The decision of an arbitral tribunal must be made by a majority of all its members, and any decision given without consulting or associating all members would be a nullity.

R.L. Anand, J. (Oral) - Petitioners M/s. Subhash Chugh and Co. and 7 others, fully described in the head-note of this petition under Article 227 of the Constitution of India, have prayed for the quashment of order dated 20.3.1999 (Annexure P7) passed by respondent No. 2 i.e. Arbitration Committee, Ludhiana Stock Exchange Association Ltd., Feroze Gandhi Market, Ludhiana, and have further prayed for the issuance of any other order or direction which this Court deems proper in the facts and circumstances of this case.

2. Facts are not much in dispute but the controversy involved in the present petition lies somewhere else. The facts can be gathered even from the impugned order Annexure P7. M/s. Girnar Fibres Limited, Ludhiana (hereinafter called the Company) came out with a public issue in October 1995 for 80,00,000 equity shares of Rs. 10/- each for cash at premium of Rs. 5/- per share aggregating to Rs. 1,200 lacs. The issue opened on 12th October, 1995 and closed on 24th October, 1995. In terms of the prospectus, on application a sum of Rs. 7.50 per share was to be paid. The claimant company entered into underwriting agreements with various underwriters including the Lead Managers, Bank of Baroda, New Delhi, Industrial Finance Corporation of India Ltd., New Delhi and the Merchant Banker, namely State Bank of Bikaner and Jaipur on 13th September, 1995. The underwriting commitments to subscribe and to underwrite varied with every underwriter.

3. The underwriters and the claimant Company entered into an agreement on 13.9.1995 whereby the underwriters agreed to underwrite/procure subscription for the public issue by the Girnar Fibres Limited on terms and conditions mentioned therein. Clause 2 of the underwriting agreement provided that the subscription list shall be kept open by the Company unless the issue is fully subscribed for a minimum period of 10 calendar days failing which the underwriter shall not be bound to discharge the underwriting obligations under the agreement. In the prospectus issued by the claimant Company the programme for the opening and closing of the issue was given as under :-

Issue opens on 12th Oct. 1995

Earliest closing 17th Oct. 1995

Closing not later than 24th Oct. 1995

4. A dispute arose between the parties to the underwriting agreement between the claimant Company and the underwriters and in terms of Clause 20 it was referred to the Ludhiana Stock Exchange, being the regional Stock Exchange, in which the equity shares were to be listed. The Ludhiana Stock Exchange constituted an Arbitration Committee as per terms of arbitration clause and the arbitration proceedings were commenced.

5. The claimant Company filed its claim petition accompanied by the supporting documents with the Ludhiana Stock Exchange on 27.8.1996. Notices were issued to the underwriters, who filed the objections and on this application dated 27.8.1996 the Arbitration Committee framed the following issues :-

1. Whether the arbitration committee has no jurisdiction to entertain, proceed with and decide the claim ?

2. Whether the proceedings taken so far by the arbitration committee are not in accordance with law of arbitration as applicable to the matter in dispute ?

3. Whether the claim is barred and not tenable in view of the provisions of Section 76 of the Companies Act, 1956 ?

4. What is the effect of Section 21 of the Arbitration and Conciliation Act, 1996 for these proceedings ?

6. The reading of the above issues would show that the Company challenged the jurisdiction of the Arbitration Committee to entertain and proceed with the reference. It also challenged the proceedings of the Arbitration Committee on the plea that all the 7 arbitrators had never participated in the arbitration proceedings. Moreover, the claim filed by the underwriters is barred and not tenable in view of the provisions of Section 76 of the Companies Act. Apart from that the Committee was called upon to consider what is the effect of Section 21 of the Arbi