2012 (12) TMI 1141 - HC - Companies Law

Summary

Issues Involved:
1. Validity and enforceability of the arbitration agreement dated January 12, 2002.
2. Whether the agreement dated March 8, 2002, and July 30, 2004, superseded the January 12, 2002 agreement.
3. Application of the principle of res judicata.
4. Applicability of Section 14 of the Limitation Act, 1963.

Summary:

Issue 1: Validity and Enforceability of the Arbitration Agreement
The plaintiff sought a decree declaring the arbitration agreement in Clause 15 of the January 12, 2002 agreement as "void and/or unenforceable and/or has become inoperative and/or incapable of being performed." The Court noted that the arbitration clause provided for disputes to be settled by the International Chamber of Commerce with arbitration in Paris under Indian law. The plaintiff argued that the arbitration agreement had been superseded by subsequent agreements dated March 8, 2002, and July 30, 2004, which stipulated that the Courts in Calcutta alone would have jurisdiction.

Issue 2: Supersession by Subsequent Agreements
The Court examined the agreements dated March 8, 2002, and July 30, 2004, which introduced CP(I)PL as a new party with independent obligations, including the payment of consideration. These agreements altered the original terms of the January 12, 2002 agreement, and included a jurisdiction clause that the Courts in Calcutta alone would have jurisdiction. The Court concluded that these agreements substantially altered the original agreement, effectively superseding the arbitration clause.

Issue 3: Principle of Res Judicata
The Supreme Court had previously held that the Company Law Board did not have jurisdiction under Sections 397, 398 read with Section 402 of the Companies Act to order specific performance of the January 12, 2002 agreement. The Court found that the Supreme Court's decision did not bind the parties on the issue of specific performance of the agreement to transfer 155 million shares, as it was deemed a private dispute not involving the company, HPL. Therefore, the issue was not res judicata.

Issue 4: Applicability of Section 14 of the Limitation Act
The Court held that Section 14 of the Limitation Act, 1963, applied to the defendants, as they had proceeded bona fide before the Company Law Board, High Court, and Supreme Court on the same issues. The Court granted the defendants the benefit of Section 14, stating that the arbitral reference was made within time.

Conclusion:
The Court affirmed the existing order of injunction restraining arbitration before the International Court of Arbitration at Paris until the disposal of the suit. The findings were deemed prima facie, and the protection under Section 14 would apply for eight weeks, within which the defendants must institute appropriate proceedings. The applications by the third and fourth defendants for deletion of their names from the cause title were allowed, as no cause of action was disclosed against them.