Shareholders agreement arbitration can bind later transferees, and inability to order winding up does not bar arbitrability.

A shareholders' agreement containing an arbitration clause can bind later transferees who enter the shareholder structure through the contractual scheme, so disputes connected with that agreement remain referable to arbitration despite non-signatory objections. The fact that an arbitrator cannot order winding up does not, by itself, make oppression or mismanagement-related company disputes non-arbitrable; the arbitrator may still assess the company's functioning, assets, liabilities and dues and grant reliefs within the arbitral framework. The challenge to referral of the disputes to arbitration accordingly failed.

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Issues: (i) Whether disputes arising from the shareholders agreements, including disputes involving parties who were not original signatories but became shareholders later, could be referred to arbitration under section 45 of the Arbitration and Conciliation Act, 1996. (ii) Whether the objection that an arbitrator could not exercise powers analogous to those under section 402 of the Companies Act, 1956 barred reference of the disputes to arbitration.

Issue (i): Whether disputes arising from the shareholders agreements, including disputes involving parties who were not original signatories but became shareholders later, could be referred to arbitration under section 45 of the Arbitration and Conciliation Act, 1996.

Analysis: The arbitration clause formed part of the shareholders agreements and bound persons who later became shareholders through the contractual scheme governing transfer of shares. The disputes were not separable in a manner that would exclude the non-signatory or later-entrant parties from the contractual framework. The companies and the parties were sufficiently connected to the shareholders agreements, and the objections based on non-signature did not defeat the reference to arbitration.

Conclusion: The disputes were validly referable to arbitration, and the objection based on non-signatory status failed.

Issue (ii): Whether the objection that an arbitrator could not exercise powers analogous to those under section 402 of the Companies Act, 1956 barred reference of the disputes to arbitration.

Analysis: The inability of an arbitrator to order winding up does not mean that all company-related reliefs are non-arbitrable. The governing principle is that the arbitrator may determine whether the company is functional, examine its assets, liabilities and dues, and grant appropriate reliefs within the contractual and arbitral framework. That position answered the objection that the reliefs sought before the Company Law Board were incapable of being considered in arbitration.

Conclusion: The section 402 objection did not prevent arbitration, and the reference to arbitration was upheld.

Final Conclusion: The challenge to the order referring the disputes to arbitration failed, and the writ petitions were dismissed.

Ratio Decidendi: Where a shareholders agreement contains an arbitration clause binding subsequent transferees, disputes arising from that agreement may be referred to arbitration even if all affected parties were not original signatories, and the fact that an arbitrator cannot order winding up does not by itself render company-related oppression and mismanagement disputes non-arbitrable.

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