2017 (2) TMI 78 - Tri - Companies Law

Oppression and mismanagement - Joint Venture Agreement - arbitration petition - Held that - It is not correct to say that the issues raised in the arbitration petition and present petition are different The CP was filed by alleging oppression and mismanagement on the Part of DDPL and that too with reference to violations arising out of JVA dated 17.10.2002. As stated supra, JVC was in fact creation of JVA dated 17.10.2002. It is not correct to say that JVA was mutually terminated and the fact remains that parties mutually agreed to terminate JVA and thus, initiated process of termination in terms of JVA by invoking arbitration Clause. As stated the Hon ble Supreme Court has appointed a sole arbitrator to decide all disputes including the disputes raised in arbitration petition. So, the respondent/petitioner can raise all the disputes raised here before the Hon ble Sole Arbitrator. The respondent/petitioner is also bound the order of the Hon ble Supreme Court and they cannot maintain separate proceedings in this Tribunal and it leads to multiple proceedings. The objection raised by the respondent/petitioner about the lengthy and costly procedure involved in referring issue to the arbitration is already addressed by the Hon ble Supreme Court by suggesting that arbitration proceedings should be commenced and concluded as expeditiously as possible. It is to mention here the instant case is not to appoint a fresh arbitrator but it is a case where, whether the sole arbitrator already appointed by the Hon ble Supreme Court can decide the issues raised in the present company petition as well. As stated supra, the Hon ble Supreme Court in its order passed in Arbitration Case has already referred all the disputes. So, the present company petition is not maintainable and the same is liable to be rejected for the reasons stated above.

Summary

Issues Involved:
1. Execution and termination status of the Joint Venture Agreement (JVA).
2. Binding nature of the arbitration proceedings initiated.
3. Maintainability of the Company Petition (CP) No. 83 of 2012 in light of the ongoing arbitration proceedings.

Detailed Analysis:

1. Execution and Termination Status of the JVA:
The JVA was executed on 17th October 2002 between Demerara Distillers Limited, Guyana (DDLG) and Kanda & Associates, a group of investors. This agreement led to the formation of Demerara Distillers Private Limited (DDPL). The JVA included an arbitration clause for dispute resolution. The tribunal found substantial evidence, including emails and board meeting minutes, confirming the execution of the JVA and the involvement of Kanda & Associates, which included Mr. Bhim Shankaram Kanda, Mr. T.G. Veera Prasad, Mrs. T.G. Aruna Kumari, and Mr. Naag Rohit.

Regarding termination, both parties had agreed to terminate the JVA and initiated the arbitration process as per the agreement. The tribunal emphasized that any contract termination must adhere to legal procedures and principles of natural justice. The JVA was not terminated unilaterally but through mutual consent, invoking the arbitration clause.

2. Binding Nature of the Arbitration Proceedings:
The arbitration proceedings were initiated following a legal notice dated 9th July 2012 from DDPL to DDLG, requesting the appointment of arbitrators. The Supreme Court, by its order dated 24th November 2014, appointed Justice B. Sudarshan Reddy as the sole arbitrator to resolve all disputes arising from the JVA. The tribunal highlighted that the Supreme Court's decision to appoint an arbitrator was binding and that all issues related to the JVA, including those raised in the company petition, were to be addressed through arbitration.

3. Maintainability of CP No. 83 of 2012:
The tribunal considered whether the company petition was maintainable given the ongoing arbitration. It was argued that the petition was a counterblast to the arbitration notice and that entertaining it would lead to parallel proceedings. The tribunal noted that the issues raised in the company petition were directly related to the JVA and its alleged violations. Given the Supreme Court's appointment of an arbitrator to address these disputes, the tribunal concluded that the company petition was not maintainable. The tribunal emphasized that litigation should not proceed at different levels simultaneously when an alternative remedy, such as arbitration, is available and already in process.

Conclusion:
The tribunal dismissed CP No. 83 of 2012, directing the petitioner to approach the appointed arbitrator with all their grievances. The interim orders were vacated, and the parties were instructed to resolve their disputes through the arbitration process as per the Supreme Court's directive.