LI Network
Published on: October 28, 2023 at 17:59 IST
The National Company Law Tribunal (NCLT) in Mumbai has clarified its role as a judicial authority with the power to refer matters to arbitration when it finds that a dispute is arbitrable and falls within the scope of an arbitration agreement.
Case Background:
The case involved a Company Petition filed by Chaitra Gowdar Chidanand, alleging oppression and mismanagement in the affairs of Get Simple Technologies Pvt. Ltd.
The petitioner claimed that the restructuring of the company was done in accordance with a Shareholders’ Agreement and that the disputes arising from the petition fell within the purview of the arbitration clause in the agreement.
The petitioner sought a reference of the disputes to arbitration and the dismissal of the Company Petition. The disputes mainly revolved around the non-allotment of shares in another company due to delayed remittance by the petitioner.
NCLT Verdict:
The NCLT referred to the Supreme Court’s ruling in Vidya Drolia & Ors. vs. Durga Trading Corporation, which discussed the issue of non-arbitrability. It determined that the disputes in this case were contractual in nature and related to the Shareholders’ Agreement.
The NCLT held that there was no need to repudiate the resolutions passed in the Extraordinary General Meeting and the Board Resolution, as they were in line with the terms of the Shareholders’ Agreement.
The issue of the petitioner’s right to claim mirror shareholding in another company, despite delayed remittance, was deemed a factual issue suitable for arbitration, as per the Shareholders’ Agreement.
The NCLT concluded that the disputes were contractual in nature and fell within the purview of the arbitration clause. It emphasized that the matter should be referred to an arbitrator by either party and not decided by the NCLT.
This ruling reaffirms the NCLT’s position as a judicial authority with the power to refer disputes to arbitration when they are found to be arbitrable and covered by an arbitration agreement.
Case Title: Nityanand Sharma Case