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2018 (7) TMI 870

and were granted to Mrs.Sonia Khosla. It was Mr.Vikram Bakshi, one of the respondents who filed the application under Section 8 of the Arbitration Act stating that there is an arbitration agreement and the parties should resolve their disputes by the arbitration process. These proceedings cannot be said to be non-est and void ab initio as is sought to be argued. - All supplementary and incidental proceedings and the said orders cannot be said to be void ab initio merely because an application was filed by Mr.Vikram Bakshi under Section 8 of the Arbitration Act and was pending adjudication. CLB did not cease to have jurisdiction. - It is not clear as to how the appellant is in any manner concerned or connected with the controversy regarding the application filed under Section 8 of the Arbitration Act by Mr.Vikram Bakshi before the CLB. The petition before CLB was not filed by him. It is also the case of the appellant as stated in the present appeal that he is not a party to the agreement dated 31.03.2006 or to the ensuing arbitration proceedings. Hence, it is obvious that the appellant is not concerned with the arbitration proceedings/application. There is no merit in this p .....

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.P.Khosla, father of the appellant herein filed an appeal being Co. A. (SB) No. 7/2008. This appeal was disposed of by order dated 11.04.2008. The appeal was disposed of noting that both the parties agree that Mrs.Sonia Khosla will withdraw Co. Pet. 114/2007 because the arbitration clause had already been invoked. Both the parties therein agreed that they shall maintain status quo with regard to the shareholdings and the fixed assets of the respondent Company as it stood at the time of filing of the petition before the CLB. Other directions were also agreed upon. The submission of the learned counsel appearing for the Bakshi Group was noted that they shall not oppose withdrawal of the company petition pending before the CLB. It was also agreed that the functioning of respondent No. 3 Company shall be subject to orders to be passed by the Arbitral Tribunal. Another appeal was filed by Mrs.Sonia Khosla being Co. Appeal (SB) No. 6/2008. This was disposed of on 22.04.2008. This court noted that as the matter is sub-judice before a panel of arbitrators, it would be appropriate that the parties maintain status quo with regard to the composition of the Board and shareholdings as it existe .....

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nd is said to be lack of subject matter jurisdiction in relation to all the orders passed after 31.08.2007 that being the date when notice was issued on the application under Section 8 of Arbitration and Conciliation Act filed by the Bakshi Group. The second ground urged is that there is a fraud inasmuch as the order dated 31.01.2008 was passed despite patently false averments contained in para 7 of Co.Application 1/2008 filed on 01.01.2008. 10. Regarding the first ground it has been strongly urged that on 31.08.2007 after verifying existence of an arbitration clause in the agreement dated 31.03.2006, notice was issued in the application filed under Section 8 of Arbitration Act filed by Mr.Vikram Bakshi which was prima facie a judicial recognition of the merit of the said application and secondly lack of jurisdiction of the CLB to deal with the matter. It is stated that despite issue of notice on the said application under Section 8 of the Arbitration Act on 31.08.2007, no decision was taken by the CLB on the question of its jurisdiction and yet the CLB continued to pass orders after orders. Reliance is placed on the judgment of the Madhya Pradesh High court in State of M.P. vs. Ha .....

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d filed an appeal against the order dated 31.01.2008 of the CLB. This Court had concluded that the contentions raised in the appeal need to be gone into and issued notice in the appeal and the application for condonation of delay and also passed interim orders. The appellant submits that the said order binds this court being a judgment of a Co-ordinate Bench. This Court is also bound to hear the matter. 12. I may note that in the written submissions that have been filed by Mr.Deepak Khosla on 29.11.2017, he has submitted that judgment only on a preliminary point has been reserved by this court on 20.11.2017, namely, as to whether the appeal is barred by limitation. I may note that the submission is incorrect as arguments have been heard in full. In fact, a perusal of the written submissions itself shows that extensive averments have been made on the merits of the appeal itself. 13. Learned Counsel appearing for the respondent has submitted as follows:- (i) That the basic object of this appeal is to challenge the order dated 31.01.2008. (ii) That the present appeal is filed on 11.11.2008 and the same is hence barred by limitation being beyond the period of 60+60 days and hence, is l .....

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, as far as affairs of the Company are concerned. The project has not taken off. It is almost dead at present. Unless the parties re-concile, there is no chance for a joint venture i.e. to develop the resort, as per the MOU dated 21.12.2005. It is only after the decision of CLB, whereby the respective rights of the parties are crystallised, it would be possible to know about the future of this project. Even the Company in question is also defunct at present as it has no other business activity or venture. In a situation like this, we are of the opinion that more appropriate orders would be to direct the parties to maintain status quo in the meantime, during the pendency of the aforesaid company petition before the CLB. However, we make it clear that if any exigency arises necessitating some interim orders, it would be open to the parties to approach the CLB for appropriate directions. 17. I may note that the appellant was a party to the said Special Leave Petition being arrayed as respondent no. 9. When the matter was heard by the Supreme Court, this appeal was pending in this court. However, before the Supreme Court, the appellant does not appear to have put forth any proposition .....

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limitation. The court also noted his submission that the appellant rests his challenge on the ground of lack of inherent jurisdiction and competence of the CLB to pass the impugned order and hence, the present appeal, even if it is beyond the period of limitation would not be barred. 20. Clearly, it follows from the order dated 9.12.2008 that the appellant has confined this present appeal to the challenge of order dated 31.1.2008 passed by the CLB. As the present appeal is filed on 11.11.2008, the appeal is clearly barred by limitation. In this context, reference may be had to the judgment of Punjab & Haryana High Court in Pawan Goel vs. KMG Milk Food Ltd. & Ors. (supra) which referred the judgment of the Supreme Court in Gopal Sardar v. Karuna Sardar: (2004) 4 SCC 252 and concluded that the maximum period available to the appellant for preferring an appeal to this Court under section 10F of the Companies Act is sixty+sixty days i.e. 120 days, subject to the condition that the appellant has shown sufficient cause for condonation up to sixty days beyond the prescribed period of sixty days. The provisions of Sections 4 to 24 of the Limitation Act were said to have no applicat .....

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3.4.2010 would show that this court had issued notice in the appeal and on the condonation of delay application as well as in the stay application. The court further passed interim orders that the impugned order dated 31.01.2008 passed by the CLB in so far as it has cancelled the shareholding of the appellant and the directorship would remain stayed. There is no finding recorded in the said order that the appeal can be heard and disposed of despite the fact that it was filed beyond the period of limitation. Even otherwise, the said order of this court dated 13.4.2010 was challenged in the Supreme Court in SLP No.6873/2010. The Supreme Court by its judgment dated 8.5.2014 noted that the proceedings being Company Appeal (SB) 23/2009 filed by Shri R.K.Garg in this court has become otiose. Clearly, the order of this court dated 13.4.2010 relied upon by the appellant is of no assistance to the appellant and cannot read to mean that the present appeal has to be heard even if it is barred by limitation. 23. Clearly, the present appeal is barred by limitation. 24. I may also examine the contention of the appellant that the orders in question of CLB are void ab initio. It has been strongly .....

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re, mean that the Arbitration Act does not oust the jurisdiction of the civil court to decide the dispute in a case where parties to the arbitration agreement do not take appropriate steps as contemplated under sub-sections (1) and (2) of Section 8 of the Act. 13. Secondly, there is no provision in the Act that when the subject-matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject-matter of the suit to the arbitrators. 14. Thirdly, there is no provision as to what is required to be done in a case where some parties to the suit are not parties to the arbitration agreement. As against this, under Section 24 of the Arbitration Act, 1940, some of the parties to a suit could apply that the matters in difference between them be referred to arbitration and the court may refer the same to arbitration provided that the same can be separated from the rest of the subject-matter of the suit. The section also provided that the suit would continue so far as it related to parties who have not joined in such appli .....

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does not come within the purview of the main proceedings, stating: (SCC p. 512, para 12) When ex parte orders are made at the back of the party the other party is forced to come to the court to vindicate its right. Such compulsion cannot disclose an unambiguous intention to give up the benefit of the arbitration agreement. Therefore, taking any other steps in the proceedings must be confined to taking steps in the proceedings for resolution of the substantial dispute in the suit. Appearing and contesting the interlocutory applications by seeking either vacation thereof or modification thereof cannot be said to be displaying an unambiguous intention to acquiesce in the suit and to waive the benefit of the arbitration agreement. Any other view would both be harsh and inequitous and contrary to the underlying intendment of the Act. The first party which approaches the court and seeks an ex parte interim order has obviously come to the court in breach of the arbitration agreement. By obtaining an ex parte order if it forces the other party to the agreement to suffer the order, or by merely contesting be imputed the intention of waiving the benefit of arbitration agreement, it would en .....

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e out of the main proceeding. In view of the decision of this Court in Food Corpn. of India [(1982) 2 SCC 499 : (1983) 1 SCR 95] the distinction between the main proceeding and supplemental proceeding must be borne in mind. What follows from the above judgment is that once an application is being filed under Section 8, the Court would first have to form a view as to whether the disputes which are pending between the parties are within the preview of the Arbitration Act and the matters which are subject matter of proceedings where the application under Section 8 is filed are covered by the arbitration agreement. The judicial authority has to hence first come to a conclusion that the requirements of Section 8 have been fulfilled before referring the parties to arbitration. Till pendency of the application under section 8 of the Arbitration Act for supplemental and incidental proceedings including passing of interlocutory orders, there is no jurisdictional bar to pass orders and directions. There is nothing to show that miscellaneous and incidental proceedings cannot go on before the court. 29. Even a reading of section 5 and section 8 of the Arbitration Act does not show that on a me .....

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d vacated. 13.03.2008: Additional applications were mentioned. It was directed that the Board Meeting held today shall be subject to decision of the C.P. 25.03.2008: Matter was simply adjourned. 26.03.2008: Parties sought adjournment. 28.07.2008: CLB heard applications filed by the appellant under Section 340 Cr.P.C. These applications relate to Section 340 Cr.P.C. and not to the main proceedings. 32. I do not feel the need to further elaborate the details of other orders passed by CLB. It is manifest that these are all supplementary and incidental proceedings and the said orders cannot be said to be void ab initio merely because an application was filed by Mr.Vikram Bakshi under Section 8 of the Arbitration Act and was pending adjudication. CLB did not cease to have jurisdiction. 33. I may also note that it is not clear as to how the appellant is in any manner concerned or connected with the controversy regarding the application filed under Section 8 of the Arbitration Act by Mr.Vikram Bakshi before the CLB. The petition before CLB was not filed by him. It is also the case of the appellant as stated in the present appeal that he is not a party to the agreement dated 31.03.2006 or .....

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