TaxTMI 
TaxTMI 
1999 (6) TMI 484
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....dividend. (c) Default in lease payment to the petitioner. (d) Irregularities in rights issue. (e) Irregularities in respect of board meetings. (f) Fabrication of the minutes of board meetings. (g) Second expansion project/fabrication of company records. (h) Obtaining loan from IDBI in violation of the sponsorship agreement. (i) Siphoning off of funds and non-disclosure of interest. (j) Failure to co-operate with the auditors. With these allegations, the petitioners have sought for various reliefs, inter alia, including directions to the company to amend the articles of association in line with the terms of the sponsorship agreement, ordering payment of interest at 24 per cent. on the delayed payment of dividend, for declaration that the board meeting dated December 7, 1996, and March 31,1997, as null and void due to non-issue of notices for the meeting to the petitioners, direction to the company to terminate all arrangement and agreement relating to the second expansion project, restraining the company from utilising the funds raised by way of rights issue, ordering a special audit of the company, for a dec....
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....d Industries Ltd. [1999] 96 Comp Cas 323 (CLB) wherein the Company Law Board declined to entertain the petitions and referred the parties to arbitration in terms of Section 8 of the Arbitration Act. 4. Shri Dholakia, senior advocate appearing for the petitioner, submitted that the petitioner has invested about Rs. 2.5 crores in the share capital of the company and is a substantial shareholder. The allegations in the petition relate to various acts of oppression and mismanagement in the affairs of the company, against which as a substantial shareholder, the petitioner is entitled to file this petition. He pointed out that the sponsorship agreement consists of two parts--one, about the petitioner becoming a shareholder and the second, regarding the undertaking of certain obligations. Having become a member, the petitioner has got all the rights of a shareholder as envisaged in the Act. He submitted that in terms of Section 9 of the Act, the provisions of the Act override the memorandum and articles and any other agreement which are repugnant to the provisions of the Act. Since Sections 397 and 398 give a statutory right to the shareholders to move the Company Law Board in case of ....
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....provisions of Section 8 of the Arbitration Act are invoked, then, the arbitration agreement should be subsisting, which is not the position in the present case. Therefore, according to him, while in terms of Section 9 of the Companies Act, the Company Law Board is bound to entertain the petition, even otherwise, since many of the allegations relate to matters independent of the terms of the sponsorship agreement, the question of referring the parties to arbitration does not arise and, therefore, the application should be dismissed. 5. We have considered the pleadings and arguments of counsel, Shri Dholakia, referred to Section 9 of the Act to state that no provision of any agreement can take away the statutory rights conferred by the Companies Act and he also relied on a Delhi High Court case in this regard. Section 9 of the Act deals only with memorandum, articles or any agreement or any resolution which are repugnant to the provisions of the Act and does not deal with the provisions of other statutes. As a matter of fact, Section 5 of the Arbitration Act which reads "notwithstanding anything contained in any other law for the time being in force, in matters governed by this pa....
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....tate that the first statement should be in writing, yet, we have to presume that the same should be in writing, as an oral statement cannot normally be taken as a formal pleading in the absence of an affidavit in writing. Even otherwise, discussions on amicable settlement cannot be considered as a statement on the substance of the dispute. Therefore, we do not consider that by participating in the discussion for amicable settlement, the respondents have forfeited their right to invoke the provisions of Section 8 of the Arbitration Act. Yet another point raised by learned counsel was with reference to the currency of the agreement. According to him, the currency of the agreement expired in October, 1997, in terms of Clause 1.2 of the agreement and as such the agreement is not subsisting on the day when the present application was filed and, therefore, the Company Law Board referring the parties to arbitration does not arise. While it seems that there is substance in this argument, yet we find that in Clause 8.7 it is stipulated that the terms of the agreement shall be binding on the company as long as the petitioner holds shares in the company. The contradiction in these two clauses....