Shareholder suits cannot bypass the statutory route for challenging an arbitral award against the company; time-bar applied.

A shareholder suit could not be used to indirectly challenge an arbitral award passed against the company. The Court distinguished personal shareholder rights from corporate rights and treated the attack on the award as an attempt to bypass the statutory setting-aside mechanism under section 34 of the Arbitration and Conciliation Act, 1996. That challenge was also time-barred, so the plaint failed to that extent. Reliefs not confined to setting aside the award were not rejected at this stage and were left for trial on merits.

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Issues: Whether a suit by shareholders was maintainable to challenge an arbitral award passed against the company, and whether the prayer for setting aside the award was barred by law.

Analysis: The pleadings showed that the grievance, though styled as fraud affecting the shareholders, was in substance directed against an award passed against the company. The Court distinguished personal rights of shareholders from corporate rights and held that a wrong done to the company must ordinarily be pursued by the company itself, while a derivative action lies only in recognised exceptional circumstances and must be framed to enforce the company's rights. The Court found that the suit, so far as it sought to declare the award non est, illegal, and unenforceable, was an indirect attempt to avoid the statutory scheme under section 34 of the Arbitration and Conciliation Act, 1996, and that such challenge had become time-barred. The remaining reliefs, not being confined to the award itself, were left to be tried on merits.

Conclusion: The suit was not maintainable to the extent it sought to set aside the arbitral award, and that part of the plaint was liable to fail; the other reliefs were not rejected at this stage.

Ratio Decidendi: A shareholder cannot, by a suit styled as a personal or derivative claim, indirectly challenge an arbitral award against the company where the statutory remedy under section 34 of the Arbitration and Conciliation Act, 1996 is the exclusive route for setting aside the award.

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