Board upholds Company Petition challenge, permits arbitration agreement, denies forensic audit. Special Officer prayer rejected.

The Board rejected the challenge to the maintainability of the Company Petition under Sections 397 and 398 of the Act, allowing the Respondents to raise the arbitration agreement during the final disposal. The request for a forensic audit in C.A.No.225 of 2014 was deemed premature, leading to the disposal of the application. The prayers for a Special Officer and further interim relief in C.A.No.226 of 2014 were rejected as they were considered impermissible final reliefs. All three Company Applications were disposed of without costs, with a final hearing scheduled for November 11, 2014.

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Issues:
1. Challenge to the maintainability of the Company Petition under Sections 397 and 398 of the Act due to an agreement to refer disputes to arbitration.
2. Prayers made in C.A.No.225 of 2014 for the appointment of an Administrator and forensic audit of sale proceeds.
3. Prayers made in C.A.No.226 of 2014 for the appointment of a Special Officer and interim relief.

Issue 1: Challenge to the maintainability of the Company Petition:
The Respondent Nos. 2 to 5 challenged the maintainability of the Company Petition under Sections 397 and 398 of the Act, citing an agreement to refer disputes to arbitration. The Respondents argued that since the parties agreed to arbitration and an Arbitral Tribunal delivered an Award, the Company Law Board lacked jurisdiction to entertain the petition. However, the Petitioners contended that the Respondent Company was not a party to the arbitration agreement. The Board analyzed the provisions of Section 8 of the Arbitration and Conciliation Act, 1996, along with relevant case laws. The Board concluded that the elements required for the application of Section 8 were not met in this case. The Board rejected the challenge to the maintainability of the Company Petition, allowing the Respondents to raise the arbitration agreement during the final disposal of the Petition.

Issue 2: Prayers in C.A.No.225 of 2014:
The Petitioners sought the appointment of an Administrator and a forensic audit of sale proceeds in C.A.No.225 of 2014. The Board noted that the Ld. Observer-cum-Facilitator was responsible for ensuring the appropriate use of sale proceeds to discharge liabilities. However, the Board found that the request for a forensic audit was premature at that stage. Consequently, the Board disposed of the Company Application with this observation.

Issue 3: Prayers in C.A.No.226 of 2014:
In C.A.No.226 of 2014, the Petitioners requested the appointment of a Special Officer and further interim relief. The Board determined that granting these prayers would equate to providing final reliefs, which was impermissible under the law. Additionally, the Board highlighted that interim relief could not be sought in a fragmented manner. The Board noted that previous interim reliefs were already considered and decided, with no new grounds presented for additional relief. Consequently, the Board rejected the Company Application made in C.A.No.226 of 2014.

In conclusion, all three Company Applications were disposed of accordingly, with no order as to costs. The Board also provided a final opportunity for the Respondents to file an Affidavit in Reply within four weeks, setting the date for final hearing on November 11, 2014.

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