Statutory remedy under sections 397 and 398 of Companies Act, 1956 is not affected by arbitration clause under section 8 of Arbitration and Conciliation Act, 1996

CL : Statutory remedy under sections 397 and 398 of Companies Act, 1956 is not affected by arbitration clause under section 8 of Arbitration and Conciliation Act, 1996
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[2014] 49 taxmann.com 7 (Andhra Pradesh)
HIGH COURT OF ANDHRA PRADESH
Triumphant Institute of Management Education (P.) Ltd.
v.
Inspire Educational Services (P.) Ltd.
VILAS V. AFZULPURKAR, J.
CO. APPEAL NO.15 OF 2013†
DECEMBER  31, 2013
Section 241 of the Companies Act, 2013/ Section 397 of the Companies Act, 1956, read with section 8 of the Arbitration and Conciliation Act, 1996 - Oppression and mismanagement - Pending section 397 petition, respondents had filed application under section 8 of Arbitration and Conciliation Act, 1996 praying CLB to direct parties to arbitration in terms of arbitration clause in franchise agreement and shareholders agreement entered into between appellant company and respondents - CLB allowed said application and, consequently, dismissed company petition without holding any enquiry into said petition - Whether while subject matter of action before CLB was allegation of oppression and mismanagement, whereas arbitrable dispute in terms of respondents application under Arbitration Act was a dispute relating to non-compete clause and inter se rights of parties in terms of said agreements, arbitration clause did not cover statutory remedy envisaged under sections 397,398 and 402 - Held, yes - Whether since dismissal of petition had undoubtedly prejudiced appellant company as no enquiry was held in said petition, thus, powers exercised by CLB under sections 397, 398 and 402 and decision/order thereof was appealable under section 10F and entertainable by High Court on question of law arising out of such order - Held, yes [Paras 21 and 31]