Arbitration and 397/398 Company Law Board

20th Century Finance Corporation Ltd v. Union of India, [2011] 161 Comp Cas 247 (Delhi)

"The grievance of the appellant was that the respondent had not adhered to the clauses of the sponsorship agreement. The right to get the memorandum and the articles of association amended had accrued to the appellant and the pre-requisite for the appellant was to fulfill all the obligations imposed on it by the sponsorship agreemnt as it was disputed by the respondents for the amendment of the mem/arts.... It flowed from the contractual obligations contained in the sponsorship agreement and had to be necessarily determined through means of arbitration as contained in the article 8(2) of the sponsorship agreement. "

arbitration, termination of the proceedings

Arbitrator of his own cannot extend time, and the proceedings get terminated automatically. BK Gopakumar v. NFDCL, 2011(1) BOMCR 12

Arbitration Agreement

mere use  of the word "arbitration" in a clause does not make it as arbitration agreement. Discovery Properties & Hotels Pvt Ltd v. CIDCO, 2011(1) BOMCR 343

foreign judgment

Section 13(b) Foreign judgment passed by the UK High Court under its summary procedure after considering evidence available on record would be decision on merits. It would be conclusive hence enforceable in India. AIR 2011 P&H 69 (NOC)

Also  simultaneous execution petition in India and Foreign Court not barred, especially when the decree holder has started that nothing has been recovered from execution filed in other court.


costs imposed by foreign court is a decree, can be executed under section 44-A of CPC.

winding-up and alternative remedy

"when the petitioner invokes a just and equitable ground ... the petitioner must convince the court not only of just and equitable ground for ordering winding-up, but also that there is no alternative remedy open to the petitioner. Apart from that the petitioner is bound to substantiate the conditions of insolvency existing to persuade the court to exercise the equitable jurisdiction. If the details of the insolvency are wanting and no supportive documents are produced, then the petitioner could not be said to have proved prima facie the status of the respondent company's insolvency. The creditor has to show the prima facie evidence that the (a) existing assets and the probable assets are insufficient to meet the existing liabilities; (b) the company is heavily indebted to various debtors; and that there is no possibility of the respondent company's making profit or the business being carried on....."

"the jurisdiction of the company court is summary jurisdiction and unless there is material before the company court to show that the company has reached the stage of commercial insolvency, the court will not order a winding up."

Hence, unless the petitioner made a definite case as to the commercial insolvency of the respondent, the mere fact that there was corporate guarantee would not entitle the petitioner to go for this relief."

[2011] 105 SCL  274 (Mad) - Dallah Abrarka v. Pentasoft Technologies Ltd

Arrangement without consideration S 391

expression 'arrangement' contemplates give and take between the parties and where there was no consideration, i.e. no give and take between the parties, same was not an arrangement under section 391 of the companies act and therefore not reconstruction capable of being sanctioned under section 391. [2001 105 SCL 301 (Guj)]

NOTE: This case has received adverse comments from commentators and senior counsels. 

Winding-up and registered office of the company

Kotak Mahindra Bank v. Hermonite Associates Ltd, [2011] 105 SCL 421 (Delhi)

"While examining the words 'has served on the company, b y causing it to be delivered at the registered office, by registered post or otherwise in section 434(1)(a), reference must be made to Section 51. The word 'served' in section 434(1)(a) is followed by the words 'by causing it to be delivered at its registered office.' The latter words have to be given due effect .... The document which includes notice under Section 434(1)(a) may be treated as served if it is 'sent' in the manner specified under Section 51.... Otherwise, by keeping the registered office closed and locked, service of notice under Section 434(1)(a) or documents under Section 51 cannot be effected...  Any other interpretation would make the provisions of the Act unworkable and will be detrimental to third parties, creditors or the members."


also  (1989) 1 SCC 264 - sending by (R) post is sufficient compliance.