TMI Blog2021 (6) TMI 1112X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not the issue in this Appeal. The issues in the Arbitration proceedings are relating to the enforcement of contractual provisions. In contrast, the issues in the Investors Petition deals with oppression and mismanagement by Promoter Respondents who are in the majority on the Board of Respondent No. 6 and allegedly abused their majority to the detriment of other Shareholders. The Promoter Respondents have failed to show a commonality of issues between the proceedings. Since the issues raised in the proceedings before the NCLT and Arbitration are distinct and separate, there is no question of any commonality of issues within the Investors Petition and Arbitration proceedings. The powers of the NCLT under the Sections 241 and 242 of the Companies Act operate in a different realm compared to an Arbitral Tribunal under the Arbitration and Conciliation Act, 1996. The NCLT under the Companies Act is concerned only with the affairs of the Company and does not have the jurisdiction to deal with the issues relating to the enforcement of contractual provisions between the parties. Therefore, there does not exist any commonality of issues in the proceedings in the NCLT due to the dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration and Conciliation Act, 1996. Thus, the NCLT erred in holding that in the absence of either party filing an Application under Section 8 of the Arbitration and Conciliation Act, it would not be able to refer the matter to Arbitration. The NCLT further held that parties cannot be permitted to initiate arbitration ; it is contrary to the settled principles of law, which mandates a judicial authority to refer the matter to Arbitration if a valid arbitration agreement existed between the parties - Appeal allowed. - Company Appeal (AT) (CH) No. 01 of 2021 - - - Dated:- 22-6-2021 - Venugopal M., J. (Member (J)) And V.P. Singh, Member (T) For the Appellant : Arun Kathpalia, Krishnendu Datta, Learned Sr. Counsels and Thriyambak Kannan, Advocate. For the Respondents : Satish Parasaran, Learned Sr. Counsel, Pradeep Nayak, Nithya Kalyani and R.V. Goutham, Learned Advocates. JUDGMENT V.P. Singh, Member (T) 1. This Appeal emanates from the orders dated 22nd December 2020 read with Order dated 07th January 2021, passed by the National Company Law Tribunal, Bengaluru Bench, Bengaluru in IA. No. 445 of 2020 in CP. No. 77/B.B./2020, whereby the Adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. For the aforesaid reasons and circumstances, we hereby direct the respondents to maintain the status quo in respect of impugned action in the instant Application with reference to arbitral proceedings initiated pursuant to the purported drag notice and purported conversion notice pursuant to Arbitration Clause under 2015 SHA, pending disposal of the instant Application. (verbatim copy) 5. Respondent No. 6, Soham Renewable Energy India Private Limited (from now on referred to as 'SREIPL' is a Company engaged in power generation business through Hydroelectric Power Plants. Respondents No. 1 to 5 are Promoters and Shareholders of Respondent No. 6. Additionally, Respondent No. 1 is the erstwhile Chairman, Respondent No. 2 is the erstwhile Managing Director, and Respondent No. 3 is the erstwhile Director of Respondent No. 6. Respondent No. 7 to 12 are companies controlled by Respondent No. 6, while Respondent No. 13 is an investor in Respondent No. 6 Company. 6. Respondent No. 14 and 15 were the nominee directors appointed by the Appellants to the Board of Directors of Respondent No. 6 when filing the Company Petition. While Respondent No. 14 continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity shares of Respondent No. 6 (conversion notice). 12. It is the contention of the Respondents No. 1 to 5/Promoters, who have wide-ranging rights under the Articles of Association ( AOA ) and Shareholder's Agreement, dated 13th February 2015 ( SHA ), that the Appellants have abused their rights, stifling the growth of the Company, and prejudicing the interests of other Stakeholders. After filing the 'Promoters Petition', the Appellants had also filed a Petition under Section 241 and 242 (CP 78/B.B./2020) ( Appellants Petition ), alleging oppression and mismanagement by the Promoters. 13. Respondents No. 1 to 5, in response to conversion notice, sent a Reply dated 17th July 2020, refusing to honour the conversion notice on the ground that no drag event had occurred and that the determination of the arguments of drag event was the still subject matter of proceedings pending before the NCLT. 14. After that, a Board meeting of Respondent No. 6 was conducted on 20th July 2020, wherein the purported conversion of 'CCPS', held by the Appellants, into equity shares was voted upon. Respondents No. 1 to 4, i.e. the Directors representing the promoter grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onferred upon it by a special Act. 3. The NCLT has erred in observing that the Appellants have not pleaded for referring the matter to Arbitration, erroneously insisting on a standalone Section 8 Application, while ignoring the pleadings taken by the Appellants in the statement of objections. 4. A status quo order has the effect of an injunction on the Arbitration proceedings, which has been granted without giving the Appellant's an opportunity of being heard. 5. The NCLT erroneously made the disposal of the Anti-Arbitration Application subject to the disposal of an unconnected lis, while holding that the subject matter of the Anti-arbitration Application is sub-judice before this Appellate Tribunal and NCLT. 6. The arbitration proceedings, which are time-bound in nature, have been stayed indefinitely, defeating the object of the Arbitration Act and contrary to the mandate of Section 8 (3) of the Arbitration Act. Appellants Submission 20. The Learned Counsel for the Appellant contended that adverting to the principles enshrined in the Code of Civil Procedure; the NCLT has not only failed to provide an opportunity of being heard to the Appellants in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the matter was scheduled for the final hearing of the same. 24. The Appellant further contends that all parties impleaded in the Promoters Petition have not been impleaded in the Applications, especially Respondent No. 6. The impleadment of other parties was necessary to decide the Interlocutory Applications. The rights and obligations as sought to be examined and adjudicated upon under SHA are disputed among the Promoters and Investors of Respondent No. 6. Respondent No. 6 settings out the inverse relationship of the parties to it. Thus the Respondent No. 6 was a necessary party for the adjudication of the Anti-arbitration Applications. Therefore the NCLT should have dismissed the Interlocutory Applications ex facie for this reason alone. 25. It is further contended that Respondents No. 1 to 5 sought to injunct the Appellants from exercising their rights under a valid and subsisting contract. However, Section 242 (4) of the Companies Act empowers the NCLT to grant interim orders regarding a company's affairs. The reliefs sought in the Interlocutory Application, i.e. an injunction on the continuance of arbitral proceedings, do not concern companies' conduct. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e New Delhi Bench of the Hon'ble Tribunal. 32. The Appellant contends that the disputes are in respect of the breach of Drag along with Right and Conversion Right as stipulated under Clauses 10 of the SHA and Clause 6 (a). Clause 7.1 of Schedule 3 and Clause 6 (a) and Clause 7 (a) Schedule 5 of SHA arose due to Respondents No. 1 to 5 to do or cause such acts as they had been obligated to do under the SHA. Accordingly, this breach of contractual obligations resulted in a dispute that Arbitral Tribunal can adjudicate. 33. It is a settled position of law that the scope of the powers of the NCLT u/s 241 and 242 of the Companies Act, 2013 is limited to the functioning and affairs of the Company. As such, the NCLT does not possess any powers concerning any contractual disputes between the parties. The proceeding before the Arbitral Tribunal relates only to the personal rights and obligations of the parties. The NCLT does not have jurisdiction to decide the contractual rights of Shareholders, nor does it have the power to determine the claims which are the subject matter of Arbitration. The NCLT could not have prevented an Arbitration from proceeding when the Arbitral Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contain the Arbitration Clause. Therefore, no injunction could have been granted to restrain from the initiation, commencement or continuation of such proceedings. Respondent No. 1 to 5 have also failed to make out any extraordinary case of the Arbitration proceedings being unconscionable to their detriment. Even the balance of convenience rests in favour of the Appellants. 38. It is further submitted that the impugned orders are arbitrary and are self-contradictory. The 1st of the impugned Order grants an interim order, with the view that the matter would be finally heard on the next date. The Learned NCLT, however, on the next date, refuses to hear the Anti Arbitration Application and posts that the Applications would be heard after the disposal of the matter before the New Delhi Bench of this Hon'ble Tribunal, in matters which are unconnected to the said issue. Further, it is held that the hearing on the Applications will be along with the hearing on the main Petition. In addition, the illegality is compounded by continuing the interim Order endlessly. Such an order is grossly unjust and illegal and cannot be sustained in law. Respondent's submission 39. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of jurisdictional conflict before the NCLT. The appellants only issued the request for Arbitration after raising such jurisdictional objection before the NCLT. (b) The Appellants have not applied to Section 8 of the Arbitration and Conciliation Act, 1996. Therefore, having already submitted to the jurisdictional of the NCLT. The Appellants are now estopped from seeking to apply kompetenz-kompetenz. (c) The Appellants challenged the Order of admission of the Promoters Petition by filing CA (AT) No. 135 of 2020, which was disposed of on 16th June 2020, with the observation that there was no flaw in the Order of admission. Thus the maintainability of the Company Petition has been tested, and the principles of estoppel apply, and the Appellants are estopped from simultaneous proceedings with Arbitration. (d) By filing the Petition ('Appellant's Petition'), the Appellants have themselves submitted to several of the same issues regarding breach of SHA, the alleged failure to honour exits rights and drag rights in the Company Petition, over which the NCLT exercises exclusive jurisdiction. These issues are now pending adjudication under Sections 241 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti-Arbitration Injunction can be granted to prevent multiplicity of proceedings. In such cases, the functionality test is to be adopted to determine the similarity of proceedings. (UOI v CIPLA, (2017) 5 SCC 262. 47. In the instant case, there is substantial Commonality between the Arbitration proceedings and the Company Petitions pending before the NCLT. The Promoters Petition raises an objection to the exercise of the contractual right of Drag and conversion. The Appellant's Petition also raises objections to the Promoters refusal to give effect to the Appellant's contractual rights of Drag. The reliefs sought in the Appellant's request for Arbitration also assert the right to drag and conversion even if some of these issues could be referred to Arbitration, bifurcation of the cause of action not permissible. (Sukanya Holdings v Jayesh Pandya (2003) 5 SCC 531). 48. The Respondent further contends that Section 41 of the Specific Relief Act is applicable and, in any event, does not prohibit grant of relief. The power of the NCLT to issue Anti-Arbitration and Anti-Suit Injunctions stems from Rule 11 of the National Company Law Tribunal Rules, 2013. It follows th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior to the Arbitral Tribunal and has no Supervisory Jurisdiction to stall Arbitration proceedings. The impugned orders are thus contrary to Section 41 (b) of the Specific Relief Act 1963. The Learned Counsel placed reliance on the decision of the Hon'ble Supreme Court in the case of Cotton Corpn. of India Ltd. v. United Industrial Bank Ltd., (1983) 4 SCC 625 at page 631. Hon'ble Supreme Court in the above case has held that the Court has no jurisdiction either under Section 41 (b) of the Specific Relief Act 1963 or under its inherent power under Section 151, CPC to grant a temporary injunction restraining a person from instituting any proceeding which such person is otherwise entitled to institute in a Court not subordinate to that from which the injunction is sought. Hon'ble Supreme Court has further explained the rationale of Section 41 (b) of the Specific Relief Act 1963. 53. Hon'ble Supreme Court has held that the equitable principle underlying Section 41 (b) is that access to Court in search of justice according to law is the right of a person who complains of infringement of his legally protected interest and a fortiori therefore, no other Court can by it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k (supra). It has been observed that when one of the parties to a contract containing a jurisdiction clause approaches the Court of choice in which exclusive or non-exclusive jurisdiction is created, the proceedings in that Court cannot per se be treated as vexatious or oppressive. Furthermore, the burden of establishing that the proceedings in the forum of choice are oppressive or vexatious would be on the party so contending to aver and prove the same. 41. The only principle on which the respondents' case is based is that the arbitration proceedings at London would be vexatious or oppressive. But, as pointed out in Modi Entertainment Network (supra), merely because an arbitration is proceeded with at the place of choice (London), would not, per se amount to a vexatious or oppressive proceeding. The onus would be on the respondents to establish that the arbitration proceedings are oppressive or vexatious. We may also note that the learned counsel for the respondents had categorically stated that it is not the place of Arbitration or the expenses which would be incurred for the conduct of arbitration proceedings at London, which is the objection on their Part. The ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs. Thus, while courts in India may have the power to injunct arbitration proceedings, they must exercise that power rarely and only on principles analogous to those found in sections 8 and 45, as the case may be, of the 1996 Act. We have already indicated that the circumstances of invalidity of the arbitration agreement or it being inoperative or incapable of being performed do not exist in this case. (Verbatim copy with emphasis supplied) 56. Hon'ble Supreme Court in case of World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd., (2014) 11 SCC 639 has held; 22. We are unable to accept the first contention of Mr. Venugopal that as Clause 9 of the Facilitation Deed provides that any party may seek equitable relief in a court of competent jurisdiction in Singapore, or such other Court that may have jurisdiction over the parties, the Bombay High Court had no jurisdiction to entertain the suit and restrain the arbitration proceedings at Singapore because of the principle of comity of courts. In Black's Law Dictionary, 5th Edn., Judicial Comity, has been explained in the following words: Judicial comity.- The principle in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a party, it will not refer the parties to Arbitration, if it finds that the agreement is null and void, inoperative or incapable of being performed. As the very language of Section 45 of the Act clarifies the word agreement would mean the agreement referred to in Section 44 of the Act . Clause (a) of Section 44 of the Act refers to ... an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies . (emphasis supplied) 57. It is apparent that in the instant case, CP No. 77/BB/2020 was listed for the final hearing of IA No. 445 of 2020 for the Anti-arbitration injunction against Respondent. However, the NCLT, instead of disposing of IA No. 445 of 2020, passed an order that respondent number 3 and 4 have preferred appeals CA (AT) 134 of 2020 and CA (AT) 135 of 2021 before the NCLAT on the subject issue, which is pending for disposal and the issue in question is subjudice before this Tribunal as well as the Appellate Tribunal, IA No. 445 of 2020 cannot be decided in isolation and thus we are inclined to take up this IA along with the main CP when the appeals are decided. Therefore, the interim Order passed on 02nd December 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39; and the 'Investors Petition'. The Appellants have initiated the proposed Arbitration in relation to the purported breach of their drag right and their conversion rights regarding their compulsory convertible preference shares (CCPS) under the 2015 SHA and the AOA. Each of these is squarely covered with the scope of the 'Promoters Petition' as well as the 'Investor's Petition'. 62. It is submitted that the Appellants and the promoters have independently already invoked the jurisdiction of the NCLT with respect to both issues with the Appellants intent to submit to Arbitration. Therefore, the subsequent attempt of the Appellant's to submit these disputes to Arbitration is an attempt to frustrate the proceedings in the Promoters Petition and is an attempt at forum shopping by avoiding adjudication by a specialised Tribunal which has extraordinary powers to deal with such intracompany disputes. The NCLT had exclusive jurisdiction to determine the issues intended to be referred to Arbitration. 63. The subject matter of the Promoters Petition relates to the continuing oppressive conduct of the Appellants in managing the affairs of the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it affects the rights and liabilities of persons who are not bound by the arbitration agreement. Equally Arbitration as a decentralised mode of dispute resolution is unsuitable when the subject-matter or a dispute in the factual background, requires collective adjudication before one Court or forum. Certain disputes as a class, or sometimes the dispute in the given facts, can be efficiently resolved only through collective litigation proceedings. Contractual and consensual nature of Arbitration underpins its ambit and scope. Authority and power being derived from an agreement cannot bind and is non-effective against non-signatories. An arbitration agreement between two or more parties would be limpid and inexpedient in situations when the subject-matter or dispute affects the rights and interests of third parties or without presence of others, an effective and enforceable award is not possible. Prime objective of Arbitration to secure just, fair and effective resolution of disputes, without unnecessary delay and with least expense, is crippled and mutilated when the rights and liabilities of persons who have not consented to Arbitration are affected or the collective resolution o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided may be relevant but is not decisive to sustain the jurisdiction of the civil Court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. 53. Dhulabhai case [Dhulabhai v. State of MP, (1968) 3 SCR 662 : AIR 1969 SC 78] is not directly applicable as it relates to exclusion of jurisdiction of civil courts, albeit we respectfully agree with the Order of reference [Vidya Drolia v. Durga Trading Corpn., (2019) 20 SCC 406] that Condition 2 is apposite while examining the question of non-arbitrability. Implied legislative intention to exclude Arbitration can be seen if it appears that the statute creates a special right or a lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties expressed in Arbitration Agreement, may not have jurisdiction to adjudicate the dispute. 67. Hon'ble Supreme Court has further held that there is a difference between a non arbitrable claim and non- arbitrable subject matter; the former may arise on account of the scope of the arbitration agreement and also when the claim is not capable of being resolved through Arbitration; while generally non-arbitrability of the subject matter would relate to non-arbitrability in law. 68. Hon'ble Supreme Court in ONGC v. Western Co. of North America, (1987) 1 SCC 496 at page 515 has held: 18. In the result we are of the opinion that the facts of this case are eminently suitable for granting a restraint order as prayed by ONGC. It is no doubt true that this Court sparingly exercises the jurisdiction to restrain a party from proceeding further with an action in a foreign court . We have the utmost respect for the American Court. The question however is whether on the facts and circumstances of this case it would not be unjust and unreasonable not to restrain Western Company from proceeding further with the action in the American Court in the facts and ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the foreign Court would be oppressive in the facts and circumstances of the case. And in such a situation the courts have undoubted jurisdiction to grant such a restraint order whenever the circumstances of the case make it necessary or expedient to do so or the ends of justice so require. The following passage extracted from para 1039 of Halsbury's Laws of England, Vol. 24, at p. 579 supports this point of view: With regard to foreign proceedings, the Court will restrain a person within its jurisdiction from instituting or prosecuting proceedings in a foreign court whenever the circumstances of the case make such an interposition necessary or expedient. In a proper case the Court in this country may restrain a person who has actually recovered judgment in a foreign court from proceeding to enforce that judgment. The jurisdiction is discretionary and the Court will give credit to foreign courts for doing justice in their own jurisdiction. It was because this position was fully realised that it was argued on behalf of the Respondent that the action in the US Court could not be considered as being oppressive to ONGC. We have already dealt with this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief cannot be heard to say that it is not prepared to act in a just and equitable manner regardless of the niceties and nuances of legal arguments. These are the reasons which make us take the view that the restraint order deserves to be made conditional on ONGC paying the undisputed dues at an early date subject to final adjustments in the light of final determination of the dispute. Hon'ble Supreme Court in the case of Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751 : (2018) 5 SCC (Civ) 652 at page 783; 62. This Court held in Vimal Kishor Shah case [Vimal Kishor Shah v. Jayesh Dinesh Shah, (2016) 8 SCC 788 : (2016) 4 SCC (Civ) 303] that disputes within the trust, trustees and beneficiaries are not capable of being decided by the Arbitrator despite existence of arbitration agreement to that effect between the parties. This Court held that the remedy provided under the Arbitration Act for deciding such disputes is barred by implication . The ratio laid down in the above case is fully applicable with regard to disputes raised in consumer fora. Hon'ble Supreme Court in the case of Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751 : (20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66. After going through submissions of both the parties and considering the relevant citations relied on, it appears that the issue before us is only limited to the extent of validity of the Order passed by the National Company Law Tribunal in issuing Anti-Arbitration Injunction Order, which restrains the Appellants from initiating, commencing and continuing of Arbitration proceedings. In the instant case, the Learned NCLT has yet not decided to refer the matter to Arbitration. However, both the parties have placed reliance on several cases of the Hon'ble Supreme Court on reference to the Arbitral Tribunal. Whether dispute should be referred to Arbitral Tribunal or not this is not the issue in this Appeal. So at present, we are dealing with the limited issue of the validity of the Anti-Arbitration Injunction order passed by the learned NCLT. 67. The Respondent/Promoters have primarily raised the following contentions; The Commonality of issues between the Arbitration proceedings and the proceedings pending before NCLT (Promoters Petition as well as Investors Petition) The Appellants have waived the right to arbitrate by firstly filing a Petition under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Promoter Respondents. 72. The issues raised in the Promoters Petition are couched to give the impression of the oppression, when in fact, the issues emanate from and relate only to contractual rights and their impact on the Promoter Respondents when exercised by the Appellants. These are issues with the parties have agreed upon to be adjudicated by an Arbitral Tribunal. There is no commonality of issues within the Promoters Petition and the Arbitration proceedings, which the NCLT can adjudicate. 73. The issues in the Arbitration proceedings are relating to the enforcement of contractual provisions. In contrast, the issues in the Investors Petition deals with oppression and mismanagement by Promoter Respondents who are in the majority on the Board of Respondent No. 6 and allegedly abused their majority to the detriment of other Shareholders. The Promoter Respondents have failed to show a commonality of issues between the proceedings. Since the issues raised in the proceedings before the NCLT and Arbitration are distinct and separate, there is no question of any commonality of issues within the Investors Petition and Arbitration proceedings. 74. The powers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is distinct from the dispute raised in the Arbitration proceedings. 80. Since the issues arising out of the Investors Petition and the Arbitration are distinct, a party invoking the jurisdiction of the NCLT and contending oppression and mismanagement under the Companies Act cannot be held to waive its rights to arbitrate a contractual dispute arising out of an Agreement. Even otherwise, assuming that the appellants have waived their rights to arbitrate, the said determination cannot be made by the NCLT. It can only be decided by an Arbitral Tribunal in keeping with the principles of Kompetenz-kompetenz. The Learned NCLT can only decide/examine to satisfy itself on a prima facie basis regarding the existence of an Arbitration Agreement and cannot use the Arbitral Tribunal's jurisdiction to decide if arbitral proceedings are barred or not maintainable. The Arbitration and Conciliation Act 1996 empower the Arbitral Tribunal to decide its own jurisdiction, and Promoter Respondents have the liberty to raise the issue before the Arbitral Tribunal under Section 16 of the Act. Therefore, the averment of the Promoter Respondents that the Appellants have waived their right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, any sort of injunction granted by the Court would tantamount to aiding breach of the arbitration agreement. *********** Parameters for grant of anti-arbitration injunctions 127. Thus, if I were to attempt an encapsulation of the broad parameters governing anti-arbitration injunctions, they would be the following: i) The principles governing anti-suit injunction are not identical to those that govern an anti-arbitration injunction. ii) Court's are slow in granting an anti-arbitration injunction unless it comes to the conclusion that the proceeding initiated is vexatious and/or oppressive. iii) The Court which has supervisory jurisdiction or even personal jurisdiction over parties has the power to disallow commencement of fresh proceedings on the ground of res judicata or constructive res judicata. If persuaded to do so the Court could hold such proceeding to be vexatious and/or oppressive. This bar could obtain in respect of an issue of law or fact or even a mixed question of law and fact. iv) The fact that in the assessment of the Court a trial would be required would be a factor which would weigh against grant of anti-arbitration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revent the breach of an obligation existing in its favour, whether expressly or by implication. Section 38 is thus an enabling section which confers power on the Court to grant perpetual injunction in situations and circumstances therein enumerated. Section 41 caters to the opposite situation. It provides that an injunction cannot be granted in the situation and circumstances therein set out. The Corporation relies on Section 41(b) in support of its contention that the Court had no jurisdiction to grant temporary injunction because perpetual injunction could not have been granted by the Court in terms in which temporary or interim injunction was sought Section 41(b) reads as under: 41. An injunction cannot be granted: (a) * * * (b) to restrain any person from instituting or prosecuting any proceeding in a court not subordinate to that from which the injunction is sought; * * * The predecessor of Section 41(b), Section 56(b) of the Specific Relief Act of 1887 repealed by 1963 Act read as under: 56. Injunction cannot be granted: (a) * * * (b) to stay proceeding in a court not subordinate to that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant an injunction restraining a person from instituting or prosecuting any proceeding in a court which is subordinate to the Court from which the injunction is sought. As a necessary corollary , it would follow that the Court is precluded from granting an injunction restraining any person from instituting or prosecuting any proceeding in a Court of coordinate or superior jurisdiction. This change in language deliberately adopted by the legislature after taking note of judicial vacillation has to be given full effect. (emphasis supplied) 87. In the above-mentioned Hon'ble Supreme Court has laid down the law that the equitable principle underlying Section 41(b) is that access to Court in search of justice according to law is the right of a person who complains of infringement of his legally protected interest and a fortiori therefore, no other court can by its action impede access to justice, except the superior Court which can injunct a person by restraining him from instituting or prosecuting a proceeding before a subordinate Court. A subordinate Court is precluded from granting an injunction restraining any person from instituting or prosecuting any proceeding in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the said issue and in addition also holds that the hearing on the Applications will be only along with the hearing on the main Petition. In addition, the illegality is compounded by containing the interim Order endlessly. Therefore, such an order is grossly unjust and illegal and cannot be sustained in law. Therefore, we are of the considered opinion that the impugned orders are against the settled principles governing the law on Anti-Arbitration Injunctions and are ultra virus the scope of Section 241 and 242 of the Companies Act 2013. 92. Therefore, we hold that the impugned orders are against the settled principles that govern Section 8 of the Arbitration and Conciliation Act, 1996. Thus, the NCLT erred in holding that in the absence of either party filing an Application under Section 8 of the Arbitration and Conciliation Act, it would not be able to refer the matter to Arbitration. The NCLT further held that parties cannot be permitted to initiate arbitration ; it is contrary to the settled principles of law, which mandates a judicial authority to refer the matter to Arbitration if a valid arbitration agreement existed between the parties. ORDER In fine, we al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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