Oppression and mismanagement claims with statutory company-law reliefs are not referable to arbitration.

A petition alleging oppression and mismanagement under the Companies Act, 1956 is not referable to arbitration where the reliefs sought are statutory remedies that an arbitral tribunal cannot grant. The dispute was not limited to contractual rights under the subscription agreement; it also involved issues of shareholder status and locus standi that could be addressed as preliminary issues in the company petition itself. The governing principle is that only disputes capable of arbitral determination may be referred under section 8, and mixed claims seeking company-law reliefs remain outside arbitration. The refusal to refer the petition was therefore upheld.

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Issues: Whether a petition for oppression and mismanagement under sections 397, 398, 402 and 403 of the Companies Act, 1956 could be referred to arbitration under section 8 of the Arbitration and Conciliation Act, 1996.

Analysis: The arbitration clause was invoked on the footing that the subscription agreement containing it had to be established or tested first. However, the dispute in the company petition was not confined to contractual rights between the parties. The reliefs sought were those which could be granted only by the Company Law Board in proceedings for oppression and mismanagement, and not by an arbitral tribunal. The Court also noted that if the petitioner's case was that the respondent had ceased to be a shareholder or lacked locus standi, that objection could be raised in the company petition itself as a preliminary issue. The principle that only disputes capable of being decided by an arbitrator can be referred, and that mixed reliefs involving statutory company-law remedies are not referable, governed the matter.

Conclusion: The request to refer the company petition to arbitration was rightly refused, and the dismissal of the section 8 application was upheld in favour of the respondent.

Ratio Decidendi: Statutory reliefs for oppression and mismanagement under the Companies Act, 1956 are not referable to arbitration where the arbitral tribunal cannot grant the substantive remedies sought and the company petition raises issues that must be decided by the Company Law Board.

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