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NCLAT does not have power to stay the hands of the High Court of hearing a Section 9 petition or any other plea under Arbitration Act.

In the recent case, the Bombay High court stated that NCLAT has no power to stay hands of the High Court in hearing Section 9 petition or any other plea under Arbitration Act. In this case, there was an order which was passed by NCLAT in 2015 where it stayed the proceedings against IFIN and therefore, the plea by the other party i.e., Bay Capital was not maintainable.

The NCLAT invoked the provisions of the Companies Act, 1956 and passed the order in the interest of the larger public directing that there would be stay in the institution or continuation of suits or any other proceedings against ILFS and its 348 group companies in any court of law, tribunal, arbitration authority.

The advocate for Bay Capital in order to oppose the order submitted that NCLAT is neither a tribunal, a judicial authority nor a constitutional court empowered to issue high prerogative remedy. According to Section 242 of the Companies Act, he submitted that the act does not give any power to the NCLAT of superintendence over the other courts and specifically over the courts that are neither subordinate to the NCLAT not subject to its superintendence.

An order of this kind may be made by the Supreme Court or by the High Court in regards to Courts over which the High Court has judicial superintendence, but certainly not the NCLAT.

On this, the Bombay High Court stated that they do not see how the words court of law can be read down because other than the NCLT there is no judicial authority over which the NCLAT exercise such superintending power. The court further stated that 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.

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