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2016 (4) TMI 876 - COMPANY LAW BOARD NEW DELHIMismanagement and oppression - Arbitration and Conciliation seeked - Held that:- On a close examination of the provisions of section 397, 398 and 402 of the Act it must be said that Company Law Board has wide power to adopt correctional mechanism when the affairs of the company are being conducted in a manner prejudicial to the interest of general public or to a manner oppressive to any Member and /or shareholders. The Company Law Board is also clothed with wide powers of regulating the affairs of the company in a manner so as to sub-serve the public interest and put an end to oppression of an individual member. It has already been observed that the scheme of sections 397, 398 & 402 constitutes a complete code in itself and no Arbitrator can possibly give relief to an aggrieved party like the petitioner in terms of section 402 and 403 of the Companies Act, The arguments that there are averments which clearly indicate breach of terms of SSSA and claim for damage should have been made before the arbitrator have not impressed me because there are a number of allegations concerning mismanagement and oppression of the petitioner as already set out in this judgment. A perusal of the various sub paras of para xxiii would reveal prima facie wholesome violation of various Articles of the Articles of Association’. In such a situation Hon’ble Bombay High Court in the case of Rakesh Malhotra (2014 (8) TMI 1050 - BOMBAY HIGH COURT) following the view taken by Hon’ble Supreme Court in Sukanya Holdings (P) Ltd.’s (2003 (4) TMI 435 - SUPREME COURT OF INDIA ) has held that bifurcation of a cause of action is impermissible. Therefore in cases filed u/s 397 and 398 of the Companies Act seeking some of the reliefs which invite a judgment in rem and some other which invite judgment in personam would not permit severe one cause of action from the other and disassemble such a petition. Therefore aforesaid arguments fails and is rejected. As a sequel to above discussion application filed u/s 8 of the Arbitration and Conciliation Act 1996 is dismissed. The respondent may file reply to the main petition within a period of four weeks and rejoinder if any be filed within two weeks thereafter.
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