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TMI Blog2019 (5) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... r and has filed written submissions. 3. This Bench heard and considered the arguments of both the sides. 4. The followings are the contentions of the applicant for referring the disputes between the parties to arbitration under section 8 of the Arbitration and Conciliation Act, 1996 : (a) The disputes raised by the petitioner in company petition arises from the first memorandum of understanding, dated April 15, 2015 and the second memorandum of understanding dated August 21, 2015. (b) The petitioner alleged in the company petition that the applicant has neither transferred the assets of M/s. Yeoman Marine Services (shortly "YMS"), owned by the applicant, to the newly formed respondent No. 1- company as provided in the second memorandum of understanding nor conducting the business of respondent No. 1 as provided in the first memorandum of understanding but has only allotted 51 per cent. of equity shares in respondent No. 1-company to himself and his wife respondent No. 3 and assumed complete management control to the exclusion and detriment of the petitioner. (c) The disputes raised by the petitioner are connected with the first memorandum of understanding and second memoran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oxes, etc. Respondent No. 2, the sole proprietor of M/s. Yeoman Marine Services (YMS) who used to do sub- contracting work for the petitioner proposed to join the petitioner by incorporating a new company under the name of Yeoman Marine Services P. Ltd., which will take over respondent No. 2's proprietorship business of YMS and will also contributes its assets as part of his contribution in return for retaining 51 per cent. shareholding in the newly formed company and the petitioner will have 49 per cent. shareholding for which the petitioner required to invest Rs. 10 crores. Accordingly, a memorandum of under standing dated April 15, 2015 (first memorandum of understanding) was executed between the parties which was subsequently modified by the another memorandum of understanding dated August 21, 2015 (second memorandum of understanding). As per the second memorandum of understanding in order to run the newly formed respondent No. 1-com pany the board of directors shall comprise of 4 members, 2 from each side, the accounting and the financial functions of respondent No. 1 shall be jointly managed and controlled by both the parties and the petitioner shall have equal access to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs who hold 49 per cent. of shares in respondent No. 1-company and these acts of the respondents are contrary and in complete breach of memorandum of understandings wherein the accounting and financial functions of respondent No. 1 has to be jointly managed and controlled by both the parties. (g) There is a phenomenal rise in the salary taken by respondent No. 2 without any justification and no break up details were provided for administrative expenses to the tune of more than Rs. 2 crore. The petitioner invested substantial amount to the extent of Rs. 6 crores but respondent No. 2 has diverted the funds invested by the petitioner for formation of respondent No. 1-company. (h) The petitioner sought the following reliefs : (i) Pass an appropriate order under sections 241, 242, 243, 244 and 246 of the Companies Act, 2013, to bring an end to the acts of oppression and mismanagement perpetrated by the respondent. (ii) Direct that respondent No. 1 would be jointly managed and con trolled by both the petitioner and respondent No. 2 and all major decisions relating to the company, its operations, business plans, further financing, capital induction, bank operations, investments, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are one and same. However, the petitioner, had voluntarily dropped four prayers, i. e., (e), (f), (g) and (h) from agitating in the application under section 17. The rest of the prayers are purely a matter arising out of the memorandum of understanding' entered into between the parties. But in so far as the pleadings in the petition, the prayers made therein deal with the acts of oppression and mismanagement undoubtedly. To say a few things, the petitioner alleges non-service of notice of meetings, financial discrepancies, non-appointment of directors even though the petitioner holds 49 per cent. of the shares in the company and the rights of shareholders and their entitlement in the company. These acts of non-service of notice of meetings, financial discrepancies and non-appointment of directors, etc., are the matters squarely covered under the Companies Act with an exclusive jurisdiction vested with the National Company Law Tribunal. Apart from that, the National Company Law Tribunal is vested with powers to pass order under section 242 to grant any kind of relief on the basis of equity and law and also vested with the power to enforce its orders which no other Tribunal or co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. v. Financial Technologies (India) Ltd. [2007] 139 Comp Cas 311 (CLB) to say that when all the issues were grievances raised in the company petition are covered by agreements, the disputes cannot be adjudicated by the Company Law Board and shall be referred to arbitration under section 8 of the Arbitration and Conciliation Act, 1996. Since the grievance in this case such as non-appointment of directors, non-service of notice of meeting, etc., are not arising out of agreement, the cases cited does not apply to the facts of the case on hand. So, from the above it can be established that the contentions with which the application under section 17 of the Arbitration and Conciliation Act is filed and the contentions raised in the main company petition are separate. Hence the application filed under section 17 of the Arbitration and Conciliation Act does not preclude the petitioner herein to agitate their grievance of oppression and mismanagement in the petition. Apart from that the acts complained of, as said above, cannot be adjudicated by the sole arbitrator since the powers available to this Tribunal cannot be exercised by him and the reliefs as sought in the petition are not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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