- (1.) Leave granted.
(2.) This appeal is directed against the judgment and order dated 21.02.2007 passed by the High Court of Delhi in F.A.O. No. 305 of 2006 by which the High Court dismissed the appeal filed by the appellant herein for lack of territorial jurisdiction holding that Section 10(1)(a) of the Companies Act, 1956 will take precedence over Section 50 of the Arbitration and Conciliation Act, 1996.
(3.) Brief facts, in a nutshell, are: On 05.10.1984, a Joint Venture Agreement was entered into between Sumitomo Corporation (appellant herein), Punjab Tractors Pvt. Ltd. (respondent No.5 herein) and Swaraj Mazda Limited (Respondent No.6 herein) comprehensively specifying the respective rights and obligations of the parties including the management control of the affairs of the company. The Joint Venture Agreement, which is filed as Annexure P-1, contains in Article XVI, arbitration agreement between the parties. In the beginning of 2005, the shareholding pattern of the appellant - Sumitomo Corporation ( in short "SC") and respondent No. 5 - Punjab Tractors Pvt. Ltd. ( in short "PTL") & respondent No. 6 - Swaraj Mazda Ltd. (in short "SML") was : respondent No.5 - PTL - 29.04%, respondent No.6 - SML - 15.66%, appellant - SC - 10.44% and respondent No.1 - CDC Financial Services (Mauritius) Ltd., respondent No.2 - South Asia Regional Fund, Mauritius, respondent No.3 - CDC-PTL Holdings Ltd. and respondent No.4 - ACTIS Agri Business Ltd. - 17.45%. On 30.06.2005, an agreement (Annexure P-2) was entered into between PTL, SC and SML for purchase by the SC, appellant herein, of 1,573,000 shares of SML from PTL. Thus, the shareholding of SC increased to 41% while the holding of PTL came down to 14%. The said agreement also contains arbitration agreement in Article II, Section 2.03. In May-June, 2006, disputes arose between the parties regarding rights of the parties envisaged in Section 4.1 and other provisions of the Joint Venture Agreement. PTL sought to nominate four Directors on the Board of SML and the same was disallowed in view of Section 4.1 of the Joint Venture Agreement. On 3.8.2006, PTL and 4 others i.e. Respondent Nos. 1to 5 herein filed Company Petition No. 68 of 2006 before the Company Law Board, Principal Bench, New Delhi seeking redressal under Sections 397,398,402 etc. of the Companies Act, 1956 (for short the "Companies Act") for oppression and mismanagement on the part of the appellant and nominee directors of the appellant in the management and conduct of the affairs of Swaraj Mazda Ltd., the company in issue (Respondent No.6 herein). In the company petition, the appellant herein i.e. S.C. filed an application being C.A. No. 259 of 2006 seeking reference to arbitration under Section 45 and alternatively under Section 8 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as the "Arbitration Act"). On 26.9.2006, the Company Law Board passed an order refusing to refer the parties to arbitration under Section 45 of the Act. Against the said order, the appellant filed an appeal being F.A.O. No. 305 of 2006 under Section 50 of the Act on 30.10.2006 in the High Court of Delhi. On 21.2.2007, the High Court delivered the judgment dismissing the appeal not on merits but for lack of territorial jurisdiction holding that Section 10(1)(a) of the Companies Act will take precedence over Section 50 of the Arbitration Act. Aggrieved by the said order, the appellant - SC filed this appeal before this Court.;