Pending challenge of arbitral award, proceedings stayed by CLB

Pending challenge of arbitral award, proceedings stayed by CLB

Hotel Vellore Royal P. Ltd And Others v. P. V. Chandra Sekar And another [2010] 153 Comp Cas 214  CLB


The case cited here falls under the  purview of section 397/398 of the Companies Act, 1956.

A family was associated with one hotel  company and they were the subscribers and first directors of the company. A dispute arose between them in carrying on this business of the company which was decided to be settled by arbitration. Parties came to a settlement and an settlement award was made. But in the meantime one of the members and his wife alleged mismanagement and misapplication of funds. The petition was resisted by the respondent on the ground that the award was passed and in which the concerned persons interest was highlighted.  An execution petition was filed before the District Court for enforcement of terms of award. Under regulation 44 of CLB regulations, 1991 read with section 10 of Code of Civil Procedure, 1908, the respondent sought for stay of further proceedings of the company petition.


In regards to validity or enforceability of arbitration award, it falls under the executing court and not CLB. The grievances of the parties in the affairs of the company can be remedied depending on the final outcome of the execution proceedings and as per the inherent power of the Board vested under regulation 44 of CLB regulations, 1991. The proceedings of the company petition were stayed pending disposal of the execution petition on the file of the District court.


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