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2021 (2) TMI 932 - Tri - Companies LawOppression and Mismanagement - scope of arbitration clause under the MoU - seeking to direct independent forensic audit into the affairs of the Company from the F.Y, 2011-2012 till the F.Y. 2018-2019 by an appointing an independent auditor - Section 241 read with Section 242 of the Companies Act, 2013 or Sections 397 and 398 read with of the Companies Act, 1956 - HELD THAT:- In order to succeed in getting a reference of the dispute arose under Section 241-242, 244 read with Section 337, 341 of the Companies Act, 2013, the applicant would not only be liable to show that the entire gamut of the dispute falls within the purview of Arbitration Agreement but also the fact that the Company Petition is a sham and mischievous one which has been decked deliberately so as to gainfully sustain the plea of non-arbitrability of such dispute. There would also be a heavy burden cast upon the applicants to show that the Arbitration Agreement would bind the non-signatory respondents. In a case involving such complex question of law and facts, determination of the aforesaid aspect may call for deeper examination of the matter by this Tribunal. However, the applicant herein could not show that the entire gamut of he dispute falls within the purview of Arbitration Agreement. In the matter of a winding up petition, the petitioner therein M/s Haryana Telecon Limited filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, inter alia, contending that the High Court should refer the matter to arbitration. The Division Bench of the Hon’ble High Court dismissed the plea of the appellants stating that the question regarding the winding up of a company could not be referred to an arbitrator - In this case, the CP is filed for oppression and mismanagement in the Company. In addition to that serious fraud has also been alleged by the petitioners. Since those questions cannot be considered by an Arbitral Tribunal, the relief prayed for reference to an Arbitral Tribunal cannot be accepted. It would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action that is to say the subject matter of the CP or in some cases bifurcation of the CP between the parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject matter of an action brought before the judicial authority is not allowed. Such bifurcation of a suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by this Tribunal would inevitably delay the proceedings. The whole purpose of speedy disposal of the dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums. Application filed for referring the matter to Arbitral Tribunal in terms of Arbitration Agreement contained in clause 8 of Memorandum of Understanding (MoU) dated 31st March, 2007 is dismissed.
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