.V.Shravan Kumar, learned counsel for the applicant, and Sri Deepak Bhattacharjee, learned counsel for the respondent/ petitioner in C.P.No.180 of 2013. For convenience, the parties are referred as they are arrayed in the Company Petition. The respondent was incorporated on 24.11.1988. The petitioner has partic .....

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various departments of the respondent- company. By 31.03.2010, the respondent has paid ₹ 12,32,87,146/- to the petitioner as against the bill amount of ₹ 16,24,95,783.05 ps. On 05.11.2012, the respondent filed an application for its demerging, in which the petitioner has filed an impleadment application. On 14.06.2013, the petitioner issued a statutory notice for winding up of the respondent- company for non-payment of ₹ 3,92,08,637.05 ps with interest at the rate of 18% per an .....

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espondent has averred that while it has fulfilled its contractual obligations and paid more than 85% of its dues, the petitioner- company has failed to fulfill its obligations and has caused substantial loss to the respondent-Company; that the petitioner-company has neglected rectification of the defects, on account of which, the respondent has issued legal notice, dated 05.09.2012, calling upon the petitioner either to rectify the defects or replace the ACC units; and that finally, in order to .....

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ted claim. It has referred to Clause 32 of the Purchase Order, dated 20.11.2008 and Clause-1.26 of the Work Order, dated 20.11.2008, and pleaded that as the parties agreed for reference of all the disputes or differences, whatsoever, arising between them, for arbitration, the petitioner is not entitled to file the Company Petition. Accordingly, it has invoked the provisions of Section 8 of the Arbitration Act for reference of the disputes to arbitration. The petitioner filed a counter-affidavit, .....

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the respective pleas of the parties, the issue that arises for consideration is whether the application made under Section 8 of the Arbitration Act is maintainable in a Company Petition. Sri Deepak Bhattacharjee, learned counsel for the petitioner, placed reliance on the judgments of the Supreme Court in Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd.(1999) 5 SCC 688), Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd (2011) 5 SCC 532) and a learned single Judge of this Court in M .....

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intainable. Before adverting to the above-mentioned judgments cited by the learned counsel for the parties, it is apposite to refer to the provisions of Section 8 of the Arbitration Act, which read as under: "Power to refer parties to arbitration where there is an arbitration agreement - (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the .....

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cilitate parties to an agreement to settle their disputes through alternative dispute resolution mechanism. Therefore, when an agreement for resolution of the disputes through arbitration exists between the parties, if any dispute arising or in connection with the agreement is raised by a party before a Court bypassing the arbitral forum, the other party to the dispute is entitled to make an application under Section 8 of the Arbitration Act for reference of the dispute to the arbitral forum. Th .....

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y is the High Court. Therefore, the Company Petition filed under Chapter-II of the Companies Act, 1956 for winding up of the Company has to be exclusively adjudicated by the High Court and no other forum has such jurisdiction. In Haryana Telecom Ltd (1 supra), an application similar to the present one was filed by a party in a pending Company Petition seeking reference of the dispute under Section 8 of the Arbitration Act to arbitration. While rejecting the said application, the Supreme Court he .....

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to the effect, in a matter like this, that the company has become commercially insolvent and, therefore, should be wound up. The power to order winding up of a company is contained under the Companies Act and is conferred on the Court. An arbitrator, notwithstanding any agreement between the parties, would have no jurisdiction to order winding up of a company. The matter which is pending before the High Court in which the application was filed by the petitioner herein was relating to winding up .....

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lic fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a Court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public fora as a matter of public policy. Certain other catego .....

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es are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters, (iv) insolvency and winding up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statutes where the tenant enjoys statutory protecti .....

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