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NCLAT has no authority to prevent the High Court from considering a Section 9 appeal or any other claim brought under the Arbitration Act: Bombay High Court

The NCLAT has absolutely no jurisdiction over this Court, even on its Original Side, given that this is a Chartered High Court. The High Court is in no way subject to the NCLAT’s jurisdiction or superintendence. But if we leave that aside and focus on the words ‘arbitration panel and arbitration authority’, and even assuming for a moment that the NCLAT has the power to stay arbitrations, it certainly does not have the authority to stay in the hands of this Court. The judgment was passed by The High Court of Bombay in the case of Bay Capital v. IL&FS Financial Services Ltd. & Ors. By single bench consisting of JUSTICE G.S. PATEL.

The Petition was filed under Section 9 of the Arbitration and Conciliation Act 1996, seeks interim protection pending arbitration to restrain the Respondent, (IL&FS Ltd) from acting on its Event of the Default notice, and seeks for a temporary injunction restraining IFIN from acting in furtherance of a pledge invocation notice,

The counsel arguing for Bay Capital argued that NCLAT is neither a tribunal, a judicial authority nor a constitutional court empowered to issue high prerogative remedy. Relying upon Section 242 of the Companies Act (powers of the tribunal), he argued that the Act does not give NCLAT a power of superintendence over other courts, specifically over courts that are neither subordinate to the NCLAT nor subject to its superintendence.

The counsel on the corollary submitted that an order of this kind may be made by the Supreme Court, or by the High Court in regard to Courts over which the High Court has judicial superintendence, but certainly not the NCLAT.

The Court Observed that NCLAT has no jurisdiction over the Bombay High Court even on its original side (as it was a chartered High Court) Justice Patel concluded that the High Court does not fall within the NCLAT’s jurisdiction or superintendence. “I do not see how the words ‘court of law’ can be ‘read down’, because other than the NCLT, there is no other judicial authority over which the NCLAT exercises such superintending power.”

While dismissing the petition Justice Patel further reasoned that NCLAT cannot pass orders under Section 9 and other such Sections under the Arbitration Act which as per the statute fall before the High Court itself. Neither are the provisions of the Arbitration Act specifically subjected to the provisions of the Companies Act, the Court observed. “Even assuming for a moment that the NCLAT has the power to stay arbitrations, it certainly does not have the authority to stay the hands of this Court in hearing a petition under Section 9 or any other petition that properly comes before this Court under the Arbitration and Conciliation Act 1996.”

Click here for the Judgment

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