Company Law:

Sick Industrial Companies (Special Provisions) Act, 1985: Section 22(3).

Suspension of legal proceedings, contracts etc.-Arbitration and Conciliation Act and SICA-Interrelation between-Predominance of the former over the latter-Inter Corporate Deposit-Default in payment of-An arbitration award was made in favour of a creditor for a certain sum- The creditor also filed an application before the High Court for winding up of the debtor-company, which was allowed- The High Court restrained the debtor-company from dealing with its assets without the permission of the Court-The debtor-company made a reference under S. 15 of SICA to the Board for Industrial and Financial Reconstruction-The Division Bench of the High Court set aside the order of winding up and directed to keep the winding up proceedings in abeyance till the disposal of the appeal under SICA-The debtor-company filed an application before the Board under S 19-A read with S. 22(3) of SICA for permission to dispose of its shares, which was dismissed-A writ petition filed against the aforesaid order before another High Court was allowed-Pursuant to or in furtherance of the said judgment of that High Court, the shares had been sold and the sale proceeds had been deposited with the Board-Validity of Held: During the pendency of an inquiry before the Board, the debtor-company could sell its shares -It, however, could not do so because of the restraint order passed against it-It was, therefore, not permissible for the High Court to direct sale of the shares despite refusal on the part of the Board to do so-The Board has the power to suspend the operation of an award if any occasion arises therefor- Arbitration and Conciliation Act, 1996, Ss. 5 & 36.

The appellant advanced a certain sum by way of an Inter Corporate Deposit to the respondent-company. The respondent-company defaulted in the payment thereof. An arbitration award was made in favour of the appellant for a certain sum under the Arbitration and Conciliation Act, 1996. The appellant also filed an application before the High Court for winding up of the respondent-company, which was allowed. The High Court restrained the respondent-company from dealing with its assets without the permission of the Court. The respondent, in the meanwhile, made a reference under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) to the Board for Industrial and Financial Reconstruction (Board).

An appeal against the order of winding up was preferred by the respondent before the Division Bench of the High Court. The Court set aside the order of winding up and directed to keep the winding up proceedings in abeyance till the disposal of the appeal under SICA. The respondent filed an application before the Board under Section 19-A read with Section 22(3) of SICA for permission to dispose of its shares, which was dismissed.

A writ petition filed against the aforesaid order before another High Court was allowed. Pursuant to or in furtherance of the said judgment of that High Court, the shares had been sold and the sale proceeds had been deposited with the Board. Hence the appeal.

The following question arose before the Court:-

Whether the provisions of the Arbitration and Conciliation Act, 1996 would prevail over the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985?

Dismissing the appeals, the Court.