Interesting arguments were made by both sides, though more vociferously by the petitioners who argued that the matters concerned could not be referred to arbitration at all. An interesting argument and analogy that was made was that an arbitrator could not grant an order of winding up of a company and support was derived from a decision of the Supreme Court.

It was argued that on the same analogy, an arbitrator could not grant relief for matters arising out of oppression and mismanagement. The CLB, however, distinguished between winding up and relief for oppression and mismanagement and refused to entertain that plea. The CLB even otherwise stated that the remarks of the Supreme Court in that decision were obiter dicta, meaning that they were passing remarks having no binding value.

It was argued that the CLB has extensive powers under the Companies Act, 1956, to grant a wide range of reliefs against oppression and mismanagement under Section 402 which an arbitrator, not being a statutory body nor having such statutory authority, could not do so. Hence by implications, issues relating to oppression and mismanagement could not be dealt with by an arbitrator. To this also, the CLB did not agree but on grounds that can be a cause for concern for the cause of arbitration.

The CLB referred to a decision of the Delhi high court and stated that in that case, the court referred the matter arising out of oppression and mismanagement to arbitration on the grounds that such reliefs could also be granted by an arbitrator. The CLB stated, "(The Delhi high court) did so because, facts of that case, it felt that the reliefs justified in that case could be granted by the arbitrator notwithstanding the fact that the powers under section 402 were very wide."

On this basis, for the present case, it held that, "If the CLB comes to a conclusion that appropriate relief justified in a particular case can be granted by an arbitrator, then, there is no reason why the matter cannot be referred to arbitration." What is implied is that this means that the CLB will not immediately refer a matter to arbitration as soon as it is established that there is a dispute and there is a valid arbitration agreement. Instead, it will consider and in its discretion decide in each and every case relating to a reference to arbitration whether appropriate relief can be granted by the arbitrator. What, thus, is implied is that the CLB may in appropriate cases refuse to let the matter go to arbitration and decide the matter itself.

In other words, the whole issue relating to whether matters arising out of oppression and mismanagement can be decided by arbitration or not has not been decided finally. Hence, unfortunately and with great respect, it is to be stated that the very litigation that arbitration law seeks to avoid is once again possible to be brought in.

Firstly, therefore, a party may file a petition with the CLB for such matters. Thereafter, they may plead that such matters can be given proper relief by the CLB only and not the arbitrator. Adverse decisions may see further appeals and the whole process would see further delays. It is not to say here that the decision should be reconsidered. It is just to point out that the law relating to arbitration itself is a law and if arbitration cannot be challenged and litigated by lawyers, they can challenge and litigate the law relating to arbitration itself and thus litigation, that is sought to be avoided by the law relating arbitration, would itself be created by that law. Interestingly, the CLB finally held that in the peculiar facts of the case, the matter could not be referred to arbitration.

This is for the reason that the various agreements of joint venture, etc., out of which these disputes arise, were not executed by all the parties to the case. Thus, a very vital ingredient of arbitration, that there should be an arbitration agreement and there should therefore be parties to such an agreement was missing. Of course, to complete the discussion on how the case was concluded, even the petition relating to oppression and mismanagement was dismissed for the same reason that the agreements in question were not executed by all the parties concerned.

Another important issue and finding needs also discussion. The question was, can the CLB grant a stay against the International Chamber of Commerce carrying out arbitration? Can it prohibit the parties concerned from pursuing such arbitration there? If not, does not mean that the CLB can carry out parallel judicial proceedings? What if there are contradictory rulings by the International Chamber of Commerce and the CLB? Interestingly, first of all the CLB held that it had no authority to grant a stay against the International Chamber of Commerce carrying on such arbitration proceedings.

However, that did not mean that the CLB could not carry on parallel proceedings. In fact, the CLB went ahead and recognised the possibility that there may be conflicting decisions! On the issue as to how to deal with such conflicting decisions, the CLB refused to comment on the matter as, in view of its other orders, the issue in the present case became academic.

To conclude, despite sincere attempts, arbitration as a route of simple, expeditious and inexpensive method of resolving disputes without lawyers and courts is unlikely to be a reality. Corporates and shareholders including co-venturers may find this unsettling. Arbitration agreements are entered into by such parties, particularly foreign parties, on the faith that disputes will not see litigation but quick settlement by international arbitral bodies. However, unless the matter is given deeper thought and care, disappointment looms in the horizon.

The author is a Mumbai-based chartered accountant. His email address is jmt@bom4.vsnl.net.in