Document Fragment View

Matching Fragments

5. The appeal claims that after the said arbitration, the original Petitioners and Respondent No. 2 took several steps to comply with the arbitration award. The Company having been allotted to the Original Respondent No. 2, the Petitioners were not entitled to file any proceeding relating to the company. In fact, on July 6, 2016, the Arbitrators had, at the instance of the parties, laid down 'Steps of Execution of Arbitration Award' laying down Company Appeal (AT) No. 360 of 2017 modalities to be performed by the parties to give full and final effect to the award. These parties consented to the same and even signed the same. According to the Appellants, Original Petitioners failed and neglected to take steps to transfer the shares in the Original Respondent No. 1 Company in favour of Original Respondent No. 2 and purported to continue as Directors of the company. Actually they ceased to be the Directors with effect from 19th October, 2016 in view of Section 167(1)(b) of the New Act and they have not attended any Board meeting after July 22, 2015.

7. By and under the said award, the Petitioners were allotted the companies viz., M/s. M.L Chopra Shipping Pvt. Ltd., M/s. KVR Shipping & Logistics Pvt.
Ltd. and M/s. Maverick Trading Pvt. Ltd. The Respondent No.2, on the other hand, was allotted M/s. Freyaship Services Pvt. Ltd. ("FSPL") and M/s. Freya Shipping Agencies Pvt. Ltd. ("FSAPL")."

9. Learned counsel submitted that the FSPL referred by the Original Petitioners is the present Company regarding which disputes have been raised. The learned counsel pointed out Annexure - A1 of the appeal which is said to be the Arbitration Award dated 22nd January, 2016. The document is in Devnagri. Translation of the same is said to be at Page 106 of the Paper- Book. Referring to Paragraph 3 of the award and reading the same with Paragraph 9, it is argued that the present Company had come to the share of Company Appeal (AT) No. 360 of 2017 the Appellant No. 1 (Original Respondent No. 2). Learned counsel submitted that when this is so, the Petition making allegations of 'Oppression and Mismanagement' could not have been maintained for acts which are admittedly of a period after the Arbitration Award. Learned counsel submitted that the learned NCLT did not consider as to what would be the effect of the award on the matter. It is stated that the NCLT should have asked both the parties to go for execution. The counsel submitted that in the face of the award, even if the acts of Appellants with regard to the Company were to be questioned, the Original Petitioners cannot claim legal injury. The counsel further referred to the additional Paper-Book filed where at Annexure-A12-Copy of the Execution Petition No. 2 of 2017 has been filed. It is submitted that the Original Petitioners have filed the said Petition before the High Court of Calcutta for execution of the same award. The Paper-Book shows that even the Appellant No. 1(Original Respondent No. 2) had filed application under Section 17 of the Arbitration and Conciliation Act, 1996 ('Arbitration Act' in brief) before the Arbitrators seeking interim measures till the award is enforced.

17. At the time of arguments, we had referred to these observations of the NCLT but the learned counsel preferred to submit that when the award was already there and the present Company had come to the share of Appellant No. 1 (Original Respondent No. 2), the Original Petitioners were even otherwise required to resign as Directors and they could not have maintained the Company Petition.

18. At the time of arguments, when the learned counsel for the Appellants referred and relied on the arbitration award passed, we had posed a question to the learned counsel that once an arbitration award like present, has been Company Appeal (AT) No. 360 of 2017 passed and the Company has been decided to be given to the share of Appellant No. 1 (Respondent No. 2), does it mean that the Petitioners next moment cease to be Directors ? The learned counsel fairly did not claim that the Petitioners would immediately cease to be Directors. We have carefully gone through the Arbitration Award which is without any reasons and quite cryptic and very much using telegraphic language. In most of the places, initials have been used and abbreviation for Companies, Individuals and Business and even HUF (Hindu Undivided Family) without explaining. The fact however, remains that such agreement has been entered into between the Original Petitioners and Original Respondent No. 2. But then the Company apparently had Respondent No. 3, Narpat Singh Surana also as Director. There is yet another Director Original Respondent No. 4 - Krishnendu Roy. The Arbitration agreement was between the Original Petitioners and Original Respondent No. 2. Even if the award between the Original Petitioners and Respondent No. 2 had been passed, there would be necessity to do further necessary compliances under the Companies Act for giving effect to the award. Only because a consent award is passed between these parties deciding to allot Company 'A' to one party and Company 'B' to another Party, it does not mean that the legal requirements to be followed under the Companies Act for transfer of shares etc. is given a go-bye. It is necessary for parties to either mutually comply/get complied with all the requirements under the Act for transfer of shares and due resignation from the Directorship etc. or it would be necessary to have recourse to the execution procedure. It cannot be that moment a document is executed, the Company Appeal (AT) No. 360 of 2017 party goes and takes over the Companies and starts doing whatever he likes without following any procedure for transfer of shares, administration etc. Till the Petitioners resigned as Directors or were removed under established procedure under the Companies Act, or in execution, it will not be permissible not to send any notices to them and declare that they have not attended meetings and they discontinued to be Directors under Section 167 of the New Act. The Appellants themselves in the NCLT relied on Section 167 to claim that the Original Petitioners were not Directors. As such, they were bound to show that duly notified and called meetings were not attended to so as to attract Section 167 of the New Act.

19. It is clearly on record that the Original Petitioners have filed an Execution Petition before the High Court of Calcutta to give effect to the award. Even the Appellant No. 1 has filed application under Section 17 of the Arbitration Act as has been referred above. It would be more appropriate for the parties to cooperate with each other and comply with the Arbitration Award as has been passed between the signatory parties and do the necessary legal compliances as per the Arbitration Award for implementation/execution of the same. If it is done mutually, execution would not be necessary, otherwise the aggrieved parties would naturally have the option of the execution of the award. Till that time, it is necessary for the parties not to commit such acts as would attract violation of the provisions of the Companies Act, 2013. For such reasons, we are unable to interfere with the impugned order.