Court Allows Appeal, Permits Beri to Exercise Membership Rights Amid Arbitration Proceedings
In a significant ruling on September 28, 2026, the Calcutta High Court, comprising Justices Sabyasachi Bhattacharyya and Sandip Kumar De, granted an injunction favoring Ambica Beri in her ongoing dispute with the Forum Atmosphere Flat Owner's Association. The court allowed Beri's appeal against the earlier refusal by the District Judge at Alipore to grant an ad interim injunction, which had sought to prevent the Association from denying her voting and membership rights.
The conflict arose when the Association issued a notice for the second Annual General Meeting (AGM), challenging Beri's status as a rightful owner of an apartment in the Forum Atmosphere complex and questioning the validity of her share certificate. Beri, who claims ownership of Apartment No. E-101, invoked an arbitration clause in the Association’s Articles of Association, seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996.
The High Court found that Beri established a strong prima facie case regarding her ownership and shareholder rights. The court noted that the Kolkata Municipal Corporation had regularized the construction of Beri's apartment and that she held a valid share certificate with the Association. The ruling emphasized that her rights to vote and participate in company meetings are integral to her shareholding.
The court also clarified the nature of arbitration agreements, affirming that the arbitration clause in the Articles of Association is a stand-alone contract that extends beyond the Articles themselves. This means disputes about apartment ownership and shareholder rights are arbitrable, despite being part of the Articles.
Furthermore, the court dismissed the Association's argument that the dispute should be resolved exclusively by the National Company Law Tribunal under the Companies Act, 2013. It stated that arbitration is not barred unless the dispute is inherently non-arbitrable or specifically reserved for another forum by statute.
The judgment concluded by setting aside the earlier decision of the District Judge and restraining the Association from enforcing its notice that denied Beri her membership rights, pending the outcome of the arbitration proceedings.
Bottom Line :
Arbitration and Conciliation Act, 1996 - Section 9 - Company member/shareholder's right to participate and vote in AGM and other meetings - Arbitration clause contained in Articles of Association is a stand-alone arbitration agreement - Bar under Sections 6 and 430 of Companies Act, 2013 does not exclude arbitration in dispute involving shareholder rights, apartment ownership and validity of share certificate - Ad interim injunction granted restraining company from acting on notice denying membership and voting rights.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Sections 7, 9, 21; Companies Act, 2013 - Sections 6, 47, 241, 242, 244, 430.
