Statutory oppression and winding-up rights override arbitration clauses in company articles; stay of proceedings was refused.

The Companies Act, 1956 confers a statutory right to invoke the court's jurisdiction for oppression and mismanagement under sections 397 and 398, and to seek winding up under section 433 in appropriate cases. Because section 9 gives the Act overriding effect over contrary provisions in articles, agreements or resolutions, an arbitration clause in the articles cannot displace that jurisdiction or render the inconsistent clause effective. Section 34 of the Arbitration Act, 1940 cannot therefore be used to obtain a stay of such proceedings. The application to stay the petition was rejected, and the petition was allowed to proceed.

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Issues: Whether an arbitration clause in the articles of association could bar or stay proceedings under sections 397 and 398 of the Companies Act, 1956, and a winding-up petition under section 433 of that Act.

Analysis: The right to invoke the jurisdiction of the court under sections 397 and 398, and to seek winding up under section 433 in appropriate cases, is a statutory right conferred by the Companies Act, 1956. Section 9 of the Act gives overriding effect to the statutory provisions notwithstanding anything to the contrary in the memorandum, articles, agreements or resolutions, and renders repugnant provisions void to the extent of inconsistency. An arbitration clause in the articles cannot therefore displace the court's statutory jurisdiction in matters concerning oppression, mismanagement or winding up, and section 34 of the Arbitration Act, 1940 cannot be used to secure a stay of such proceedings.

Conclusion: The application to stay the petition was rejected, and the petition was not stayed.

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