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TMI Blog2017 (1) TMI 1662X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, I have found to concur with such claim of the applicants. It goes without saying that observations made herein are only for the purpose of deciding issues as to whether the disputes should be referred to arbitrator and necessarily, same cannot be made applicable to any proceeding which the parties to this proceeding have already initiated or may have initiated in future. The tribunal would, therefore, proceed to decide the matter on the basis of materials placed before it - petition disposed off. - TA No. 14/2016 (CA No. 907/2016) in TP No. 20/397/398/GB/2016 (CP No. 143/2015) - - - Dated:- 5-1-2017 - P.K. Saikia, J. For Appellant: U.K. Chodhury, Senior Advocate, D. Baruah, N. Upadhya, Atul Sood, Saumitra Saikia, Raktim Gogoi, Himanshu Vij and Pabitra Saikia For Respondents: S.N. Mukherjee, S. Dutta, P. Chatterjee, Senior Advocates, S. Mitra, S. Dalmia, O. Chatterjee and N. Modi JUDGMENT P.K. Saikia, 1. This application under section 8 of the Arbitration and Conciliation Act, 1996 ('the Act of 1996') has been filed by the respondent No. 1, (namely, Calcom Cement India Ltd.) and respondent No. 2, [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the company and were originally in the control of the company. 6. However, with a view to strengthen and extend the business activities of the company, Bawri group had taken a decision in the month of January 2012 to induct Dalmia group as a strategic investor. Accordingly, on 16th January, 2012, several agreements including SHA-I was executed by and between Bawri group/promoter group on one side and Dalmia group and the company on the other side. However, it was agreed upon by the parties that the management of the company would remain with Bawri group. Following the execution of SHA-I, the articles of association of the company ('the AoA') was suitably amended. 7. According to such agreement, the Board of directors shall comprise of 12 directors of which 8 shall be nominated by promoter group and Dalmia group in equal number, one of them shall be nominated by AIDC while remaining 3 directors would be independent directors to be nominated jointly by promoter group and Dalmia group. Under such agreement, Dalmia group was to infuse necessary funds to the company so that the various schemes, incorporated in the SHA-I, could be implemented properly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under section 17 of the Act of 1996 and was also pleased to pass the order dated 19th October, 2015 which runs as follows: The respondents shall not transfer, alienate or create any third party interest in respect of their fixed assets as well as their shares in Calcom Cement India Ltd. till disposal of section 17 applications by the learned arbitrator. 13. Dalmia group too approached Delhi High Court invoking provisions in section 9 of the Act of 1996 seeking some interim reliefs. Such application was numbered and registered as OMP(1)341/2015. On hearing both the parties, by the order dated 19th October, 2015, Delhi High Court was pleased to order that the petition, filed by Dalmia group, too would be treated as petition under section 17 of the Act of 1996. 14. Thereafter, the petitioner Nos. 1-9 approached the Company Law Board ('CLB'), Kolkata having filed a company petition under sections 397, 398, 402, 403 and 406 of the Act of 1956, which was numbered as CP No. 143/2015. In such application, Bawri group alleged that Dalmia group and other respondents from 3-25 have resorted to huge illegalities in managing the affairs of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. (iii) A direction requiring the respondents to compensate the company to the extent of ₹ 550.32 crore or in alternative such sums as may be found due on proper enquiry. 17. In the meantime, the respondent Nos. 1 and 2 in the company petition have filed an application under section 8 of the Act of 1996 urging the learned CLB to refer the parties to the arbitration, since, according to the counsel for the applicants, the allegations in the company petition arose from or in connection with the implementation or non-implementation of various terms and conditions incorporated in the SHA-I and SHA-II, since each of such agreements, contained an arbitration clause for resolution of disputes arose therefrom and since the disputes in the company petition are well covered by the arbitration agreements requiring such disputes to be decided by arbitrator alone and not by any other authority. 18. It may be stated here that on receipt of the petition under section 397/398 of the Act of 1956, learned CLB, Kolkata has passed an interim order directing the parties to maintain status quo as regards the shareholding of the company and the composition of Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (CLB) 7. Ananthesh Bhakta represented by Mother Usha A Bhakta v. Nayana S. Bhakta [2016] 135 CLA 160 (SC)/(Civil Appeal No. 10837/2016 8. Ramnish Kumar Sharma v. D.R. John Lab (P.) Ltd. 9. Co-Operative Central Bank Ltd. v. Addl. Industrial Tribunal AIR 1970 SC 245 10. Kinetic Engineering Ltd. v. Sadhana Gadia [1992] 7 CLA 8 (CLB)) and 11. S.S. Rajkumar v. Perfect Castings (P.) Ltd. 22. In P. Anand Gajapati Raju (supra) hon'ble Apex Court held that the language of section 8 is quite peremptory and, therefore, it is quite obligatory for the court to refer the parties to the arbitration in terms of their arbitration agreement. Similar view was rendered by the Apex Court in Hindustan Petroleum Corporation Ltd. (supra) where it was held that when there is an arbitration agreement, it is obligatory for the court to refer the parties to arbitration and it is for the arbitral Tribunal to rule its own jurisdiction including ruling on any objection with respect to the existence or validity of the arbitration agreement. 23. On the other hand, the learned advocates appearing for non-applicants/petitioners strenuously contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned senior counsel for the petitioners/non-applicants had relied on the following decisions: The petitioners have relied upon the following decisions: 1. Gautam Kapur v. Limrose Engineering [2006] 72 CLA 323 (CLB) : [2007] 137 Comp Cas 513 2. Greisheim Gmbh v. Goyal Mg Gases (P.) Ltd. [2004] 62 CLA 141 (CLB) : 123 Comp Cas 280 3. Sporting Pastime India Ltd. v. Kasthuri Sons Ltd. [2006] 72 CLA 401 (CLB) : [2006] 4 CTC 377 4. Benett Coleman Co. v. Union of India [1977] 47 Comp Cas 92 5. Debi Jhora Tea Co. Ltd. v. Barendra Krishna Bhowmick [1980] 50 Comp Cas 771 6. Cosmos Steels (P.) Ltd. v. Jairam Das Gupta AIR 1978 SC 375 : [1978] 1 SCC 215 7. Surendra Kumar Dhawan v. R. Vir [1977] 47 Comp Cas 276 8. Shri O.P. Gupta v. Shiv General Finance (P.) Ltd. ILR 1975 Del. (II) 911 9. Manavendra Chitnis v. Leele Chitnis Studios (P.) Ltd. 1984 Mh. LJ 586 10. Sudarshan Chopra v. Company Law Board [2004] 60 CLA 214 (P H) : [2004] 2 Abr. LR 241 11. Booz Allen Hamilton Inc. v. SBI Home Finance Ltd. [2011] 103 CLA 9 (SC) : [2011] 5 SCC 532 12. Rakesh Malhotra v. Rajinder K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied on. 28. According to the counsel for the petitioners, if the parties in the arbitration agreement and the parties before the judicial authority are not identical, the judicial authority cannot refer the party to the arbitrator as has been held in Ajay Kriti Kumar Dalmia (supra) and Premier Automobile Ltd. (supra). 29. In Christians Muller (supra), it has been held that the jurisdiction of CLB cannot be ousted by arbitration clause since CLB has vast powers for regulating the affairs of company. The decision in Christians Muller (supra) derives further support from decisions, rendered in the case of Surendra Kumar Dhawan (supra), Avigo PE Investments Ltd. (supra), Griesheim Gmgbh (supra), Gautam Kapur (supra), Sangramsinh P. Gaekward (supra), Cosmosteels (P.) Ltd. (supra), Bennet Colemen (supra), Debi Jhora Tea Co. Ltd. (supra) and Emgee Housing (P.) Ltd. (supra), Rakesh Malhotra (supra) and Shri O.P. Gupta (supra). 30. In Surendra Kumar Dhawan (supra), Shri O.P. Gupta (supra), Manavendra Chitnis (supra), Gautam Kapur (supra), Griesheim Gmgbh (supra) and Christians Muller (supra) and Debi Jhora Tea Co. Ltd. (supra), it has further been held that CL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad (supra), it has been held that certain matters, such as, removal of director, transfer of shares in violation of articles of association and the Companies Act, increase in capital to gain control over the company, amendment of articles violating the statutory rights and not permitting the existing shareholders to exercise their statutory rights, etc., cannot be tried by arbitrator. Such matters are in the exclusive domain of the company tribunal. 37. Referring to the decision in Needles Industries (India) Ltd. (supra), it is being argued by Mr. Chaterjee, learned senior counsel appearing for the petitioner Nos. 10 to 15 that even if the petitioner in a proceeding under section 397/398 could not make out the allegation of oppression and mismanagement even then, the CLB has the jurisdiction to provide necessary relief to the petitioner in order to do substantial justice. 38. According to Sri S.N. Mukherjee, senior advocate and Sri S. Dutta, senior advocate appearing for petitioner Nos. 1 to 9 and Sri P. Chatterjee, senior advocate appearing for petitioner Nos. 10 to 15, laws, laid down through aforesaid decisions, are quite authoritative and unambiguous as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42. Since both the parties have attacked each other on various points advancing lengthy argument on each count and had also relied on a series of judgment in support of their respective case, I find it necessary not to refer such arguments now. Instead, for convenience of discussion and for brevity as well, I propose to discuss the case of the parties point-wise (so stated in para 25 of this judgment) and also propose refer to the arguments, advanced by the learned counsel for the parties point-wise at appropriate time and place. Being so, I have taken up point No. (i) aforesaid first for discussion. Point No. (I) Whether there is an arbitration agreement requiring the parties to resolve their dispute(s) through arbitration 43. The learned counsel for the applicants contend that the existence of a valid arbitration agreements was not in dispute and in that connection, it has been submitted that the petitioners themselves had annexed copies of the SHA-I and SHA-II with the petition under section 397/398 of the Act of 1956 and such agreements indisputably contain arbitration clauses. They also annexed copies thereof along with the reply to the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lability or otherwise, the parties shall mutually appoint a suitable alternate person in place of Mr. S. Gurumoorthy as the sole arbitrator for the dispute. If the parties to the dispute fail to agree on the alternate person to be appointed as a sole arbitrator within 10 days of a Party referring a dispute for settlement by arbitration, the dispute shall be decided by an arbitration panel of 3 arbitrators who shall be appointed in accordance with the provisions of the Arbitration Act. 17.6 The language of arbitration in relation to this agreement shall be English. The place of arbitration in relation to this agreement shall be decided by the sole arbitrator or the panel of arbitrators as the case may be. 17.7 Any award shall be treated as an award made at the seat of the arbitration and the arbitral proceedings shall be conducted in accordance with the Arbitration Act. The arbitral award shall be final and binding upon the relevant parties. 17.8 Each party shall bear the cost of preparing and presenting its case, and the cost of arbitration, including fees and expenses of the arbitrators, shall be shared equally by the Parties unless the award otherwise p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... close mismanagement in running the affairs of the company and so also oppression, having been perpetuated by Dalmia group on the minority shareholders. Being so, the disputes in company petition can be adjudicated by the CLB alone which is clothed with enormous power to grant statutory reliefs, so specified in section 402/403 of the Act of 1956. 49. But then, the applicant No. 2 (respondent No. 2 in the CP No. 143/2015) categorically claims that the subject-matters in the proceeding under section 397/398 of the Act of 1956 are nothing but alleged violations of various clauses, incorporated in the SHA-I and SHA-II and, therefore, all the disputes in the company petition are fairly and squarely covered by said agreements which quite importantly provide for an effective mechanism for resolution of disputes that may arise while executing various clauses in the agreements. 50. The fact that the petitioners could not complete the project conditions in time to the satisfaction of Dalmia group the fact that on the failure of the petitioners to complete the project conditions within the stipulated time, the applicant invoked the default clause in the agreement and asked Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other proved fact or facts would certainly help the court in deciding the truth or otherwise of various other issues involved in the section 8 proceeding. In other words, such revelations together with some other proved fact or facts may help the court in ascertaining whose claims, whether petitioners or applicants, are required to be accepted. One of such issues is the claim of the petitioners that under the SHA-I, Dalmia group was to infuse funds, necessary to revamp the company, so that it can run effectively. 56. However, according to the senior counsel appearing for the petitioners, under the SHA-I, the management of the company was to remain in the hands of Bawri group. Unfortunately, Dalmia group did not act in accordance with the prescription in SHA-I and instead, it started interfering with the day-to-day management of the company for which Bawri group was constrained to hand over the management of the company to Dalmia group in the month of October 2012. In simple words, Bawri group had to handover the management of the company to Dalmia group under compulsion and coercion. 57. Does such a contention bear any truth. An answer to such a query can be foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of SHA-I are found to be absolutely free from any ambiguity, whatsoever and such averments, clearly show that Bawri group handed over the management of the company to Dalmia group willingly and also entered into SHA-II voluntarily. In the face of above revelations and also in view of law laid down in section 92 of the Evidence Act, Bawri group cannot be permitted to repudiate the statements in the SHA-II. 61. It is also the case of the petitioners which they projected in their oral argument, and also, in their written argument that only some of the agreements in the SHA-I and SHA-II were incorporated in the AoA. Such claim was, however, vehemently denied by the applicants stating that all the clauses in SHA-I as well as all the clauses in SHA-II were incorporated in the AoA of the company. In other words, the AoA is replica of the SHA-I and SHA-II. 62. In order to ascertain the veracity of the claims of the parties on this score, I find it necessary to compare the AoA of the company with the SHA-I and SHA-II and on doing so, it is found that the AoA of the company was nothing but the pari materia to the SHA-I and SHA-II. Therefore, above claim of the applicants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SHA-II read with clause 3.1 of SHA-I), clause 4.11 of SHA-II and clause 4.11 of SHA-II, respectively. 67. Likewise, the Chart B - above shows that the allegations in the company petition, which were shown in serial Nos. 7 to 11 of the Chart B, above, are relatable to clause 3.7 of SHA-II read with clause 3.1 of SHA-I, -(clause 3.9 of SHA-II read with clause 3.26 of SHA-II), (clause 3.9 of SHA-II read with clause 3.26 of SHA-II), (clause 3.9 of SHA-II read with clause 3.26 of SHA-II) and (clause 3.9 of SHA-II read with clause 3.26 of SHA-II), respectively. 68. On a further and very careful perusal of the company petition in the light of various documents attached therewith, more particularly, the SHA-I and SHA-II, one would also find that even those allegations in the company petition, which cannot be directly correlated to any of the clauses in the said agreements, seem to be the summery effect of alleged violations of various clauses incorporated in agreements under consideration. What, therefore, emerges from the charts above is that each of the allegations in the company petition could be correlated to a corresponding clause or cluster of clauses in the SHAs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) to the reasonable satisfaction of the Dalmia group on or before 30th June, 2013): (a) The company shall have obtained necessary clearance and renewals, as the case may be, from the Ministry of Environment and Forests with respect to its operations and use of land at: (i) Grinder Plant in Lanka, District Nagaon, Assam; (ii) Clinker Plant at Jamunanagar, Umrangshu, Assam for 0.75 mtpa; and (iii) cement grade limestone mining unit at New Umrangshu, North Cachar Hills, Assam. (b) The company shall obtain consent to operate as required under Water (Prevention and Control of Pollution) Act, 1974 and with respect to (i) cement grade limestone mining unit at New Umrangshu, North Cachar Hills, Assam; (ii) Clinker Plant at Umrangshu; and (iii) the Grinder Plant in Nagaon, Lanka, as may be required. (c) The company shall secure electricity supply through 132 KVA line to be set up by ASEB for the Clinker Plant at Jamunanagar, Umrangshu. (d) The company shall have renewed and have valid Mining Lease for the Project and obtained necessary authorisations for running the mines of the project as its installed capacity, including but not limited to clearance f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etion, to exercise the rights set out in clause 9.2.' 73. More importantly, what would be the consequences for failure to complete such project conditions within the specified time had also been stipulated in the SHA-I itself, vide clause 9.2 of the SHA-I. For ready reference, clause 9.2 is also reproduced below: '9.2 The parties agree that upon the happening of any of the following events: (a) the Bawri group are unable to complete the project conditions in accordance with clause 9.1 above. (b) the Bawri group and/or the company issues a notice, in writing, to the Dalmia group, that the project conditions will not be completed on the project CP satisfaction date: then notwithstanding the provisions of clause 6, the Dalmia group shall have the right, at its sole discretion, to either: Purchase, by itself or through any nominee, affiliate or third person nominated by the Dalmia group, at its sole discretion, all and not less than all of the shareholding of the promoter group in the company for an aggregate consideration of Re. 1 and upon exercise of such right by the Dalmia group, the promoter group shall be obliged to se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15th May, 2015, Bawri group sent the letter dated 18th May, 2015 disputing such claim and also hurling the allegations of mismanagement and oppression against Dalmia group and also invoked Mediation as per SHA-I-I/SHA-II. 76. But the matter did not end there. Soon thereafter, Bawri group rushed to Delhi High Court by way of an application under section 9 of the Act of 1996 invoking the arbitration clause in agreements and prayed for several reliefs including a relief in the form of a direction prohibiting Dalmia group from alienating in any manner its remaining shares in the company. Delhi High Court, record reveals, obliged Bawri group by granting some interim reliefs under order dated 19th October, 2015 in OMP(1) 341/2015. 77. According to the learned counsel for the applicants, the completion of project conditions in time to the satisfaction of Dalmia group was important so much so that only on the successful completion of project conditions, Bawri group could have required Dalmia group to discharge some very vital obligations, imposed on the later, under the agreements aforesaid which could have ultimately led to the successful commissioning of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period-nay-even in the extended period of time. 82. It is also not in dispute that for the alleged non-completion of the project conditions within the stipulated time, Dalmia group invoked default clause in agreements and served notice dated 15th May, 2015 on Bawri group asking the later to sell its remaining shareholding in the company to Dalmia group for Re. 1 in terms of clause 9.2 of the SHA-I. The materials on record further show that following service of notice on it, Bawri group responded with knee-jerk reaction and started knocking the doors of several judicial/quasi-judicial bodies leveling various serious allegations against Dalmia group including the allegation of mismanagement and oppression. 83. Such disclosures prima facie establish that at the very bottom of all the proceedings which were initiated by Bawri group after it being served with notice dated 15th May, 2015 including the company petition lies the disputes regarding the alleged inability of Bawri group to complete the project conditions in time to the satisfaction of Dalmia group which - as we have already noticed - entailed sweeping, grave and far-reaching consequences for the defaulting p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he effect that following changes in management of the company, Bawri group would be relieved off the liability of completing the project conditions which, in turn, clearly demonstrates that aforesaid contention too, falls flatten on its face. 89. Even otherwise, the claim of the petitioners that there was an understanding between the parties to amend the clause 3.20 in SHA-II so as to relieve the petitioners of the liability of completing project conditions cannot be accepted for the prohibition of section 92 of the Evidence Act since section 92 of the Evidence Act ordains that when the terms of contract/grant, etc., are reduced to writing, no oral agreement could be allowed to operate to repudiate the contents of the written contract. 90. But then, such apparent failure on the part of the petitioners to prove their claim that following the change of guards in the management of the company, it was agreed upon between the parties that Bawri group would be relieved off the liability of completing the project conditions manifestly demonstrates that in presenting the company petition Bawri group quite desperately tried to hide something very serious from the notice of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 9 of the Act of 1996 seeking various reliefs. It is also not in dispute that Dalmia group too approached the hon'ble Delhi High Court preferring a section 9 application seeking various reliefs. 95. The rushing of the parties to hon'ble Delhi High Court by way of section 9 of the Act of 1996 invoking arbitration clause in the SHAs, and that too, soon after the service of notice dated 15th May, 2015 coupled with the subsequent events which led to filing of the company petition, in my opinion, lends more credence to our finding that the alleged breaches of the various clauses in the SHAs form the very foundation of the allegations in the company petition. 96. The net effect of all the revelations, which have emerged from our foregoing discussion, can be deduced as follows: (i) The subject-matters in company petition and the subject-matters in arbitration agreements are same. In other words, all the disputes in the company petition are covered by the aforesaid agreements. (ii) Such disputes were entirely between the Bawri group on one side and the Dalmia group on the other side. (iii) The disputes projected through the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (x), clause 1.2(xi)(b), clause 6.2.B, clause 6.5.1, clause 6.7.1 and clause 8.3 of SHA-I. 101. Secondly, according to the counsel for the applicants, the post-agreements conducts of the petitioner Nos. 10 to 15, express, implied or constructive, are so tell taleing and so significant that such conducts, in no uncertain term, show that they are part and parcel of Bawri group. In that connection, they referred to various clauses in the SHA-I and SHA-II, more particularly, clauses 8.4 and 5.4 in the SHA-I, SHA-II, respectively. 102. It was next contended that R-3 to R-25 too are the integral part of the R-2 since they do not have separate existences insofar as the matters, covered by agreements aforesaid are concerned. That being the position, R-2 duly represented them in the agreements in question. In that view of the matter, the parties in the company petition and the parties in the agreements are one and same. In order to draw support to such contention, they referred me to the introductory part of the petition under section 397/398 of the Act of 1956 where the petitioners portrayed the identities of the various respondents. 103. Fourthly, and, also, in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 107. But then, clause 6.5.1 or for that matter, clause 6.7.1 could hardly show that petitioner Nos. 10 to 15 are the part of Bawri group. The fact that Dalmia group has been authorised under the agreements to acquire the shareholding only of Bawri group, so specified in Schedule I to the SHA-I and not the shareholding of entities in Schedule - XII of the SHA-I and the fact that Bawri group was authorised under said agreement to sell their shares only, and not the shares of entities in Scheduled-XII makes it more than clear that the petitioner Nos. 10 to 15 are entities different from Bawri group. 108. In regard to clause 6.2B, it has been stated that it is true that clause 6.2B specifically forbids Dalmia group from acquiring any share, held by the persons/entities, mentioned in the Schedule XII which included the petitioner Nos. 10 to 15. It is also true that subject to certain pre-conditions, incorporated therein, Bawri group shall have the right to acquire freely the equity shares, held by the persons/entities, mentioned in the Schedule XII. 109. But such clauses hardly establish that the petitioner Nos. 10 to 15 are the part of Bawri group. Quite cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han one in oppressing the petitioners over a long period of time. 113. Since neither the petitioner Nos. 10 to 15 nor the respondent Nos. 3 to 25 are parties to the agreements, under consideration, one of the fundamental conditions necessary for referring the parties to the arbitrator was found conspicuously absent in the proceeding under section 8 of the Act of 1996 and on this count also, this court requires to reject the application seeking reference of the parties to the arbitrator. 114. I have very carefully considered the arguments advanced from the sides of the parties. However, before taking up the case of the petitioners, I find it necessary to focus my attention on the claims of the applicants and for that purposes, I have very carefully perused the various clauses, referred to by the learned counsel for the applicants, which, the applicants claim, support the contention that petitioner Nos. 10 to 15 are integral part of Bawri group. For ready reference, some of the clauses referred to by the counsel for the applicant are reproduced below: '1.2 (x) For the purpose of calculating the shareholding of a shareholder in the company, incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he promoter group Put Option Price, on the terms and conditions contained in this Agreement (the promoter group Put Option ). Such Put Notice shall only be issued by the promoter group after the accounts for the previous financial year has been approved by the Board. Such Put Notice shall specify the date on which such Transfer shall take place ( Put Date ), which shall not be less than 180 days from the issuance of the Put Notice. 6.7.1 At any time after 31st July, 2017 and for a period up to 31st July, 2020 (the Call Option Period ), the Dalmia group shall have the right to but the obligation to issue a notice ( Call Notice ) to the promoter group, to sell to the Dalmia group or any nominee or affiliate of the Dalmia group ( Call Option Purchaser ), at its sole discretion, either (i) all, and not less than all, of the equity shares held by the promoter group in the company; or (ii) the entire shareholding of the promoter group in the company on a Fully Diluted Basis less 5 per cent of the shareholding of the promoter group in the company (such that the promoter group shall retain 5 per cent of the share capital of the company on a fully diluted basis post the exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner Nos. 10 to 15, make such conclusion inevitable. 118. Coming to the contention of the counsel for the petitioners that clause 6.2B hardly establishes that the petitioner Nos. 10 to 15 are the part of Bawri group, I have found that such a contention too is entirely based on sound reason and logic and as such, such a contention, in my considered view, needs approval of this court. Resultantly, I have no difficulty in concluding that clause 6.2B too does not establish that the petitioner Nos. 10 to 15 are part of Bawri group. 119. On my further perusal of the record, I have also found that the contention of the learned counsel for the petitioners that clause 8.4 of the SHA-I (which is pari materia to clause 5.4 SHA-II), never serves to show that the petitioner Nos. 10 to 15 are the part of Bawri group, is also found to be based on strong logic and reason. This is because of the fact that had the petitioner Nos. 10 to 15 been the part of Bawri group, there would not have been any necessity for incorporating clause 8.4 in SHA-I (or clause 5.4 in SHA-II). 120. The learned counsel for the applicants, however, takes one more cudgel to assail the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to by the parties which is, however, no body's case. 124. The various revelations which I have catalogued herein above, in their combined effect very firmly evince that the petitioner Nos. 10 to 15 are not the part and parcel of Bawri group. Rather, they are independent entities and, therefore, those petitioners could not be held responsible for the omission/commission of any act done by Bawri group under the agreements aforesaid, of course, they would certainly fall or fly for their own deeds or misdeeds which they may have done in their individual capacities in relation to other matters pertaining to administration of the company concerned. 125. This brings me to a yet another important controversy where I am to see if the respondent Nos. 3 to 25 are the part and parcel of Dalmia group. Dalmia group steadfastly claims that those respondents do not have any independent existence. Rather, their existences stand merged with the R-2 for all purposes and it, in turns, makes them the very integral part of Dalmia group at least in so far matters covered by agreements are concerned. In that connection, they have also placed heavy reliance on the description ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up at least insofar as the matters covered by the SHA-I and SHA-II are concerned. 130. It is worth noting here that while discussing point No. (ii), we have already found that the various disputes in the proceeding under section 397/398 of the Companies Act are nothing but contractual disputes and all such disputes are well covered by the arbitration agreements aforementioned and in such disputes, only Bawri group, on one side and Dalmia group, on the other side, are the parties. What is, however, immensely important to note is that in such disputes, none of the petitioners, who are arraigned in serial Nos. 10 to 15 of the petition, not being the part of Bawri group, are the parties. 131. One may note here that Mr. P. Chatterjee, learned senior advocate appearing for the petitioner Nos. 10 to 15 contends that though their shareholding in company was as little as 003 per cent of the paid-up capital, yet, number-wise, they constitute more than one-tenth of total shareholders of the company and in that capacity, they, on their own, can maintain the proceeding under section 397/398, even if, it is found the case, projected by the petitioner Nos. 1 to 9, is unsustainab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral part of Bawri group or Dalmia group respectively. Being so, the petitioner Nos. 10 to 15, who are evidently not the part and parcel of Bawri group, are ranked outsiders and have no role, whatsoever, to play in the determination of disputes therein. 137. In other words, only Bawri group and Dalmia group are the necessary parties in the disputes in the company petition. Viewing from that angle, one would invariably find that the parties in the company petition and the parties in the arbitration agreements are quite identical and, therefore, the proceeding under section 8 of the Act of 1996 cannot be rejected on the ground of lack of commonality of the parties in the proceeding aforesaid, as contended for by the counsel for the petitioners. In the result, this point is also answered in affirmative and in favour of the applicants. Point No. (IV) Whether there is violation of section 7(3) and 7(4) of the Act of 1996 138. The counsel for the petitioners further submits that the application under consideration is liable to be rejected since the application fails to satisfy the requirement of section 7(3) and 7(4) of the Act of 1996. For ready refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... group represents the petitioner Nos. 1 to 9, Dalmia group represents R-2 to R-25. That being the position, in such disputes, the petitioner Nos. 10 to are strangers or outsiders. 142. Since the petitioner Nos. 10 to 15 are not the integral part of the Bawri group and since they are ranked outsiders to the agreements aforesaid, the question of their signing the said agreements do not arise at all. In that view of the matter, the agreements, under consideration, in no way infringe the mandate of section 7(3) and 7(4) of the Act 1996 as alleged by the petitioners. The question in this point is accordingly answered. Point No. (V) (Whether there is violation of section 8(2) of the Act of 1996) 143. Here, we are to decide whether the section 8 application is required to be rejected for not being filed in accordance with the prescription of section 8(2) of the Act. We have already found that Mr. Chatterjee, learned senior counsel for the petitioner Nos. 1-9, argues that application is bad for it being preferred in violation of prescription in section 8(2) of the Act of 1996. In support of his contention, it is being pointed out that section 8 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy must be with the application. 149. As a corollary to above proposition, one needs to conclude that the original arbitration agreement or a duly certified copy may be filed with the record any time before the application is taken up for entertainment. In support of such contention, the decision of the Apex Court in Ananthesh Bhakta v. Nayana Bhakta decided on 15th November, 2016 was relied on. 150. It is also the case of the applicants that the argument that copies of the arbitration agreements were not duly certified as required under the law is also equally erroneous and without any substance. The counsel for the applicant contends that the terms duly certified , so used in section 8(2) of the Act of 1996, do not mean the certification of copy of the original agreement by the statutory authorities only. Rather, the words duly certified needs to be read in context of the nature of the document required to be certified, viz., whether the document to be certified is private or public document. 151. When the document in question is a public document, its certification needs to be done in accordance with the prescription of section 76 of the Evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be dated and subscribed by such officer with his name and his official title, and shall be sealed, whenever such officer is authorised by law to make use of a seal; and such copies so certified shall be called certified copies. Explanation: Any officer who, by the ordinary course of official duty, is authorised to deliver such copies, shall be deemed to have the custody of such documents within the meaning of this section. 156. Section 76 of the Evidence Act, therefore, clearly shows that only the public documents are to be certified by public servants. But section 76 further shows only certain classes of the public servants, as indicated in that section itself, are allowed to do the job. An essential corollary to such a proposition is that a public servant, in his capacity as public servant, cannot certify a document which is private one. 157. Above conclusion of mine has also been reinforced by rule 9 of the National Company Law Tribunal Rules, 2016 - which speaks about certification of copy of a document. The term 'certified' has been defined in rule 9 as follows: '(9) certified means in relation to a copy of a document as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication, etc., is filed with the judicial authority. In that view of the matter, the term entertainment and the term initiation of the proceeding do not carry similar meaning. In support of such contention, the decision of the Apex Court in Ananthesh Bhakta (supra) is relied on. 163. The relevant part of the judgment in Ananthesh Bhakta (supra) is reproduced below: '18. The word entertained has specific meaning in P. Ramanatha Aiyar's Advanced Law Lexicon word entertained has been defined as: 1. To bear in mind of consider, esp. to give judicial consideration to the court then entertained motions for continuance). 2. To amuse or please, 3. To receive (a person) as a guest or provide hospitability to (a person). The expression entertain means to admit a thing for consideration and when a suit or proceeding is not thrown out in limine but the court receives it for consideration and disposal according to law it must be regarded was entertaining the suit or proceeding, no matter whatever the ultimate decision might be, The Black's Law Dictionary also defines this word entertain as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pta AIR 1962 All. 543 and Haji Rahim Bux Sons v. Firm Samiullah Sons, AIR 1963 All. 320 and again in Mahavir Singh v. Gauri Shankar AIR 1964 All. 289. These decisions have interpreted the expression entertain as meaning adjudicate upon or proceed to consider on merits . This view of the High Court has been accepted as correct by this court in Lakshmiratan Engineering Works Ltd. v. Asstt Comm., Sales Tax, Kanpur AIR 1968 SC 488. We are bound by that decision and as such we are unable to accept the contention of the appellant that clause (b) of the proviso did not apply to the present proceedings. 20. Another relevant judgment is [1998] 1 SCC 732, Martin and Harris Ltd. v. Additional District Judge and others. In the above case section 21(f) provision of UP Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (13 of 1972) word entertained came for consideration. The proviso to section 21(f) was to the following effect. 8. Provided that where the building was in the occupation of a tenant since before its purchase by the landlord, such purchase being made after the commencement of the Act, no application shall be entertained on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but well before the date of entertainment of such application do not infringe the mandates of section 8(2) of the Act, 1996. 168. The counsel for the applicant further contends that the facts and circumstances of the case in hand match completely with the facts and circumstances in Dhamu Builders Developers (supra). In our instant case, we have already found that the petitioners themselves annexed the copies of the agreements with the company petition and they did so to support their claims in the petition under section 397/398 of the Act of 1956. In such factual scenario, hon'ble Rajasthan High Court in Dhamu Builders Developers (supra), held as follows: As already noticed hereinbefore, in the present case, the plaintiff itself has produced copy of the agreement which contains the arbitration clause and, thus, copy of such agreement continues to be part of the record for having been produced with the plaint and both the parties has relied on the said agreement for their rival claims; the existence of the agreement dated 13th March, 2013 has not been question by any of the parties and, therefore, seeking defendant to again file the original agreement da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not by any other authority, including arbitral tribunal, which are designed to try disputes of personal nature. 174. In para 9(dd) of the petition, the petitioners prayed for deletion of clause 66(a) of the AoA which is said to be illegal and bad in law. 175. In para 9(7'), the petitioners prayed for a direction requiring the respondents in CP No. 143/2015 to compensate the company by giving an award to the tune of 550.32 crore. 176. In para 9(a) of the petition, the petitioners prayed for a direction for framing of a scheme for future management of the company so that the company which was allegedly taken out of the normal and natural course by Dalmia group, by committing illegalities of various norms and forms could be brought back on its original track. 177. However, such contentions were assailed by the counsel appearing for applicants arguing that the CLB cannot grant any of the reliefs, so mentioned in the petition since those disputes are manifestly commercial disputes having their roots in the SHAs and, therefore, arbitrator, and not the CLB, has the necessary jurisdiction to try such disputes. 178. In regard to the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the petitioners are to exit from the company by 31st March, 2018 in view of various contracts contained in the SHAs. Since the petitioners are to exit from the company by 31st March, 2018, they have hardly any ground to seek the relief, so mentioned in article 9(a). 183. The well apparent fact that in their section 9 application, the petitioners themselves admitted that they have sold their shareholding in the company to the Dalmia group on as-is-where-is basis makes such a conclusion inevitable. On considering such submission in the light of the materials on record, I have found to concur with such claim of the applicants. 184. Our foregoing discussion has now established that all the disputes, projected through the company petition, are nothing but all alleged breaches of various clauses in the SHAs which are all contractual in nature. In other words, such disputes appear to be pure and chaste commercial disputes. Since those disputes are commercial disputes, the arbitral tribunal is well competent to grant adequate reliefs in accordance with prescription of law holding the field. (A) Whether the petition in question is a dressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 189. Equally importantly, they also tried to show that there are some entities, other than Dalmia group, who indulged in huge illegalities in manning the affairs of the company, they being the respondent Nos. 3 to 25. However, the attempts, so made from the petitioners side, remains far from being substantiated and such unsubstantiated plea, in my firm view, go a long way to show that the petitioners have made desperate attempts to colour some commercial disputes as disputes covered by section 397/398 of the Act which, in turn, only serves to show that such a petition is a dressed up one. 190. Our foregoing discussion also shows that claim of the petitioners that Bawri group had to hand over the management of the company under huge duress and their claim that Bawri group had to sign the SHA-II only being coerced by Dalmia group appear to be totally unfounded since the materials on record show that Bawri group and Dalmia group had voluntarily entered into SHA-II and the former quite willingly handed over the management of the company to Dalmia group. Such unsubstantiated plea, over a very vital point, speaks loud and clear that the petition under consideration is a dresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other side. 196. It is worth noting here that it is a settled law that the substance in the petition determines the nature of the proceeding. In this context, one may look in to the decision rendered by the CLB, Chennai in the case of Airtouch (supra). The relevant part is reproduced below: In this connection, reference has been made to ITC Ltd. v. Debts Recovery Appellate Tribunal [1998] 2 SCC 70 to show that mere clever drafting of the pleadings does not change the dispute before the court and Nagin Mansukhlal Bagli v. Haribhai Manibhai Patel AIR 1980 Bom. 123 to show that court must look at the real substance of the suit and not legal ingenuity in drafting the plaint, while determining the nature of suit. 197. In view of revelations, which I have catalogued in the preceding paragraphs, there cannot be any escape from the conclusion that the petition under section 397/398 of the Act of 1956 is a dressed up petition and same is presented before the CLB, Kolkata with the sole object of frustrating the arbitration agreements in SHA-I and SHA-II. (B) Whether it is permissible under the law to refer the parties before the judicial aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the allegations are related to disputes and difference between the parties, in implementation of the agreement and if the agreement contains arbitration clause, the issues must be referred to Arbitrator. Similar view was also rendered in Kasthuri Sons (supra). 203. In my firm opinion, the decisions, rendered in the aforesaid cases including the decision in Pinaki Das (supra) and the decision in Airtouch International (supra), are applicable to the case in hand since facts and circumstance in the present case are very similar to the facts and circumstances in those case, particularly in Pinaki Das (supra) and in Airtouch International (supra) and more so, when, as is evident from our foregoing discussion, section 8 application fairly and squarely, satisfies all the conditions laid down in sections 7 and 8 of the Act of 1996. 204. However, in our instant case, there are more compelling reasons for referring the parties here to the arbitration. The discussions, made herein before unequivocally show that the company petition is nothing but a dressed up petition which is designed only to hide the actual colour of the disputes before the CLB and tried to paint such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed and the parties in company petition are required to be referred to the arbitration to have their disputes resolved in accordance with the prescription of law. 207. Resultantly, this proceeding is allowed referring the parties to the arbitrator to have the disputes resolved in accordance with prescription of law(s) holding the field. 208. In view of above finding, interim order(s), if any, rendered in aforesaid proceeding, also stand vacated. 209. It goes without saying that observations made herein are only for the purpose of deciding issues as to whether the disputes should be referred to arbitrator and necessarily, same cannot be made applicable to any proceeding which the parties to this proceeding have already initiated or may have initiated in future. 210. The tribunal would, therefore, proceed to decide the matter on the basis of materials placed before it and in doing so, it would be guided by law(s) holding the field including section 16 of the Act of 1996 which empowers the arbitrator to rule on its own jurisdiction. Consequent to the decisions, arrived at hereinbefore, the company petition too stands disposed of. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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