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TMI Blog2014 (8) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since other agreements are connected with joint venture and therefore, the parties to such agreements could be referred to arbitration or they could be said to be claiming through parties to arbitration agreement, are not required to be considered. Similarly, the question about the intention of the parties to relate the dispute to all agreements is also not required to be considered. In view of the joint venture agreement, reference of part of the matter to the arbitration would not amount to bifurcation of subject matter of the company petition. However, when the Court finds that entire matter before the CLB is not referable to the arbitration, even if the parties are taken to be bound by JVA, it is not permissible to bifurcate the matter and the cause of action for referring the matter to the arbitration. In any case, in the context of Section 8 of the Arbitration Act, as held by the Hon'ble Supreme Court in the case Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya and Another reported in MA: (2003 (4) TMI 435 - SUPREME COURT OF INDIA)it is not permissible to make reference for part of the matter For the reasons stated above, no interference is called for in the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) That this Hon'ble Board may be pleased to direct the respondent no. 3(SIPL) along with the respondent nos. 2 and 4 to 8 to refund the amount of approximately ₹ 17 crores, siphoned away under the Service Agreement dated 1.3.2010, to the Company, along with interest on the aforesaid amount at such rate as this Hon'ble Board may deem fit and expedient; (vi) That this Hon'ble Board may be pleased to quash and set aside the Services Agreement dated 22.9.2010, claimed to have been executed between the respondent no. 3(SEL) and the Company; (vii) That this Hon'ble Board may be pleased to direct the respondent no. 2(SEL) along with the respondent nos. 3 to 8 to give the accounts in respect of the amount received from the Company under the Services Agreement dated 22.9.2010 and be further pleased to direct the respondent no. 2(SEL) to refund the said amount to the Company, along with interest at such rate as this Hon'ble Board may deem fit and expedient; (viii) That this Hon'ble Board may be pleased to quash and set aside the Management Services Agreement dated 21.5.2012, executed between the Company and the respondent no. 3(SIPL); (ix) That thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Company in their Extra-Ordinary General Meeting held on 27.6.2013; (xix) That this Hon'ble Board may be pleased to direct the respondent no. 3(SIPL) along with the respondent nos. 2 and 4 to 8, to disclose the details of the payment made by the Company to SIPL towards the interest amount in respect of the temporary loans claimed to have been availed by the Company for payment of bonus under the EPC contract dated 10.3.2010 and be further pleased to direct SIPL along with the interest nos. 2 and 4 to 8, after taking such accounts, to refund the amount of interest paid by the Company to SIPL along with such rate of interest as this Hon'ble Board may deem fit and expedient; (xx) That this Hon'ble Board may be pleased to declare the appointment of respondent no. 8 as the director of the Company as illegal and invalid; (xxi) That this Hon'ble Board may be pleased to appoint as independent firm of Chartered Accounts as a Statutory Auditor of the Company in the place of M/s. Manubhai Co., Chartered Accountants; (xxii) That this Hon'ble Board may be pleased to restrain the Company from availing the services of M/s. Wadia Gandhy Co., Advocates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred as EPC Contractor in the agreement) to carry out the works in respect of the project highway. The contract price agreed to be paid by SEL to EPC Contractor was fixed at ₹ 825 Crores. There is also a provision made for payment of bonus on early completion of the project. It appears that some differences and dispute started taking place between the respondent No. 3-Managing Director/Chairman of the MCL and respondent No. 7-Chairman and Managing Director of SEL (Director of the company till 4.6.2012), who are brothers, as regards conducting Board meetings, decisions taken in the Board meetings, execution of transaction and financial documents in the name of company and execution of EPC contract dated 30.4.2010 without knowledge of the respondent No. 3. Such disputes led to exchange of letters/various communications between the MCL and majority Sadbhav Group. As stated in the company petition, the respondent No. 7 assured the respondent No. 3 that the company would not be put to any loss through EPC contract and that the SEL shall negate the impact created pursuant to the EPC contract. It was then decided to execute Share Holder Agreement (SHA) in respect of managing the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the issues raised in the Correspondence. 3. The Correspondence will not be relied upon and be an evidence in any matter before any judicial or non judicial authority. 4. Minutes recorded by the Company for the meeting held upto 25th May have been verified by Parties and found to be correctly recorded and agreed upon in all respect. 5. Parties have on this date entered into shareholders agreement and agreed upon the terms and conditions of the various Transaction Documents (as defined in the Shareholders Agreement), entered into or to be entered in by Company. 6. Parties agreed to approach jointly to lenders of the project for replacing Joint and Several Liability clause with Proportionate liability immediately after achieving Commercial Operation Date for 100% of the project length and start of toll collection. 7. Company is accordingly authorized by the nominees of SEL/SIPL and MCL for entering into such document to the extent yet to be executed and ratify and conform the documents already entered into. 3.8. It appears that even after the MoU was executed, the disputes and differences between the minority and majority group continued. The company peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon, third test is not met as the matter brought before the CLB is not subject matter of arbitration agreement and fourth test is met. As regards last test, it is held that the Arbitral Tribunal is not capable to grant reliefs prayed in the company petition. 7. I have heard learned advocates for the parties. 8. Learned senior advocate Mr. Kamal B. Trivedi appearing with M/s. Wadia Gandhi and Company, Advocates for the petitioners, submitted that the respondent Nos. 2 to 4 having stated in the company petition that they do not want winding up of the company, it clearly appears that the company petition is nothing but to settle the score of private dispute between two brothers and is filed just for monetary benefits which could always be considered in arbitration. Mr. Trivedi submitted that the respondent Nos. 4 to 8 in the company petition are the directors representing the joint venture partners on the Board of company and though they are not necessary parties in the company petition but are joined as respondents just to keep away the remedial measures through the arbitration. Mr. Trivedi submitted that even in their absence, the CLB can grant the reliefs prayed in the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a whole, it clearly appears that the respondent No. 3, the Managing Director of MCL has differences and disputes with respondent No. 7 (Chairman/Managing Director of SEL) and company petition is filed complaining breach of assurances/promises given by his brother. Mr. Trivedi submitted that by the MoU, the disputes between the brothers were set at rest and parties consciously made provisions in the SHA, which is incorporated in the MoU, for resolving any dispute in connection with the agreements between the parties only through the arbitration. Mr. Trivedi submitted that since full mechanism is provided to remedy the breach of obligation and the agreement in Clause No. 15 and No. 19 of SHA, the disputes between the parties could be resolved by arbitration. Mr. Trivedi submitted that in view of the legislative mandate in Section 8 of the Arbitration Act to refer the parties to arbitration once it is found that there exists a valid arbitration agreement between the parties, the CLB could not have refused to refer the parties to arbitration on the ground that there is no commonality of parties and that arbitrator is not capable to grant reliefs as prayed in the company petition. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 315 (CLB); [19] Judgment of the High Court of Delhi in the case of Delhi Express Travels Pvt. Ltd. Vs. International Air Transport Association and Others dated 28.05.2009 in I.A. No. 13094/2007 in C.S. (OS) 1044/2007; [20] In the case of Sundaram Brake Linings Ltd., Kotak Mahindra Bank Ltd., M.S. Subhramanian and G. Manikandan reported in (2010) 4 Comp L.J. 345 (Madras); [21] In the case of M/s. Srivenkateswara Constructions and others Vs. The Union of India reported in 1974 Andhra Pradesh 278; 11. Learned senior advocate Mr. Manish Bhatt with learned advocate Mrs. Mauna Bhatt for the Company submitted that though the company is not having a particular stand in the matter, however, it is not correct to say that the company is not a party to the arbitration agreement. Mr. Bhatt submitted that the respondent Nos. 4 to 8 to the company petition are formal parties and since representing majority group, it can be said that there is a commonality of parties to the arbitration agreement. Mr. Bhatt submitted that all the prayers in the company petition, if individually taken, are agreed to be dealt with as per the terms of SHA and therefore, it could be said that the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that what is projected in company petition is draftsman's skill which cannot defeat the purpose behind the arbitration agreement. Mr. Shelat submitted that in fact, the impugned order has not considered the real causes for the dispute. The dispute in the company petition is in connection with the agreements between the parties, however, to frustrate the agreement for arbitration, the respondent Nos. 4 to 8 are joined in the company petition. Mr. Shelat submitted that Clause 15 of SHA provides complete mechanism for resolution of the dispute as regards breach of obligation and agreements between the parties and Clause 19 also provides for indemnifying parties suffering loss on account of the act of the other party. 13. Mr. Shelat submitted that the business of the company is a joint venture and cannot be dependent upon one agreement. Therefore, all the agreements between the parties are interconnected. Mr. Shelat submitted that though KNR Company is not the signatory to the arbitration agreement, however since connected to execution of project undertaken by the joint venture, the KNR could be referred to the arbitration. Mr. Shelat submitted that the dispute between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government is authorized to ask for taking measures under Sections 397 and 398 of the Act. Mr. Thakore submitted that under Section 402 of the Act, the CLB has even power to alter the shareholdings of the members in the company, whereas the arbitrator shall be bound by the terms of agreement between the parties while deciding the dispute in arbitration. Mr. Thakore submitted that none of the powers available to CLB under Sections 398, 398 read with Section 402 of the Act can be exercised by the arbitrator. Mr. Thakore submitted that the powers under Sections 405 and 406 of the Act are available to the CLB in exclusion. Mr. Thakore submitted that the matter in the company petition is not only for the complaint as regards oppression but it is also a derivative action for the benefit of the company. Mr. Thakore submitted that the matter in the company petition also covers the manner of majority in conducting the affairs of the company prejudicial to the public interest on the ground that the grant of ₹ 273 crores given by the National Highway Authority has been siphoned away. Mr. Thakore submitted that it is also alleged that the majority directors, having fiduciary relationshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, considering statutory provisions of Sections 397, 398 read with Section 402 of the Act, it is not permissible to first refer the matter to the arbitration to examine whether the dispute is fit to be resolved by the arbitrator. Mr. Thakore submitted that the remedy available under Sections 397 and 398 of the Act was never and can never be termed as ordinary or common law remedy. Mr. Thakore submitted that as per the allegation made in the company petition, not only more than ₹ 200 crores of the company are siphoned away by EPC contract, service contract etc but it is also alleged that without involving nominated Director of minority in day-to-day affairs of the company and without serving agenda notice of the Board meetings, major decisions as regards business of the company were taken by majority directors which resulted into loss of crore of rupees to the company and also prejudicial to the public interest. Mr. Thakore submitted that the remedy available to a member of the company under Sections 397 and 398 of the Act is a statutory remedy under the special statute and such remedy cannot be frustrated by virtue of arbitration clause in the agreement. Mr. Thakore submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re submitted that the company is not among the parties referred but is individually referred as a party and the reference to arbitration contemplated is only as regards the dispute between the promoters who are referred as parties. Therefore, the CLB has rightly held that the company is not a party to the arbitration agreement in SHA. Mr. Thakore submitted that since in the context of shareholding group, the company cannot be referred as part of any shareholding group and therefore also, it cannot be said that the company is a party to the arbitration agreement. Mr. Thakore submitted that if the company is not a party to the arbitration agreement and the reliefs prayed in the company petition are for the benefit of the company, the arbitrator is not competent to consider and grant such relief. Mr. Thakore submitted that the CLB after considering the matter involved in the company petition with reliefs prayed therein has found that there is no commonality of parties and of the subject matter with the arbitration agreement and such being the agreed view taken by the CLB, no interference is called for in the impugned order of CLB in exercise of the powers under Article 226/227 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. The right to remedy under the said provisions is available to a member of the company against the Director which ordinarily not available to the shareholders to complain about his manner of conducting the affairs of the company. Therefore, the statutory remedy availed by the respondent Nos. 2 to 4 before the CLB by the company petition cannot be converted into a remedy of arbitration especially when the matter involved in the company petition could be statutorily dealt with only by the CLB. 20. Mr. Joshi submitted that whether the conduct of majority is oppressive to minority or prejudicial to the interest of the company or to the public interest can only be examined by the CLB and it is for the CLB to pass appropriate orders including rejection of the petition. But, the arbitrator cannot be first permitted to examine and decide whether the conduct of majority is of oppressive or of mismanaging the company and then to decide whether any lesser remedy can be granted. Such exercise would frustrate the legislative intention of conferring exclusive jurisdiction to the CLB in respect of matter under Sections 397 and 398 of the Act. 21. Learned senior advocate Mr. Joshi submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 105; 23. From the above submissions and having regard to the provisions of Sections 397, 398 read with Section 402 of the Act, the following incidental issues also arise for consideration:- (1) Is there a common law remedy in respect of the matter brought before the CLB under Sections 397 and 398 of the Act? (2) Are the powers conferred on CLB in respect of proceedings initiated by the member of a company under Sections 397 and 398 of the Act special and exclusive and does the jurisdiction of Civil Court stands excluded to decide the matter brought before the CLB under Sections 397 and 398 of the Act? (3) Is the arbitrator competent to decide the matter brought before the CLB under Sections 397 and 398 of the Act? (4) Is it permissible to first refer the parties of the company petition filed under Sections 397 and 398 of the Act to the arbitration to examine and decide as to whether the matter brought before the CLB could be resolved by the arbitrator in terms of agreement between them? (5) Is it permissible to refer the parties for part of the matter involved in the company petition filed under Sections 397 and 398 of the Act if it appears that the dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inging to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company's affairs in future, or for the purchase of the shares of any members of the company by other members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company's capital, or otherwise. (3) Where an order under this section makes any alteration in or addition to any company's memorandum or articles, then, notwithstanding anything in any other provision of this Act but subject to the provisions of the order, the company concerned shall not have power without the leave of the court to make any further alteration in or addition to the memorandum or articles inconsistent with the provisions of the order; but, subject to the foregoing provisions of this subsection, the alterations or additions made by the order shall be of the same effect as if duly made by resolution of the company and the provisions of this Act shall apply to the memorandum or articles as so altered or added to accordingly. (4) An office copy of any order under this section altering or adding to, or giving l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 908), shall apply to any such application as it applies to any suit within the meaning of that rule. (4) If on any such application the Court is of opinion- (a) that the company's affairs are being conducted as aforesaid, and (b) that to wind-up the company would unfairly and materially prejudice the interests of the company or any part of its members, but otherwise the facts would justify the making of a winding-up order on the ground that it is just and equitable that the company should be wound up, the Court may, with a view to bringing to an end the matters complained of, make such order in relation thereto as it thinks fit. (5) Without prejudice to the generality of the powers vested in a Court under sub-section (4), any order made under that subsection may provide for- (a) the regulation of the conduct of the company's affairs in future; (b) the purchase of the shares or interests of any members of the company by other members thereof or by the company; (c) in the case of a purchase of shares or interests by the company being a company having a share capital, for the reduction accordingly of the company's capital or otherwise; (d) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the affairs of the company pending the making of a final order in relation to the application. (9) Where any manager, managing agent, managing director or any other director or any other person who has not been impleaded as a respondent to any application under this section applies to be made a party thereto, the Court shall, if it is satisfied that his presence before the Court is necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the application, direct that the name of any such person be added to the application. (10) In any case in which the Court makes an order terminating any agreement between the company and its manager, managing agent or managing director or any of its other directors, as the case may be, the Court may, if it appears to it that the manager, managing agent, managing director or other director, as the case may be, has misapplied or retained or become liable to accountable for any money or property of the company or has been guilty of any misfeasance or breach of trust in relation to the company, compel him to repay or restore the money or property or any part thereof respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nti Prasad Jain (supra), the Hon'ble Supreme Court has observed in para 14 and 18 as under:- 14.... It gives a right to members of a company who comply with the conditions of S. 399 to apply to the Court for relief under S. 402 of the Act or such other relief as may be suitable in the circumstances of the case, if the affairs of a company are being conducted in a manner oppressive to any member or members including any one or more of those applying. The Court then has power to make such orders under S. 397 read with S. 402 as it thinks fit, if it comes to the conclusion that the affairs of the company are being conducted in a manner oppressive to any member or members and that to wind up the company would unfairly prejudice such member or members, but that otherwise the facts might justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up. The law, however, has not defined what is oppression for purposes of this Section, and it is left to Court to decide on the facts of each case whether there is such oppression as calls for action under this Section. 18. In Harmer's case, 1958-3 All ER 689, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of Court under Chapter VI headed Prevention of Oppression and Mismanagement . Under Section 397 any member of a Company who complains that the affairs of the Company are being conducted in a manner oppressive to any member or members including any one or more of themselves, may petition the Court which, if satisfied that the Company's affairs are being conducted in a manner oppressive to any member or members and that the facts justify the making of a winding up order on the ground that it is just and equitable to do so but that this would unfairly prejudice such member or members, may make such order as it thinks fit with a view to bringing to an end the matters complained of. This Section corresponds to Section 210 of the English Companies Act, 1948. Section 398 considerably enlarges the scope of the remedy by providing that any members of a Company who complain that the affairs of the Company are being conducted in a manner prejudicial to the interests of the Company or that a material change has taken place in the management or control of the Company, and that by reason of such change, it is likely that the affairs of the Company will be conducted in a manner prejudici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any power on the Court to set aside on interfere with past and concluded transactions between a Company and third parties which are no longer continuing wrongs, confines the power of the Court to making an order for the purpose of putting an end to oppression or mismanagement on the part of controlling share-holders. It is undoubtedly true that the power of the Court under Sections 397 and 398 is very wide-it is conferred in terms of the widest amplitude-and the Court can make such order as it thinks fit, but this power is conditioned by the purpose for which it can be exercised, namely, with a view to bringing to end the matters complained of' in a case under Section 397 and with a view to bringing to an end or preventing the matters complained of or apprehended in a case under Section 398. These words indicate the confines within which the power of the Court under Sections 397 and 398 must operate. Now what are these confines? The answer is clear from the language of Sections 397 and 398. The remedy under Section 397 can be invoked only when the affairs of the Company are being conducted in a manner oppressive to a shareholder or shareholders and similarly the remedy u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter is also borne; out by the second part of Section 398 which applies when a material change has taken place in the management or control of a Company and by reason of such change it is likely that the affairs of the Company would be conducted in a manner prejudicial to the interests of the Company and empowers the Court in such a case to make an order with a view to preventing the matters apprehended, namely, the prejudicial conduct of the affairs of the Company, so that such prejudicial conduct may not at all/ oil result from such change and may Be totally prevented. Whereas the first part of Section 398 applies to a case where the affairs of the Company are being conducted in a manner prejudicial to the interests of the Company and it is required to put an end to such existing course of prejudicial conduct, the second part of the Section applies where there is no existing course of prejudicial, conduct but prejudicial conduct is apprehended by reason of a material change in the management or control of the Company and what is, therefore, required is the prevention of occurrence of such prejudicial conduct. These then are the confines within which the remedy provided by Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be disregarded. The decisions in Joseph v. Jos [1964] KLT 234 : 34 Comp Cas 931 (Ker) and Star Tile Works v. N. Govindan, AIR 1959 Ker 254 also support the view that instances of the present kind are recognised exceptions to Foss v. Harbottle [1843] 2 Hare 461. The last question is as to whether the provisions of Chap. VI of the Act exclude the jurisdiction of civil courts in matters relating to oppression and mismanagement. Section 397 provides that any members of a company having a grievance that its affairs are being conducted in a manner oppressive to them may apply to the court for an order under this sub-section . Section 398 makes a like provision where the grievance is that the affairs are conducted in a manner prejudicial to the company's interests. But only a group of members having the specified voting strength under Section 399 could resort to these remedies. Section 408 empowers the Central Govt. also to grant some relief from oppression and mismanagement to the minority, but here again the application must be by a specified number of shareholders. If the argument on behalf of the defendants is that these statutory remedies exclude recourse to the ordinary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have the support of the majority. In view of the rival contentions of the parties and pending such investigation, it is difficult to prima facie accept the claims of the defendants that they have the support of the majority. Thus, the balance of convenience cannot be said to be in favour of the defendants for allowing them to continue in office in the face of serious prima facie infirmities of several transfers and transmissions of shares followed again by transfers resulting in mutation. The complaint of the plaintiffs in this respect requires further probe and investigation and cannot be dismissed as frivolous. Pending such investigation which is possible, at the trial of the suit, the question arises as to what further interim protection can and should be granted. The first ad interim order passed on September 17, 1986, has left the question of the validity of the annual general meeting to abide by the results of this application. In view of the absence of prima facie evidence being produced by the company in support of the impugned transfers of 1,348 shares and having regard to the unsatisfactory evidence produced in respect of the transfers and/or transmissions of som ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company, the consequent reduction of the share capital of the Company. Rule 90 of the companies (court) Rules 1959, provides that where an order under Ss. 397 and 398 involves reduction of capital, the provisions of the Act and the Rules relating to such matter shall apply as the Court may direct. 10. The scheme of Sections 397 and 406 appears to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on company purchasing its shares under Court's direction, is conferred on the Court. When the Court exercises this power by directing a purchase of its shares by the Company, it would necessarily involve reduction of the capital of the Company. Is such power of the Court subject to a resolution to be adopted by the members of the Company which, when passed with statutory majority, has to be submitted to Court for confirmation? No canon of construction would permit such an interpretation in which the statutory power of the Court for its exercise depends upon the vote of the members of the Company. This would inevitably be the situation if reduction of share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, the appeal used to lie before the Division Bench of the High Court. But after the amendment the power has been given to the CLB and appeal has been provided under Section 10F of the Act. Thus, Part 1A was inserted by the amendment with effect from 1.1.1964. But the constitution of the Company Law Board and the power to decide application under Sections 397 and 398 of the Act was given to the CLB with effect from 31.5.1991 and appeal was provided under Section 10F of the Act with effect from 31.5.1991. Therefore, on reading of Sections 10E, 10F, 397 and 398 of the Act, it becomes clear that it is a complete code that applications under sections 397 and 398 of the Act shall be dealt with by the CLB and the order of the CLB is appealable under Section 10F of the Act before the High Court. No further appeal has been provided against the order of the learned Single Judge. Mr. Nariman, learned senior counsel for the respondents submitted that an appeal is a vested right and therefore, under clause 15 of the Letters Patent of the Calcutta High Court, the appellants have a statutory right to prefer appeal irrespective of the fact that no appeal has been provided against the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r treated as an Industrial dispute or says that it shall be adjudicated by any of the forums created by the industrial Disputes Act. Otherwise, recourse to Civil Court is open. (4) It is not correct to say that the remedies provided by the Industrial Disputes Act are not equally effective for the reason that access to the forum depends upon a reference being made by the appropriate government. The power to make a reference conferred upon the government is to be exercised to effectuate the object of the enactment and hence not unguided. The rule is to make a reference unless, of course, the dispute raised is a totally frivolous one ex facie. The power conferred is the power to refer and not the power to decide, though it may be that the government is entitled to examine whether the dispute is ex facie frivolous, not meriting an adjudication. (5) Consistent with the policy of law aforesaid, we commend to the Parliament and the State Legislatures to make a provision enabling a workman to approach the Labour Court/Industrial Tribunal directly-i.e., without the requirement of a reference by the Government-in case of industrial disputes covered by Section 2-A of the Industrial Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its own jurisdiction upon arriving at a finding in regard to the existence of the jurisdictional fact. 14. It is also well settled that there is a presumption that a civil court will have jurisdiction and the ouster of civil court's jurisdiction is not to be readily inferred. A person taking a plea contra must establish the same. Even in a case where jurisdiction of a civil court is sought to be barred under a statute, the civil court can exercise its jurisdiction in respect of some matters particularly when the statutory authority or Tribunal acts without jurisdiction. 33. A dispute arising in between an employer and employee may or may not be an industrial dispute. The dispute may be in relation to or arising out of a fundamental right of the employee, or his right under a Parliamentary Act and the Regulations framed thereunder, and/or a right arising under the provisions of the Industrial Disputes Act or the sister laws and may relate to same or similar rights or different rights, or even may be based on common law right or contractual right. The question in regard to the jurisdiction of the civil court must, therefore, be addressed having regard to the fact as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt having jurisdiction in relation to the place at which the registered office of the company concerned is situate, except to the extent to which jurisdiction has been conferred on any District Court or District Courts subordinate to that High Court in pursuance of sub-section (2); and (b) where jurisdiction has been so conferred, the District Court in regard to matters falling within the scope of the jurisdiction conferred, in respect of companies having their registered offices in the district. (2) The Central Government may, by notification in the Official Gazette and subject to such restrictions, limitations and conditions as it thinks fit, empower any District Court to exercise all or any of the jurisdiction conferred by this Act upon the Court, not being the jurisdiction conferred (a) in respect of companies generally, by sections 237, 391, 394, 395 and 397 to 407, both inclusive; (b) in respect of companies with a paid-up share capital of not less than one lakh of rupees, by Part VII (sections 425 to 560) and the other provisions of this Act relating to the winding up of companies. (3) For the purposes of jurisdiction to wind up companies, the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication all matter raised in that connection should be decided by the Court under Sec. 155 and if it finds adjudication of any matter not falling under it, it may direct a party to get his right adjudicated by Civil Court. Unless jurisdiction is expressly or implicitly barred under a Statute, for violation or redress of any such right Civil Court would have jurisdiction. There is nothing under the Companies Act expressly barring the jurisdiction of the Civil Court, but the jurisdiction of the 'court' as defined under the Act exercising its powers under various sections where it has been invested with exclusive jurisdiction, the jurisdiction of the Civil Court is impliedly barred. We have already held above the jurisdiction of the 'court' under Sec. 155, to the extent it has exclusive, the jurisdiction of Civil Court is impliedly barred. For what is not covered as aforesaid the Civil Court would have jurisdiction. Similarly we find even under Sec. 446(1), its words itself indicate jurisdiction of Civil Court is not excluded. This sub-section states, '........ no suit or legal proceedings shall be commenced........ or proceeded with....... except by leave of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court or it is genuinely so. Similarly we feel appropriate while deciding this the Court should take into consideration the submissions for the respondents, whether it would come within the scope of rectification or not in the light of what we have said above. 36. However, in the case of Dwarka Prasad Agarwal (D) By LRs. and Another Vs. Ramesh Chander Agarwal and others reported in (2003)6 SCC 220, the Hon'ble Supreme Court has held and observed in para 18 to 23 as under:- 18. Sections 9 and 10 of the Companies Act are as under: 9. Act to override memorandum, articles etc.-Save as otherwise expressly provided in the Act- (a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in general meeting or by its Board of Directors, whether the same be registered, executed or passed, as the case may be, before or after the commencement of this Act; and (b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lli Lakshminarayana and another, (1962) Supp 1 SCR 8), this Court upon considering the Press and Registration of Books Act, 1867 observed that the matter relating to ownership of the press is a matter of general law and the Court, thus, must follow that law. It was observed that a declared keeper of the press is not necessarily the owner thereof so as to be able to confer title to the press upon another. 22. The dispute between the parties was eminently a civil dispute and not a dispute under the provisions of the Companies Act. Section 9 of the Code of Civil Procedure confers jurisdiction upon the civil Courts to determine all disputes of civil nature unless the same is barred under a statute either expressly or by necessary implication. Bar of jurisdiction of a civil Court is not to be readily inferred. A provision seeking to bar jurisdiction of civil Court requires strict interpretation. The Court, it is well-settled, would normally lean in favour of construction, which would uphold retention of jurisdiction of the civil Court. The burden of proof in this behalf shall be on the party who asserts that the civil Court's jurisdiction is ousted. (See Sahebgouda (dead) by LRs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Bennet Coleman and Co. Vs. Union of India and others reported in 1977(47) Company Cases 92 (Bombay), the Bombay High Court has held and observed on page 113 to 120 as under:- In our view, the submissions made by Mr. Sen on the point of legality or otherwise of the impugned orders will have to be appreciated in the context of the principal question as to what are the powers of the court when it is acting in proceedings instituted under section 397 and 298 read with section 402 of the Companies Act. The questions whether a board of directors of the type indicted in the impugned order could be reconstituted by the court or not and whether the court had power to frame an article inconsistent with the provisions of section 255 of the Act or not must in the ultimate analysis depend upon the true ambit of the powers of the court under section 397 or 398 read with section 402, for, if these sections confer upon the court jurisdiction and powers of the widest amplitude to pass appropriate orders which the circumstances of the case may require, it would be difficult to accept Mr. Sen's submissions that the impugned orders and directions are liable to be set aside on the basis that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extraordinary circumstances where the normal corporate management has failed and has run into oppression or mismanagement and steps are required to be taken to prevent oppression and/or mismanagement in the conduct of the affairs of a company. It is in view of this scheme which is very apparent on a fair reading of the arrangement of chapter and the sections contained in each chapter which are all grouped under Part VI of the Act that the question will have to be answered as to whether the powers of the court under Chapter VI (which includes sections 397, 398 and 402) should be read as subject to the provisions contained in the other chapters which deal with normal corporate management of a company and, in our view, in the context of this scheme having regard to the object that is sought to be achieved by sections 397 and 398 read with section 402, the powers of the court thereunder cannot be so read. Further, an analysis of the sections contained in Chapter VI of Part VI of the Act will also indicate that the powers of the court under section 397 or 398 read with section 402 cannot be read as being subject to the other provisions contained in sections dealing with usual corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be wound up with a view to bringing to an end the matters complained of . Similarly, under section 398 read with section 402 power has been conferred upon the court to make such orders as it thinks fit if it comes to the conclusion that the affairs of the company are being conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company or that a material change has taken place in the management or control of the company by reason of which it is likely that the affairs of the company will be conducted in a manner prejudicial to public interest or in a manner prejudicial to the interests of the company, with a view to bringing to an end or preventing the matters complained of or apprehended . Both the wide nature of the power conferred on the court and the object or object sought to be achieved by the exercise of such power are clearly indicated in sections 397 and 398. Without prejudice to the generality of the powers conferred on the court under these sections, section 402 proceeds to indicate what type of orders the court could pass and clauses (a) to (g) are clearly illustrative and not exhaustive of the type of such orders. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a manner prejudicial to public interest. Similarly, sub-section (2) of section 398 clearly provides that where the court is of the opinion that the affairs of the company are being conducted in a manner suggested in sub-section (1), then, the court may, with a view to bringing to an end or preventing the matters complained of or apprehended, make such order as it thinks fit. In other words, sections 397 and 398 are intended to avoid winding up of the company if possible and keep it going while at the same time relieving the minority shareholders from acts of oppression and mismanagement or preventing its affairs being conducted in a manner prejudicial to public interest and if that be the objective the court must have power to interfere with the normal corporate management of the company. If under section 398 read with section 402 the court is required by its order to provide for the regulation of the conduct of the company's affairs in future because of oppression or mismanagement that has occurred during the course of normal corporate management, the court must have the power to supplant the entire corporate management, or rather corporate mismanagement by resorting to non-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that behalf could in any manner be curbed. In our view, therefore, the position is clear that while acting under section 398 read with section 402 of the Companies Act the court has ample jurisdiction and very wide powers to pass such orders and give such direction as it thinks fit to achieve the object and there would be no limitation or restriction on such power that the same should be exercised subject to the other provisions of the Act dealing with normal corporate management or that such orders and directions should be in consonance with such provisions of the Act. Considerable emphasis was laid by Mr. Sen on the fact that there was absence of a non-obstante clause in any of the relevant sections, viz., section 397, 398 and 402. His contention was that whenever the legislature intended that any of the provisions of the Act should be overridden and the legislature has clearly expressed its intention by using appropriate language, namely, by user of a non-obstante clause and since there was no non-obstante clause in section 397 or section 398 read with section 402 of the Act, the court's powers thereunder could not override the other provisions of the Act but would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act dealing with corporate management including section 255 and, therefore, a non-obstante clause was used at the commencement of section 408. We are, therefore, inclined to take the view that the absence of a non-obstante clause in sections 397, 398 and 402 does not lead to the inference suggested by Mr. Sen. Moreover, as we have already indicated, there is neither a non-obstante clause contained in any of these sections nor is there language to indicate that the court's powers under these sections are to be exercised subject to any of the other provisions of the Act. In such a situation the ambit of the court's powers must be determined by the scheme of Part VI in which all the concerned sections appear, the language employed in these relevant sections and the object sought to be achieved by them and in this context it would be useful to refer to the rule of construction enunciated in Maxwell on the Interpretation of Statute, 12th edition, page 45, to which our attention was invited by Mr. Phadke. The relevnt rule of construction has been stated thus: If the choice is between two interpretations, the narrower of which would fail to achieve the manifest purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to some evidence, the CLB, having exclusive powers for such matter, is under obligation to examine the evidence and then to decide whether the complainant/member is successful in bringing home the charges of oppressive, unfair and prejudicial conduct of majority. At the conclusion on determination of such petition, even if the CLB finds that the complainant/member has failed to bring home the above such charges, and still it is of the opinion that the company's affairs are conducted in a manner prejudicial to the public interest or to the interest of company or to any other member, it is not powerless to pass appropriate orders and to take measures contemplated under Section 402 of the Act as held by Hon'ble Supreme Court in the case of M.S.D.C. Radharamanan (supra) in para 15, 20 to 23 and 41, which read as under:- 15. Ordinarily, therefore, in a case where a case of oppression has been made a ground for the purpose of invoking the jurisdiction of the Board in terms of Sections 397 and 398 of the Act, a finding of fact to that effect would be necessary to be arrived out. But, the jurisdiction of the Company Law Board to pass any other or further order in the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act or Section 397 and/or 398 thereof, an order of winding up may be passed, but as noticed hereinbefore, the Company Law Board in a winding up application may refuse to do so, if any other remedy is available. The Company Law Board may not shut its doors only on sheer technicality even if it is found as of fact that unless the jurisdiction under Section 402 of the Act is exercised, there will be a complete mismanagement in regard to the affairs of the company. 23. Sections 397 and 398 of the Act empower the Company Law Board to remove oppression and mismanagement. If the consequences of refusal to exercise jurisdiction would lead to a total chaos or mismanagement of the company, would still the Company Law Board be powerless to pass appropriate orders is the question. If a literal interpretation to the provisions of Section 397 or 398 is taken recourse to, may be that would be the consequence. But jurisdiction of the Company Law Board having been couched in wide terms and as diverse reliefs can be granted by it to keep the company functioning; is it not desirable to pass an order which for all intent and purport would be beneficial to the company itself and the majority o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. 5. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract. 44. Sub-section (1) of Section 7 of the Arbitration Act provides that the agreement whereby the parties have agreed to submit to arbitration their disputes which have arisen or to arise between them in respect of define legal relationship whether the contractual or not, is an arbitration agreement. The question, however is whether arbitrator is competent to decide the dispute though arising out of legal relationship but has given rise to a matter, the jurisdiction to deal with and decide it is exclusively conferred upon a special forum especially a public forum under the Statute even if it is found that the parties are common. 44.1. In the case of Haryana Telecom Ltd. (supra), the Hon'ble Supreme Court has held and observed in para 4 and 5 as under:- 4. Sub-section (1) of Section 8 provides that where the judicial authority before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leum Corporation Ltd. was purely contractual power under the agreement and not a statutory one under the Act of 1985. Therefore, no absolute law is laid down that in every case wherever there is a clause for arbitration, the parties are to be mandatorily referred to arbitration irrespective of satisfying the pre-requisites of Section 8 of the Arbitration Act and without considering the competence of the arbitrator to decide the matter in dispute. 44.3. In the case of Rashtriya Ispat Nigam Ltd. (supra), the Hon'ble Supreme Court has in the facts of the case found that the existence of a valid agreements stood admitted. There could not be any dispute that the matter relating to termination of contract would be a dispute arising out of a contract and arbitration agreement contained in Clause 44 of the contract would be squarely attracted. Once the condition precedents contained in the said proceedings were satisfied, the judicial authority was statutorily mandated to refer the matter to arbitration. It is further observed that what is necessary to be looked into would be as to whether the subject matter of dispute is covered by an arbitration agreement or not. The Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble Supreme Court has not laid down any absolute law that once there is an arbitration agreement, the court is not required to consider the competence of arbitrator for the matter to be decided and whether prerequisites of Section 8 of the Arbitration Act are satisfied or not. 44.6. In the case of Tapan Kumar Paul (supra), decided under the Arbitration Act of 1940, especially para 9 thereof, it is held that there is no bar in referring the dispute to the arbitration. However, as observed in the said paragraph, the Court agreed with the submission of learned counsel that the powers under Section 397 and allied sections of the Act were exclusively given to the court on the ground of public policy and could not be delegated to the private forum. But, while examining the award made by the arbitrator, the court in the facts of the case observed that the arbitrator did not seek to exercise that the Court enjoyed exclusive under the provisions of the Act. 44.7. In the case of Gurnir Singh Gill (supra), the Delhi High Court has held and observed on page 208 to 209 as under:- Shri Saharya, appearing for the respondents, next contended that, if Shri Deshpande had been appointed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 397 to 403 should be read down to prohibit the reference by it, of some or all of the points in dispute before it, to arbitration. Its power cannot be less in this regard than those of a civil court trying a suit between the parties. In the facts of the case, the Court observed as under:- These are, therefore, civil proceedings before a court and issues arising therefrom can be referred to arbitration. Nor is there anything in the nature of the proceedings here that precludes a reference to arbitration: These are not proceedings in rem, like insolvency proceedings, nor do they involve public rights, as in the case of a suit under section 92 of the Code of Civil Procedure. The disputes raised are purely inter parties and do not affect the rights of strangers to the proceedings. 44.8. In the case of Booz Allen and Hamilton Inc. (supra), the Hon'ble Supreme Court while comparing the scope and extent of Section 8 with Section 11 has held and observed in para 19, 32, 33, 35, 36, 37 and 38 as under:- 19. Where a suit is filed by one of the parties to an arbitration agreement against the other parties to the arbitration agreement, and if the defendants file an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f courts and tribunals which are public fora constituted under the laws of the country. Every civil or commercial dispute, either contractual or non-contractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of arbitral tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the Legislature exclusively for public fora as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by a public fora (courts and Tribunals), may by necessary implication stand excluded from the purview of private fora. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes. 36. The well recognized examples of non-arbitrable disputes are: (i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cause/dispute is inarbitrable, the court where a suit is pending (judicial authority) will refuse to refer the parties to arbitration, under Section 8 of the Arbitration Act, even if the parties have agreed upon arbitration as the forum for settlement of such disputes. The well recognized examples of non-arbitrable disputes are mentioned in para 36 of the judgment. However, this may not be taken as exhaustive list. Therefore, in respect of the matter brought before the court or the judicial authority, if it is found that the adjudication of such matter is reserved for public fora by legislature and excluded by necessary implication from the purview of private fora, the parties cannot be referred in respect of such dispute to arbitration under Section 8 of the Arbitration Act. It is required to be noted that the law mandates in Section 400 of the Act to give notice of every application made under Sections 397 and 398 of the Act to the Central Government and also mandates the CLB to take into consideration the representation if any made by the Central Government before passing any final order. Section 402 of the Act gives additional powers to the CLB which as stated in the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the parties to the suit, it will refer the parties to arbitration, by refusing to decide the action brought before it and leaving it to the parties to have recourse to their remedies by arbitration. When such an order is made, parties may either agree upon an arbitrator and refer their disputes to him, or failing agreement, file an application under section 11 of the Act for appointment of an arbitrator. The judicial authority 'referring the parties to arbitration' under section 8 of the Act, has no power to appoint an arbitrator. It may, however, record the consent of parties to appoint an agreed arbitrator. 39. Reliance was placed upon certain observations in the decision of the House of Lords in Heyman v. Darwins Ltd. 1942 AC 356. We extract below the paragraph containing the relied upon observations: The law permits the parties to a contract to include in it as one of its terms an agreement to refer to arbitration disputes which may arise in connection with it, and the court of England enforce such a reference by staying legal proceedings in respect of any matter agreed to be referred if satisfied that there is no sufficient reason why the matter should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves, salaries, age of retirement, pension, dismissal, removal, reduction in rank, suspension and other conditions of service are to be governed exclusively under the statutory regime provided in Chapter IV. The Tribunal constituted under Section 11 is the forum provided for enforcing some of these rights. In Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke of Bombay and Ors. 1976(1) SCC 496), it has been observed that if a statute confers a right and in the same breath provides for a remedy for enforcement of such right, the remedy provided by the statute is an exclusive one. If an employee seeks to enforce rights and obligations created under Chapter IV, a remedy is available to him to get an adjudication in the manner provided in Chapter IV by the prescribed forum i.e. the Tribunal. That being so, the Tribunal cannot and in fact has no power and jurisdiction to hear the appeal on merits and only way is to ask the parties to go for arbitration. 11. According to learned counsel for the appellant though there may be two remedies available to the dismissed employee, that is, one the appeal and the other before the arbitrator, his stand was that when one of the parties i.e. th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, refund of ₹ 200 crores to the company alleged to have been siphoned away by the Sadbhav Group, including their nominated directors, refund of ₹ 91.50 crores to the company alleged to have been siphoned away by Sadbhav Group, including their nominated directors, to quash the service agreement dated 1.3.2010 and to refund the amount of ₹ 17 crores to the company allegedly siphoned away under the service agreement, to quash the service agreement dated 22.9.2010, to refund the amount to the company received by Sadbhav Group, including majority directors, to refund ₹ 1.85 crores siphoned away under the management service agreement dated 21.5.2012, to quash the Board meetings and the resolution passed in the Board meeting dated 4.3.2010 for approving the execution and operation of maintenance contract, to quash EPC contract dated 30.4.2010 executed in favour of one KNR Construction Company, to quash the other Board meetings and resolutions passed in the meeting of the company and to direct the company to return the amount of ₹ 16,91,88,000/- deposited by MCL under protest vide its letter dated 7.6.2013 etc. 49. If above are the nature of reliefs prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial. (2) The provisions of this Part apply to a person who is not a member of a company but to whom shares in the company have been transferred or transmitted by operation of law as they apply to a member of a company. (3) In this section, and so far as applicable for the purposes of this section in the other provisions of this Part, company means-- (a) a company within the meaning of this Act, or (b) a company that is not such a company but is a statutory water company within the meaning of the Statutory Water Companies Act 1991 (c. 58). The Trial Court granted stay of proceeding, which the Appellate Court confirmed and the plaintiff unsuccessfully applied to further appeal. The question arose as to whether dispute could be referred to the arbitrator or not. Considering the nature of dispute, the Court observed that determination of whether there has been unfair prejudice consisting of the breach of an agreement or some other unconscionable behaviour is plainly capable of being decided by an arbitrator and it is common ground that an arbitral tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was decided under Section 994 which takes care of the claim as regards conducting the affairs of the company in a manner prejudicial to the interest of members like the minority oppression claim. Similarly, the Singapore Court examined the issue about the arbitrability of the dispute in the context of minority oppression claims under Section 216 of the Companies Act which read as under:- Personal remedies in cases of oppression or injustice 216.--(1) Any member or holder of a debenture of a company ... may apply to the Court for an order under this section on the ground-- (a) that the affairs of the company are being conducted or the powers of the directors are being exercised in a manner oppressive to one or more of the members or holders of debentures including himself or in disregard of his or their interests as members, shareholders or holders of debentures of the company; or (b) that some act of the company has been done or is threatened or that some resolution of the members, holders of debentures or any class of them has been passed or is proposed which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arbitrability of minority oppression claims (at p. 324): First, where the rights asserted will directly affect third parties, i.e. persons who are not parties to the arbitration agreement, it may prove difficult to convince a court to stay proceedings before it in favour of arbitration. The courts in those circumstances seem to have a fairly strong ground upon which to base a holding that the matter is not capable of settlement by arbitration. Secondly, public shareholder claims are particularly susceptible to arguments that it is contrary to the public interest that matters be referred to arbitration. The interaction between large groups of shareholders, directors and companies is complex. Legal rules have been developed to confine and mould those relationships in fairly invasive respects, such as the process requirements associated with derivative and class actions. Courts will likely find it difficult to accept that informal arbitration procedures, which may rely heavily on ad hoc decisions by the arbitral tribunal, can satisfactorily handle these relationships. They are likely to be comforted greatly if a party which seeks a stay in favour of arbitration can explain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of arbitration clauses laid down by the Court of Appeal in Larsen Oil. In such an instance, the arbitral tribunal would leave the choice of the remedy or appropriate order to the Court. Even then, there is the problem of whether the arbitral tribunal should also recommend what remedy would, in its view, be most appropriate. As I have discussed earlier ([123] above), there is a possibility that the Court may disagree with the arbitral tribunal-can the Court then impose the remedy it considers appropriate with a view to bringing to an end or remedying the matters complained of? There might also be other difficulties, e.g., a possible impact or concern about the solvency of the company and the interests of creditors that was not surfaced at the arbitration proceedings. Even if these difficulties are put to one side, what exactly is being sought for the purpose of enforcement if the arbitral tribunal had only made recommendations? For the reasons set out above, I have my doubts if an arbitral tribunal can and should make a declaration that the claimant is entitled to ask a Court to wind up the company or order a buy-out upon specified terms. 133. The third approach available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory and at an early stage, the Court is unlikely to be able to assess what each party's approach will be as the dispute unfolds and develops. 138. In the absence of an express statutory provision allowing me to make such orders, I would hesitate to do so. Further, in the absence of a contractual agreement to refer matters to adjudication by a tribunal other than a Court, the Plaintiff is entitled to avail itself of the Court's processes. Under Singapore law, the referral of matters to an arbitrator is a purely consensual process. There is no power for me to otherwise order that the parts of the dispute not caught by the arbitration clause and those against the other defendants not party to it to also be heard at an arbitration or by the arbitrator as part of the Court's process, as was done in ACD Tridon. 139. A practical solution in the present case will be for the Plaintiff and all of the defendants to agree to submit their disputes to arbitration. All parties will then be before one tribunal and will be bound by that tribunal's decision. The possible complications which I have set out above may still arise thereafter, but they cannot be avoided and will h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigants to manipulate the process and evade otherwise binding obligations to refer their disputes to arbitration. 142. That said, except for those cases where all the shareholders are bound by the arbitration agreement, or where there are unique facts like Fulham, and the Court is satisfied that, first, all the relevant parties (including third parties whose interests may be affected) are parties to the arbitration and, secondly, the remedy or relief sought is one that only affects the parties to the arbitration, many if not most of the minority oppression claims under s. 216 of the CA claims will be non-arbitrable. This will often be in cases where, e.g., there are other shareholders who are not parties to the arbitration, or the arbitral award will directly affect third parties or the general public, or some claims fall within the scope of the arbitration clause and some do not, or there are overtones of insolvency, or the remedy or relief that is sought is one that an arbitral tribunal is unable to make. 54. What appears to be common in Fulham's case and Silica Investors' case (supra), is that it is the nature of dispute which decides the question. However, con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with default events taking place resulting into breach of obligation, agreements, declaration, undertaking, etc. provision to indemnify the damages or losses arising out or in connection with any wrong or false representation made by any party for breach of any of the covenants, agreements, declaration or undertaking made by any party to other parties in terms of the agreement. However, when it comes to referring the parties to arbitration, what is relevant is whether the matter in the nature of complaint before CLB as regards the conduct of majority group oppressive to minority and prejudicial to the interest of the company as also to the public interest could be said to be a matter of same subject covered by arbitration clause. It is required to be noted that the matter before the CLB is just not a kind of civil dispute concerning the rights of the parties flowing from the terms contained in the agreement but it is about unfair conduct of majority group of conducting the Board meetings without serving the agenda notice to the minority group director, not involving the minority into day-to-day business of the company by majority group, execution of the agreements without knowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnatory to the SHA in their individual capacity as directors of the majority group. The dispute agreed to be referred to arbitration in SHA is between the promoters who are SEL, SIPL and MCL. Though relying on Clause 36.1.2, it was submitted by Mr. Trivedi that both of the shareholder group is given right to appoint one arbitrator on failure of promoters to appoint the sole arbitrator and since majority directors are covered by definition of shareholder group in the SHA and also covered in the definition of associate, the majority group directors, i.e. respondent Nos. 4 to 8 in the company petition, are to be construed as parties to the arbitration agreement and can be referred to arbitration. Such argument is not available to he petitioners in view of the fact that the respondent Nos. 4 to 8 though represent majority shareholder group on the board of the company, however they are in fiduciary relationship with the company and joined in the company petition in the capacity as directors of the company. They, therefore, cannot belong to any group of shareholders. They cannot be thus considered to be parties to the arbitration agreement. 60. Mr. Trivedi, however submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to be considered on the basis of the judgment in the case of M.R. Engineers and Contractors Pvt. Ltd. (supra). 62. However, relying on the judgment in the case of Everest Holding Limited (supra), Mr. Trivedi submitted that in view of the joint venture agreement, reference of part of the matter to the arbitration would not amount to bifurcation of subject matter of the company petition. However, when the Court finds that entire matter before the CLB is not referable to the arbitration, even if the parties are taken to be bound by JVA, it is not permissible to bifurcate the matter and the cause of action for referring the matter to the arbitration. 63. In any case, in the context of Section 8 of the Arbitration Act, as held by the Hon'ble Supreme Court in the case Sukanya Holdings (P) Ltd. Vs. Jayesh H. Pandya and Another reported in MA: (2003)5 SCC 531, it is not permissible to make reference for part of the matter. In the said case, the Hon'ble Supreme Court has held and observed in para 15 and 16 as under:- 15. The relevant language used in S. 8 is- in a matter which is the subject matter of an arbitration agreement. Court is required to refer the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stage itself, we would make it clear that it is not necessary for us to examine the correctness or otherwise of the judgment in the case of Sukanya AIR 2003 SC 2252: 2003 AIR SCW 2209) (supra). This we say for varied reasons. 133.1. Firstly, Sukanya was a judgment of this Court in a case arising under Section 8 Part I of the 1996 Act while the present case relates to Section 45 Part II of the Act. As such that case may have no application to the present case. 133.2. Secondly, in that case the Court was concerned with the disputes of a partnership concern. A suit had been filed for dissolution of partnership firm and accounts also challenging the conveyance deed executed by the partnership firm in favour of one of the parties to the suit. The Court noticing the facts of the case emphasized that where the subject-matter of the suit includes subject-matter for arbitration agreement as well as other disputes, the Court did not refer the matter to arbitration in terms of Section 8 of the Act. In the case in hand, there is a mother agreement and there are other ancillary agreements to the mother agreement. It is a case of composite transaction between the same parties or the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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