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2023 (9) TMI 1072 - HC - Companies LawOppression and mismanagement - Seeking an injunction to restrain the defendants from enforcing an anti-suit permanent injunction order passed by the High Court of Singapore - NCLT is the only appropriate and competent forum to decide the disputes and grievances raised by the plaintiff, pertaining to oppression and mismanagement against the defendants or not - balance of convenience - HELD THAT - This Court is conscious of the position of law and the principles laid down in the said judgment, in the case of MODI ENTERTAINMENT NETWORK ANR. VERSUS W.S.G. CRICKET PTE. LTD. 2003 (1) TMI 734 - SUPREME COURT , particularly when parties have agreed to submit to a foreign Court or forum for resolution of disputes. In such circumstances, as in the present case, the plaintiff seeking to restrain proceedings before such chosen foreign Court or forum, has to make out an exceptional case to satisfy the test of a strong prima facie case being made out for grant of an antienforcement order. In such a case, the plaintiff is also required to satisfy a high threshold of the three-pronged test. The Delhi High Court, in the case of Interdigital Technology Corporation Vs. Xiaomi Corporation and others 2021 (5) TMI 1072 - DELHI HIGH COURT had an occasion to consider factors that would be relevant when a court is called upon to issue an anti-enforcement injunction, as in the present case. The Delhi High Court held that certain principles could be kept in mind while issuing or refusing anti-suit injunctions or anti-enforcement injunctions - The Delhi High Court, in the said judgment, before identifying the aforementioned general principles, has made an observation, with which this Court agrees, that when the ends of justice are predominant, there can never be any hard and fast rule or guidelines cast in iron. Hence, each individual case has to be dealt with on its own facts and circumstances, while applying principles that have been developed by Courts of law over a period of time, dealing with similar or identical situations. It is settled law that if the plaintiff fails to make out a prima facie case, examination of questions pertaining to grave and irreparable loss, as also balance of convenience, are rendered meaningless - in such a situation, this Court is called upon to first determine as to what are the factors to be taken into consideration while answering the question as to whether the plaintiff has indeed made out a prima facie case in his favour for allowing the present application. In order to arrive at a conclusion on the said aspect of the matter, some of the established positions of law need to be adverted to. Whether the NCLT has exclusive jurisdiction to decide disputes pertaining to oppression and mismanagement, has arisen before Courts and after much deliberation, it has been found that only the NCLT has exclusive jurisdiction to decide such disputes. No Court, including a Civil Court, can go into such disputes. In this regard, Sections 241, 242 and 430 of the Companies Act, 2013 are relevant. It becomes abundantly clear that when the subject matter of dispute, as in this case pertaining to oppression and mismanagement, is incapable of settlement through arbitration under the law of India, the Court cannot have any discretion in such matters and enforcement of such a foreign award becomes an impossibility. Hence, there is substance in the contention raised on behalf of the plaintiff that in the light of the said public policy of Indian law, as recognized by the Courts in India pertaining to non-arbitrability of disputes concerning oppression and mismanagement, even if the said questions were gone into in the arbitral proceedings at Singapore, the award pursuant thereto would be incapable of enforcement in India under Section 48 of the Arbitration Act. The fact that the plaintiff has been able to show that if the anti-suit permanent injunction order granted by the High Court of Singapore is enforced, he will be rendered remediless, is enough to make out a strong prima facie case in his favour. The aspect of grave and irreparable loss to the plaintiff in the absence of such temporary injunction, becomes evident in the light of the finding given hereinabove that the plaintiff would be left remediless if the anti-suit permanent injunction order of the High Court of Singapore is allowed to operate. It cannot be countenanced that the plaintiff would stand restrained from pursuing the only remedy available to him before the NCLT, while the arbitration at Singapore would continue and the award that may be rendered therein would be unenforceable in India. Therefore, on the aspect of grave and irreparable loss also, the plaintiff has made out a case in his favour. As regards balance of convenience, this Court finds that if the temporary injunction sought by the plaintiff is not granted, the plaintiff shall stand restrained from pursuing the only remedy available to him as regards the disputes of oppression and mismanagement, while if such temporary injunction is granted, the plaintiff would be able to pursue such a remedy - It is not as if the defendants would not be able to assert their claim before the NCLT that the petition filed by the plaintiff is a dressed-up petition and that the disputes raised therein are not genuine oppression and mismanagement disputes, instead being disputes purely contractual in nature. Hence, the balance of convenience is also in favour of the plaintiff. This Court finds that temporary injunction restraining enforcement of the anti-suit permanent injunction order needs to be granted in favour of the plaintiff - the interim application is disposed of.
Issues Involved:
1. Anti-enforcement action and jurisdiction of NCLT. 2. Non-arbitrability of disputes related to oppression and mismanagement. 3. Prima facie case for temporary injunction against enforcement of anti-suit injunction. 4. Examination of the petition filed before NCLT. 5. Public policy considerations and enforceability of arbitral awards. Summary: Issue 1: Anti-enforcement action and jurisdiction of NCLT The plaintiff sought an injunction to restrain the defendants from enforcing an anti-suit permanent injunction order by the High Court of Singapore, which restrained the plaintiff from proceeding with his petition before the NCLT, Mumbai, concerning oppression and mismanagement. The plaintiff argued that NCLT is the only appropriate and competent forum to decide these disputes. Issue 2: Non-arbitrability of disputes related to oppression and mismanagement The plaintiff contended that disputes related to oppression and mismanagement under Indian law are non-arbitrable and that any arbitral award from proceedings initiated by defendant No. 2 in Singapore would be unenforceable in India. The plaintiff emphasized that if the anti-suit injunction order is enforced, he would be left remediless. Issue 3: Prima facie case for temporary injunction against enforcement of anti-suit injunction The Court applied the three-pronged test of prima facie case, grave and irreparable loss, and balance of convenience. It concluded that the plaintiff made out a strong prima facie case for the issuance of an anti-enforcement temporary injunction, as the enforcement of the anti-suit injunction would render the plaintiff remediless, violating his right to access justice under Article 21 read with Article 14 of the Constitution of India. Issue 4: Examination of the petition filed before NCLT The Court limited its examination to whether the petition filed before the NCLT pertained to disputes concerning oppression and mismanagement under Sections 241 and 242 of the Companies Act. It refrained from detailed scrutiny to avoid encroaching upon the exclusive jurisdiction of the NCLT. The Court found that the petition did relate to oppression and mismanagement and that the NCLT has exclusive jurisdiction to decide such matters. Issue 5: Public policy considerations and enforceability of arbitral awards The Court noted that the arbitration clause in the Shareholders Agreement stipulated that the enforcement of any arbitral award would be subject to the Indian Arbitration and Conciliation Act, 1996. Given that disputes related to oppression and mismanagement are non-arbitrable under Indian law, any arbitral award on these issues would be unenforceable in India, aligning with the public policy of India. Order: The Court granted a temporary injunction restraining the defendants from enforcing the anti-suit permanent injunction order dated 26.10.2021 and the Appeal Court Order dated 06.01.2023 passed by the Courts of Singapore. The plaintiff was allowed to pursue his petition before the NCLT, and the interim order dated 22.11.2021 was extended for a further period of eight weeks.
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