Arbitration clause cannot displace oppression and mismanagement claims that are independent of the underlying agreement.

A petition under Sections 397 and 398 of the Companies Act, 1956 was not referable in full to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 merely because part of the dispute arose from a sponsorship agreement containing an arbitration clause. The arbitration clause governed disputes arising out of or connected with that agreement, and Section 8 applied to matters subject to an arbitration agreement, but Section 9 of the Companies Act did not displace the Arbitration and Conciliation Act. Because the petition also contained independent allegations of oppression and mismanagement in the company's affairs, which were outside arbitral jurisdiction, the entire petition could not be referred to arbitration or dismissed. The non-arbitrable allegations were to proceed.

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Issues: Whether the petition under Sections 397 and 398 of the Companies Act, 1956 was liable to be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 because the dispute arose from a sponsorship agreement containing an arbitration clause, even though the petition also contained allegations independent of that agreement.

Analysis: The arbitration clause covered disputes arising out of, in relation to, under, or connected with the sponsorship agreement, and Section 8 mandated reference to arbitration where the action was brought in a matter that was the subject of an arbitration agreement. Section 9 of the Companies Act did not override the Arbitration and Conciliation Act, 1996. However, the petition did not rest entirely on the sponsorship agreement. Several allegations, including oppression and mismanagement in the affairs of the company, were independent of the agreement and could not be adjudicated by an arbitrator for want of jurisdiction. In such a mixed petition, the matters covered by the arbitration clause could not justify referring the entire petition to arbitration or dismissing it outright.

Conclusion: The request to refer the parties to arbitration and dismiss the petition was rejected. The petition was to proceed on the allegations not covered by the arbitration agreement.

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