Oppression and Mismanagement Plea Not Maintainable Where Dispute is Purely Contractual: NCLT Refers Eros International Media to Arbitration [Read Order]
The Mumbai NCLT held that Eros International’s oppression plea was contractual in nature and referred the dispute to arbitration
![Oppression and Mismanagement Plea Not Maintainable Where Dispute is Purely Contractual: NCLT Refers Eros International Media to Arbitration [Read Order]](https://images.taxscan.in/h-upload/2026/05/02/2135188-oppression-and-mismanagement.webp "Oppression and Mismanagement Plea Not Maintainable Where Dispute is Purely Contractual: NCLT Refers Eros International Media to Arbitration [Read Order]")
The National Company LawTribunal (NCLT) Mumbai Bench has held that a petition alleging oppression and mismanagement cannot be maintained where the substratum of the dispute is purely contractual and accordingly referred the dispute involving Eros International Media Ltd. and Colour Yellow Productions Pvt. Ltd. to arbitration. The dispute arose out of a Term Sheet signed on...
The National Company LawTribunal (NCLT) Mumbai Bench has held that a petition alleging oppression and mismanagement cannot be maintained where the substratum of the dispute is purely contractual and accordingly referred the dispute involving Eros International Media Ltd. and Colour Yellow Productions Pvt. Ltd. to arbitration.
The dispute arose out of a Term Sheet signed on January 22, 2014 wherein Eros International Media Ltd. had made a business acquisition of 50% shareholding in Colour Yellow Productions which was being promoted by film-maker Aanand L. Rai and Yogita Rai.
According to the deal the control over creative matters rested with Aanand Rai and the rest of the production-related decisions were to be taken by Eros. There was also a provision for arbitration.
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Further, the Eros approached the NCLT under Sections 241 and 242 of the Companies Act, 2013 alleging oppression and mismanagement claiming that the promoters had siphoned off company funds,engaged in transactions of self-dealing without approval withheld company documents from them and excluded Eros from participating in company decisions.
However, Aanand Rai moved an application under Section 8 of the Arbitration and Conciliation Act 2013, contending that the allegations essentially arose from alleged breaches of the Term Sheet and a subsequent agreement executed on August 23, 2023 both of which contained valid arbitration clauses. He argued that the company petition was a dressed-up attempt to avoid arbitration.
In its response, Eros submitted that the case was founded on violations of the Companies Act 2013 namely non-convening of the board meeting and improper related party transactions which could not be determined by an arbitration panel. It also submitted that the respondents have renounced arbitration through their lack of action following the initiation of the arbitration process in 2021.
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