Mehtab S. Gill, J.
1. The petitioners have prayed for issuing a writ in the nature of mandamus quashing order dated December 8, 2000 (Annexure P-1).
2. The petitioners have averred that the rights of the petitioners have been affected by not relegating the parties to arbitration. It has been further averred that Section 7 of the Arbitration and Conciliation Act, 1996 (hereinafter called the '1996 Act'), postulates a contract between the parties and if there is an agreement for arbitration, the parties should be relegated to the jurisdiction of an arbitrator. A contract between a party having an arbitration agreement, a formal agreement is not necessary.
It has been further averred that the meaning of expression 'First statement on the substance of the dispute', has wrongly been interpreted by the Company Law Board. It has been further averred that, contesting an interlocutory application, would amount to acquiescence and it would be a step in the direction of the first statement.
The 'Hind Samachar Limited' was incorporated by the Indian Companies Act, 1930 with an authorised capital of Rs. 35 lacs. The main objects of the company are publishing of Newspapers, Journals, Magazines etc. This Company was formed to take over Hind Samachar, the Urdu Daily Newspaper.
Late Shri Jagat Narain was the father-in-law of petitioner No. 1 and grand-father of petitioner Nos. 2 and 3. He was assassinated in September 1981. After his death, Shri Ramesh Chander, husband of petitioner No. 1 and father of petitioner Nos. 2 and 3, took over as Chief Executive of the Company. Shri Ramesh Chander was assassinated on May 12, 1984.
Petitioner Nos. 1 to 3 are/were Directors of the Company. Petitioner No. 1 is the widow of Shri Ramesh Chander. Petitioner Nos. 3 and 4 are the sons of petitioner No. 1. Petitioner Nos. 4 to 6 are HUF of petitioner Nos. 1 to 3.
Respondent No. 2 Shri Vijay Kumar Chopra son of late Shri Jagat Narain, is a shareholder of the Company. He is the Chairman-cum-Managing Director of the Company. Respondent No. 2 is brother-in-law of petitioner No. 1. Respondent No. 3 is the wife of respondent No. 2. Respondent Nos. 4 and 5 are the sons of respondent No. 2.
It has further been averred that the petitioners are represented as Group 'A' and respondent Nos. 2 to 6 are represented as Group B' in the Company.
Petitioner No. 1, in the interest of long term future of the Company and also that no bickering arose, agreed to surrender her family's shares in favour of respondent Nos. 2 to 6 (Group B') so that, both Group 'A' and Group 'B' had equal shares in the Company.
The petitioners and the respondents entered into a family settlement. In the family settlement, arbitration Clause (30) was introduced which states that in case of any dispute Sarvshri S.L. Batra and S.R. Suri will arbitrate between the two families. Memorandum of family settlement and Articles of Association of the company is annexed with the petition as Annexure P-2.
The petitioners and the respondents also entered into a family agreement dated May 6, 1996 (Annexure P-3). Clause 16 of this agreement had an arbitration clause. It was stated therein that all misunderstanding shall be resolved by mutual discussion, if required, then appointing an arbitrator.
It has been further averred that respondent No. 2 persuaded the petitioners to relinquish majority share in favour of Group 'B' and share holders agreement was signed on February 8, 1997 (Annexure P-4). The share holders agreement was adopted and incorporated in the Memorandum and Articles of Association of the Company dated August 9, 1949 (Annexure P-5).
Respondent Nos. 2 to 6 (Group B'), instead of appreciating what the petitioners have done for the congenial and harmonious working of the company, with mala fide intention, took over control of the Company. They kept the petitioners out of the management and control of the Company. After having taken control of the Company, respondent Nos. 2 to 6 filed a petition under Sections 397 and 398 of the Companies Act, as Company Petition No. 76 of 1999. This petition was filed in total disregard to the arbitration agreement, contained in the Memorandum of Family Settlement, entered between the parties, dated May 6, 1996 and share holders agreement dated February 8, 1997. Respondent Nos. 2 to 6 in this petition, made allegations that the affairs of the Company were being conducted by Group 'A' to the prejudice of public and the share holders. It has been further stated in the Company Petition, that a deadlock had arisen and thus the jurisdiction of the Company Law Board, Principal Branch, New Delhi was invoked.
The parties appeared before the Company Law Board (for short 'the C.L.B.') (respondent No. 1.). Company Petition No. 76 of 1999 was hotly contested, by both the parties. After hearing both the parties, the CLB passed an order dated December 8, 2000 (Annexure P-1).
3. Notice of motion was issued.
4. Respondent Nos. 2 to 6 in the written statement, have stated that there can be no challenge to the impugned order of the CLB. The parties were heard and then the order dated December 8, 2000 (Annexure P-1) was passed.
5. Learned counsel for the petitioners has stated that the CLB has erred in rejecting the application filed by the petitioners, under Section 8 of the 1996 Act. He has further stated that there is an application under Section 34 of the Arbitration Act, 1940 (hereinafter called the '1940 Act') for staying the proceedings, which could be moved before filing of the written statement. He has further stated that the competent authority under Section 8 of the 1966 Act, could refer the parties to arbitration, before submitting the application but not later than, submitting the first statement on the substance of the dispute.
6. Learned counsel has further stated that before submitting 'first statement on the substance of the dispute', would not, necessarily, mean the written statement. If an application is made under Section 8 of the 1996 Act, the Court is duly bound to refer the parties for arbitration. The parties have entered into an agreement for arbitration, as given in the Memorandum of Family Settlement (Annexure P-2), as also in Clause 17 of the family agreemeat dated May 6, 1996 (Annexure P-3) and share-holders agreement dated February 8, 1997 (Annexure P-4), Article 33 of the agreement talks of arbitration.
7. Learned Senior Counsel, Shri Ashok Aggarwal, has further stated that the CLB has observed that the respondents sought permission on August 24, 1999 to file an application under Section 8 of the 1996 Act. He has further stated that a number of applications were made by the petitioners and also by the respondents. All endeavours were made to settle the dispute amicably. It would show that nothing was done on merits and no statement on the substance of the dispute was given by the parties. He has further stated, that the provisions of Section 16 of the 1996 Act regarding the powers of the Arbitrator on the existence/validity of an arbitration agreement would arise, when one of the parties appoints an arbitrator. Section 16 of the 1996 Act, does not preclude judicial body from examining the existence of an arbitration agreement, especially when an application is made to it. The CLB has held that there was no valid and binding agreement. Article 33 of the Agreement and Articles 100 and 190 of the Articles of Association the word 'may' and not 'shall' has been used. He has further stated that this finding of the CLB is erroneous. Clause 33 and Article 190 of the Articles pf Association, would show that one of the parties may refer the matter to arbitration. The word 'may' could not have been used to the detrimental of the petitioners, if it had been provided that both the parties may refer the matter to arbitration. He has further contended that the word 'may' has been used for one party and once a party chooses to go for arbitration, there is no other alternative left.
8. Learned counsel has further stated that CLB has wrongly held, that the petitioners had dealt with the main issue in the reply filed to the application for interim relief and also in the subsequent application filed by the respondents therein. It could not be said, that respondents therein had not submitted the 'first statement on the substance of the dispute'. The CLB has gravely erred, as giving replies to the applications, or even filing the application for interim relief cannot preclude a party, from invoking jurisdiction to arbitration. In none of the applications, or the reply to the application for interim relief, touched the merits of the controversy between the parties. The petitioners had sought time to file an application under Section 8 of the 1996 Act as early as on August 24, 1999. He has further contended that once intention to refer the matter to arbitration had been given, it could not be held that a 'first statement on the substance of the dispute' was not submitted. The statement dated September 17, 1999 is not a first statement on the substance of the dispute. It is only a step in the proceedings.
9. It is clear that the petitioners never abandoned their rights to arbitration. Their intentions were also clear that they wanted the dispute to be referred to arbitration.
10. Learned counsel has further stated that the civil suit was filed by the petitioners in March, 2002, i.e. much after the impugned order dated December 8, 2002, (Annexure P-1) was passed. Learned counsel has further stated that mere factum of filing of the Civil Suit, would not constitute an abandonment, as the civil suit was filed after passing of the impugned order.
11. Learned counsel for respondent Nos. 2 to 6, Shri Arun Kathapalia, has stated that the writ petition filed by the petitioners against the order dated December 8, 2000 (Annexure P-1) should be dismissed. This Court, in exercise of writ jurisdiction under Article 226/227 of the Constitution of India, does not have the powers of judicial review. He has further stated that the arbitration agreement was willfully abandoned by the petitioners. The ingredients and conditions of the provisions of Section 8 of the 1996 Act do not exist and the application which was filed under Section 8 of the 1996 Act, was filed after their 'first statement on the substance of the dispute'. He has further stated that the conduct of the petitioners before the CLB-disentitled them for any relief. He has further prayed that this Court should not interfere with the order of the CLB dated December 8, 2000 (Annexure P-1). This petition has been filed only to delay matters.
12. Learned counsel has further stated that application filed by the petitioners under Section 8 of the 1996 Act was wholly misconceived. This application was filed after 9 months and after 13 hearings before the CLB. This in itself is enough to suspect their conduct, as they had male fide intentions. He has further stated that on each and every date before the CLB false and misconceived applications were filed only to delay and derail the proceedings. The present petition is only in continuation of the abuse of the process of Court.
13. The Company Petition under Sections 397 and 398 read with Section 402 of the Companies Act, 1956 was filed on August 17, 1999. The present petitioners appeared. An interim application incorporating all the assertions made in the Company Petition was moved by the present respondent Nos. 2 to 6. The matter came up for hearing on August 20, 1999. The present petitioners appeared and were directed to file reply to the interim prayer, The matter was adjourned to August 27, 1999. The petitioners did not, mention anything about the existence of an arbitration agreement. On August 24, 1999, the petitioners stated before the CLB that they wanted to file an application under Section 8 of the Act. The CLB granted them 10 days time and adjourned the case to September 10, 1999. 10 days time expired on September 4, 1999 and no application was filed by the petitioners till then. On September 4, 1999 counsel for respondent Nos. 2 to 6, wrote three letters to the counsel for the petitioners, reminding them of order dated August 24, 1999. No reply was received to the letters, nor was any application filed by the petitioners.
14. On September 13, 1999, the petitioners filed a detailed reply to the interim application. The matter came up for hearing on September,14, 1999. Arguments had taken place and the matter was adjourned to September 17, 1999. The petitioners did not mention anything before the CLB at the time of arguments, on the interim application that there existed any arbitration agreement. The petitioners made a prayer before the CLB to appoint a Chairman for the Board of Directors in lieu of respondent No. 1. On September 17, 1999 matter again came up for hearing. Interim prayers were not pressed and the petitioners before the CLB agreed that the matter should be finally decided by the CLB. Case was listed for final hearing on 16, 17 and 22 December, 1999. In the meantime, the petitioners were directed to file their reply to the main Company Petition within one month. One month's time expired on October 17, 1999. No reply was filed by the petitioners to the main Company Petition.
15. Between October 17, 1999 and December 15, 1999, counsel for respondent No. 1 wrote several letters/reminders to the counsel for the petitioners, reminding him of the order of September 17, 1999 and the filing of the reply to the main company petition. There was no response from the side of the petitioners to these letters. The response, which respondent nos. 2 to 6 were awaiting was at least, waiting for the mentioning of the arbitration agreement. On December 15, 1999, the petitioners filed an application under Section 402 of the Companies Act before the CLB to inspect certain records of the Company for the purpose of enabling them to file their reply to the main petition. Records were made available to the petitioners and on January 7, 2000, the petitioners filed a contempt petition for non-compliance of order dated December 16, 1999 before the CLB. 18. On February 1, 18 and 19, 2000, the present petitioners carried out inspection of all the required documents. Even after inspecting the record/documents, no reply to the Company Petition was filed by the present petitioners.
16. On March 2/3/2000, the present petitioners filed another interim application and invoked the jurisdiction of the CLB. On May 12/16/2000, after expiry of one year since the grant of time by the CLB, to file their reply to the application filed by respondent Nos. 2 to 6, frivolous/mala fide and misconceived application under Section 8 of the 1996 Act was filed by the present petitioners. This application was heard by the CLB. On December 8, 2000, after hearing both the parties application was dismissed.
17. The present petitioners, after three months and six days, filed an appeal, against the aforesaid order of the CLB, before this Court under Section 10F of the Companies Act, 1956. During the pendency of the aforesaid appeal, the petitioners while asserting that there existed an arbitration agreement and they were wanting the reference of the petition before the CLB to be put before the arbitrator, filed a civil suit before the Hon'ble Delhi High Court. This civil suit was filed relating to the Share Holders Agreement and Articles of Association of the Company.
On April 24, 2002, this Court dismissed the appeal of the petitioners, by passing an order that it was not maintainable and directed the parties to appear before the CLB on May 1, 2002.
On July 15, 2002, petitioner filed the instant writ petition before this Court, challenging the order dated December 8, 2002 (Annexure P-1), passed by the CLB, dismissing their application under Section 8 of the 1996 Act. In the petition, it was averred that in view of the appeal under Section 10F of the Companies Act, having been dismissed as not maintainable, the petitioners had no remedy other than filing the writ petition.
In August, 2002, the present petitioners filed SLP before the Hon'ble Supreme Court, against the order and judgment dated April 24, 2002 passed by this Court, This was clearly contrary to their assertions in this writ petition, that in view of the appeal under Section 10F of the Companies Act, having been dismissed as not maintainable, the petitioners had no remedy other than filing the writ petition. The factum of filing of SLP in the Supreme Court against the order dated April 24, 2002 of this Court, was not disclosed to this Court.
On September 2, 2002, the present petitioners brought to the notice of this Court the fact of the SLP having been filed by the petitioners.
On September 19, 2002, final hearing before the CLB commenced. On 20.9.2.002, the Hon'ble Supreme Court dismissed the SLP filed by the petitioners.
On 20.9.2000, the respondents concluded their arguments before the CLB.
I have heard the learned counsel for the petitioners and the learned counsel for respondent Nos. 2 to 6. 15.
Learned Counsel for the petitioners has laid much stress that the CLB erred in rejecting the application filed by the petitioners under Section 8 of the 1996 Act. The provisions of Sections 7 and 8 are reproduced as under:-
'7. Arbitration Agreement.- (1) In this part arbitration agreement means an agreement by the parties to submit to arbitration alt or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement,
(3) An arbitration agreement shall be in writing.
(4) an arbitration agreement is in writing if it is contained in
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement: or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clauseconstitutes an arbitration agreement if the contract is in writing and the reference issuch as to make that arbitration clause part of the contract.'
'3. Power to refer to arbitration where there is a arbitration agreement.-
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in Sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement: or a duly certified copy thereof.
(3) Notwithstanding that an application has been made under Sub-section (1) and that the Issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.'
16. Section 34 of the Arbitration Act, 1940, is reproduced as under:-
'34. Power to stay proceedings where there is an arbitration agreement:- Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him In respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was at the time when the proceedings were commenced and still remains, ready and wiling to do all things necessary to the proper conduct of the arbitration such authority may make an order staying the proceedings.'
18. If there was any intention on the part of the present petitioners to go for arbitration, they would have spelt it out, at the very outset, when they appeared before the CLB. The present petitioners were asked to file their written statement and one would see that the written statement was never filed by them within a reasonable time. If the written statement had been filed within a reasonable time, it could have been mentioned that the parties be referred to arbitration under Section 8 of the 1996 Act. The CLB was bound to send them to arbitration as per agreement between the petitioners and respondents Nos. 2 to 6, but the present petitioners who were the respondents before the CLB did not choose to file the written statement for months together and kept seeking adjournments from time to time.
19. In Clause 30 of the Memorandum of Family Settlement (Annexure P-2), there is a reference to arbitration. Clause 30 of the Memorandum of Family Settlement (Annexure P-2), should have been invoked at the very outset, by the petitioners, but did not do so.
20. Clause 17 of the Family Agreement executed on May 6, 1996 refers to arbitration. This document is signed by all the Members of Group A and Group B', should have also been invoked by the present petitioners.
21. Article 33 of the Share Holders Agreement also refers to arbitration, though this was an agreement between the shares holders.
22. Learned counsel for the petitioners has drawn my attention to the judgments rendered in the cases of Jonsons Rubber Industries v. G.M. Eastern Railways and Anr., (2002) 87 Delhi Law Times 552 and Food Corporation of India and Anr. v. Yadav Engineer and Contractor, (1982)2 Supreme Court Cases 499.
In Jonsons Rubber Industries Case (supra), the Hon'ble High Court has held as under:-
'Arbitration Act, 1940 - Section 34 - Arbitration and Conciliation Act, 1996 - Section 8(2) - Recovery Suit based on agreement - Agreement containing arbitration Clause for dispute to be referred to arbitration and also for jurisdiction of Court to refer the dispute - Application under Section 34 for stay of proceedings of suit on ground of territorial jurisdiction - Applicability of - Arbitration Clause on which application predicated duly reproduced verbatim and in extenso in the application itself - Objection taken at the very thresh hold of proceedings - Copy of arbitration agreement not required to be filed - Mere on fact that reference made to old Act whereas new Act applies, application not to be rejected - Application to be allowed.'
23. In Food Corporation of India'a case (supra), The Hon'ble Supreme Court has made the following observations:-
'Arbitration Act, 1940 (10 of 1940) - Section 34 - What constitute steps in the proceedings which if taken before making stay application would disentitled a party to the arbitration agreement to the stay of the proceedings under - Test to determine - Appearing and contesting petition or notice of motion for interlocutory order and appearing and seeking to vacate an exparte ad interim injunction granted by the Court or to discharge a Receiver appointed by it to the opposite party, held, do not amount to steps in the proceedings so as to bar the stay petition.'
24. The authorities cited (supra) do not cover the petition in hand, as the facts in the present writ petition and in the cases cited (supra) are distinguished.
25. Learned counsel for the respondents No. 2 to 6 has rightly stated that judicial review under Articles 226/227 of the Constitution of India against the order passed by the CLB, is only available to a limited extent. The CLB has not gone beyond its jurisdiction while passing the order, nor has it refused to exercise its jurisdiction. The impugned order dated December 8, 2009 (Annexure P-1) is definitely not conceived or is based on a misconception of law and facts. It is not an order, where no evidence is there in favour of respondent Nos. 2 to 6. This Court cannot act as a Courts of appeal. There has been no miscarriage of justice.
26. Learned counsel has drawn my attention to a judgment of the Hon'ble Apex Court rendered in the case of Bharat Steel Tubes Ltd. etc. etc. v. Gujarat Steel Tubes Mazdoor Sabha and Ors., A.I.R. 1980 S.C. 1896 wherein their lordships the Hon'ble Supreme Court have held as under:-
'Constitution of India, Articles 226, 227 - Powers of High Court to interfere with award of Arbitrator under Section 10A of Industrial Disputes Act.
The amended Article 226 would enable the High Court to interfere with an award of the arbitrator if that is based on a complete misconception of law or it is based on no evidence or that no reasonable man would come to the conclusion to which the Arbitrator has arrived.'
27. Learned, counsel has further drawn my attention to a decision of the Hon'ble Apex Court rendered in the case of Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, A.I.R. 1987 Supreme Court 117, wherein the Hon'ble Supreme Court has observed as under:-
'Constitutjon of India, Articles 226/227 - Findings of fact - No interference unless finding is perverse or is based on no evidence to justify it or has resulted in manifest injustice - High Court should decline to interfere where question depends upon appreciation of evidence and two views are possible.'
28. The impugned order dated December 8, 2000 (Annexure P-1) is well reasoned and is in accordance with taw and there is nothing to show that the impugned order is perverse.
29. The petitioners had abandoned their claim for arbitration. The petitioners were very much aware of the arbitration agreement. They were granted 10 days time by the CLB to file an application under Section 10 of the Act. They did not file an application within 10 days nor did they apply for extension of time, for filing of the application. No reply was given to the letters written by the counsel for respondent Nos. 2 to 6. They filed their 'first statement on the substance of the dispute' on September 13, 1999. On September 17, 1999, the petitioners made a statement before the CLB, that the matter in dispute be finally heard by the CLB. It would have been the right and appropriate time to convey to the CLB, that they would like to have an arbitrator appointed, but they chose not to do so. The petitioners on September 17, 1999 and in May, 2000 invoked the jurisdiction of the CLB under the Companies Act, to get various reliefs including appointment of an administrator. Never during the hearings before the CLB i.e., between August 24, 1999 and 12/16 May, 2000, did the petitioners mention, that the matter should be referred to an arbitrator under the arbitration clause. Not only this, in February 2002, petitioners filed a civil suit against the respondents in the Delhi High Court.
30. These acts of the petitioners clearly show that they had acquiesced in the proceedings of the CLB. They, with their free will and expressly came under the jurisdiction of the CLB and gave a statement that the CLB should decide the matter finally.
31. Learned counsel for respondent Nos. 2 to 6 has rightly argued that the petitioners have waived/abandoned their rights under the arbitration agreement and now are estopped, from seeking reference of the petition pending before the CLB to arbitration.
32. Learned counsel for respondent Nos. 2 to 6 has drawn my attention to a judgment of the Hon'ble Apex Court rendered in the case of Maharashtra State Road Transport Corporation v. Bawant Regular Motor Service, Amravati and Ors., A.I.R. 1969 Supreme Court 329, wherein, the Hon'ble Supreme Court has held as under:-
'Constitution of India Article 226 - Writ petition against RTA's order - RTA directed to maintain status quo during pendency of writ - Compromise between parties - Orders of RTA in terms of compromise - Acquiescence in the Order of RTA - Writ will not be granted against orders of RTA - Writ of certiorari will not be granted in a case where there is such negligence or omission on the part of the applicant to assert his right as, taken in conjunction with the lapse of time and other circumstances, causes prejudice to the other party.'
33. The argument put forward by the learned counsel for the petitioner that the suit was filed before the impugned order dated December 8, 2000 (Annexure P-1) was passed, does not cut any ice.
34. By filing the civil suit, the petitioners abandoned their arbitration agreement. The question of relegating the parties to an arbitrator, now does not arise.
35. The conditions of Section 8 of the 1996 Act have got to be fulfilled which are that - there should have been some action against the parties before the Judicial Authority. There must exist a valid arbitration agreement between the parties. Original arbitration agreement or a duly certified copy thereof should accompany the application. Subject matter of the action should be the same, as the subject matter of the arbitration agreement. The most important fact is that the party seeking reference moves the Judicial Authority for reference of the matter to arbitration, before it submits its 'first statement on the substance of the dispute'.
36. None of the ingredients of Section 8 of the 1996 Act have been fulfilled by the petitioners. The 'first statement on the substance of dispute' can be contained in any interlocutory application or any reply to any interlocutory application. The legislature in its wisdom intended that the first statement was not the 'written statement'. If it meant the written statement, the word 'Written Statement' would have been included for the word 'First Statement.' In fact, the Legislature omitted the expression 'Written Statement' and used the expression 'First Statement' in Section 6 of the 1996 Act. The 'Written Statement' is used in the repealed Arbitration Act, 1940.
37. Learned counsel for the respondent Nos. 2 to 5 has relied on the decisions rendered in the case of Wankanner Jain Society v. Jugal Kishore, (2001)3 Arbitration Law Reports 623; Manna Lal Kedia v. State of Bihar, A.I.R. 2000 Patna 91; Suresh Kumar v. Hindustan Industries, (1998)3 C.L.J. 501 and Architecture Innovations v. Rajasthan Cooperative, 1999 (1) Arbitration Law Reports 337.
38. In Wankanner Jain Society's case (supra), the Madras High Court has held that ... Now, we have to see what these words 'first statement on the substance of the dispute' refer to. An application for adjournment or time for counter are almost certainly not first statements on the substance of the dispute, but, when the substance of the dispute has been made clear to the opposing party and the party sets down its stand clearly in any proceedings pending action before the judicial authority, then it would definitely amount to first statement. If, as the petitioner would like us to construe, the first statement is only the written statement, and untill the written statement is filed, the applicant can approach the Court under Section 8, then, the question arises, 'what are the subsequent statements after the written statement that may be filed by the party on the substance of the dispute.' Obviously therefore, the first statement need not necessarily be the written statement.'
39. In Manna Lal Kedia's case (supra), the Hon'ble Apex Court has made the following observations:-
'Arbitration Act (10 of 1940), Section 8(1) Reference to arbitration - suit for recovery of money due to non-supply/delivery of goods - Application for dismissal of suit on ground of limitation - Material facts stated were not primary facts - Said application could not be said to be first statement within meaning of Section 8(1) - Hence rejection of prayer made in application for reference, not valid.'
40. The above cited judgments squarely cover the case of respondent Nos. 2 to 6.
41. The judgments rendered in Suresh Kumar's case (supra) and Architecture Innovations' case (supra) also refer to the 'first statement of the substance of the dispute', being any interim application or reply to an interim application.
42. The petitioners filed an application for arbitration after filing of several statements on the substance of the matter. The learned CLB has rightly held that since the respondents have dealt with the main issues raised in the petition, in their interim reply, it has to be taken as a statement on the substance of the dispute.
43. The judgments relied upon by the learned counsel for the petitioners in Johnson Rubber Industries's case (supra), wherein the Delhi High Court has held that the 'First statement on the substance of the dispute' means the 'Written Statement' and another judgment rendered by the Apex Court in Food Corporation of India's case (supra), do not apply to the case in hand, as the facts in this petition and the facts in these cases cited, are not similar.
44. The question of 'first statement on the substance of the dispute' was not an issue before the Hon'ble Delhi High Court. The question in issue was that whether an application for reference of the dispute to the arbitration, could be entertained, when an application had not been moved under Section 8 of the 1996 Act, but had been filed under Section 34 of the Arbitration Act, 1940, which had stood repealed.
45. The other question to be answered by the Hon'ble Delhi High Court was that whether non-filing of agreement alongwith an application for reference of the dispute to arbitration would defeat the purpose of filing application and whether the application for reference under Section 34 of the 1940 Act or under Section 8 of the 1996 Arbitration Act, must set out the dispute to be referred to the arbitrator,
46. It is clear from the judgment of Johnson Rubber Industries case(supra) that (the 'first statement on the substance or the dispute' was not an issue before the Delhi High Court and the observations made by the Hon'ble High Court were purely arbiter and cannot be taken as a precedence.
47. In the case of Kalpana Kothari v. Sudha Yadav, (2002)1 S.C.C. 203 and Sundaram Finance v. NEPC, (1999)2 S.C.C. 479, where the Hon'ble Supreme Court has held that Arbitration Act, 1996 is a departure from the Arbitration Act, 1940.
48. Learned counsel for the petitioners relying on a decision rendered in Food Corporation of India's case (supra) also does not have any application to the case in hand. It interprets Section 34 of 1940 Arbitration Act and not Section 8 of the 1996 Arbitration Act. As it has been held in Kalpana's case (supra) that the scope and ambit of Section 34 of the old Act and Section 8 of the 1996 Act are quite different and the provisions of the old Act cannot be brought into play to interpret the provisions of 1996 Act.
49. In the case in hand, the petitioners had waived/abandoned their rights to the arbitration agreement and submitted themselves to the jurisdiction of the CLB first and then to the jurisdiction of the civil Court.
50. Arbitration agreement, which is contained in the Articles of Association. 'The Hind Samachar Limited Company,' is not a party to the arbitration agreement. As per arbitration agreement, only disputes between the parties could be referred to arbitration. The parties have been defined in both the shareholders agreement and the Article of Association as Group A and Group B. Group A and B do not include the Company, i.e., Hind Samachar Limited. Hind Samachar Limited is a party to the proceedings before the CLB. The company, which is not a party to the arbitration agreement, cannot be referred to arbitration.
51. Entertaining the writ petition and interfering with the order of the CLB dated 8.12.2000 (Annexure P-1) would lead to a grave miscarriage of justice. Final hearing in the proceedings before the CLB has commenced and the respondents have concluded their arguments. The parties have spent more than four years before the CLB and now when the proceedings before the CLB are coming to a final conclusion, it will definitely be a travesty of justice if the parties are relegated to an arbitrator.
52. With the above observations and reasons, writ petition is dismissed.