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CASE NO.: Appeal (civil)  2572 of 2006

PETITIONER: Morgan Securities and Credit Pvt. Ltd.                  \005Appellant

RESPONDENT: Modi Rubber Ltd.                                                        \005Respondent.

DATE OF JUDGMENT: 14/12/2006

BENCH: S.B. Sinha

JUDGMENT: J U D G M E N T

S.B. SINHA,  J:

Introduction :

       The principal question involved in this appeal arising out of a  judgment and order dated 08.06.2005 passed by the  High Court of Delhi in  Writ Petition (Civil) No.10284 of 2005 revolves round a dispute as to  whether the provisions of the Arbitration and Conciliation Act, 1996 (for  short, ’the 1996 Act’) would prevail over the provisions of the  Sick  Industrial Companies (Special Provisions) Act, 1985 (for short, ’SICA’).

Background Facts :         A sum of Rs.5,00,00,000 (Rupees five crores) by way of an Inter  Corporate Deposit (ICD) was advanced by Appellant to Respondent  Company.  It committed a default in the payment thereof.  The agreement  contained an arbitration clause which was invoked.  The learned Arbitrator  made an award on or about 06.05.2004 in favour of the appellant for a sum  of   Rs.6,72,63,015/- , directing :

"I, therefore, in the circumstances, make the following  Award :

i)      The claimant is entitled to receive from the  respondents and the respondents are jointly and  severally liable to pay Rs.6,72,63,015/- up to the  date of reference;

ii)     The claimant will also be entitled to interest at the  contractual rate of 21% p.a. from the date of  reference i.e. 15.4.2002 till the date of Award and  thereafter i.e. from the date of Award till the date  of payment with simple interest @ 18% p.a.   However, if the entire amount is paid within three  months from the date of the award, the rate of  interest from the date of Award till the date of  payment shall stand reduced to 12% p.a.  

iii)    The claimant will also be entitled to costs of  arbitration which are fixed at Rs.2,00,000/-.

In the course of the proceedings I had passed two  interim orders restraining the respondent no.1 from  transferring or alienating their fixed as well as movable  assets.  Both those orders  shall continue to operate till  the full payment of the amount awarded under this  Award."

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       Appellant also filed an application before the High Court of Allahabad  for winding up of the respondent Company.  The said application was  admitted and an order of winding up was passed on 12.03.2004.     

       Apart from the Arbitrator, the Allahabad High Court also by order  dated 13.08.2001 passed in C.P. No.92 of 2000 and 13.03.2002 in C.P. No.1  of 2002 restrained the Respondent Company from dealing with or in any  way encumbering its assets without the permission of the court.  In a  proceeding before the AAIFR, that Authority had also passed an order of  restraint against the respondent company.  The respondent in the meanwhile  made a reference under Section 15 of SICA to the Board for Industrial and  Financial Reconstruction (for short, ’the Board’).  An appeal against the  order of winding up was preferred by the respondent before the Division  Bench of the High Court. The High Court set aside the said order of winding  up by an order dated 20.05.2004 and directed to keep the winding up  proceedings in abeyance till the disposal of the said appeal under SICA.  An  application for recalling of the said order is said to be pending before the  said Court.     

       Before the Board, an application was filed by the Respondent  purported to be under Section 19A read with Section 22(3) of SICA praying  for  permission to dispose of the shares it held in M/s Ambuja Cement  Eastern Ltd. in pursuance of a public offer made by M/s Holcim Cements  India Pvt.  Ltd. to purchase 5.92% of the shares of M/s Ambuja Cement  Eastern Ltd.  The Respondent Company held 23,10,000 equity shares of the  said company  constituting about 1.02% of its total share capital at Rs.70/-  per share. In the said application a disclosure was made as regards the  restraint order passed by the Allahabad High Court. The said application was  dismissed by the Board by an order dated 04.06.2005,  holding :

"\005The injunction orders against sale of company’s  assets from various Courts/Tribunals do not fall within  the scheme of things envisaged u/s 22, 26, & 32.  In fact,  Section 22A itself empowers the Board to give directions  not to dispose of assets.  We do appreciate the  circumstances regarding the offer for ACEL shares but in  view of the orders of the various Courts/Tribunals  restraining the company from disposing of its assets  including AAIFR’s order dated 13.5.2005 to maintain  status quo, the Board finds it difficult to agree to the  proposal to sell the shares as prayed by MRL."

Questioning the legality of the said order, a writ petition, which was  marked as Writ Petition (Civil) No.10284 of 2005, was filed by the  Respondent before the Delhi High Court.  By reason of the impugned  judgment, a Division Bench of the High Court allowed the said writ petition.   

It is not in dispute that pursuant to or in furtherance of the said  judgment of the High Court, the shares had been sold and the sale proceeds  had been deposited with the Board.   

Submissions :

Mr. C.A. Sundaram, the learned Senior Counsel appearing on behalf  of the Appellant, inter alia, submitted that the provisions of SICA could not  have been taken recourse to as no scheme had been framed and, thus, the  High Court committed a serious error in passing the impugned judgment  relying, inter alia, on or on the basis of Section 22(3) of SICA.   

Section 5 of the 1996 Act having an overriding effect, the counsel  urged, even the Board could not have interfered with the award.  Contrasting  the provision of sub-section (1) of Section 22 with sub-section (3) thereof, it  was contended that the award under the 1996 Act did not fall within the

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ambit thereof, in view of the fact that in  terms of Section 36 thereof it  becomes a decree.

Mr. Neeraj Sharma, the learned counsel appearing on behalf of the  Respondent, on the other hand, submitted that the Board being not a judicial  authority, Section 5 of the 1996 Act will have no application.  On a  conspectus of the provisions of  SICA, counsel contended, that the Board  had the requisite jurisdiction to pass an appropriate order directing sale of  the property even at the stage of inquiry.  For the aforementioned purpose,  Mr. Sharma argued, all the provisions inserted by reason of Act  12 of 1994  of SICA Amendment Act, 1993, namely, Section 19A, Section 22A and  Section 22(1) as amended, must receive a harmonious construction.  Counsel  urged that the interim award having merged with the final award and  furthermore in view of the fact that the award was yet to become a decree of  the court, the question of its having become enforceable in law did not and  could not arise.    

SICA :  SICA was enacted in order to afford maximum protection of  employment, optimize the use of financial resources, salvaging the assets of  production, realizing the amounts due to the Banks and to replace the  existing time consuming and inadequate machinery by   efficient machinery  for expeditious determination and with a view to securing the timely  detection of sick and potentially sick companies owning industrial  undertakings, the speedy determination by a Board of experts of the  preventive, ameliorative, remedial and other measures which need to be  taken with respect to such companies and the expeditious enforcement of the  measure so determined and for matters connected therewith or incidental  thereto.  

It contains special provision.   The said Act was enacted for giving  effect to the policy of the State for securing principles specified in Article 39  of the Constitution of India.   

’Sick industrial company’ has been defined in Section 2(o) to mean  "an industrial company which has at the end of any financial year  accumulated losses equal to or exceeding its entire net worth.   

                Chapter III of SICA provides for references, inquires and schemes.   Section 15 empowers the Board of Directors of a company to make a  reference to the Board for determination of the measures which shall be  adopted with respect to the company.  The Board  on receipt of such an  application may make an inquiry into the working of the sick industrial  company in exercise of its power conferred under Section 16 thereof, for  determining whether the company has become a sick industrial company or  not.  For the said purpose it may require an operating agency to inquire into  and to make a report to it.  The Board or the operating agency, as the case  may be, is required to  complete the enquiry as expeditiously as possible and  an endeavour is to be made, to do so within sixty days from the  commencement thereof.  The Board may during the pendency of the said  inquiry  appoint Special Directors.  Section 17 empowers the Board to make  suitable orders on the completion of inquiry if it is found to be practicable  for a sick industrial company to make  its net worth exceed the accumulated  losses within a reasonable time.  The Board is also required to make an   order in writing and subject to such restrictions or conditions as may be  specified therein, give such company as it may deem fit to make its net  worth exceed the accumulated losses.  However, in the event it comes to the  conclusion that it is not practicable for the sick industrial company to make  its net worth exceed the accumulated losses within a reasonable time, it may  by an order in writing direct any operating agency specified in the order to  prepare,  having regard to such guidelines as may be specified, a scheme in  relation to such company.

       Section 18 empowers the Board to prepare and sanction a scheme in

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terms whereof it is permissible for the operating agency, inter alia, to  prepare a scheme to direct sale or lease of a part or whole of any industrial  undertaking of the sick industrial company. Section 19 provides for  rehabilitation by giving financial assistance where the scheme relates to  preventive, ameliorative, remedial and other measures with respect to any  sick industrial company.  Section 19A of  SICA reads as under :

"19A. Arrangement for continuing operations, etc. during  inquiry.-(1) At any time before completion of the inquiry  under Section 16, the sick industrial company or the  Central Government or the Reserve Bank or a State  Government or a public financial institution or a State  level institution or a scheduled bank or any other  institution, bank or authority providing or intending to  provide any financial assistance by way of loans or  advances or guarantees or reliefs or concessions to the  sick industrial company may make an application to the  Board -            (a)     agreeing to an arrangement for continuing the     operations of the sick industrial company; or  

(b)     suggesting a scheme for the financial  reconstruction of the sick industrial company. (2)             ***             ***                     ***"

Section 20 provides for winding up of sick industrial company;  sub- section (4) whereof reads as under :

"(4) Notwithstanding anything contained in sub-section  (2) or sub-section (3), the Board may cause to be sold the  assets of the sick industrial company in such manner as it  may deem fit and forward the sale proceeds to the High  Court for orders for distribution in accordance with the  provisions of section 529A, and other provisions of the  Companies Act, 1956 (1 of 1956)".

Sub-sections (1) and (3) of Section 22 which are relevant for our  purpose read as under :

"22. Suspension of legal proceedings, contracts, etc..- (1)  Where in respect of an industrial company, an inquiry  under section 16 is pending or any scheme  referred to  under section 17 is under preparation or consideration or  a sanctioned scheme is under implementation or where  an appeal under sections 25 relating to an industrial  company is pending, then, notwithstanding anything  contained in the Companies Act, 1956 (1 of 1956), or any  other law or the memorandum and articles of association  of the industrial company or any other instrument having  effect under the said Act or other law, no proceedings for  the winding up of the industrial company or for  execution, distress or the like against any of the  properties of the industrial company or for the  appointment of a receiver in respect thereof and no suit  for the recovery of money or for the enforcement of any  security against the industrial company or of any  guarantee in respect of any loans or advance granted to  the industrial company shall lie or be proceeded with  further, except with the consent of the Board or, as the  case may be, the Appellate Authority."

                       xxx             xxx             xxx

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(3)     Where an inquiry under section 16 is  pending or any scheme referred to in section 17 is under  preparation or during the period of consideration of any  scheme under section 18 or where any such scheme is  sanctioned thereunder, for due implementation of the  scheme, the Board may by order declare with respect to  the sick industrial company concerned that the operation  of all or any of the contracts, assurances of property,  agreements, settlement, awards, standing orders or other  instruments in force, to which such sick industrial  company is a party or which may be applicable to such  sick industrial company immediately before the date of  such order, shall remain suspended or that all or any of  the rights, privileges, obligations and liabilities accruing  or arising thereunder before the said date, shall remain  suspended or shall be enforceable with such adoptions  and in such manner as may be specified by the Board.

Provided that such declaration shall not be made  for a period exceeding two years which may be extended  by one year at a time so, however, that the total period  shall not exceed seven years in the aggregate."                     Sub-section (5) of Section 22 mandates that in computing the period  of limitation for the enforcement of any right, privilege, obligation or  liability, the period during which it or the remedy for the enforcement  thereof remains suspended under the said Section shall be excluded.   

Section 22A reads as under :          "22A. Directions not to dispose of assets.- The Board  may, if it is of opinion that any direction is necessary in  the interest of the sick industrial company or creditors or  shareholders or in the public interest, by order in writing  direct the sick industrial company not to dispose of,  except with the consent of the Board, any of its assets \026

(a)     during the period of preparation or  consideration of the scheme under section  18; and

(b)     during the period beginning with the  recording of opinion by the Board for  winding up of the company under sub- section (1) of section 20 and up to  commencement of the proceedings relating  to the winding up before the concerned High  Court."    

Section 32 provides for a non-obstante clause.   

The Board in exercise of its rule making power made regulations,  known as ’Board for Industrial and Financial Reconstruction Regulations,  1987’.  Chapters IV to Chapter VIII thereof provide for various measures  which are required to be taken by the Board during the inquiry or thereafter.         

1996 Act :         The 1996 Act was enacted to consolidate and amend the law relating  to domestic, international and commercial arbitration and enforcement of the  arbitral awards.   

       1996 Act is in four parts.   Part I provides for the matter relating to  domestic arbitration; whereas Part II refers to enforcement of certain foreign  awards.  Part III provides for conciliation; whereas Part IV provides for

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supplementary provisions.  We are concerned with the provisions contained  in Part I of the Act.  Chapter I, which begins with the interpretation clause,  provides for the general provisions.  Section 2(c) defines "arbitration award"  to include an interim award.  Section 5 provides for a non-obstante clause in  the matters governed by Part I stating that no judicial authority shall  intervene except where so provided for therein.  Section 16 provides for the  power of arbitral tribunal to rule on its own jurisdiction.   

       Chapter VII provides for recourses available against the arbitral  awards.  Section 34 of the Act provides that the Court may be approached  against an arbitral award by way of an application for setting aside the same  in terms of sub-section (2) or sub-section (3) thereunder.  Section 36  provides for enforcement of award in the following terms:

"36. Enforcement. - Where the time for making an  application to set aside the arbitral award under section  34 has expired, or such application having been made, it  has been refused, the award shall be enforced under the  Code of Civil Procedure, 1908 (5 of 1908) in the same  manner as if it were a decree of the Court."  

In Mcdermot International Inc. v. Burn Standard Co. Ltd. [2006 (6)  SCALE 220], this Court noticing  the changes made in the 1996 Act  vis-‘- vis the 1940 Act, observed :   

"The 1996 Act makes a radical departure from the  1940 Act. It has embodied the relevant rules of the  modern law but does not contain all the provisions  thereof.  The 1996 Act, however, is not as extensive as  the English Arbitration Act.          Different statutes operated in the field in respect of  a domestic award and a foreign award prior to coming  into force of the 1996 Act, namely, the 1940 Act, the  Arbitration (Protocol and Convention) Act, 1937 and the  Foreign Awards (Recognition and Enforcement) Act,  1961.  All the aforementioned statutes have been  repealed by the 1996 Act and make provisions in two  different parts, namely, matters relating to domestic  award and foreign award respectively."          

The 1996 Act is a complete Code by itself.  It lays down the  machinery for making an arbitral award enforceable.   In terms of Section 36  of the 1996 Act, an award becomes enforceable as if it were a decree; where  the time for making the application for setting it aside under Section 34 has  expired, or such application having been made,  has been refused.   

Analysis of the Statutory Provisions  :   It is not in dispute that during the pendency of an inquiry before the  Board, the respondent could sell its shares.  It, however, could not, do so  because of the restraint order passed against it.  Was it, therefore,  permissible for the High Court to direct sale of the shares despite refusal on  the part of the Board so to do, is the question.  The Board exercises statutory  functions.  It is a quasi judicial authority.  It exercises various powers under  the Code of Civil Procedure.  For the purpose of the 1996 Act it is a judicial  authority.   

A power to pass an interim order, however, and that too directing  disposal of the assets must be found out in the scheme of the statute itself.   Although the courts of limited jurisdiction may also possess by necessary  implication incidental power so as to enable it to direct preservation of  property during the pendency of a proceeding before it,  it is doubtful  whether such incidental power can be exercised for sale of the assets of the

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company.

       When a reference is made before the Board, certain consequences  ensue, the proceedings  for the winding up of a company or for execution of  distress or the like against the property of the company or for the  appointment of a receiver would not continue.  Even, no suit for recovery of  money or for the enforcement of any security  or of any  guarantee shall lie  or be proceeded with further, save and except with the consent of the Board  or the appellate authority.   

Section 22A, however, permits the Board to pass certain conditional  orders.  Upon receipt of a reference, the Board has no other option but to  make an inquiry, of course, therefor the reference is to be registered, upon  scrutiny thereof.  The imperative character of an inquiry  at the hands of the  Board is inherent in the scheme of the Act.  The legislative intention therefor  is clear and explicit.  The consequences flowing from  registration of a  reference necessarily would mean initiation of an inquiry which would  include investigation into facts, causes and effects thereof.  Act No. 12 of  1994 amending SICA also specified  the main features of the amendments to  be as under :

"(a)    jurisdictional amendments which redefine the  category of the companies coming within the  purview of the Act, and the options which are  available for revival, rehabilitation or winding up  of sick industries companies;

(b)     amendments to enhance the effectiveness of  Board;

(c)     amendments which seek to remove certain  ambiguities and strengthen internal coherence of  the Act by redefining certain provisions which are  clarificatory in nature."

Section 19A of SICA as inserted in the year 1994, although may be  held to be clarificatory in nature, however, confers a special power to pass  an order envisaged thereunder.  Section 19A does not empower the Board to  direct sale of the assets at the stage of enquiry.  Section 22(1) and 22(3)  again would, however, be applicable where an inquiry under Section 16 is  pending.  Whereas under sub-section (1) of Section 22 no specific order is  required to be passed by the Board; it is necessary,  in respect of the matters  enumerated under sub-section (3) of Section 22 thereof.  

Although for the aforementioned purpose, it may not be imperative  that such an order be passed only in terms of a  scheme, as was submitted by  Mr. Sundaram, but it is true that  application of mind on the part of the  Board in relation thereto is necessary.  

It is difficult to accept the submission of the learned Senior Counsel  that sub-section (3) of Section 22 of SICA deals only with contractual  obligations.  The expression "award, standing orders or other instruments" in  our considered view does not refer only to a contractual obligation which is  binding on the company, but also liabilities thereunder.   

The expression "award" has a distinct connotation. It envisages a  binding decision of a judicial or a quasi judicial authority. It may be an  arbitral award.  It may also be an award under Section 10A of the Industrial  Disputes Act, 1947, or one made by the Labour Court or an Industrial  Tribunal.  An award of a quasi judicial or judicial authority may provide for  a binding decision on the company.    

Meaning of the term "award" in our opinion cannot be restricted to a  contractual obligation inasmuch as by its very nature a third party

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intervention, for  resolution of disputes between the parties where company  is a party, is envisaged.  Even a ’settlement’ arrived at by and between the  parties thereto would be binding, inter alia, in terms of the  provisions of  Section 18 of the  Industrial Disputes Act, 1947.   

Submission of Mr. Sundaram that sub-section (3) of Section 22 would  be attracted only in a case where a scheme has been made,  in our opinion,  does not stand a close scrutiny.  Sub-section (3) of Section 22 contemplates  four different regimes : (i) where an inquiry under Section 16 is pending; or  (ii) where any scheme referred to in Section 17 is under preparation; or (iii)  during the period of consideration of any scheme under Section 18; or (iv)  where any such scheme  is sanctioned thereunder.   

The expression "for due implementation of the scheme" would refer  only to the scheme which has been sanctioned under Section 18 and not any  stage prior thereto.  If  the submission of Mr. Sundaram is accepted, the  other provisions contained in sub-section (3) of Section 22 cannot be given  effect to,  as a result whereof the same would become otiose.   

What, however can be directed to be  suspended were the matters  which were existing immediately before the date of such order.   

Rule of ejusdem generis for construing the words "agreement,  settlement standing order or other instruments" is also not applicable in the  instant case.        

       An award under the 1996 Act indisputably stand on a different footing  vis-‘-vis an award made under the  Arbitration Act, 1940.  Whereas under  the 1940 Act, an award was required to be made a rule of the court to make  it enforceable;  the 1996 Act, however, raises a legal fiction.  When an  award is made, an application under Section 34 is required to be filed   questioning the validity thereof.  Once such an application is filed, it remains  under suspension in the sense that it would not be enforceable.  Only upon  expiry of the period specified in Section 34 to challenge an award or when  such objection is refused,  the same would become enforceable.  Section 36  merely specifies as to how such an award can be enforced by laying down  that it can be enforced as if it were  a decree.

       The legal fiction created under Section 36 has, therefore, a limited  application. An award is, thus, to be treated to be a decree even without  intervention of the court only for the purpose of its enforceability.   

Thus, an order can be passed by the Board for suspending the  operation of the award if any occasion arises therefor.    

In Rishabh Agro Industries Ltd. v. P.N.B. Capital Services Ltd.   (2000) 5 SCC 514], it was held that the word ’deemed’ used in the section  would thus mean, "supposed", "considered", "construed", "thought", "taken  to be" or "presumed".

       The question, however, will moreover  have to be considered in the  light of Section 5 of the 1996 Act, which would depend on the meaning of  the word "judicial authority" occurring therein.   

However, sub-section (1) of Section 22 would be attracted only when  an award becomes a decree and, thus, enforceable in a court of law, albeit in  the event a proceeding is initiated therefor.   In this case, an objection to the  award has been filed.  It is, therefore, yet to become a decree.

       While exercising its power under sub-section (3) of Section 22, the  Board cannot ignore an order passed by a superior court.  It may be bound  by the doctrine of judicial discipline.   

Sub-section (1) of Section 22 itself provides for a non-obstante clause.   It not only refers to the provisions of the Companies Act or the

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Memorandum or Articles of Association of an industrial company or any  other instrument in force under the said Act, but also of other laws.   

SICA furthermore was enacted to give effect to a larger public interest  so as to secure the principles specified in Article 39 of the Constitution of  India.  Sub-section (1) of Section 22 must be construed having regard to the  aforementioned principles in mind.  It seeks to restrain the Court from  entertaining and/or proceeding with any court proceeding if the lis is before  it.   

The provisions contained in sub-section (1) of Section 22, however,  appear to be clear and unambiguous.  Sub-section (3) of Section 22, on the  other hand, does not speak of automatic suspension of the proceedings or bar  the jurisdiction of the Court in entertaining any application.  The provision  empowers the Board to make a declaration in terms whereof, inter alia,  operation of a settlement or award, not only where the industrial company is  a party, but also where the same would be applicable thereto, would remain  suspended.  It envisages suspension of not only operation of any contract of  assurances of property, agreement, settlement, award, standing orders, etc.,  but also rights, privileges, obligations and liabilities accruing or arising  thereunder.  The result of such declaration is not far to seek.  Such  declaration, however, either for suspension or operation of the contract or  award, etc. for the rights, privileges, obligations and liabilities or all or any  of the rights, privileges, obligations and liabilities accruing or arising  thereunder is to be made specifically.  The Board may choose to make either  of the declarations, as provided for thereunder.  The period for such  suspension, however, is controlled by the proviso appended thereto.

       A statutory distinction has, thus, been made by the Legislature as  regard suspension of a proceeding, on the one hand, and initiation and/or  continuance thereof, on the other. Whereas in the former case the statutory  impact would be automatic, in the latter the court is required to apply its  mind having regard to facts and circumstances of each case.  When an order  is passed by the Board in exercise of its jurisdiction under sub-section (3) of  Section 22 directing the parties not to continue the proceeding, an award or  decree is not set aside thereby.  They are merely kept in abeyance so as to  enable the Board to pass an appropriate order, inter alia, for revival of a sick  company for the purpose of giving effect to the purport and object for which  the laws relating to corporate insolvency have been enacted.            

       While it has to be acknowledged that that the Board has a duty to  afford maximum protection to employment, optimize the use of financial  resources, salvaging the assets of production, realizing the amounts due to  the Banks and to replace the existing time consuming and inadequate  machinery by efficient machinery for expeditious determination by a body  of experts and, thus, to a limited extent making it entitled to safeguard the  economy of the country and protect viable sick units, it, however,  must act  within the four-corners of the statute.  The Board, however, while passing an  interim order has to keep in mind not only the governing principles relating  to grant of injunction as envisaged  in Morgan Stanley Mutual Fund etc. v.  Kartick Das etc. [(1994) 4 SCC 225], but also the principles of judicial amity  or comity.  [See ’A Treatise on the Law Governing Injunctions’ by Spelling  and Lewis’ page 10 -  See also M/s Transmission Corporation of A.P. Ltd.   & Ors.  v.  M/s Lanco Kondapalli Power Pvt. Ltd. \026 (2006) 1 SCC 540,  Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai & Ors. 2006 (8)  SCALE 631 and M. Gurudas & Ors. v. Rasaranjan & Ors. 2006 (9) SCALE  275]

Judicial Authority :         The 1996 Act does not define the term ’Judicial Authority’.   What is  defined in Section 2(e) thereof is ’Court’.  In its ordinary parlance ’judicial  authority’ would comprehend a court defined under the Act but also courts  which would either be a civil court or other authorities which perform  judicial functions or quasi judicial functions.

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       In SBP & Co. v. Patel Engineering Ltd. and Another [(2005) 8 SCC  618], a Seven Judge Bench of this Court although did not have the occasion  to deal with the question directly; but while overruling the decisions in   Konkan Railway Corporation Ltd. and Others v. Mehul Construction Co.  [(2000) 7 SCC 201] and Konkan Railway Corporation Ltd. and Another v.  Rani Construction Pvt. Ltd. [(2002) 2 SC 388] opined :                  "\005A judicial authority as such is not defined in the Act.  It would certainly include the court as defined in Section  2(e) of the Act and would also, in our opinion, include  other courts and may even include a special tribunal like  the Consumer Forum (see Fair Air Engineers (P) Ltd. v.  N.K. Modi). When the defendant to an action before a  judicial authority raises the plea that there is an  arbitration agreement and the subject-matter of the claim  is covered by the agreement and the plaintiff or the  person who has approached the judicial authority for  relief, disputes the same, the judicial authority, in the  absence of any restriction in the Act, has necessarily to  decide whether, in fact, there is in existence a valid  arbitration agreement and whether the dispute that is  sought to be raised before it, is covered by the arbitration  clause. It is difficult to contemplate that the judicial  authority has also to act mechanically or has merely to  see the original arbitration agreement produced before it,  and mechanically refer the parties to an arbitration\005"  

In Management Committee of Montfort Senior Secondary School v.  Vijay Kumar and Others  [(2005) 7 SCC 472] a question arose as to whether  a Tribunal under the Delhi School Education Act, 1973, is a judicial  authority.  It was held that a School Tribunal is a judicial Authority, as it act  judicially and exercise a judicial power.  

The question again came up for consideration indirectly in P. Anand  Gajapathi Raju and Others v. P.V.G Raju (Dead) and Others  [(2000) 4 SCC  539] wherein it was held :          "5. The conditions which are required to be satisfied  under sub-sections (1) and (2) of Section 8 before the  court can exercise its powers are: (1) there is an arbitration agreement; (2) a party to the agreement brings an action in the  court against the other party; (3) subject-matter of the action is the same as the  subject-matter of the arbitration agreement; (4) the other party moves the court for referring the  parties to arbitration before it submits his first statement  on the substance of the dispute. This last provision creates a right in the person bringing  the action to have the dispute adjudicated by the court,  once the other party has submitted his first statement of  defence. But if the party, who wants the matter to be  referred to arbitration applies to the court after  submission of his statement and the party who has  brought the action does not object, as is the case before  us, there is no bar on the court referring the parties to  arbitration."

In Fair Air Engineers Pvt. Ltd. and Another v. N.K. Modi [(1996) 6  SCC 385], it was held that the District Forum, National Commission and the  State Commission under the Consumer Protection Act  are included in the  term ’judicial authority’ for the purpose of Section 34 of the Arbitration Act,  1940.  

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In Canara Bank v. Nuclear Power Corporation of India Ltd. and  Others (1995) Supp. 3 SCC  page 81], it was held : "8. Sub-section (1) of Section 9-A empowers the  Special Court to exercise the jurisdiction, powers and  authority exercisable by a civil court. It so empowers the  Special Court in relation to any matter or claim, inter  alia, that arises out of transactions in securities entered  into between the stated dates in which a notified person is  involved. The words "civil court" are used in the context  of the jurisdiction, powers and authority that the Special  Court may exercise. The Special Court is empowered to  exercise such jurisdiction, powers or authority in relation  to the matters or claims therein specified. These matters  or claims include those arising out of transactions in  securities entered into between the stated dates in which a  notified person is involved. Sub-section (2) of Section 9- A deals with the transfer of certain suits, claims or other  legal proceedings (other than an appeal) to the Special  Court. Every suit, claim or other legal proceeding  pending before any court the cause of action whereof is  such that, had it arisen after the commencement of the  Amendment Ordinance, the suit, claim or other legal  proceeding would have had to be filed before the Special  Court, stands transferred to the Special Court. Every suit,  claim or other legal proceeding pending before any court  the cause of action whereof arises out of transactions in  securities entered into between the stated dates in which a  notified person is involved would, therefore, if it is  pending before any court on the date on which the  Amendment Ordinance came into force, stand transferred  to the Special Court. By reason of sub-section (3) of  Section 9-A, on and after the commencement of the  Amendment Ordinance, no court other than the Special  Court may exercise any jurisdiction, powers or authority  in relation to any matter or claim referred to in sub- section (1), that is to say, in relation to any matter or  claim, inter alia, arising out of transactions in securities  entered into between the stated dates in which a notified  person is involved."

We are, however, not oblivious of a decision of this Court in The  Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi [1950  SCR 459] wherein an Industrial Tribunal functioning under the Industrial  Disputes Act was held to be not a Judicial Tribunal, stating that although it  has all the trappings of a court but is not a court.   

The expression ’judicial authority’ must, therefore, be interpreted  having regard to the purport and object for which the 1996 Act was enacted.   Judging the contention of the Board and having regard to the width of its  jurisdiction, we are of the opinion that the Board is a judicial authority  within the meaning of Section 5 of the Act.

Non Obstante Clause  :         Both the Acts contain non-obstante clauses. Ordinary rule of  construction  is that where there are two non-obstante clauses, the latter shall  prevail. But it is equally well-settled that ultimate conclusion would depend  upon the limited context of the statute.  [See Allahabad Bank  v. Canara  Bank and Another (2000) 4 SCC 406 \026 para 34].   In  Maruti Udyog Ltd. v. Ram Lal and Others (2005) 2 SCC 638], it  was observed :  

"39. The interpretation of Section 25-J of the 1947 Act  as propounded by Mr Das also cannot also be accepted  inasmuch as in terms thereof only the provisions of the

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said chapter shall have effect notwithstanding anything  inconsistent therewith contained in any other law including  the Standing Orders made under the Industrial  Employment (Standing Orders) Act, but it will have no  application in a case where something different is  envisaged in terms of the statutory scheme. A beneficial  statute, as is well known, may receive liberal construction  but the same cannot be extended beyond the statutory  scheme\005"

       In Shri Sarwan Singh and Another v. Shri Kasturi Lal [(1977) 1 SCC  750], this Court opined :

"\005When two or more laws operate in the same field  and each contains a non-obstante clause stating that its  provisions will override those of any other law,  stimulating and incisive problems of interpretation arise.  Since statutory interpretation has no conventional  protocol, cases of such conflict have to be decided in  reference to the object and purpose of the laws under  consideration\005"  

       The endeavour of the court  would, however, always be to adopt a rule  of harmonious construction.   

In NGEF Ltd. v. Chandra Developers (P) Ltd. and Another  [(2005) 8  SCC 219], interpreting sub-section (4) of Section 20 of  SICA, it was held :

"41. It is difficult to accept the submission of the  learned counsel appearing on behalf of the respondents  that both the Company Court and BIFR exercise  concurrent jurisdiction. If such a construction is upheld,  there shall be chaos and confusion. A company declared  to be sick in terms of the provisions of SICA, continues  to be sick unless it is directed to be wound up.        Till  the company remains a sick company having regard to  the provisions of sub-section (4) of Section 20, BIFR  alone shall have jurisdiction as regards sale of its assets  till an order of winding up is passed by a Company  Court."

       It was further held :

"49. Section 32 of SICA contains a non obstante  clause stating that provisions thereof shall prevail  notwithstanding anything inconsistent with the provisions  of the said Act and of any rules or schemes made  thereunder contained in any other law for the time being  in force. It would bear repetition to state that in the  ordinary course although the Company Judge may have  the jurisdiction to pass an interim order in exercise of its  inherent jurisdiction or otherwise directing execution of a  deed of sale in favour of an applicant by the Company  sought to be wound up, but keeping in view the express  provisions contained in sub-section (4) of Section 20 of  SICA such a power, in our opinion, in the Company  Judge is not available. (See BPL Ltd.)

50. We may, however, observe that the opinion of the  Division Bench in BPL Ltd. to the effect that the  winding-up proceeding in relation to a matter arising out  of the recommendations of BIFR shall commence only  on passing of an order of winding up of the Company  may not be correct. It may be true that no formal

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application is required to be filed for initiating a  proceeding under Section 433 of the Companies Act as  the recommendations therefor are made by BIFR or  AAIFR, as the case may be, and, thus, the date on which  such recommendations are made, the Company Judge  applies its mind to initiate a proceeding relying on or on  the basis thereof, the proceeding for winding up would be  deemed to have been started; but there cannot be any  doubt whatsoever that having regard to the phraseology  used in Section 20 of SICA that BIFR is the authority  proprio vigore which continues to remain as custodian of  the assets of the Company till a winding-up order is  passed by the High Court."

       In ICICI Bank Ltd. v. Sidco Leathers Ltd.  and Others [2006) 5  SCALE 27] the law is stated in the following terms :  

"The non-obstante nature of a provision although  may be of wide amplitude, the interpretative process  thereof must be kept confined to the legislative policy.   Only because the dues of the workmen and the debt due  to the secured creditors are treated pari passu with each  other, the same by itself, in our considered view, would  not lead to the conclusion that the concept of inter se  priorities amongst the secured creditors had thereby been  intended to be given a total go-by.   

       A non-obstante clause must be given effect to, to  the extent the Parliament intended and not beyond the  same."

       Section 5 of the 1996 Act also provides for a non-obstante clause.  It  has, however, a limited application aiming at the extent of judicial  intervention.  Its application would be attracted only when an order under  sub-section (3) of Section 22 is required to be passed.  If the said provision  is to be given effect to, the Board would not intervene in the matter of  the  implementation of the award.  It would merely suspend the operation of it.   It may even pass an order suspending the liabilities or obligations of the  industrial company under the award.  Even otherwise  in the fact of the  present case it stands suspended.   

The Board however, has not passed an order under sub-section (3) of  Section 22 of SICA.  The court, therefore, must proceed with the objection  filed by the Respondent under Section 34 of the 1996 Act.  However, if the  objection filed by the Respondent is rejected, the question of its  enforceability would come into being.  Once the arbitral award having the  force of a decree  is put into execution, sub-section (1) of Section 22 of   SICA would come  on its way from being enforced.  The contention raised  by Mr. Sundaram that having regard to the provisions of  Section 5 of the  1996 Act, the Board would have no jurisdiction, therefore, does not seem to  have any force.

       Sub-section (3) of Sections 22 SICA provides for a specific power in  the Board  The said provision contemplates a larger public interest.  In the  event an arbitral award is held to be outside the purview of sub-section (3) of  Section 22 thereof, it may be difficult to frame a scheme or in a given case  implement the same under SICA.  SICA provides for a time-frame for all the  stages of proceedings.   Proviso appended thereto assumes significance in  this behalf.  

The Parliament presumed that the suspension of an award shall not be  for a long period.  In a given case, a party to an award may face some  hardships owing to its suspension; but in such an event, it would always be  open to it to bring the same to the notice of the Board   The Board under

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sub-section (3) of Section 22 of SICA may pass such an order or may not do  so.  If an order is passed by the Board, an appeal lies thereagainst.  The  provisions of SICA, it will bear repetition to state, have been made to seek to  achieve a higher goal and, thus, the provisions of  SICA would be  applicable, despite Section 5 of the 1996 Act.

In Kailash Nath Agarwal and Others v. Pradeshiya Industrial &  Investment Corporation of U.P. Ltd. and Another [(2003) 4 SCC 305], it was  held :    

"\005The object for enacting SICA and for introducing the  1994 Amendment was to facilitate the rehabilitation or  the winding up of sick industrial companies. It is not the  stated object of the Act to protect any other person or  body\005"

       In Burn Standard Co. Ltd. v. Mc.Dermott International Inc. & Others  disposed of on 11.06.1997, a Division Bench of the Calcutta High Court  opined that the  arbitration proceedings may continue during the pendency of  an inquiry pursuant to a reference made under SICA.   

Yet again in Saurabh Kalani v. Tata Finance Lrtd. and Anr. [2003 (3)  Arb. LR 345 (Bombay),  the Bombay High Court took the same view.   

Conclusion :

       In this case, the shares have been sold.  The sale proceeds have been  deposited before the Board.  It is, thus, futile to interfere with the impugned  order at this stage.  However, we thought it necessary to lay down the law  for future guidance of the Board while deciding a similar case.

       For the reasons aforementioned, we do not intend to interfere with the  impugned judgment of the High Court.  It is dismissed accordingly having  become  infructuous.  No costs.