2008 (12) TMI 790 - SC - Companies Law

Appointment of arbitrator - Services Agreement as well as disputes between the parties, exist - Section 11(6) of the Arbitration and Conciliation Act, 1996. HELD THAT - The Services Agreement dated July 15, 2006 has not ceased to exist and the applicant is entitled to invoke the arbitration clause contained in that agreement. The application filed by the applicant is within the time prescribed by law. There is no manner of doubt that disputes are existing between the parties relating to the execution of the Services Agreement dated July 15, 2006, which are arbitrable. Under the circumstances, the instant application will have to be accepted. Mr. Justice Arvind Sawant (Retd.), former Chief Justice, High Court of Kerala, is appointed as the sole arbitrator - application allowed.

Summary

Issues:
1. Appointment of arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
2. Existence of arbitration agreement between the parties.
3. Validity of Services Agreement dated July 15, 2006 in light of Tripartite Share Purchase Agreement.
4. Effect of Letter of Intent dated August 1, 2006 on the agreements.

Analysis:

Issue 1: Appointment of arbitrator under Section 11(6)
The applicant sought the appointment of Mr. Justice Arvind Sawant (Retd.) as the sole arbitrator under Section 11(6) of the Act due to disputes arising from the Services Agreement. The respondent did not concur with the appointment, leading to a legal challenge.

Issue 2: Existence of arbitration agreement
The respondent argued that the Services Agreement ceased to exist as part of the Tripartite Share Purchase Agreement, which automatically terminated due to certain events not occurring by a specified date. The court analyzed the clauses of both agreements to determine the validity of this claim.

Issue 3: Validity of Services Agreement
The court examined the clauses of the Services Agreement dated July 15, 2006, highlighting the payment terms, termination rights, and arbitration clause. It was noted that the respondent did not deny the execution of this agreement, despite the termination of the Tripartite Share Purchase Agreement.

Issue 4: Effect of Letter of Intent
The respondent contended that the Tripartite Share Purchase Agreement was novated, rescinded, or revoked by a Letter of Intent dated August 1, 2006. The court dismissed this argument, emphasizing that the Letter of Intent merely expressed an agreement to enter into another agreement by a specified deadline, which was not fulfilled.

In conclusion, the court ruled in favor of the applicant, upholding the validity of the Services Agreement and appointing Mr. Justice Arvind Sawant (Retd.) as the sole arbitrator to resolve the disputes. The application was deemed maintainable, and the respondent's claims regarding the termination of agreements were rejected.