Skip to content


Spray Engineering Devices Ltd. Vs. Shree Saibaba Sugars Ltd. and Sh. - Court Judgment

LegalCrystal Citation
CourtCompany Law Board CLB
Decided On
Judge
Reported in(2008)145CompCas166
AppellantSpray Engineering Devices Ltd.
RespondentShree Saibaba Sugars Ltd. and Sh.
Excerpt:
1. in this order i am considering company application no. 366 of 2007 in company petition no. 13 of 2007 filed by spray engineering device ltd. under sections 397 and 398 of the companies act, 1956 (hereinafter referred to as the "act") against shree saibaba sugars ltd. and anr.(r-1) alleging acts of oppression and mismanagement and praying that (i) to direct the respondents to buy back 3,00,000 equity shares of the petitioner or to cancel the allotment of 3,00,000 equity shares of rs. 100 each made by the respondents in the name of the petitioner and to direct the respondents to refund the amount of rs. 3 crores to the petitioner along with interest calculated @ 15% per annum from the date of deposit of this amount with the respondent company till the date of payment; (ii) to direct the.....
Judgment:
1. In this order I am considering Company Application No. 366 of 2007 in Company Petition No. 13 of 2007 filed by Spray Engineering Device Ltd. under Sections 397 and 398 of the Companies Act, 1956 (hereinafter referred to as the "Act") against Shree Saibaba Sugars Ltd. and Anr.

(R-1) alleging acts of oppression and mismanagement and praying that (i) to direct the respondents to buy back 3,00,000 equity shares of the petitioner or to cancel the allotment of 3,00,000 equity shares of Rs. 100 each made by the respondents in the name of the petitioner and to direct the respondents to refund the amount of Rs. 3 crores to the petitioner along with interest calculated @ 15% per annum from the date of deposit of this amount with the respondent company till the date of payment; (ii) to direct the respondents to file Form No. 32 in respect of the resignation of nominees of the petitioner namely Mr. Vivek Verma, Mr. Prateek Verma and Mr. Sanjay Gupta from the directorship of the respondent company with effect from the dates of their resignation letters; (iii) to direct the respondents that in case they are willing to avail the technical expertise and skills of the petitioner in the setting up and running of the sugar mill, they should hand over full operational and financial control of the sugar mill to the petitioner with representation on the Board of Directors of the respondent company as per the Agreement dated 24.11.2004, because it is only thereafter that the petitioner will be able to provide technical solution as well as management solution to the respondent company, and (iv) to terminate the Agreement dated 24.11.2004 in case the respondents are not willing to handover full operational and financial control of the sugar mill to the petitioner with representation on the Board of Directors of the respondent company.

2. The undisputed facts of the case are Shree Saibaba Sugars Ltd. and Anr. (R-1) was incorporated on 9.3.2000 having its registered office at 17-A. Asha Villa, 134, Garudia Nagar, Ghatkopar (E), Mumbai, 400077.

The authorized share capital of the company is Rs. 16,00,000 equity shares of Rs. 100 each and issued, subscribed and paid up capital is Rs. 4,77,42,000 of Rs. 100 each. The main objects of the company are to (1) to manufacture Sugar and products from beet root, sugarcane, gur, molasses and any other substance on produce of chemicals, and (2) to produce, grow, raise, preserve, purify, refine, import, export, prepare, sell and deal in sugar, sugarcane, gur, molasses, syrups and all other by-products and food products, fertilizers things generally and to maintain refineries, foundries, works, distilleries, etc.

3. The CA No. 366/07 was filed by the Respondents praying that the instant matter deserves to be referred to the Arbitration as contemplated Under Section 8 of the Arbitration & Conciliation Act. Dr.

R.R. Deshpande counsel for the respondents contended that (a) there exists a Valid agreement dated 24.11.2004 which is one of the undisputed fact in between both the parties to this proceedings; (b) the execution of the agreement is admitted by the petitioner, which also contain an arbitration clause, so it is a fact that, there is an existence of valid Arbitration agreement between the petitioner and the Respondents but still the petitioner has never invoked the jurisdiction of Arbitrator; (c) it reveals from the contents of Clause 'H' (the arbitration clause) that, unlimited coverage is given to the arbitration as all the matter concerning and in which the company is interested shall be referred to the arbitration; (d) the Clause 'H' consist the work 'shall and so it creates a mandate binding on all the parties to the agreement and so reference Under Section 8 deserves to be made, (e) though the petitioner has relied on this agreement and has pleaded almost all the favourable and convenient facts from this agreement in the pleadings vide the petition but has deliberately concealed the clause pertaining to the arbitration and as such it reveals that the petitioner has not approached this Hon'ble Court with clean hands; (f) in addition to the Clause 29 from the Memorandum of Association which is also binding on all the members of the company amply proves that, the disputes about the affairs of the company shall be subject to jurisdiction of the Arbitrator; (g) from this clause also it reveals that, no option is left with the members of the company other than to have the reference to the arbitrator in case of dispute and it is settled law that memorandum of Association is binding on all the members of the company and so it binds the petitioner also as petitioner is member of the Respondent company. Reliance was placed on the reported judgment of Hon'ble Apex Court reported at in the case of V.B. Rangaraj v. V.B. Gopal Krishnan and Ors.; (h) member cannot be allowed to act contrary to the memorandum of Association as the said memo is nothing but the constitution of the company, so the petitioner ought not to go contrary to the Constitutional Provisions and its basic spirit; (i) any act, contrary to the memo of Association by the member as well as the company also will be unconstitutional from the angel of the company and the law, in view of the above referred ratio and so the very basic act of the petitioner to invoke the jurisdiction of this Hon'ble Court by the petitioner without invoking the jurisdiction of the Arbitration, itself is highly invalid and objectionable; (j) nowhere it is alleged that the Clause H from agreement dated 24.11.04 is either unlawful or involuntary and so act of the petitioner contrary to this clause is highly unlawful and it must be discouraged; (k) nowhere it is pleaded that, the Clause 29 from the memo of Association pertaining to the arbitration is unlawful or involuntary or not binding on the petitioner for any reasons and so also that act of filing the petition before this Hon'ble court is invalid; (1) if the prayers Clauses of the petition from page No. 16 are seen and observed it is rather crystal clear that the Clauses are basically based on the agreement and its terms and conditions dated 24.11.2004 and so when the main dispute or substantive dispute is about the Clauses of the agreement itself then the arbitration clause from the same agreement cannot be avoided or kept apart by the petitioner; (m) more specifically it was argued that, the Clause (i) and (ii) are outcome of agreement dated 24.11.2004 as this basic transaction of equity shares as well as appointments of the persons named in Clause (ii) have taken place under the terms and conditions of the agreement itself and so these matters are also not outside the scope of the basis agreement which provides for reference to the arbitrator; (n) prayers Clause (iii) and (iv) are apparently about the agreement itself which provides for arbitration reference and as such the petitioner cannot be allowed to place reliance on half of the contents of the agreement and at the same time to contend the rest of the agreement Clauses are not binding on him; (o) if the pleading and the prayers related to or based on the contents of the agreement dated 24.11.2004 are struck down or kept apart from the consideration being those fall well within the jurisdiction of Arbitrator, then nothing remains in the petition of the petitioner which can be triable by this Hon'ble Court and so the petition deserves to be called as misconceived as well as highly erroneous and bad in the eyes of law.

4. Dr. R.R. Deshpande further contended that the verbal arguments advanced by the petitioner that, its petition contains the points which are outside the scope of the jurisdiction of the Arbitrator and being those are the points pertaining to the non compliance of the statutory provisions, petition need not be referred to the Arbitrator cannot be accepted because (i) Major part, more than 90% of the petition consist the dispute which fell within the jurisdiction of the arbitrator; (ii) Very little part, if any, it falls outside the scope of Arbitration agreement, then for this little clause, the jurisdiction of the agreement cannot be revoked or avoided by the party to the agreement; (iii) If some part of the dispute filed before the court deserves to be referred to the Arbitrator then not that part only but the entire case must be referred to the Arbitrator. Reliance was placed on para E(41)(46) of the judgment of the Hon'ble Apex Court from the case of Rashtriya Ispat Nigam Limited and Anr. v. Verma Transport Co. Reported in ; (iv) The concept of the half reference is highly unlawful as well as inconvenient as per the above laid ratio; (v) If there are two cause of actins and if one is falling within the ambit of Arbitration clause, the entire case has to be referred as half cannot be ought not to be referred as per ratio laid down as above. Further, it was argued that if the ratio laid down by the Hon'ble Apex Court in the case of Agrigold Exims Ltd. v. Sri Lakshmi Knife & Woven and Ors.

Reported in is seen it is very specifically observed by their Lordships that The term dispute must be given its general meaning under the 1996 Act. The arbitration agreement entered into by and between the parties is of wide amplitude. The Arbitration agreement brings within its fold dispute of any nature whatsoever. It is in broadest term so all the disputes raised by the petitioner in this proceeding are when having concern or touch with the basic agreement, then definitely the matter deserves to be referred to the Arbitrator as contemplated Under Section 8 of the Arbitration and Conciliation Act.

5. Furthermore, the counsel for the respondents responding to the contention of the petitioner that Application is filed at late stage, it was contended that (a) Application is filed on 17.7.2007 and written statement is filed as on 3.8.2007 so it is crystal clear that the objections is raised at the earlier opportunity and prior to delivery of first statement by the Respondents and so it is totally in consonance with the proviso 8 of the Arbitration and Conciliation Act (b) my attention was drawn to page No. l Para (A) of the counter Affidavit of the Respondents and it was contended that it is seen it is rather more crystal clear that these Respondents have filed written statement under compelling situations but by reserving the rights of the earlier raised objection vide this CA as on 17.7.2007; (c) Para 7 of the instant CA No. 366/07 also makes ample clarification that how these Respondents have raised the objections to the jurisdiction of this Hon'ble Court so all these points never allows to even think that, Respondents were intending to anytime to waive the objections; (d) Reliance was placed on the judgment reported in AIR 2006 SC 2800 (referred earlier) at Para 34 of the judgment; (e) my attention was drawn to Para 12 of the counter affidavit and it was contended that it amply indicates that, these Respondents have taken the serious objections to the jurisdiction of this Hon'ble Court and that too at earliest.

6. Again drawing my attention to the verbal submissions of the petitioner that, application Under Section 8 of Arbitration and Conciliation Act is filed after the lapse of 5 months from the date of appearance, there is breach in compliance of statutory obligation by the Respondent company, the Respondents have filed the written statement the chance to file application Under Section 8 of Arbitration and Conciliation Act is gone etc. are not acceptable, the counsel for the respondents contended that (i) No first statement is delivered by the Respondents till filing of this application; (ii)As both the petitioner and Respondents were trying to settle the matter and that too on the request of the petitioner; (iii) Breach of statutory compliance is also basically related to the contents of the agreement; (iv) written statement is filed by the Respondents after filing of this application and so filing of written statement cannot be the point of hurdle for this Respondents; and (v) The Respondents have not waived the objection of jurisdiction.

7. Shri Anil K. Aggarwal Counsel for the petitioner argued that the respondents have filed Application under Section 8 of the Arbitration Act with an Ulterior and Oblique motive. This Hon'ble Board, vide its Order dated 18.7.2007 had granted interim reliefs to the petitioner as per prayers at Para 9 (i) to (iii) of the petition. Since the respondents did not comply with the Order, this Hon'ble Board vide its Order dated 7.9.2007 again directed the respondents to comply with the CLB's orders dated 18.7.2007. As per these orders, the respondents were required, inter alia, to provide to the petitioner monthly statements of receipts and expenditures, minutes of Board Meetings and General Meetings of the respondent company since 24.11.2004, being the date on which the Agreement was executed between the parties to this petition.

But till date the respondents have not provided these documents to the petitioner and are thereby defying the Orders of this Hon'ble Board with impunity. It was contended that the respondents, therefore, do not deserve any indulgence from this Hon'ble Board. The application under Section 8 has been filed with the ulterior and oblique motive of avoiding the compliance of interim orders of this Hon'ble Board.

8. The counsel for the petitioner argued that the Application under Section 8 is not maintainable because the subject matter of the petition is different from the subject matter of the Arbitration Agreement. My attention was drawn to the decision of the Hon'ble Supreme Court in the case of P. Anand Gajapathi Raju and Ors. v. P.V.G.Raju and Ors. (2001) 4 CLJ 219 (SC) wherein it has been held that the conditions which are required to be satisfied under Sub-sections (1) and (2) of Section 8 of the Arbitration and Conciliation Act, 1996, before the court can exercise its powers to refer parties to arbitration where there is an arbitration agreement are that (i) there is an arbitration agreement; (ii) a party to the agreement brings an action in the court against the other party; (iii) subject-matter of the action is the same as the subject-matter of the arbitration agreement; and (iv) the other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute. It was argued that the allegations of oppression and mismanagement as contained in the petition pending before this Hon'ble Board do not arise out of the agreement dated 24.11.2004. The allegations of non-issue of general meeting notices to the petitioner, non-dispatch of balance sheet to the petitioner, depriving the petitioner from attending general meetings and participate and vote thereat, non issue of share certificate to the petitioner, non-issue of board meeting notices to the nominee directors of the petitioner and thereby depriving them from attending the board meetings and from participating and voting thereat, keeping the petitioner in dark about the affairs of the company, etc. are not the subject matter of the agreement dated 24.11.2004 and are, therefore, not arbitrable. It was argued that an application under Section 8 is maintainable only if the subject matter of the dispute pending before the court (in this case pending before this Hon'ble Board) is wholly covered under the Arbitration Agreement, since it is not so in the present case. My attention was drawn to the various allegations of Oppression and Mismanagement, contained in the specific paragraphs of the petition-Non-issue of share certificates (Para 6.15); Non-issue of Board Meeting notices (Para 6.20); Non-issue of General Meeting notices (Para 6.21); Non-issue of Balance Sheet (Para 6.21); Non-filing of annual accounts and annual return with ROC (Para 6.22); Non-maintenance of Statutory records (Para 6.23). It was argued that the allegations of Oppression and Mismanagement can be adjudicated by this Hon'ble Board without reference to the terms of the Arbitration Agreement. In several cases, the Hon'ble Board has dismissed the application under Section 8 of 1996 Act for referring the dispute to arbitration. Further, my attention was drawn to the decision in the case of Sporting Pastime India Limited v. Kasturi & Sons Limited (2006) 70 SCL 391 (CLB) wherein it was held that if allegations of oppression and mismanagement set out in company petition can be adjudicated upon without reference to terms of arbitration agreement, then question of referring parties to arbitration does not arise even if agreement covers same issue before Co. Law Board; Pinamanein Subb Rao v. Semicondutors Ltd. [2004] 53 SCL 58 (CLB) - Where the matters raised before CLB Under Section 397 & 398 fell outside the scope of agreement, the application Under Section 8 for referring the parties to arbitration has to be dismissed; 20^th Century Finance Corporation Limited v. RFB Latex Limited and Ors.[2000] 1 CLJ 104 (CLB) - Disputes raised in Section 397/398 petition arose out of and in connection with a sponsorship agreement so also, independent of sponsorship agreement. Such of the disputes which did not arise out of or in connection with sponsorship agreement, such as failure to issue notices for the Board meetings, siphoning off of funds, non payment of dividend etc. do not have to be referred to arbitration.

Company petition held not liable to be dismissed; Khandwala Securities Ltd. and Ors. v. Kowa Spinning Ltd. and Ors. [2000] 1 CLJ 78 (CLB) - If the entire subject matter of disputes in the court do not fall under the purview of arbitration agreement, such disputes cannot be referred to arbitration; Machino Plastics Ltd. v. Caparo Maruti Ltd. [2004] 6 CLJ 511 (CLB) - Parties to the petition and joint venture agreement were not similar. Subject matter of the petition also not covered under various Clauses of joint venture agreement application of respondent for referring the case to arbitration under joint venture agreement could not be allowed as it would amount to splitting of subject matter of petition, more so, when all the parties to the petition had not signed the joint venture agreement; Binay Prakash and Ors. v. Domco P.Ltd. and Ors. [2007] 138 CC 619 (CLB) - The allegations made in the petition more particularly with regard to the attempt of the second respondent to take away the mining lease is not covered under the arbitration agreement. Hence, application under Section 8 for referring the dispute to arbitration cannot be allowed; Akkadian Housing and Infrastructure (P) Ltd. and Ors. v. Pantheon Infrastructure (P) Ltd. [2007] 137 CC 523 (CLB) - If allegations can be examined without reference to arbitration agreement, then the same cannot be referred to arbitration; Gautam Kapur and Ors. v. Limrose Engineering and Ors.

[2007] 137 CC 513 (CLB) - If the allegations of oppression and mismanagement can be adjudicated without reference to the terms of the arbitration agreement, then the question of refereeing the matter to arbitration does not arise even if the agreement covers the same matter; Akshay Kapur v. Rishav Kapur 2003 (2) Arbitration Law Report 508 (Delhi) - The Court took the view that the subject matter of an agreement is different from the question raised in the suit, Section 8 would have no application; Altek Lammertz Needles Ltd. v. Lammertz Industrienadel Gmbh [2006] 129 CC 108 (CLB) - The Hon'ble Company Law Board held that the test to determine, as to whether the matter in a petition under Section 397/398 is to be relegated to arbitration is to examine as to whether the allegations of oppression and mismanagement contained therein can be adjudicated without reference to the terms of the arbitration agreement.

9. Further, the counsel for the petitioner argued that the respondents have filed their written statement to the petition on 3.8.2007 in reply to the petition and have therefore, subjected themselves to the jurisdiction of this Hon'ble Board. The written statement has been filed before the application under Section 8 of 1996 Act could be decided by this Hon'ble Board. In several cases, this Hon'ble Board has dismissed the application under Section 8 of 1996 Act for referring the dispute to arbitration on the ground that the respondents have filed their written statement. My attention was drawn to the cases of Winfred Investments Ltd. v. Mainstay Teleservices (P.) Ltd. [2004] 5 CLJ 155 (CLB) Reference to arbitration held, barred on the facts. Second respondent submitted his counter statement on substance of dispute, subjected himself to jurisdiction of CLB and concluded arguments; Sunair Hotels Ltd. v. Union of India (2001) 1 CLJ 132 (Del.) - Application under Section 8 of the Arbitration Act was dismissed because the respondents therein had filed a detailed reply to the petition and not an interim reply, dealing with the substance of the disputes. A formal application under Section 8 was filed only after a delay of five months.

10. Furthermore, it was argued that before filing the application under Section 8 the respondents have participated in the proceedings since February, 2007 on 13.2.2007, 2.3.2007, 2.4.2007 and 18.7.2007, Application under Section 8 is nothing but an attempt of the respondents to further delay the proceedings before this Hon'ble Board.

My attention was drawn to the case of Suresh Kumar Jain v. Hindustan Ferro Industries Ltd. [1999] 96 CC 507 (CLB) wherein the application of the respondents for referring the matter to arbitration was dismissed because the respondents participated in the proceeding for over 13 months before filing an application under Section 8.

11. I have considered the pleadings, arguments and the case laws cited by the parties. Applicants' case is that the petitioner has mainly asked for the implementation of the Arbitration Agreement dated 24.11.2004, all its prayers cover the subject matter which is arbitrable as per Arbitration clause given at 'H' in the Arbitration Agreement dated 24.11.2004; C.P No. 13/2007 cannot be adjudicated upon without referring to the Arbitration Agreement, the petitioner has relied on this agreement and has pleaded all the favourable and convenient facts from this agreement deliberately considering the arbitration clause contained in the agreement, if the pleadings and prayers related to or based on the contents of the agreement dated 24.11.2004 are struck down or kept apart, then nothing remains in the petition which is triable by the Company Law Board; even otherwise if a very little part, to be specific, some irregularities fall outside the scope of Arbitration Agreement, then for this little cause, the jurisdiction of the agreement cannot be avoided by the petitioner because if some part of the dispute filed before the Court deserves to be referred to the arbitrator then not only that part but the entire case must be referred to the arbitrator, the concept of the half reference is highly unlawful as well as inconvenient; breach of statutory compliance is also basically related to the contents of the agreement; application for reference to arbitration has been filed on 17.7.2007 and the written statement was filed only subsequently on 3.8.2007 without prejudice to the pending application and subject to the outcome of the application, in any case no first statement is delivered by the Respondents till filing of this application, the applicants have not waived the objection of jurisdiction. The petitioner's case is that CA No. 366/07 is not maintainable as the subject matter of the petition is different from the subject matter of the Arbitration Agreement; the allegations of non issue of general meeting notices, board meeting notices to the directors of the petitioner, non issue of share certificates to the petitioner etc. are not arbitrable; the petition can be adjudicated upon without reference to the terms of Arbitration Agreement; in any case it is a delayed application, even written statement has been filed by the Applicants and the Applicants have participated in the proceedings before the Company Law Board.

12. It is settled law that when an application is filed under Section 8 of the Arbitration Act, judicial authority is entitled to, has to and is bound to decide the jurisdictional issue raised before it before making or declining to make a reference to arbitration. In other words, it has to decide whether there is a valid agreement and whether the dispute that is sought to be raised before it is covered by arbitration clause. Over the years the Company Law Board has evolved the test to determine as to whether the matter in a petition under Sections 397 and 398 is to be relegated to arbitration or not, the test being whether the allegations of oppression/mismanagement contained in the petition can be adjudicated without reference to the terms of the arbitration agreement, if it can be, then the question of referring the matter to arbitration does not arise even if assuming that there is an arbitration agreement and the agreement covers the same matter. The provisions contained in Sections 397 to 409 of the Act constitute a code by themselves and are not subject to other provisions of the Act.

Under Sections 397 and 398 of the Act, the claim to relief rests not on any contract but on statutory right. Arbitrator cannot grant relief of the nature specified in Sections 402 or 403 of the Act. The powers conferred by Sections 397 to 402 of the Act cannot be taken away by agreement whether contained in the Articles or otherwise, the said provisions are an alternative to winding up proceedings and deal with public interest, the representative cause of Company.

13. It is true that the provisions of Section 8 of the Arbitration Act are mandatory. Sub-section (1) of Section 8 of the 1996 Act provides that a judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. Therefore, for application of Section 8, it is absolutely essential that there should be an arbitration agreement between the parties. Sub-section (2) of Section 8 of 1996 Act provides that the application referred to in Sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

14. Timing of application under Section 8 of the Arbitration Act is an essential pre requisite to be considered for maintainability of such an application. The C.A. No. 366/07 under Section 8 of the Arbitration Act in the present case was filed on 17.7.2007. The requisite pre condition of Sub-section (1) of Section 8 has been satisfied as the application has been filed prior to filing of the written submission on 3.8.2007 and that too without prejudice to the pending application and subject to the outcome of the application, the reply to CP has been filed in compliance with the CLB's orders, the respondents have not waived their objection regarding jurisdiction of the CLB. The application being prior in time, the written submission having been filed only subsequently, the petitioners' contention regarding delay in filing the application is of no consequence. The petitioners' objection regarding maintainability of the application is also not tenable.

15. Besides, the Applicant's case, when examined for reference of parties to arbitration on the touchstone of the test applied by the Company Law Board, as referred to above, does clear the test. In Hindustan Petroleum Corporation Ltd. v. Pinkcity Midway Petroleum case it has been held that disputes among contracting parties have to be referred to Arbitration. In S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618 it is held that the judicial authority is bound to decide on its jurisdiction. In Shin Etsu Chemicals Ltd. v. Aksh Optifibre Ltd.'s Supreme Court has held that in terms of Section 45 of the Arbitration Act, the judicial authority has to only form a prima facie opinion that there exists an arbitral agreement which is not null and void; inoperative or incapable of being performed and once such a prima facie opinion is formed, the parties will have to be referred to arbitration.

In terms of Section 2(h) of the Arbitration Act, "party" means a party to an arbitration agreement. In other words, the party to the judicial proceeding should be a party to the arbitration agreement. Therefore, first I have to decide whether the disputes/allegations in the petition are among the contracting parties and if so, then only the application of the decision in Shin Etsu Chemicals would arise. It is to be tested whether the allegations of oppression and mismanagement contained in the petition can be adjudicated without reference to the terms of the Arbitration Agreement dated 24.11.2004 which is an "Agreement for setting up a sugar plant at Latur (Maharashtra)" between Sh. Rajeshwar Vaijanathrao Bukey and others, the core promoters of M/s. Shree Sai Baba Sugars Ltd. and M/s. Spray Engineering Device Ltd. Specified Promoter wherein Clause 'H' reads as under: All differences and disputes between the parties hereto on any clause or matter herein contained or their respective obligations, rights, claims, liabilities hereunder or otherwise in relation to or arising out of this Agreement, shall be referred to Arbitration by a sole Arbitrator mutually agreed upon and in case there is no agreement in this behalf both the parties shall appoint one Arbitrator each. The award of the Arbitrator or the Arbitrators as the case may be, shall be final and binding on both the parties. The Arbitrators so appointed shall, before entering upon the dispute, appoint an empire. The arbitration shall be governed by the Indian Arbitration and Adjudication of Disputes Act, 1996 or any modification or re-enactment thereof for the time being in force.

The applicants have rightly pointed out that in the present case there is an arbitration agreement signed by the parties. The applicants' further contention that the allegations of 'oppression' and 'mismanagement' are arbitrable and cannot be adjudicated upon without reference to the arbitration agreement is found to be correct. It is noticed that the reliefs sought in this CP are nothing but the seeking of compliance of the Arbitration Agreement dated 24.11.2004. There is no way that these reliefs can be granted without reference to the Arbitration Agreement. A few more alleged irregularities or alleged illegalities are not adequate enough to withhold this petition from referring the matter to arbitration which alone has jurisdiction in this matter.

16. In view of the foregoing, I allow the prayers in CA No. 366/07 and refer the matter to Arbitration as contemplated under Section 8 of the Arbitration and Conciliation Act, 1996. C.P. No. 13 of 2007 is disposed off in the above terms. All interim orders stand vacated. All CAs stand disposed of. No order as to cost.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //