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In order to recover foreign arbitration award, a Company’s name can be restored

Ratio of the Case: Merely because a financial loss would be suffered by the appellant qua the arbitration Awards which had been passed against him would not entitle him to come under the exception seeking a refusal of the restoration of the company.

CLR Editorial Note: The appellant was aggrieved by an order wherein an application filed by him under order I Rule 10 read with Section 151 of the Code of Civil Procedure seeking impleadment in the proceedings pending under Section 560(6) of the Companies Act, 1956 was dismissed.

A Company, M/s Value Advisory Services Private Ltd. , was struck off from the Register of the Registrar of Companies (ROC) which was pursuant to a Simplified Exist Scheme, 2003; it was on an application made by the company itself. The appellant and the company had entered into a consultancy agreement and some disputes arose between the two basis which an arbitration in Singapore held the appellant to pay damages to the company. This was contended by the appellant with reference to the non-existence of the company at the time of dispute resolution. They, also being creditors to the company, also wanted the company to be restored, so that the dues could be received.

Based on several underlying facts and references to other cases in similar matters it was held:

“Merely because a financial loss would be suffered by the appellant qua the arbitration Awards which had been passed against him would not entitle him to come under the exception seeking a refusal of the restoration of the company. The position of the company vis-à-vis this stand is that a healthy company who was admittedly operational at the time when its name was struck off would be deprived of its right to function as a going concern and in the bargain would not be permitted to recover its dues which amounts have accrued to it under the Awards of the Arbitral Tribunal….

…..In this factual scenario, in no manner can it be said that it would not be just to restore the name of the company. The concept of just being to enable a person to get his due; based in turn on the concept of fairness….

…..On no count can the petitioners succeed. This appears to be a classic case where the appellant is making desperate effort by one way to ward off its liability which he admittedly owes to the company in terms of the Arbitral Awards which has been passed against him. It is also not a case where the appellant would be remediless, he has the option to contest the Award at the time as and when the execution proceedings are filed by the company.”

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Case document available for download

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Tags: AppealArbitral tribunalArbitrationArbitration awardCivil procedureDispute resolutionLawSingapore

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