Contractual oppression claims must go to arbitration when company petition reliefs arise from agreements with a binding arbitration clause.

A company petition alleging oppression and mismanagement was treated as referable to arbitration because the reliefs claimed arose directly from contractual arrangements containing a binding arbitration clause. The Board held that, where the grievances are intertwined with obligations under the Term Sheet, Investor Rights Agreement and Reciprocal Obligations Agreement, the dispute cannot be independently adjudicated under Sections 397 and 398 of the Companies Act, 1956. As the subject matter fell within the arbitration agreement, the requirements of Section 8 of the Arbitration and Conciliation Act, 1996 were satisfied and the parties were directed to arbitration.

---

---

Issues: Whether a petition alleging oppression and mismanagement 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 disputes arose from agreements containing an arbitration clause.

Analysis: The reliefs sought in the company petition were found to flow directly from the Term Sheet, Investor Rights Agreement and Reciprocal Obligations Agreement executed between the parties. The disputes complained of, though styled as oppression and mismanagement, were held to be intertwined with the contractual obligations created by those agreements and could not be adjudicated independently in the company petition without reference to the contractual terms. Since the agreements contained a binding arbitration clause and the subject matter of the petition was treated as covered by the subject matter of the arbitration agreement, the requirements of Section 8 were held to be satisfied. The Board also relied on the principle that relief for breach of agreement and consequential relief do not lie before the CLB under Sections 397 and 398 when the dispute is referable to arbitration.

Conclusion: The petition was held to be referable to arbitration and the request to proceed before the CLB was rejected in favour of arbitration.

Final Conclusion: A company petition under Sections 397 and 398 is not maintainable before the CLB where the grievances are essentially contractual and fall within a valid arbitration clause, and the judicial authority must refer the parties to arbitration under Section 8.

Ratio Decidendi: Where the disputes raised in a company petition are directly rooted in contractual agreements containing an arbitration clause, and the relief sought depends on those agreements, the judicial authority must refer the parties to arbitration under Section 8 rather than adjudicate the matter under Sections 397 and 398.

---