The central legal point established in the judgment is the interpretation and application of provisions of the Companies Act, 1956, in relation to the maintainability of the claim and the character of the respondent company.

1. This Original Petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the Award dated 09.11.2016 passed against it by the Arbitral Tribunal.

2. The petitioner is a public limited company, whereas, the respondent is a private limited company. The petitioner issued three work orders in favour of the respondent. These work orders were with respect to electrical and plumbing works to be done by the respondent. A sum of Rs.30 lakhs was paid to the respondent as advance by the petitioner.

3. The respondent started and proceeded with the work. For the work executed, bills were raised and submitted to the petitioner for certification and the same were certified by the petitioner. The bills would include the work done by the respondent along with the items used as materials. Though the bills were certified by the petitioner, no payment was made. Hence, the respondent stopped the work. The petitioner did not question the stoppage of work. According to the respondent, the work was stopped in the midway due to the failure of the petitioner in making payments. Thus, claiming a specific amount under various categories, the respondent invoked the arbitration clause.

4. Before the Tribunal, the petitioner raised the question of maintainability and without prejudice to the same, it had also made a counter claim. The preliminary objection raised with regard to maintainability was rejected by the Tribunal. A contention was raised by the petitioner that the respondent was deemed to be a Public Limited Company in not making amendment to the Bylaws by removing the clause, which provides for receiving monies from private as deposits. After rejecting the preliminary objection, the matter was proceeded by the Tribunal.

5. Issues have been framed by the Tribunal. After considering the entire materials available on record, the Tribunal has awarded a sum of Rs.23,83,595.33 for Contract No.1, Rs.2,72,658.27 for Contract No.2 and Rs.4,26,395/- for Contract No.3 together with interest at the rate of 18% per annum. Besides that, a cost of Rs.1 lakh was also awarded. Incidentally, the counter claim of the petitioner was also rejected. It is to be noted that in the claim petition, the respondent has claimed a total sum of Rs.95,32,418.80/-.

6. The learned counsel appearing for the petitioner would submit that the claim made before the Tribunal is not maintainable. The Bylaws of the respondent has not been amended. Section 3(1)(3)(d) of the Companies Act, as amended in 2000 prohibits acceptance of deposits from the public. Since the respondent did not amend the Bylaws, which provides for such activity, it partakes the character of a public company and the Directors being less than 7, as mandated under the Companies Act and the others are being liable, but not parties to the arbitral agreement, the only remedy lies before the jurisdictional civil court. The contracts are lump-sum contracts. Therefore, there cannot be any claim for damages item-wise. In other words, unless and until, the entire contract is completed, the claims as made are not maintainable. It is the respondent, which unilaterally rescinded the contract. There cannot be any damage as sought for. There is a clear violation of Sections 297 and 299 of the Companies Act, 1956. Thus, the contracts being voidable, the claims ought to have been dismissed by the Tribunal.

7. To buttress his submissions, the learned counsel for the petitioner has relied upon the following decisions:-

(i) 1948 61 LW 449 (Govindram Seksaria a firm and another vs. Edward Radbone)

(ii) AIR 1958 SC 560 (State of Madras... Vs. Gannon Dunkerley & Co., (Madras) Ltd.....)

(iii) (2015) 14 SCC 277 (Darius Rutton Kavasam A Neck Vs. Gharda Chemicals Limited and others)

(iv) (2004) 11 SCC 425 (Draupadi Devi and others Vs. Union of India and others)

8. The learned counsel appearing for the respondent would submit that the execution of agreements are not in dispute.