Arbitration does not oust oppression and mismanagement remedies where the company is not bound and the award is unfinished.

An arbitration agreement or award does not displace oppression and mismanagement proceedings where the company is not a party to the arbitration, no arbitration clause exists in the articles, and the award has not attained finality because it remains under challenge. In that setting, Section 8 of the Arbitration and Conciliation Act, 1996 need not be applied to stay or dismiss a petition under Sections 397 and 398 of the Companies Act, 1956. The pending statutory remedy remains available where the controversy concerns company affairs and the award has not fully resolved the dispute or resulted in distribution of assets.

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Issues: Whether the Company Law Board erred in rejecting the objection to maintainability of the company petition under Sections 397 and 398 on the basis of an arbitration agreement and an arbitral award, and whether the reasons assigned for non-application of Section 8 of the Arbitration and Conciliation Act, 1996 were sustainable.

Analysis: The appeal under Section 10-F of the Companies Act, 1956 lay only on a question of law, and interference with an interlocutory order of the Company Law Board was warranted only if the conclusions were perverse, unsupported by evidence, or arbitrary. The objection to maintainability rested on an arbitration agreement entered into during the pendency of the oppression and mismanagement proceedings and on an award said to have followed it. The Company Law Board had found, among other things, that the company was not a party to the arbitration arrangement, there was no arbitration clause in the articles of association, the arrangement was entered into during the proceedings, and the award had not attained finality because it was under challenge under Section 34 of the Arbitration and Conciliation Act, 1996. In these circumstances, the arbitral process did not displace the pending jurisdiction under Sections 397 and 398, particularly as the dispute concerned oppression and mismanagement in the affairs of the company and the award had not yet resulted in distribution of assets or complete resolution of the controversy.

Conclusion: The reasons assigned by the Company Law Board were held to be substantially sustainable in law, and no error of law was found in its view that the arbitration arrangement and award did not oust the pending proceedings under Sections 397 and 398.

Final Conclusion: The challenge to the Company Law Board's refusal to dismiss the company petition failed, and the appeal was dismissed.

Ratio Decidendi: In oppression and mismanagement proceedings, an arbitration arrangement or award does not automatically oust the jurisdiction of the Company Law Board where the company is not party to the arbitration, the award has not attained finality, and the dispute remains one for statutory relief under Sections 397 and 398.

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