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TMI Blog2018 (9) TMI 2017X X X X Extracts X X X X X X X X Extracts X X X X ..... THAT:- It is a fact that the petitioners shareholders. wanted funds for the development of the company for which purpose roped the R2 into the company and while doing so both the parties have entered into the SPA and SSSA. Further the SSSA is also incorporated in the AOA - It is also a fact that the R I and R2 herein are the promoter directors and they are still continuing as directors of the Company. They are very much aware that SPA and SSSA contains clause with regard to appointment of other directors by the investor and it is also a fact that what binds on the Company would also binds its board of directors and shareholders. Clause 9 of SSSA and Clause 7.1 of amended AOA deal with use of money, borrowings and funding and clause 10.17 and clause 8.18 of the amended AOA deal with decision of the board. The clause 10.20 of the SSSA deals with the undertaking given by the petitioners. It is also a fact that the company convened all the board meetings and general meetings and the petitioners are party to the decisions taken in such meetings. The petitioners have not made any allegations that the Company has not convened any meetings. It is also an admitted fact that the Clause 19.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Act, 1996 (the Arbitration Act) by M/s. RIMS Bellrose Institute of Medical Sciences Private Limited, the Ist Respondent Company in the main petition, to refer the dispute between the parties to the arbitration. 2. The petitioners, the RI and R2 in the present application, have filed a petition under section 241 and 242 of the Companies Act, 2013 (the Act) alleging various acts of oppression and mismanagement in the affairs of the applicant Company and sought for the following reliefs: a. To appoint an independent auditor to audit the accounts of the Company from the date of incorporation till date; b. To direct the Respondent No. I to convene and hold a board meeting to consider the passing of the accounts so audited. c. To grant injunction restraining the Respondent No. 2 from making transfer of funds except with the consent of the Petitioners and other board members; d. To restore the rightful position and the authority of the Petitioners to direct and control the operations of the Respondent No. I company; e. To investigate and assess the sums of money of Respondent No. I Company misappropriated by any person and direct person guilty of such misappropriati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to support and assist the investor. The RI and R2, the main petitioners, are continuing as directors of the company and they are party to all the board meetings and general meetings and being party to all the decisions taken in the said meetings they cannot make wild allegations. Every year the board approves the accounts and the same are adopted in the general meetings. The RI and R2, the petitioners in the main petition, are parties to all the decision taken in the board or general meetings and now they cannot make wild allegations. The RI and R2 made allegations that their shareholding is reducing every year as the R3 herein invested more in the company and it is to be noted that the RI and R2 herein are the promoters and they are continuing as directors of the company. Further Clause 19.4 and 19.5 of SSSA and Clause 17.4 and 17.5 of the amended AOA deal with the provisions of infusing funds and it also bars the RI and R2 to obstruct or create any impediment to such further subscription by the investor. All the allotments are made as per relevant clauses of SSSA and AOA and complying with the provisions and also in the paramount interest of the Company. The RI a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Act is not maintainable in the facts and the circumstances of the case. (ii) Though the SPA and SSSA have the arbitration clause, both clauses have very limited scope. (iii) The Company petition is filed for the alleged actions of the Respondents in the main petition and the same are not contained in the SPA and SSSA. The petition is filed for oppression and mismanagement in the affairs of the Company. The legal position and arbitritrability of oppression and mismanagement is well settled principle of law, therefore, the application is not maintainable. (iv) The arbitration clause cannot give power to an arbitrator to decide the issues with respect to oppression and mismanagement. 6. The learned Counsel for the RI and R2, the petitioners in the main petition, while reiterating the averments made in the counter prayed for the dismissal of the Application filed under section 8 of the Arbitration Act and relied on the following case laws in support of his submissions: Rakesh Malhotra Vs Rajinder Malhotra - where in the Bombay High Court held that where a petition under Chapter VI of the Companies Act, 1956 seeks reliefs some of which are in the nature of reliefs in rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering this application, the prayers made in the petition are to be looked into. The petitioners in the main petition sought for appointment of an auditor to audit the accounts of the Company from its incorporation, direct the respondents to convene the board meeting to consider the passing Of the accounts so audited, grant injunction restraining the R2 from making transfer of funds except with the consent of the petitioners and other board members and restore the rightful position and authority of the petitioner to the direct control of the operations of the applicant company. It is a fact that the board meetings and general meetings have been convened by the Company as per the provisions of the Act and the petitioners are party to all such decisions taken in the said meetings. The infusing of funds and allotment of shares are also covered in the SSSA. The other directors who are not party to the agreement are not third parties and they are the directors appointed by the investor (R2 in the main petition) as per the clause of SSSA. Being aware about the consequences of the SPA and SSSA and, the petitioners having entered into such SPA and SSSA, it is not proper for them to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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