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IN THE HIGH COURT OF DELHI AT NEW DELHI
JAYANT NATH, J.
Mr. Deepak Khosla - Appellant
Versus
Union of India & Ors. - Respondent
CO.A(SB) 26 of 2008
Decided On : 21-05-2018
Companies Act - Appeal under Section 10 F - Summary of Acts and Sections: Companies Act, 1956, Section 10F, Section 8 of Arbitration and Conciliation Act - The court discussed the lack of subject matter jurisdiction, fraud allegations, and the issue of limitation under Section 10F of the Companies Act. The court also highlighted the interpretation of Section 5 and Section 8 of the Arbitration Act and their implications on the court's jurisdiction. The court dismissed the appeal as barred by limitation and ruled that the orders of the Company Law Board were not void ab initio due to the pendency of the arbitration application.
Fact of the Case:
The appeal sought to quash all orders passed by the Company Law Board (CLB) in Co. Pet. 114/2007 between 20.10.2008 and after 31.08.2007, citing lack of subject matter jurisdiction and fraud allegations. The disputes arose from a joint venture project and shareholding issues in a company.
Finding of the Court:
The court found that the appeal was barred by limitation under Section 10F of the Companies Act and ruled that the orders of the CLB were not void ab initio due to the pendency of the arbitration application. The court also noted that the appellant was not a party to the arbitration proceedings and dismissed the appeal.
Issues: The issues included lack of subject matter jurisdiction, fraud allegations, and the applicability of the limitation period under Section 10F of the Companies Act.
Ratio Decidendi: The court held that the appeal was barred by limitation and ruled that the orders of the CLB were not void ab initio due to the pendency of the arbitration application. The court also emphasized that the appellant was not a party to the arbitration proceedings.
Final Decision: The court dismissed the appeal as barred by limitation and ruled that the orders of the CLB were not void ab initio due to the pendency of the arbitration application.
JAYANT NATH, J.
1. This appeal is filed under Section 10 F of the Companies Act, 1956 seeking to quash/strike down and/or declaring null & void and void ab initio all the orders passed by the Company Law Board (herein referred to as “CLB”) in Co. Pet. 114/2007 between 20.10.2008 and after 31.08.2007 as being Coram non judice.
2. The genesis of the present appeal relates to a land in Kasauli, Dist. Solan, Himachal Pradesh. The land was owned by the appellant/family of the appellant/respondent No.3. Some of the persons being part of the Appellant Group entered into an MOU dated 21.12.2005 with Mr.Vikram Bakshi. The project was a joint venture between the Appellant Group and Bakshi Group. There was to be some transfer of share holding in favour of Bakshi Group. Pursuant to the MOU, Mr.Vinod Surha and Mr.Wadia Prakash, nominees of Mr.Vikram Bakshi were appointed as additional directors of respondent No. 3 Company.
3. Disputes arose between the parties. Mrs. Sonia Khosla wife of the appellant filed a petition under Sections 397 and 398 of the Companies Act, 1956 before the Company Law Board (CLB). The allegation of Mrs. Sonia Khosla in the petition was that she held 49% shares in the Company which have been reduced to 36% and that the affairs of the Company were being managed in a manner being oppressive to the minority shareholders.
4. There are events that arose thereafter. According, to the appellant, Mr. Wadia Prakash and Mr. Vinod Surha ceased to be directors of the Company on 30.09.2006. Further, on 18.12.2007 in a purported meeting of the Company held Mr. Deepak Khosla and Mr. R.K. Garg were appointed as directors of the Company and the Board allotted 6.58 lakhs equity shares to 11 persons being part of the Appellant Group. The Bakshi Group of course have stated that the alleged meeting of 18.12.2007 was illegal.
5. The CLB vide its order dated 31.01.2008 where the matter was pending directed the parties to maintain status quo with regard to the shareholdings and the directors of the Company as it existed on the date of filing of the petition i.e. 13.08.2007.
6. Three appeals have been filed against the said order dated 31.01.2008 before this Court. Mr. R.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 existed on the date of filing of petition by Mrs. Sonia Khosla before the CLB i.e. 13.08.2007.
Mrs. Sonia Khosla filed a review against the order of this court dated 22.04.2008. This court on 06.05.2008 dismissed the said review petition noting that the order was dictated in the presence of the counsel for both the parties. Similarly, Mr. R.P. Khosla filed a review petition which was dismissed as withdrawn on 06.05.2018. The appellant herein moved an application being Co. Appl. 487/2008 in Co. Appeal No.7/2008. This court on the said date i.e. 06.05.2008 noted the contention of the appellant that th
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