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2014 (9) TMI 1127 - Board - Companies LawArbitration proceedings - Section 8 of the Arbitration Act applicability - stay further proceedings of this Petition and/or dismissing the same seeked - Held that - From a plain reading of the provision contained in Section 8 of the Arbitration Act we have no hesitation to hold that Section 8 of the Act is not applicable having regard to the facts and circumstances of this case. The reasons are; firstly there is no commonality of the parties secondly the Respondent No.1 Company is not a party to the Agreement of Arbitration; thirdly it is matter of record that there is no arbitration clause in the Articles of Association of the Company and it is well settled law that these are the Articles of Association of the Company which binds the members thereof to act according to its Regulations. The alleged Agreement for arbitration has been entered into during the trial of the case; and lastly reference for arbitration is with regard to distribution of assets between the two Groups in which the Company is not a party. It is further an established law that any private arrangement between the shareholders/ members of the Company has no material bearing in a petition filed under Section 397/398 of the Act by such member/ shareholder having qualification under Section 399 of the Act. Thus the necessary elements cited above are not made out for application of the provisions of Section 8 of the Act and therefore the prayer made by the Respondents to stay further proceedings of this Petition and/or dismissing the same on this ground is liable to be rejected. The said objection is therefore rejected. It is however observed that the effect of this so called Arbitration agreement arrived at between the parties during the pendency of the Petition would be seen at the time of final disposal of the Petition. The Respondents may take such pleas in this regard in their reply as they deem fit and proper in the fact and circumstances of the case. As Respondents / Applicants (in C.A.No.231/14) have themselves challenged the Award by way of filing a Petition under Section 34 of the Arbitration Act before the Civil Judge Sr. Division Pune. In such a situation they are estopped from relying upon a part of the Award which stipulates that the Respondent No.1 Company has been given in their share in the distribution of assets by the Ld. Arbitrators in the said arbitration proceedings and therefore the present petition under Section 397/398 of the Act with reference to Respondent No.1 Company are no more sustainable in the CLB.
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