2011 (6) TMI 939 - HC - Companies Law

Summary

Issues Involved:
1. Restraint against Indian Hockey Federation (IHF) from creating third-party interests.
2. Validity of the board resolution authorizing the petition.
3. Alleged abandonment of the Sanction Agreement by the Petitioner.
4. Suppression of material facts by the Petitioner.

Issue-wise Detailed Analysis:

1. Restraint against Indian Hockey Federation (IHF) from creating third-party interests:
The Petitioner, Premier Hockey Development Private Limited (PHDPL), sought to restrain IHF from creating any third-party interest in the rights granted to the Petitioner under the Sanction Agreement dated 31.12.2004. The Petitioner also sought to prevent IHF from taking steps that would revoke, impede, detract from, or devalue the sanction granted in favor of the Petitioner until the disputes are resolved through arbitration. Additionally, the Petitioner requested that any agreements made by IHF with third parties in breach of the Sanction Agreement be injuncted from being implemented. However, the court noted that the Petitioner failed to make out a prima facie case for the grant of any interim measures of protection as prayed for in this petition.

2. Validity of the board resolution authorizing the petition:
The Respondent argued that the board of directors of the Petitioner company had not passed a legally binding resolution to initiate the present proceedings against the Respondent and to authorize Mr. Rajput to act on behalf of the Petitioner company. The court found that the board meeting held on 18.01.2011 was not legally called and held, as the notice for the meeting did not provide the required ten days' notice and lacked a specific agenda. Furthermore, the presence of an unauthorized person, Mr. Aloke Malik, at the meeting and the absence of a director nominated by IHF indicated that the quorum was not met. Consequently, the court concluded that the resolution relied upon by the Petitioner was invalid, and the petition was not maintainable at the instance of Mr. Rajput.

3. Alleged abandonment of the Sanction Agreement by the Petitioner:
The Respondent claimed that the Petitioner had abandoned the Sanction Agreement, as evidenced by an email dated 14.03.2008 from ESS, indicating that future editions of the Premier Hockey League would be postponed due to a lack of sponsorship support. The court found that the Petitioner had shown no interest in organizing the Premier Hockey League after January 2008 and had made no attempts to enforce its rights under the Sanction Agreement. The court noted that the Petitioner had not provided any communication to IHF in terms of Article 6.3 of the Sanction Agreement and that the reason given by the Petitioner for not organizing the league appeared to be an afterthought.

4. Suppression of material facts by the Petitioner:
The court observed that the Petitioner had suppressed relevant documents, including the email communication dated 14.03.2008, which indicated ESS's intention to suspend the Premier Hockey League due to insufficient sponsorship. The court held that the Petitioner was guilty of suppression of material facts, which was another ground for denying interim relief.

Conclusion:
The court dismissed the petition with costs of Rs. One lakh, emphasizing that the observations made were only for the purpose of considering the present petition under Section 9 of the Arbitration and Conciliation Act and would not be binding on the arbitral tribunal. The tribunal would arrive at its own findings based on the pleadings and evidence presented before it.