Reliefs claimed in company petition cannot be granted by Arbitrator.

(Civil Miscellaneous Appeal filed under Section 10-F of the Indian Companies Act, 1956 against the order dated 27.12.2005 in C.A. Nos.154, 155 and 160 of 2005 in C.P. No.50 of 2005 pending on the file of the Additional Principal Bench of the Company Law Board.)

Against the Company Petition filed by Kasthuri & Sons Limited (“KSLâ€) before the Company Law Board, Southern Region Bench, Chennai, under Sections 397, 398, 402 and 403 of the Indian Companies Act, 1956 (“the Actâ€) alleging acts of oppression and mismanagement in the affairs of Sporting Pastime (India) Limited (“SPILâ€), the respondents 1,2,5,8,9 and 10 in the Company Petition have filed C.A. Nos. 154, 155 and 160 of 2005 before the Additional Principal Bench of the Company Law Board (“CLBâ€) under Section 8 of the Arbitration and Conciliation Act, 1996 (“the Act, 1996â€) to direct the parties for arbitration and dismiss the Company Petition as not maintainable on the ground that the grievances of KSL form part of Clause 21 of an agreement dated 19.07.2004 which provides for resolving the disputes by arbitration and that KSL has already instituted the arbitration proceedings to resolve certain disputes, which are inter-connected with the acts complained of in the Company Petition. The CLB, upon hearing the arguments of both sides, has rejected the prayer of the applicants to refer the parties to arbitration in terms of Section 8 of the Act, 1996 and dismissed the C.A. Nos. 154, 155 and 160 of 2005. Aggrieved by this order of the CLB, the present appeal.

2. For the purpose of easy comprehension, the parties are referred to as per their ranking in the Company Petition.

3. According to the petitioner in the Company Petition, the facts in nutshell, which led to the petition are that the first respondent Company incorporated in May 1994 as a 100% subsidiary of the petitioner for the sole purpose of establishing, maintaining and conducting a Golf course-cum-beach resort could not achieve its main object and therefore, the petitioner entered into an agreement with the second respondent on 19.07.2004, regarding the taking over of the Company. Accordingly, the second respondent acquired 90% shareholding, controlling and management interest in the Company for a lump sum consideration of Rs.2.43 crores, besides agreeing to discharge the debts and liabilities due by the Company to the petitioner and several others and relieve the petitioner of its guarantee obligations in respect of the Company within the stipulated time. Further, the liabilities taken over by the second respondent remain undischarged. However, pursuant to acquisition of the shares by the second respondent, the petitioner's nominees resigned from the office of Director and the respondents 3 and 4, being nominees of the second respondent were inducted on the Board of Directors of the Company. It is the grievance of the petitioner in Company Petition that ever since taking over the control and management of the Company in August 2004 by virtue of the agreement dated 19.07.2004, the respondents 2 to 6 have been reportedly indulging in acts of oppression and mismanagement in the affairs of the Company and therefore, the petitioner invoked the jurisdiction of Sections 397 and 398 of the Act and prayed the CLB to allow the Company Petition as prayed for.

4. The prayer sought for in the Company Petition are:

a. to supersede the present Board of Directors and consequently appoint an independent Chairman and such other Directors,

b. to declare the increase in share capital from Rs.27 crores to Rs.53 crores made on 28.10.2004 as illegal and void ab initio.

c. to cancel the allotment of shares of Rs.25 crores made on 28.10.2004 and direct the consequent reduction of share capital under Section 100 of the Companies Act, 1956,

d. to declare all proceedings and resolutions passed at the meeting held on 28.10.2004 as void and inoperative and also declare any further resolutions that may be passed either at Bo