Appeal Withdrawn, Parties Opt for Arbitration: Importance of Company Dispute Resolution

The appeal against the Company Law Board order under sections 397 and 398 of the Companies Act, 1956 regarding the constitution of the respondent company was filed. The parties agreed to withdraw the petition before the Company Law Board in favor of arbitration proceedings involving a panel of three Arbitrators. They also agreed to maintain status quo regarding shareholdings and fixed assets of the company until the arbitration is resolved. The appeal was not pursued further and disposed of accordingly, emphasizing the importance of arbitration in resolving disputes related to company matters and the need to maintain stability during arbitration proceedings.

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Issues involved: Appeal against Company Law Board order u/s 397 and 398 of Companies Act, 1956 regarding constitution of respondent company.

Details of the judgment:

The appellant filed an appeal u/s 10 F of the Companies Act, 1956 against an order passed by the Company Law Board in CP no.114/2007 u/s 397 and 398 of the Companies Act, 1956. The dispute primarily revolved around the constitution of the respondent company, where the appellant owned land in Kasoli, and family members were involved in the company's affairs. An agreement was made for the development of the land for real estate purposes. Respondent no.3, Mrs. Sonia Khosla, feeling herself in the minority, filed a petition alleging oppression by majority shareholders. The parties agreed to withdraw the petition before the Company Law Board in favor of arbitration proceedings involving a panel of three Arbitrators. They also agreed to maintain status quo regarding shareholdings and fixed assets of the company until the arbitration is resolved. The functioning of the company was to be subject to orders from the arbitral tribunal. The appeal was not pressed further, and it was disposed of accordingly.

This judgment highlights the importance of arbitration in resolving disputes related to company matters and the significance of maintaining status quo during arbitration proceedings to ensure fairness and stability in company affairs.

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