TMI Blog1975 (9) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... its members on the other will be referred to arbitration. It is stated in this application that the subject-matter of the petition is an essentially internal dispute between the members of the private limited company and, therefore, in the interest of justice such a matter should be referred to arbitration. I had already dealt with a similar application in another petition under sections 397 and 398 in C.A. No. 626 of 1972 in C.P. 73 of 1973 ( Surendra Kumar Dhawan v. R. Vir [1977] 47 Comp. Cas. 276 (Delhi)) decided by me on 6th May, 1974. In that case the respondent had also moved for a stay of the petition on the ground that there was a similar arbitration agreement. I overruled the objection and dismissed the petition for stay. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stayed. Similarly, the learned counsel has also cited Nalla Ramudamma v. Aalla Kasi Naidu AIR 1945 Mad. 269 and Faiz Ali v. Ml. Ashraf Khatun AIR 1929 Lah. 177. In these two cases, reference had been made to arbitration during the pendency of suits, which had led to arbitrators making arbitration awards concerning the validity of a marriage. I do not wish to make any comments on these decisions except to say that what can be referred during the pendency of a suit to arbitration under section 21 of the Arbitration Act, and the requirements for obtaining a stay of pending legal proceedings under section 34 of the same Act are completely different. In the present case, a petition under sections 397 and 398 is already pending before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he oppression of the majority or mismanagement of the company and is seeking orders from the court to protect his interest, it would be entirely useless to direct that this matter shall be referred to some arbitrator to be appointed by the parties. Such an arbitrator would have no powers and could not pass any order either under section 402 or 403. The appointment of such an arbitrator would be a complete waste of time as he would be unable to pass any orders at all in the case. The learned counsel for the applicant states that the court should refrain from proceeding in this matter till the arbitrator has given his award and then the court can act in accordance with the award of that arbitrator. The learned counsel for the applicant interr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver v. Wilier [1959] 2 All ER 220 (Ch D) were relied upon for this view, I fully agree that no arbitrator can possibly give relief to the petitioner under sections 397 and 398 and will be unable to pass any order under section 402 or 403 of the Companies Act. An order of stay in these proceedings will be tantamount to dismissing the petition. In my view, the application has been moved merely for the purpose of denying the petitioner all possible relief from this court, and in that sense is a vexatious proceeding. I must also refer to section 9( b ) of the Companies Act, 1956, which states that any provision in any memorandum, article or agreement to the extent that it is repugnant to the Act will be void. In view of the fact that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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