SURESH KUMAR JAIN Vs. HINDUSTAN FERRO INDUSTRIES LIMITED

JUDGEMENT

(1.) THIS is an application filed by respondent No. 2 in C. P. No. 55 of 1996, a proceeding under sections 397 and 398 of the Companies Act, 1956, initiated by the petitioner, Suresh Kumar Jain and others, in October, 1996, alleging, inter alia, oppression and mismanagement in the affairs of the company. By this application the petitioner is praying for further proceedings in C. P. No. 55 of 1996 to be kept in abeyance till the final adjudication by the sole arbitrator under the agreement dated August 6, 1996.

(2.) It is alleged in the instant application that respondents Nos. 2, 3, 7 and 10 along with petitioner No. 1 in C. P. No. 55 of 1996 (hereinafter referred to as the main petition) entered into an agreement dated August 6, 1996, whereunder it transpired that petitioner No. 1 would purchase the shares of, inter alia, the respondents at an agreed rate total sum in excess of Rs. 10 crores. It is further alleged that the said agreement dated August 6, 1996, had an arbitration clause with one Shri Amitav Kothari being appointed as the sole arbitrator.

(3.) PETITIONER No. 1, being the respondent in this application, has opposed this application alleging, inter alia, that the said agreement dated August 6, 1996, is not an arbitration agreement between the parties to the main petition before the Company Law Board, the said Amitav Kothari described as purported arbitrator was required to function only as stake holder or escrow agent and the parties to the said agreement did not confer any power on the person sought to be named as arbitrator to adjudicate any dispute. PETITIONER No. 1 by his reply states that the other parties to the said agreement dated August 6, 1996, have not sought to enforce the said purported arbitration agreement, and further the subject-matter of the said agreement is not capable of being a subject-matter of any arbitration agreement.