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TMI Blog2017 (2) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. - CA No. 153 of 2012 In CP No. 83 of 2012 (TP. No. 68/HDB/2016) - - - Dated:- 9-12-2016 - Mr. Rajeswara Rao Vittanala and Mr. Ravikumar Duraisamy, JJ. For The Applicant : Shri Y. Suryanarayana For The Respondent : Shri S. Chidambaram, PCS ORDER (As Per Rajeswara Rao Vittanala, Member) (J) 1. The Company Petition bearing No. 83 of 2012 was initially i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equity shares of ₹ 10/- (Rupees Ten) each. (c) Demerara Distillers Limited, Guyana (hereinafter referred to as DDLG), (the Petitioner of CP No. 83 of 2012) is a company registered under the laws of the Republic of Guyana, having its registered office at 44B High Street, Kingston, Georgetown, Guyana. It is a shareholder of Demerara Distilleries Private Limited (DDPL), by holding 57,80,220 equity shares of ₹ 10/- each fully paid amounting to 50% of the total paid up capital of the Company. (d) A Joint Venture Agreement (hereinafter referred to as JVA for brevity) was entered into on the 17th October, 2002 by and between DDLG and Kanda Associates, a group of investors having their principal place of Business at 5-3-118, 2nd Floor, 21st Century Commercial Complex, Nampally, Hyderabad-500 001. By virtue of this Agreement, they have jointly registered a company under Companies Act, 1956, under the name and style of DEMERARA DISTILLERS LIMITED, hereinafter referred to as JVC (Joint Venture Company). DDLG and Kanda Associates have agreed to subscribe 50% each in JVC and, several conditions were mentioned in the Agreement. The relevant conditions to the present issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also mentioned therein that Kanda and Associates presently consisting of Mr. TG Veera Prasad, Mrs. T.G. Aruna Kumari and Mr. Naag Rohit. (h) ICADR has appointed Sri Justice TNC Rangarajan, a retired judge of High court of AP as Arbitrators and thus DDLG was called upon to appoint their own arbitrators, within 30 days from the date of receipt of copy of notice, failing which they would move the Hon'ble Chief Justice of India for appointment of Arbitrator on their behalf as provided under Arbitration and Conciliation Act, 1996. (i) Since DDLG failed to respond to any of efforts made by the DDPL to take appropriate action(s) to give effect to decision of termination of JVA, DDPL along with Mr, T.G.V Prasad, Mrs, TG Aruna Kumari and Mr. Naag Rohit (Kanda's Associates) have filed Arbitration Petition No. 11 of 2013 before the Apex court, seeking relief U/S. 11 of Arbitration and Conciliation Act, 1996 for appointment of Arbitrator. After considering the various contentions made by the parties, the Apex court, by an order dated 24th November, 2014, has appointed Hon'ble Justice Sri B. Sudarshan Reddy, a former judge of Apex court as Sole Arbitrator. (j) Though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestment in M/s. DDPL. 7. They have stated that the Company petition was virtually a counter blast to the legal notice dated 9th July, 2012 issued to DDLG seeking appointment of its arbitrator under section 21 of Arbitration and Conciliation Act, 1996, The said provision reads as under Section 21-Commencement of Arbitral Proceedings-Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent . It is contented that arbitral proceedings had already commenced. 8. Entertaining the present Company petition would amount to parallel proceedings as Arbitral proceedings already pending before the sole Arbitrator appointed by the Apex court as stated above. 9. The Respondent No. 1 to 4 of this present Application has filed a common reply dated 15th November, 2012 by inter-alia contending as follows:- (i) The applicants have not complied with the mandatory provisions contained in Section 8 of the Arbitration and Conciliation Act, 1996. It is stated that there is no arbitration agreement between applicant and respondents (DDLG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther stated that the DDLG, at no point of time, has raised any objections to the actions of said Associates of Kanda, except in the present company petition and, contended that all the matters complained of in the present Company Petition are totally related to and arises out of implementation of JVA dated 17.10.2002. 12. The DDLG has decided not to make further investment in Joint Venture Companies and, started efforts for possible ways of terminating of JVA and consequently to settle the accounts between them. On behalf of applicants (DDPL), it is suggested to DDLG to refer the entire matter to an arbitrator. However, DDLG did not agree the proposal on the ground that it would be long and costly process. 13. By letter dated 18th January, 2012, DDLG has agreed to the proposal to terminate the JVA dated 17.10.2002 through mutual consideration or arbitration. Since, the nature of issue can be resolved by mutual discussion, it was thought appropriate to appoint an arbitrator, Accordingly, the DDLG was called upon to appoint sole arbitrator under Section 8 of the Arbitration Conciliation Act, 1996. They further stated that the issue involves disputed questions of facts and iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to avail the arbitration clause in JVA and thus forced the Applicants to file arbitration case (Civil No. 11 of 2013) before the Hon'ble Supreme Court by seeking a direction to appoint an arbitrator under Section 11(6) of the Arbitration Conciliation Act, 1996 and, to go into the dispute/differences between DDLG and DDL, arising out of JVA dated 17.10.2002. He further contended the said application was opposed by the DDLG with almost similar objections raised now in the present application. However, by rejecting the objections of respondent/petitioner, the Hon'ble Supreme Court has ultimately held that there was no bar to entertain the present application, even though proceedings were pending before Company Law Board. And, it is further held that JVA was signed between DDLG Kanda Associates and out of that agreement, Joint Venture Company in the name of DDL was born and, all the applicants herein represent Kanda Associates. Hence, the Hon'ble Supreme Court appointed Hon'ble Justice Shri B. Sudarshan Reddy, Former Judge of Supreme Court as a sole arbitrator to decide all disputes including disputes raised in the petition by an order dated 24th November, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : U27106AP1996PTC024798), the first respondent in CP, was initially incorporated on 31.07.1996 as TMT Metallurgical Industries Limited, under the Companies Act, 1956, and the name was changed to Demerara Distilleries Limited on 15.01.2001. Later, the Company was converted into Private Limited on 04th September, 2009. A Joint Venture Agreement (JVA) was entered into between DDLG and Kanda Associates, a group of investors having their principal place of Business at 5-3-118,2nd Floor, 21st Century Commercial Complex, Nampally, Hyderabad-500 001. By virtue of this Agreement, they have jointly registered a company under Companies Act, 1956 under the name and style of DEMERARA DISTILLERS LIMITED, (JVC-Joint Venture Company), DDLG and Kanda Associates agreed to subscribe 50% each of the paid-up capital of the company in JVC and several conditions mentioned in the Agreement. One of the conditions in the JVA is Arbitration clause as an alternative mechanism to resolve the dispute between the parties, under Clause 14(f) (General Conditions) and Clause 15(d) Miscellaneous as mentioned above. Kanda Associates is admittedly a group of investors and, it is not a single individual. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irs of DDPL. In pursuance to the above letter, BS Kanda and TGV Prasad have addressed a letter dated 20th February, 2012 to the DDLG by accepting the choice of termination of JVA and, also advised the DDPL take into account of termination of JVA by convening its Board meeting and, further stated that such termination would be carried out in terms of JVA, And they have also written letter dated 22nd February 12, to the Board of Directors, DDPL requesting to take into consideration of termination of JVA. The Board of Directors of DDPL held its 66th meeting on 8th April, 2012 at 11.30 hrs at its registered office at Nampally, Hyderabad and both TGV Prasad and BS Kanda as Executive Director and Director respectively and Mr. Lokeshwar Reddy K also attended the meeting as an invitee on behalf of DDLG. After discussing various issues of the Company, Mr. Prasad had also pointed out that JV agreement had clear provision for resolving differences of opinion by way of mutual discussions, mediation, and arbitration and finally litigation could be resorted to. So it is clear that the JVA still was not terminated. It is an admitted fact that there are lots of differences between the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intainable at the instance of the petitioners; which alone would require an in-depth consideration. 22. The second serious objections raised in the Arbitration proceedings and also in the present application are that the applicants are not parties to JVA and, it is only Kanda Associates. And the Hon'ble Supreme court, after considering the issue, at para 6, has held BS Kanda had signed the Agreement on behalf of M/s. Kanda and Associates, the said entity also consist of petitioners Nos. 2, 3 and 4 (applicant No. 2 to 4 herein). Therefore, the issue regarding as to who are parties to JVA is no more res Integra and the contention of respondents herein in that context is not tenable and thus rejected. 23. The next question is whether the present CP itself is maintainable when a Sole Arbitrator was appointed by the Apex court and the proceedings are stated to be still being completed. The Contentions of the respondents that there was no JVA at all in force and, only Kanda and Associates are only parties to JVA are not at all tenable in view of the facts mentioned above and also the observations of the Hon'ble Supreme Court. Whether an Arbitrator/NCLT is empowered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets and can also issue direction and pass orders regarding dues and liabilities and also for taking recourse to appropriate remedy. The Hon'ble High court of Delhi has also considered the said ratio in Vijay Sekhri Vs. Union of India [2011] 163 Comp Cas 195(Delhi). b. In Naveen Kedia Vs. Chennai Power Corporation Ltd. [1999] 95 Comp Cas 640 (CLB), the Hon'ble Principal Bench, CLB, New Delhi, the question of arbitration was considered and considered Section 45 of Arbitration and Conciliation Act, 1996. Section 45 reads as under: Power of judicial authority to refer parties to arbitration.- Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. And held CLB is bound to refer the parties to arbitration in terms of Section 45 of the Arbitration and Conciliation Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the parties on other which will be examined by the CLB on merits. So the present case also would not have any application to the instant case . (d) Deutsche Post Bank Home Finance Ltd. Vs. Taduri Sridhar and Anr (MANU/SC/0262/2011): One of the issues considered in the case relates to the case on hand is that impleading a non-party to agreement would be contrary to the contract and the law. It is held that if a person who is not a party to arbitration agreement is impleaded as party to the petitioner under section 11 of the Act, the court should either delete such party from the array of parties or when appointing an Arbitrator make it clear that the Arbitrator is appointed only to decide the disputes between the parties to the arbitration agreement. This case is also not applicable to the facts and circumstances of case mentioned supra. (e) Premier Automobiles Vs. Fiat India Private Ltd. [2004] 56 SCL 59 (CLB - New Delhi) : This is a case where 10th respondent of petition has filed CA No. 181 of 2002 by seeking to refer the disputes in the petition to International Arbitration in terms of Arbitration clause contained in SHA and JVA also EA. The Hon'ble CLB, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Bennel Coleman and Co Vs. Union of India and Ors. (1977) 47 Comp Cases (Bom) (Para 16) : In this case, the challenge is against the judgement and order dated 28th August, 1969 whereby the learned judge directed reconstitution of the board of directors for the company in the manner done for a period of 7 years, Both the legality as well as propriety of the order directing reconstitution of the Board was challenged. This case too has no application for the reasons stated above. 28. 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 supra, the Hon'ble Supreme Court has appointed a sole arbitrator to decide all disputes including the disputes raised in arbitration petition. S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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