TMI Blog1983 (12) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... Bal Thackeray. The said Bal Thackeray made an award dated November 24, 1982, whereby he, inter alia , directed that the members of the Srivastava group do transfer their shareholding in the first respondent company to the Chitnis group, on the Chitnis group paying to the Srivastava group a sum of Rs. 11.68 lakhs. The said award was filed in this court. Sudha Srivastava ( i.e ., the second respondent herein) (belonging to the Srivastava group) thereupon filed a petition, being Petition No. 68 of 1983 in this court, inter alia , challenging the said award. The petition has been accepted and presently adjourned for recording of evidence. Pending these proceedings, one Kumar Amit being respondent No. 3 (in this judge's summons) filed a petition in this court being Petition No. 269 of 1983 under sections 397 and 398 of the Companies Act, inter alia , against the Chitnis and the Srivastava groups. This petition was resisted principally by the Chitnis group and the locus of the said Kumar Amit to file the said petition was challenged. What seems to have transpired is that the said Kumar Amit had about 1,200 shares of the first respondent company in his name. However, at the hearing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lthough those rights may not be enforceable until the award is made a decree of the court. Mr. Zaiwalla argued that there are now in fact two proceedings before this court ( a ) petition filed by Sudha Srivastava (of the Srivastava group) challenging the said award, and ( b ) this Petition No. 577 of 1983 filed under sections 397 and 398 of the Companies Act. That it may transpire the challenge to the award may fail and the award is upheld. That if this petition is proceeded with, the court may arrive at a different conclusion in so far as the shares are concerned. In other words, there was a possibility of there being conflicting decisions on the same subject. That in view of this, it would only be fit and proper to stay this petition and the proceedings therein, more particularly, in view of the provisions of section 10 read with sections 141 and/or section 151 of the CPC. Mr. Zaiwalla, however, conceded that section 34 of the Indian Arbitration Act would be of no relevance whatsoever in so far as this matter was concerned. Mr. Bhatt, the learned counsel for respondent No. 2, stated that in view of Mr. Zaiwalla's statement pertaining to section 34 of the Indian Arbitration Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by those sections, and that beyond this limitation which arises by necessary implication, it would be difficult even to read any other restriction or limitation on the exercise of the court's power. That sections 397 and 398 were not only to avoid winding up of the company if possible and to keep it going, but at the same time was to relieve the minority shareholders from acts of oppression and mismanagement but preventing its affairs being conducted in a manner prejudicial to public interest, and if that be the objective, the court would have power to interfere with the normal corporate management of the company, and to supplant the entire corporate management, or rather, mismanagement, by resorting to non-corporate management which may take the form of appointing of an administrator or a special officer or a committee of advisers, etc ., who would be in charge of the affairs of the company. The court could even have a truncated form of corporate management if the exigencies of the case required it, and any truncated form of corporate management can never conform to all the provisions dealing with corporate management. Therefore, it was clear that while acting under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvited attention to the ruling in the case of Gupta v. Shiv General Finance ( P. ) Ltd. [1977] 47 Comp. Cas. 279 (Delhi). In that case, it was observed that merely because there is an article in the articles of association of the company to the effect that any dispute between the company on the one hand and its members on the other will be referred to arbitration, the court will not stay a petition under section 397 or section 398 of the Companies Act, 1956, for relief against mismanagement or oppression in the affairs of a company. That such an article could not be called into play for the purpose of staying proceedings under section 397 or section 398. The provisions of sections 397 and 398 and of section 434 gave exclusive jurisdiction to the court and the matters dealt with thereby cannot be referred to arbitration. It was further held that no arbitrator could possibly give relief to the petitioner under sections 397 and 398 or pass any order under section 402 or section 403. Mr. Bhatt submitted that in view of this also, the applicants would be disentitled to relief. Mr. Bhatt submitted that looking to the very wide powers of the court, and in view of the ratio of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this judge's summons cannot arise. Now, considering the rival contentions, it may be stated that admittedly there has been an award. As regards the effect of such an award is concerned, the Supreme Court has, in the case of Satish Kumar v. Surender Kumar, AIR 1970 SC 833, referred to the decision in the case of Bhajahari Saha Banikya v. Behari Lal Basak [1906] ILR 33 Cal. 881 at p. 888, wherein it was observed as follows : "The award is in fact a final adjudication by a court of the parties' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the face of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive." (Underlining supplied) In this case, it is an admitted position that the award has been impeached and it is not urged by the applicants that this impeachment is not on sufficient ground, and not in an appropriate proceeding. This must detract from Mr. Zaiwalla's argument as to the effect of the said award. Then again, considering the ratios laid down in the cases cited by Mr. Bhatt, it is abunda ..... X X X X Extracts X X X X X X X X Extracts X X X X
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