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BEFORE THE
X LIMITED..PETITIONER
V.
Y LIMITED..RESPONDENT
LIST OF ABBREVIATIONS03
INDEX OF AUTHORITIES..04
STATEMENT OF JURISDICTION...05
STATEMENT OF FACTS.07
ISSUES INVOLVED.10
SUMMARY OF ARGUMENTS....11
ARGUMENTS ADVANCED13
PRAYER14
LIST OF ABBREVIATIONS
Commerce
MD Managing Director
SC Supreme Court
INDEX OF AUTHORITIES
1. CASES CITED
1. Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013)
1 SCC 641.
2. World Sport Group(Mauritius) v. MSM Satellite(Singapore)pvt.ltd
Edition, 1998.
3. Grewal, T.S., Double Entry Book Keeping for Partnership Firms and
4. LEGAL DATABASES
1. Judis.nic.in
2. SCC Online
3. Indinkanoon.com
STATEMENT OF JURISDICTION
The case has been brought to the notice of the Honble Company Law Board for hearing by
X Limited under the Sections 397/398, 402 and 403 of the Companies Act, 1956.
Though Section 8 of the Arbitration and Conciliation Act, 1996 is also considered in the
Any members of a company who complain that the affairs of the company are being
member or members (including any one or more of themselves) may apply to the
Company Law board] for an order under this section, provided such members have a
Interim order by Company Law Board: Pending the making by it of a final order
under section 397 or 398, as the case may be, Company Law Board] may, on the
application of any party to the proceeding, make any interim order which it thinks fit
for regulating the conduct of the company' s affairs, upon such terms and conditions
1
Section 399 of the Companies Act, 1956
Section 8 of the Arbitration and Conciliation Act, 1996 states that:
(1) A judicial authority before which an action is brought in a matter which is the
subject of an arbitration agreement shall, if a party so applies not later than when
submitting his first statement on the substance of the dispute, refer the parties to
arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is
(3) Notwithstanding that an application has been made under sub-section (1) and that
the issue is pending before the judicial authority, an arbitration may be commenced or
continued and an arbitral award made.
STATEMENT OF FACTS
I
ABC Ltd. is a public limited company which is a Joint Venture Company operating under
a Joint Venture Agreement between X Limited (a foreign company) and Y Limited (an
Indian Company).
II
X and Y are equal shareholders in ABC each holding 30 per cent. Of the issued, paid up
and subscribed capital of ABC. The remaining 40 per cent of the shares in ABC is with
III
Under the provisions of the Joint Venture Agreement X had the right to nominate 4 Directors
on the Board of Directors and one of his nominee Directors as the Managing Director of ABC
Ltd. Y too had the right to nominate 4 Directors on the Board of Directors and one of his
nominee Directors as the Chairperson of the company. The JVA also contained an arbitration
clause for settlement of any dispute that may arise out of the JVA between the parties to
which ABC Ltd. is also a party to the JVA. The clause in the JVA provided for arbitration to
IV
The Articles of Association recognized the JVA between X and Y including their respective
rights under the agreement by incorporating specific clauses. The AOA did not, however
Y with the support of few other shareholders which gave Y the majority of the voting rights at
the shareholders meeting removed two of Xs nominee directors of X from the BOD and
appointed two other people for the post. He also removed and replaced the MD of the
company.
VI
X with a few other shareholders not parties to the JVA filed for Oppression and
Mismanagement under Sections 397 and 398 of the Companies Act, 1956, before the
Company Law Board for his actions. X also applied for interim orders in terms of Section
403 of the Companies Act, 1956 for restoration of the Directors and MD appointed by him.
VII
Y in his defense put forward the Joint Venture Agreement containing the arbitration clause
that disputes have to be resolved by the ICA and is followed to require the mandate under
Section 8 of the Arbitration and Conciliation Act, 1996. Y claimed that CLB cannot pass any
interim orders which can be passed under Sections 9 and 16 of the Arbitration and
Conciliation Act, 1956 and that the Act does not provide any other provision other than
VIII
X on the other hand claimed that no arbitrator has the power to grant the relief that the CLB
can grant under Sections 397, 398, 402, 403 etc. of the Companies Act and the CLB has
special jurisdiction to deal with the affairs of the company in case of oppression and
mismanagement. Even the Arbitration and Conciliation Act, 1996 under Section 2 (3)
recognizes that certain disputes may not be submitted to arbitration by virtue of the
XI
On the question of interim relief, X claims that the CLB has the jurisdiction under Section
403 to give the interim relief and even the Section 9 of the Arbitration and Conciliation Act,
1. Whether the Company Law Board is bound to refer the matters raised by X in the
petition filed under Sections 397, 398 etc. of the Companies Act, 1956 to the Indian
Council of Arbitration as per the arbitration clause contained in the JVA as provided
2. Whether the Company Law Board has the jurisdiction and power to grant any interim
orders to X after Y had filed the application under Section 8 of the Arbitration and
Conciliation Act, 1996 pending the decision on the application for arbitration?
3. Whether relief will be provided to X or Ys claim will hold right under the jurisdiction
decided on?
SUMMARY OF ARGUMENTS
The arguments put forward in favor of the Respondent Y Limited. first of all comes down to
the basic fact that the Company ;ABC are operating under the JVA which sets out the
respective rights and duties of the X and Y company in the ABC ltd. The JVA says that the
company Y has the majority of the voting rights at the shareholders. The incorporated
organization must have and work by. As they are working under the JVA, they must follow
the guidelines provided in the JVA. And as according to the JVA the arbitration regarding any
dispute shall be conducted by the ICA and FICC , New Delhi only. The JVA clearly defines
the roles and responsibilities of Directors, and the AOA of the company doesnt make any
sense as it misses the entire guidelines of the JVA which has to be mentioned in the AOA,
Hence the AOA of the company is not valid considering the JVA. the. X Limited has filed the
petition in before the Company Law Board and also sough reliefs including that a scheme be
evolved for the management of ABC ltd consistent with the JVA and the articles and also seek
restoration of the position of the X nominees on the board. X has also applied for the interim
orders but all in the terms of Section: 403 of the Companies Act, 1956. As there is no
guideline mentioned about the Company Law Board in the JVA and it is clearly mentioned
that only ICA and FCCI are taken in granted for the Arbitration regarding any Dispute both
the companies X and Y simply are bounded by the arbitration clause of the company
mentioned in the JVA. Hence, X cant go for a petition before the Company Law Board and if
it happens the petition will not be accepted according to the JVA of the company. Therefore,
X is completely wrong in approaching the Company Law Board and should not be granted
1. Both the companies X and Y are operating as a JVC and both are following the
JVA. So, first of all it is important to have an arbitration clause in the Company. And
the AOA must contain all rules and regulations and measures of control and methods
of settling disputes in the internal organization of the company. It is not just essential
but mandatory as well. If the arbitration clause is not mentioned in the AOA it means
that the AOA is not valid as it doesnt cover all the rules and guidelines of the JVA
else. So, the AOA should not be taken in as granted. The JVA should be given the first
and prime priority as it is the base of the AOA of the company. And according to the
JVA between the company X is bound to go to the ICA and FCCI only because there
Ltd. is not supposed to file his petition and seek relief from any other court of his
choice.
2. According to the section: 8 of the arbitration clause, the company law board does not
have the authority to decide the case. Only ICA and FCCI can decide the arbitration
case. Now that the jurisdiction has been determined let us see that Xs claims are not
the CLB under the Sections 397/398 of the Companies Act 1956. He has also filed his
case under Sections 402 and 403 which allows the CLB to not only pass an interim
order but also to replace the changed directors and the Managing Director selected by
X. But there is no existence of the CLB in the arbitration clause of the JVA. So, X
cant get reliefs on the basis of the petition filed before CLB/
3. Since Y has the majority of the shareholders in the Company, Y has then the right to
replace the Directors and the Managing Director selected by X. This is a not consider
as the breach of agreement. Y and X must follow the JVA otherwise then it will be a
breach of the agreement between them because all these agreements and their specific
clauses have been accepted and incorporated into the JVA and not in the AOA. The
JVA should be given the prime priority. Hence, X in real has indulged in breach of
contract by filing the petition in the court other than what mentioned in the agreement,
not the Y. So, Y must be granted as innocent. The relevant case Law in the favor of
respondent is Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.,
Satellite(Singapore)pvt.ltd
PRAYER
Wherefore in the light of issues involved, arguments advanced, reasons given and the
authorities cited, I humbly pray this Honble Court may be pleased to:
Declare the Respondent innocent and Pass the judgment the favor of the company Y .
Along with relief the Respondent requests the Court to terminate the petition filed by X.
AND/OR
Pass any other relief which this Honble court may be pleased to grant in the interests of
For This Act of Kindness, the Respondent Shall Duty Bound Forever Pray.
Sd/-