TaxTMI 
TaxTMI 
2013 (11) TMI 542
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.... 'HPL'), respondent No. 1 plaintiff, which was also heard along with the instant appeal. On 21st March, 2012 the appellant Chatterjee Petrochem (Mauritius) Company (hereinafter referred to as 'CPMC') filed a request for arbitration in ICC, Paris for the following reliefs: (a) An award: (i) (1) That WBIDC take all necessary steps and GoWB ensure that WBIDC takes all necessary steps forthwith to: (A) dematerialize The Shares (being the shares in Haldia bearing certificate number HPL 24 and distinctive numbers 29 to 155100026 inclusive); (B) issue instructions to its depository participant to transfer the same to CPIL; (C) ensure that the depository records CPIL as the beneficial owner of the same in the Register of beneficial owners of the depository, and (2) that Haldia take all necessary steps to facilitate the dematerialization and transfer of The Shares and registration of CPIL as their owner and GoWB and WBIDC procure that the Haldia directors appointed by WBIDC vote in favour of any resolution necessary to achieve the same. (ii) (1) That WBIDC accept from CPIL as nominee of CPMC Rupees 1,173,449,980 being the sum of unencashed loan payments (being the lo....
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....ewith or incidental thereto. (c)a decree of permanent injunction prohibiting the defendant no. 8, its agents, officers and employees from acting upon and further proceeding with any proceeding pursuant to the Impugned Arbitration Agreement contained in clause 15 of the Agreement dated January 12, 2002 and the Request for Arbitration dated March 21, 2012 and the communication dated April 2, 2012 bearing case No. 18582/ARP issued by the defendant no. 8 and any proceeding pursuant thereto. (d) Injunction; (e) Costs; (f) Such further or other reliefs. The learned Single Judge declined to grant ad interim relief in the interlocutory application. In appeal filed by HPL, a Division Bench of this Court passed an order of injunction restraining CPMC from proceeding with the arbitration. The order was challenged before the Hon'ble Supreme Court whereupon the Apex Court directed the learned Single Judge to dispose of the matter within 20th of December, 2012. Upon hearing the parties, the learned Single Judge has passed the impugned order dated 20th December, 2012 restraining the appellant from proceeding with the arbitration before ICC till disposal of the suit. Hence, th....
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.... agreement whichever was later. It was also agreed that the role of the Government in HPL would only be limited to its promotion and guidance through the initial phase of the project. The commercial production commenced in August, 2001. Thereafter, on 12th January, 2002, CPMC, Government of West Bengal, WBIDC and HPL, inter alia, entered into an agreement for financial and managerial reconstruction of HPL which was heavily indebted by them. The 12th January, 2002 agreement, inter alia, provided for the following condition: 1. Under clause 1 - 3 of the 12 January, 2002 CPMC agreed that it would: (a) Induct Rs. 107 crore in HPL within 5 working days of signing of the agreement. (b) Induct a minimum of Rs. 500 crores (inclusive of the aforesaid Rs.107 crores), as equity/ equity like instruments and/or advances from outside sources; (c) Arrange a letter of comfort (the "Letter of Comfort") in respect of the possession of Rupees 500 crores in long term funding for Haldia, to be issued within 30 days of the signing of the agreement. (d) Out of the Rupees 500 crore, invest or "induct": (i) Rupees 53.5 crore within 5 working days of the signing of the agreement. (ii) R....
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....ed by CPMC. (d) WBIDC and GoWB would vote in accordance with CPMC at shareholders' meetings in terms of a new Joint Venture Agreement to be entered into. 7. Clause15 of the 12 January, Agreement, to which GoWB, WBIDC, CPMC and Haldia were parties, provides: In respect of all disputes, differences, claims and questions between the parties hereto arising out of this JVA or in any way relating to this document or any term, condition or provision herein mentioned or construction or interpretation thereof or as to the working of (Haldia) or in any way relating to the business or the affairs of (Haldia), the parties shall first endeavor to settle such disputes, differences, claims or questions by friendly consultation and failing such settlement, disputes or differences will be settled in accordance with the Rule of Arbitration of the International Chamber of Commerce (ICC) Court of Arbitration. The venue of the arbitration will be in Paris and the law applicable to the Contract will be Indian Law. Any award with financial implication of more than 50 lakhs shall be made with reasons. Any decision or award rendered pursuant to such arbitration may be confirmed and enforced in ....
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....r, to the tune of 387750000 shares shall also be pledged to WBIDC against such loan. Such shares so pledged to WBIDC as security for the loan shall be released in a phased manner to CPIL and CPMC respectively with progressive repayment of the loan in a manner as provided in Clause 2.5 of the agreement. Clause 7.5 of the agreement provided that Courts of Calcutta alone shall have jurisdiction in all matters relating to this agreement. Thereafter a supplemental agreement dated 30th July, 2004 was executed by and among Government of West Bengal, WBIDC, CPMC and HPL whereby Clause 5 and Clause 9 of the 12th January, 2002 agreement were altered. Clause 1 of the said agreement dated 30th July, 2004 recorded that transfer of 155 crore shares to CPIL by WBIDC was accepted by CPMC in fulfilment of shares transfer obligation of Government of West Bengal (except the right to first refusal as described in Clause 2 thereof under the principal agreement of 12th January). Clause 2 of the supplemental agreement provided that CPMC gave up its right to acquire any further shares of HPL as mentioned in Clause 5 of the principal agreement except the right to first refusal in respect of any share....
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....her effect to the resolution passed on the EGM held by the Company on January 14, 2005 in any manner whatsoever; (e) Permanent injunction restraining the respondents from receiving any money or encashing any cheque that may have been issued by the respondent no. 6 to the Company in pursuance of the Memorandum of Association and the resolution passed by the EGM of the Company held on January 14, 2005; (f) Permanent injunction restraining the Company and its Board of Directors from taking any major decision or policy decision relating to the management and affairs of the Company before the majority shareholding and management control in the Company is effectively established as per the Agreements dated 12th January, 2002 and 30th July, 2004 including the due recognition of the nominee of petitioner no. 2 as Director of the Company pursuant to the letter of Petitioner no. 2 dated 1st August, 2005; (g) Permanent injunction restraining the Company and its present board from dealing with or disposing of or alienating or encumbering any asset or property of the Company except strictly in the course of the business of the Company; (h) Permanent injunction restraining the Compan....
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....oup to infuse adequate funds into the Company by way of equity, as promised and to participate in its rights issue. It was at a stage when the Chatterjee Group failed to invest sufficient funds, HPL was constrained to induct IOC as a member by transferring 150 million shares to it. Dr. Chatterjee himself decided to induct IOC as member of the Company at the board meeting and there was no clandestine sale of shares to IOC. The Supreme Court held that had Chatterjee Group stood by its commitment to bring in equity and subscribe to the rights issue it would neither have been in minority nor it would have been necessary to induct IOC as a strategic partner. With regard to failure of WBIDC, Government of West Bengal to register 150 million shares to CPIL the Apex Court held that such failure was a failure between the parties to a private agreement to abide by their commitments and the remedy for such failure was not under Section 397 of the Companies Act. With regard to powers under Section 402 of the Companies Act, the Apex Court held that it was not on account of any act on the part of the Company that the shares transferred to CPIL were not registered in the name of Chatterj....
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....h, 2002 where it is provided that the Courts in Calcutta alone would have jurisdiction in respect of any dispute arising therefrom. Earlier agreement dated 12th January, 2002 including the arbitration clause stood abrogated by the 8th March, 2002 agreement. As the earlier agreement had been substituted by the subsequent one, the arbitration clause perished with it and the arbitral tribunal did not have any jurisdiction over the subject matter of the dispute. Accordingly, the learned Single Judge granted injunction against the continuation of the impugned arbitration. Learned Single Judge, however, held that the findings of the Supreme Court did not operate as res judicata on the issue of specific performance of the agreement to transfer 155 million shares or that such a prayer was barred by limitation. Arguments on behalf of the appellants: Mr. Siddartha Mitra, Learned Senior Counsel submitted that the agreement dated 12th January, 2002 was not novated. According to him, this was the principal agreement which was implemented by the supplemental agreements dated 8th March, 2002 and 30th July, 2004. He submitted that the letter dated 8th March, 2002 did not create any independe....
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....upreme Court did not operate as res judicata or issue estoppel. He further submitted that the plea of res judicata is to be left to be decided by the arbitrator. On the issue of limitation he submitted that the letter dated 20th September, 2005 does not unequivocally terminate the contract as it was issued during the pendency of the Company Petition and was marked "without prejudice" and as such was never placed in the course of such Company proceeding. He submitted that the period taking in pursing the company proceeding ought to be excluded from computing the period of limitation in terms of Section 14 of the Limitation Act. He submitted that in any case when question of limitation is disputed and not patent the same has to be left to be decided by the arbitrator. Arguments on behalf of HPL: Mr. Pratap Chatterjee, Senior Advocate appearing for HPL submitted that the jurisdiction of the civil court to entertain a suit seeking declaration that the arbitration agreement is null and void, inoperative and/or incapable of being performed is not barred. He submitted that Section 5 of the Act can come into play only when existence of a valid arbitration agreement is establish....
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....for arbitration wherein the self same issues would be germane for consideration of relief. He further submitted that the prayer for the transfer of such shares upto a maximum of 360 crores is vexatious and is abuse of process of law as such right under Clause 5 of the 12th January, 2002 agreement was given up by CPMC under Clause 1 and 2 of the Supplemental Agreement of 2004. Arguing in support of his cross objection, Mr. Chatterjee submitted that the request of arbitration was patently barred by the law of limitation as the contract was terminated by a letter dated 28th September, 2005 and no action was instituted seeking specific performance thereof in terms of Article 54 of the Limitation Act, 1963. He further submitted that Section 14 of the Limitation Act did not have a manner of application as the relief was not denied on the ground of defect of jurisdiction but on other considerations. He therefore sought to justify the order of injunction not only on the grounds stated therein but also on the ground that there was no live issue for arbitration as the same was barred by res judicata and limitation. Arguments on behalf of the GoWB and WBIDC: Mr. Kapoor, Senior Advoca....
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....n 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 anyone 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. Agreement referred to in Section 44 of the Act means an agreement in writing for arbitration to which Convention set out in the First Schedule of the Act applies. Arbitration agreement in the instant case which refers to arbitration under ICC Rules is admittedly such an agreement under Section 44 of the Act. A bare reading of Section 45 of the Act would therefore show that in the event a judicial authority is in seisin of an action relating to a matter covered by an arbitration agreement referred to in Section 44 of the Act the judicial authority shall refer the dispute in question to arbitration provided - (a) a party or anyone claiming through or under him makes such request and (b) a judicial authority is satisfied that the agreement is not null and void or inoperative or incapable of being performed. Section 45 therefore empowers the judicial authority when seized....
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....nr. vs. M/s. Janki Saran Kailash Chandra and Anr. 1973(2) SCC 96, it held as follows: "..........It is, however, to be clearly understood that the mere existence of an arbitration clause in an agreement does not by itself operate as a bar to a suit in the court. It does not by itself impose any obligation on the court to stay the suit or to give any opportunity to the defendant to consider the question of enforcing the arbitration agreement. The right to institute a suit in some court is conferred, on a person having a grievance of a civil nature, under the general law. It is a fundamental principle of law that where there is a right there is a remedy. Section 9 of the Code of Civil Procedure confers this general right of suit on aggrieved person except where the cognizance of the suit is barred either expressly or impliedly..." Section 5 of the Act restrains judicial intervention in respect of matters covered by Part I of the Act except in the manner so provided. As the power of the Court to entertain a suit or action is not derived from any provision of the Act but is inherent in it, it cannot be said entertaining a suit or cause in a matter relating to an arbitration agree....
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....all proceed if it is prima facie satisfied that an arbitration agreement under the Rules may exist. In such a case, any decision as to the jurisdiction of the Arbitral Tribunal shall be taken by the Arbitral Tribunal itself. If the Court is not so satisfied, the parties shall be notified that the arbitration cannot proceed. In such a case, any party retains the right to ask any court having jurisdiction whether or not there is a binding arbitration agreement. 3. If any of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration shall proceed notwithstanding such refusal or failure. 4. Unless otherwise agreed, the Arbitral Tribunal shall not cease to have jurisdiction by reason of any claim that the contract is null and void or allegation that it is non-existent, provided that the Arbitral Tribunal upholds the validity of the arbitration agreement. The Arbitral Tribunal shall continue to have jurisdiction to determine the respective rights of the parties and to adjudicate their claims and pleas even though the contract itself may be non-existent or null and void. It has also been contended that the said article is similar to Section....
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....in the arbitral tribunal. In fact, the decision of the court would prevail over the arbitrator's jurisdiction. In the instant case, respondent no. 1 has not submitted to the jurisdiction of the arbitrator and has sought to bring an action in court challenging the validity and existence of the arbitration agreement. The Court is not denuded to entertain such a cause or action relating to the arbitration agreement but may choose to refrain from exercising the same leaving the dispute to be decided by the arbitrator on cogent reason, namely, the issues are debatable and not ex facie or patent in nature. However, in appropriate cases where the issue as to invalidity or nonexistence of the arbitration agreement brooks no controversy or where the claim is patently stale making the agreement inoperative or incapable of being performed, the Court has jurisdiction not to refer the parties to a vexatious and futile arbitration which would be an abuse of process of law. In Korp Gems (India) Pvt. Ltd. vs. Precious Diamond Ltd. & Ors. (2007) 2 CHN 544 this Court held that in the event there is a valid arbitration agreement no injunction can be passed restraining the arbitration. On fac....
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....null and void but is operational and capable of being performed, and only after it arrives at this conclusion, can it refer the parties to arbitration. The deliberate decision not to incorporate Section 9(b) of FARE assumes great significances, and leads inexorably to the conclusion that the factum of Indian laws in the 1996 Arbitration regime, especially Part II thereof, venue/territoriality is all important." In Dr. Devinder Kumar Gupta vs. Realogy Corporation and Anr. 2011 (3) Arb. LR 227 (Delhi) (DB) a Division Bench of the self-same High Court held as follows: "14. We would also like to clarify that the provisions of Section 34 and Section 41 of the Specific Relief Act, 1963 may not apply so far as the prayers of Declaration or Injunction are concerned. We say this for the reason that both these reliefs are actively and specifically contemplated in the A&C Act itself in terms of Section 8 and Section 45 thereof. The proposition that Section 5 of the A&C Act bars the jurisdiction of civil courts may be too FAO(OS) 268/2011 Page 34 of 54 widely stated, especially on a consideration of Section 8 of the A&C Act for the reason that an arbitration agreement may perforce be nul....
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....r to examine the arbitration agreement between the parties is available." Such issue did not fall for decision in the case of Bharat Aluminium Company Vs. White Industries Australia Ltd. (2012) 9 SCC 552. In Bharat Aluminium Company question which fell for decision was as to whether a civil suit for interim relief in the nature of Section 9 of the Act was permissible in respect of foreign seated arbitration. The Supreme Court held that Part I of the Act was inapplicable to foreign seated arbitration. It however held that the law shall not apply to foreign seated arbitration agreements already entered into as the present one. Reference to paragraph 175 of the said judgement is of no assistance to the appellant. The said paragraph deals with a suit for interim relief in a foreign seated arbitration and not one seeking declaration that the arbitration agreement is null and void or inoperative or incapable of being performed in terms of section 45 of the Act. Similarly, in Venture Global Engineering vs. Satyam Computer Services Ltd. & Anr. (2008) 4 SCC 190, the Court was dealing with a post award situation and did not have the occasion of dealing with the power of the judic....
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.... 125 percent of face value shares remain as security for the outstanding loan. WBIDC shall within 10 days of the letter of comfort being accepted, shall cause the said transfers to be effected. In the event, WBIDC/GoWB at any point of time intend to transfer all or any part of its remaining shares, WBIDC/GoWB shall first offer it to CP(M)C who shall have the right of first refusal. If CP(M)C also wants to acquire at any time all or any of these shares of WBIDC/GoWB, these shares shall be sold by WBIDC/GoWB to CP(M)C at a price that may be agreed between the parties, and failing that at a price to be determined by independent valuation done by a valuation expert of repute, who shall be jointly determined by WBIDC/GoWB and CP(M)C." In analysis, CPMC was to receive such shares upto a maximum of Rs. 360 crores from time to time so as to ensure that it had 50 % of the total paid up equity of HPL. The clause also provided that CPMC shall pay 3% of the consideration amount by way of earnest money as part payment and 2% of the consideration money would be paid with the transfer of the shares. The balance amount of the consideration shall be treated to be paid to WBIDC and WBIDC shall....
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....roviding a deemed loan to CPIL against pledge of the shares by CPIL and CPMC as indicated in the aforesaid letter. CPMC stood as a guarantor in the said agreement. Clause 2.3 of the said agreement provided for repayment of the said loan amount by way of installments. Clause 2.5 of the said agreement provided for phased release of pledged shares to CPIL as well as to CPMC, the guarantor, on repayment of the loan by way of installments. Clause 7.5 of the said agreement provided that Court of Calcutta alone shall have jurisdiction in all matters relating to the said agreement. Salient features of the 8th March, 2002 agreement are set out as follows: "......... AND WHEREAS the CORPORATION has entered into an agreement with the GUARANTOR on 12th January,2002 to transfer a part of said shares to the GUARANTOR on certain terms and conditions and due to certain pending necessary approvals such shares instead of being transferred to the GUARANTOR have been transferred and delivered to the BORROWER vide the letter dated 8th March, 2002 of the GUARANTOR in order to comply with the said agreement. AND WHEREAS the payment for 15,50,99,998 (fifteen crores fifty lakhs ninety-....
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....9,980 (Rupees Seventeen crores thirty four lakhs forty nine thousand nine hundred and eighty only) on or before 7th March, 2012 Time is of the essence for repayment in the manner aforesaid and any default in repayment of any installment will be treated as a default. 2.4 The loan shall remain secured by pledge of 19,38,74,998 (Nineteen crores thirty eight lakhs seventy four thousand nine hundred and ninety eight only) shares of Haldia Petrochemicals Ltd. which will comprise of 15,50,99,998 (fifteen crores fifty lakhs ninety-nine thousand and nine hundred and ninety eight) shares now transferred by the Corporation to the borrower on this date and 3,87,75,000 (Three crores eighty seven lakhs seventy five thousand only) other fully paid-up shares of the GUARANTOR. 2.5 On the Borrower paying the Corporation installments as stated in Clause 2.3 above the Corporation shall unconditionally release to the Borrower and Guarantor, shares as follows: Installment No. of Shares to be released to Borrower No. of Shares to be released to Guarantor 1st Rs.10,00,00,000 1,00,00,000 25,00,000 2nd Rs.10,00,00,000 1,00,00,000 25,00,000 3rd Rs.10,00,00,000 ....
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....nd it is settled law that a purchaser to a sale agreement may direct delivery in favour of his nominee. It has been argued that there is no novation of the agreement as the parties are different and that the supplemental agreement dated 30th July, 2004 unequivocally reiterates the principal agreement except the alterations made in clause 5 and clause 9 thereof. Reference has also been made to the letter dated 17th December, 2004 wherein Government of West Bengal wrote to HPL stating its commitment to transfer shares to CPMC as agreed vide agreement dated 12th January, 2002, 8th March, 2002 and 30th July, 2004. Perusal of the letter dated 8th March, 2002 and the terms of the agreement of the self-same date shows that the parties had, in fact, altered their legal relationships inter se by substituting the terms of the earlier agreement dated 12th January, 2002. Under 12th January, 2002 agreement, the transferee of the shares in question was CPMC, whereas under the new agreement it was CPIL (as non-signatory to the arbitration agreement). It is true that CPIL has been described as a affiliate of CPMC in subsequent agreements but what is important is not the description of the entit....
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.... Ltd. Bombay vs. Motilal Dharial s/o Dhulichand AIR 1966 MP 313 and M/s. Dadri Cement and Co. and Anr. Vs. M/s. Bird and Co. Pvt. Ltd. AIR 1974 Delhi 223. The ratio of the aforesaid decisions applies with full force to the instant case wherein the subsequent contract has created new rights and discharged the rights under the old contract in respect of transfer of 155 million shares of HPL. Such substituted contract has not only discharged the liabilities under the original contract but also created a new forum for adjudication in relation to disputes arising from the subsequent contract. In Lata Construction vs. Rameshchandra Ramniklal Shah, AIR 2000 SC 380 the Apex Court held that there was no substitution of an earlier contract as the terms of the subsequent contract provided that the earlier contract would stand extinguished on payment of certain sum of money and as the said money was not paid earlier contract was sought to be revived. In the instant case, the terms contained in clause 5 of January, 2002 agreement was unequivocally substituted by the new agreement of 8th March, 2002. It was not conditional on the happening of any event. Failure on the part of WBIDC t....
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.... parties, who were group companies, had entered into ancillary agreements mostly on the same date in aid of the principal agreement. None of the ancillary agreements are running counter to the terms or modified or altered the principal shareholder agreement. In this backdrop the Apex Court held that the real interaction of the parties was to subject the non-signatory group companies to the arbitration clause. The Court held that, in exceptional cases, where it can be inferred that the real intention of the parties was to subject non signatory affiliates to arbitration, such non signatory affiliates could be referred to arbitration. It further held that real intention of the parties was to be decided in the facts of the case. Let us examine whether such intention is evident from the facts of this case. In the instant case, the subsequent agreement dated 8th March, 2002 was not in terms of the 12th January, 2002 agreement but materially altered the terms of the said agreement and expressly stated the intention of the parties to adjudicate the dispute arising out of the subsequent agreement before a different forum, namely Courts of Calcutta. The transferee of the shares i....
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..../GoWB deciding to transfer the remaining of its shares, CPMC shall have the right of first refusal. Clauses 1 and 2 of the supplemental agreement dated 30th July, 2004, read as follows: "Clause 1: Pursuant to the said Principal Agreement GoWB has caused WBIDC to transfer to Chatterjee Petrochem (India) Private Limited (CPIL), an affiliate of CPMC Rs. 155 crores of shares from the shareholding of WBIDC existing on the date of the said Principal Agreement, which in effect has been transferred and CPIL has become the beneficial owner thereof, however, the registration of the said shares in the book of HPL are pending the approval of the Lenders, being the Banks and Financial Institutions of HPL (hereinafter referred to as the Lenders) CP(M)c has accepted such transfer in fulfillment of shares transfer obligations (except Right of First Refusal discussed in Clause 2 below) of GoWB under the Principal Agreement of any other agreement, arrangement or understanding. Clause 2: CPMC hereby agreements to relinquish its rights to acquire any further shares of HPL as mentioned in Clause 5 of the said Principal Agreement except that in the event WBIDC/GoWB at any point of time in....
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....had been induced to invest in HPL so as to make it a successful commercial enterprise on the promise that the Company would always retain a private character and the Chatterjee Group would have control over its management, but such a promise had not been adhered to and, on the other hand, negotiations were undertaken by WBIDC to induct IOC, Central Government Company, with the intention of ultimately handing over the management of the Company to IOC. The aforesaid case of the Chatterjee Group is also based on the grievance that while keeping the Chatterjee Group under the impression that it intended to ensure that the Chatterjee Group had the requisite number of share to allow it to have a majority shareholding and thereby control of the Company's management, the Company carried on clandestine negotiations with WBIDC to transfer all the shares held by it in the Company to IOC to give it management and control over the Company's affairs. 100. The second ground, as made out by the Chatterjee Group, was that despite having transferred 155 million shares in favour of CP(I)PL on 8th March, 2002, it did not register the same in the name of CP(I)PL, which remained the beneficial owner,....
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....o provide a part of the same, it did not do so and instead of bringing in equity, it obtained a loan from HSBC through the Merlin Group, which only increased the debt equity ratio of the Company. Furthermore, while promising to infuse sufficient equity in addition to the amounts that would have been brought in by way of subscription to the Rights Issue, the Chatterjee Group imposed various preconditions in order to do so, which ultimately led GoWB and WBIDC to terminate the agreement to transfer sufficient number of shares to the Chatterjee Group to enable it to have complete control over the management of the Company and also to retain its private character. It is at a stage when there was a threat to the supply of Naphtha, which was the main ingredient used by HPL for its manufacturing process, that it finally agreed to induct IOC into the Company as a member by transferring 150 million shares to it. It may not be out of place to mention that it was on Dr. Chatterjee's initiative that it had been decided to induct the IOC as a member of the Company at meetings of the Directors which were chaired by Dr. Chatterjee himself. Of course, as explained on behalf of the Chatterjee Group,....
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....hat the same relief as to the managerial control and majority holding was also claimed before the CLB. The same was dealt with on merits in the Apex Court and was denied on the ground that the Chatterjee Group failed to live up to its commitments. The appellant therefore could not revive such a claim in arbitration which it had abandoned by conduct. It was not a denial of relief on the premise that the relief claimed was beyond the scope of the Company Petition so far as it related to prayers (IV), (V) & (VI) of RFA. When a party to an arbitration agreement pursues the self-same relief before a court and invites the Court to adjudicate the same on merits and such court adjudicates the same on merits and arrives at a decision, the said party shall be deemed to have abandoned his right to seek arbitration in respect of such claim. In the instant case, the right of the Chatterjee Group to seek managerial control and majority status under the aforesaid agreement or otherwise had been finally decided by the Apex Court. It would be patently vexatious and the abuse of process of law to permit the appellant to reagitate the self-same issue before the arbitral tribunal. The appellant ....
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....could not, strictly speaking, be taken to be failure on the part of the Company, but it was the failure of one of the parties to a private arrangement to abide by its commitments. The remedy in such a case was not under Section 397 of the Companies Act. It has been submitted by both Mr. Nariman and Mr. Sarkar that even if no acts of oppression had been made out against the Company, it would still be open to the learned Company Judge to grant suitable relief under Section 402 of the Act to iron out the differences that might appear from time to time in the running of the affairs of the Company. No doubt, in Needle Industries case, this Court had observed that the behavior and conduct complaint of must be held to be harsh and wrongful and in arriving at such a finding, the court ought not to confine itself to a narrow legalistic view and allow technical pleas to defeat the beneficial provisions of the Section, and that in certain situations the Court is not powerless to do substantial justice between the parties, the facts of this case do not merit such a course of action to be taken. Such an argument is not available to the Chatterjee Group, since the alleged breach of the agreement....