Arbitration cannot displace oppression and mismanagement claims where necessary parties are absent and company rights are independently in issue.

Section 8 referral to arbitration was unavailable because the company and other necessary parties were not signatories to the family MOU, so the dispute lacked the required commonality of parties and also involved issues partly outside the arbitration agreement. Allegations of oppression and mismanagement concerning removal of directors, further issue of shares, and exclusion of family members from management were held to be independently cognisable in company law proceedings. The Company Law Board was therefore treated as the proper forum, with broader jurisdiction and remedial powers for statutory shareholder rights and equitable relief in company affairs. The petition was not required to be sent to arbitration.

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Issues: (i) Whether the disputes raised in the petition could be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 in the absence of commonality of parties between the petition and the arbitration agreement. (ii) Whether allegations of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956, based on conduct affecting shareholding and directorship in a family company, required adjudication by the Company Law Board rather than the arbitral tribunal.

Issue (i): Whether the disputes raised in the petition could be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996 in the absence of commonality of parties between the petition and the arbitration agreement.

Analysis: The statutory requirements for reference under Section 8 include the existence of an arbitration agreement, an action between parties to that agreement, identity of subject matter, and a timely application before the first substantive statement. The agreement relied upon was contained in the family MOU, but the company against which oppression was alleged was not a party to that agreement, and the proceeding also involved parties who were not signatories. On that basis, the requisite commonality of parties was absent. The ruling in Sukanya Holdings was treated as governing where the dispute is partly outside the arbitration agreement and involves non-parties to the agreement.

Conclusion: The reference under Section 8 could not be made on these facts, and the objection based on arbitration failed.

Issue (ii): Whether allegations of oppression and mismanagement under Sections 397 and 398 of the Companies Act, 1956, based on conduct affecting shareholding and directorship in a family company, required adjudication by the Company Law Board rather than the arbitral tribunal.

Analysis: The allegations were not confined to breach of the MOU but alleged oppressive acts in the affairs of the company, including removal of directors, issue of further shares, and exclusion of family members from management. Such claims could be examined independently of the arbitration agreement, and if established, could attract relief under Section 402. The Company Law Board's jurisdiction and remedial powers in oppression matters were treated as wider than those of the arbitral tribunal, especially where the complaint concerns statutory shareholder rights and equitable relief in company affairs.

Conclusion: The oppression and mismanagement petition was maintainable before the Company Law Board and was not required to be relegated to arbitration.

Final Conclusion: The application for reference to arbitration was rejected, and the company petition was left to proceed before the Company Law Board.

Ratio Decidendi: A dispute under Sections 397 and 398 of the Companies Act, 1956 will not be referred under Section 8 of the Arbitration and Conciliation Act, 1996 where the company and all necessary parties are not parties to the arbitration agreement and the oppression allegations can be adjudicated independently of that agreement.

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