Arbitration clause prevails for contractual grievances, while independent oppression and mismanagement claims remain with the company forum.

Disputes in a petition under sections 397 and 398 of the Companies Act, 1956 that arise directly from a sponsorship agreement containing an arbitration clause must be referred to arbitration under section 8 of the Arbitration and Conciliation Act, 1996. That mandate applies notwithstanding inconsistent provisions, and section 9 of the Companies Act does not displace it for contractual disputes. Allegations of oppression and mismanagement that are independent of the agreement are not arbitrable and may remain before the Company Law Board. On the pleadings, the contractual allegations were held referable to arbitration, while the independent allegations could continue before the CLB.

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Issues: Whether allegations in a petition under sections 397 and 398 of the Companies Act, 1956 that arise out of a sponsorship agreement containing an arbitration clause can be referred to arbitration under section 8 of the Arbitration and Conciliation Act, 1996, while the Company Law Board retains jurisdiction over allegations independent of that agreement.

Analysis: The petition contained a mix of grievances, some of which directly concerned performance of obligations under the sponsorship agreement and some of which were alleged acts of oppression and mismanagement. The governing principle applied was that section 8 of the Arbitration and Conciliation Act, 1996 obliges a judicial authority to refer parties to arbitration where the subject matter of the action falls within an arbitration agreement, notwithstanding anything inconsistent in other law. Section 9 of the Companies Act, 1956 does not override that mandate in relation to arbitral disputes. At the same time, allegations not arising from the agreement and having an independent basis in oppression or mismanagement remain within the CLB's jurisdiction. On the pleadings, the Court accepted that the allegations in sub-paragraphs (a), (d), (g), (h) and (j) were contractual in nature and therefore arbitrable, while the remaining independent allegations could continue before the CLB.

Conclusion: The reference of the contractual disputes to arbitration was upheld, the CLB's refusal to send the entire petition to arbitration was approved, and the appeal failed.

Ratio Decidendi: In a petition under sections 397 and 398 of the Companies Act, 1956, disputes that arise directly out of a contract containing an arbitration clause must be referred under section 8 of the Arbitration and Conciliation Act, 1996, while only the independent oppression and mismanagement allegations may be adjudicated by the Company Law Board.

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