Calcutta High Court
Ram Swarup Rungta vs Mahabir Prasad Rungta & Ors on 8 April, 2010
Author: Nadira Patherya
Bench: Patherya
AP No. 139 of 2010
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
RAM SWARUP RUNGTA
Versus
MAHABIR PRASAD RUNGTA & ORS.
For Petitioner : MR. ANINDYA MITRA, SENIOR ADVOCATE WITH
MR. A. MITRA, MR. J. CHOWDHURY, ADVOCATES.
For Respondent No.2 : MR. P. CHATTERJEE, SENIOR ADVOCATE WITH
MR. RANJAN BACHAWAT, ADVOCATE.
For Respondent NO.4 : MR. S.N. MOOKHERJEE, SENIOR ADVOCATE WITH MR. R. KAPOOR, MR. R. BHATTACHARYA, ADVOCATES.
BEFORE:
The Hon'ble JUSTICE PATHERYA Date : 8th April, 2010.
The Court : By order dated 29.3.2010 an order was passed restraining the respondent no.2 from proceeding with CP No.113 [ND] of 2009.
Counsel for the respondent no.2 seeks vacating of such order while counsel for the petitioner seeks continuance thereof.2
Counsel for the respondent no.2 submits that none of the minutes before the Arbitrator was signed by the Arbitrator. This has been accepted by the petitioner and as the arbitration was to be completed within four months and no extension by consent granted, the time has long expired. Therefore, the arbitration proceedings cannot be continued. On 5.3.2010 one of the parties filed an application before the Arbitrator to resume the proceedings and take a decision. By letter dated 12.3.2010 the respondent no.1 has also sought resumption of the arbitration proceedings. Prior thereto i.e. between January 2007 and March 2010 there is no request to the Arbitrator to resume the proceedings. In fact, consent has also been given by the respondent no.4 to resume the proceedings on 19.3.2010. Therefore, the said request has been made only prior to filing of the instant application. Except for five meetings no further meetings have been held by the Arbitrator and the last of such meeting was held on 5.12.2006. It is an admitted fact that since January 2007 no further meeting has been held. As none of the parties showed any interest in the arbitration proceedings till December 2009, the proceedings before the Company Law Board was filed. On 14.12.2009 and 26.3.2010, proceedings under Section 8 of the 1996 Act have been filed by the respondentno.4 and the next date of hearing of the Section 8 application is fixed on 31.3.2010. In fact, on 27.1.2010 directions were given in the application filed under Section 8 of the 1996 Act but no affidavit has been filed. On 31.3.2010 the order of 29.3.2010 was placed before the Company Law Board.3
The allegation of the petitioner that the respondent no.2 was absconding since 2007 is incorrect as all cheques have been signed by the respondent no.2 in 2007, 2008 and 2009. Section 9 of the 1996 Act does not contemplate passing of orders as an interim direction which cannot be granted by the Arbitrator finally. Letters have also been written to the Government agency and other authorities. In fact, the business of the Company Law Board, Jharkhand Bench is vested in the Company Law Board functioning at New Delhi and, this Court, therefore, lacks jurisdiction to entertain the application or pass orders thereon. Therefore, the case made out for stay of proceedings before the Company Law Board is baseless and the order passed be vacated.
Counsel for the petitioner, in reply, submits that from the minutes of the meeting handed to Court by the respondent no.2 it will appear that in each of the meetings the Arbitrator was present. The minutes have been signed by the parties and at each meeting steps taken to resolve the disputes and differences between the parties. In fact, at meeting held on 20.7.2006 the take over of Jharkhand Ispat Pvt.Ltd. (JPIL) was discussed and the petitioner agreed to take over the said company in totality. It is only for the purposes of valuation that the matter was deferred. The order passed on 29.3.2010 in view of Section 9 [ii] [c] of the 1996 Act can be passed and be continued.
Counsel for the respondent no.4 submits that by agreement dated 9.5.2006 the parties agreed to refer all the disputes to the Arbitrator including disputes that will arise in the course of hearing. The proceedings filed before the 4 Company Law Board is with regard to the management of Jharkhand Ispat Pvt.
Ltd. It has been admitted by the respondent no.2 that 71.28% of the paid up capital is held by his group and the shareholding pattern as on 29.4.2009 set out which is contrary to the discussions held at meeting dated 5.12.2006. One of the prayers sought before the Company Law Board relates to shifting of the registered office. This issue was also decided on 5.12.2006. As the issues raised before the Company Law Board have been resolved at the meeting held by the Arbitrator, the proceedings initiated before the Company Law Board is contrary to the agreement between the parties and in order to preserve such agreement, orders passed under Section 9 be continued.
Having considered the submission of the parties, the interim order granted on 29.3.2010 is continued till eight weeks from date.
This order is passed as by agreement dated 9.5.2006 the parties had agreed to resolve all the disputes and differences through arbitration. The said agreement has been signed by each of the parties. The minutes of the meeting handed to Court by the respondent no.2 bears the signature of the parties. Therefore, the discussions and decisions taken at such meeting has been accepted by each of the parties. In each of the meetings each issue with regard to the companies including JPIL was considered. In fact, in the meeting of 5.12.2006 it was decided that the respondent no.2 would resign as a Director. A decision was also taken on the relinquishment of shares held by the parties. By filing the proceedings before the Company Law Board the respondent no.2 is 5 seeking to scuttle the efforts made at the various meetings of the Arbitrator to resolve the disputes between the parties. In order to preserve the subject matter of the dispute in arbitration the order is continued.
Accordingly, directions are given for filing affidavits. Affidavit in opposition within three weeks from date; reply thereto, if any, within two weeks thereafter. Matter to appear in the list six weeks hence.
All parties concerned to act on a photostat signed copy of this order on the usual undertakings.
[PATHERYA, J.] pkd.
Asstt. Registrar [C.R.]