TaxTMI 
TaxTMI 
2008 (10) TMI 629
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....#39;) between the petitioner and respondent no. 1. The said company was incorporated and registered under the provisions of the Indian Companies Act, 1956. However, during the pendency of the aforesaid proceedings the name of respondent no. 8 was deleted from the array of parties. 3. On 08.09.2003, an agreement of cooperation was entered into between the petitioner on one hand and respondent no. 1 on the other hand for the purpose of providing cooperation and also for exports of iron ore from mines belonging to Shrivastava Group. Pursuant to the above agreement, a JVA was executed on 25.09.2003 between the petitioner and respondent no. 1 for the purpose of mining, processing and export of iron ore. On 26.03.2004 another JVA was executed between the parties, particularly, to iron out certain controversies in respect of the JVA dated 25.09.2003. Article 14.3 of the said JVA, which is an arbitration clause, reads as follows: "If the parties fail to resolve the matter through mutual agreement, the dispute shall be referred to an Arbitrator appointed by mutual agreement of the two parties. Such Arbitrator shall be a retired High Court or Supreme Court Judge; such arbitration....
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....t no. 3 that future of the JVA should not be jeopardized only on account of the said event, particularly, when both the parties had invested enormous time and energy in establishing the Joint Venture. By the said reply the respondent no. 3 was requested to withdraw the letter of cancellation. On 04.11.2004, the sister concern of the petitioner, namely, M/s. Focus Trading Company Ltd. and its director Mr. J.M. Sahai received a legal notice from the advocate of respondent no. 2 demanding an amount of rupees US $ 5,03,319 with 14% interest towards the reduction of price in the shipment supplied through the vessel named M.V. LUO - QUING. The petitioner pointed out in the reply to the aforesaid notice that the petitioner is willing to cooperate and resolve the issues provided the said issues are within the JVA. However, the said issues could not be resolved as the respondents were not willing to resolve the same. Consequently on 15.12.2004 the petitioner sent a request to the respondent no. 1 to refund the amount of security deposit of US $ 725,000, US $ 11,000 paid as equity contribution and Rs. 25,00,000/- paid towards working expenses of respondent no. 8 with interest @ 18% ....
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.... petitioner that since in the present case disputes have arisen between the parties in connection with the matters pertaining to the JVA, therefore, all the said disputes are required to be referred for adjudication to the arbitration by appointing an arbitrator. 8. Upon careful perusal of the petition filed under Section 11(6) and (9) of the Act and upon hearing the counsel appearing for the parties it could be deduced that the petitioner is mainly confining its claim for refund of the money paid/deposited pursuant to and in execution of JVA and also amount paid towards working expenses of respondent no. 8 with interest @ 18% per annum. In the petition details of the amount as paid by the petitioner towards JVA are also furnished, wherein it is stated that M/s. Focus Trading Company Ltd., a sister concern of the petitioner company even prior to the singing of JVA on 18.02.2004 advanced an amount of US $ 450,000 to respondent no. 3 company i.e. the Deccan Minerals Pvt. Ltd. towards capital investment. The receipt of the aforesaid amount is in fact recorded in the JVA itself, under Article 4, clause 4.2.(b)(i). It is, therefore, contended that the said payment made, also fo....
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....b) M/s. New India Mining Corporation Pvt. Ltd. (c) Minerals and Metals; (d) M/s. Raw and Finished Product; and (e) M/s. The Champion India Industries Pvt. Ltd. By the aforesaid JVA the parties have expressed their intention to form and register a Joint Venture Company with equal equity participation at the earliest possible date for the purposes of carrying on the business as mentioned in the said agreement. The incorporation of the company was in the name of "Everest Mining & Mineral Pvt. Ltd." which was incorporated with initial authorized capital of Rs. 50,00,000/-. Both the parties, namely, Shrivastava Group and M/s. Everest Holding Ltd. agreed to capitalize the Joint Venture Company up to Rs. 10,00,000/- and that each party was required to subscribe to 50,000 equity shares of Rs. 10/- each. In the said clause, namely, clause 3.3, the parties also agreed that the aforesaid shares could be subscribed by either of the parties itself or by its affiliates and that the shareholding of the affiliates should be included in the shareholding of the party and each party should ensure that each such affiliates would be bound by and comply with the terms and conditions of the agreeme....
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....ed the right High Court, whether there is a valid arbitration agreement in terms of Section 7 of the Act and whether the person before him with the request is a party to the arbitration agreement or whether there was no dispute subsisting which was capable of being arbitrated upon. It was also held in the said decision that the Chief Justice can also decide the question whether the claim was a dead one; or a long barred claim that was sought to be resurrected and whether the parties have concluded the transaction by recording satisfaction of their mutual rights and obligations or by receiving the final payment without objection. This Court, however, issued a caution that at that stage it may not be possible to decide whether a live claim made is one which comes within the purview of the arbitration clause and that it would be appropriate to leave that question to be decided by the Arbitral Tribunal on taking evidence, along with the merits of the claims involved in the arbitration. The decision further laid down that on coming to a conclusion on these aspects, the Chief Justice or his designate has to enquire whether the conditions for exercise of his power under Section 11(6....
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....iew, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject-matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject-matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject-matter of an action before a judicial authority is not allowed". In paragraph 17 of the said judgment it was held as follows: "Secondly, such bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the civil court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and order....
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....re is any dispute between the parties to the agreement arising out of or in relation to the subject matter of the said JVA, all such disputes and differences have to be adjudicated upon and decided through the process of arbitration by appointing a mutually agreed arbitrator. Pursuant to the aforesaid JVA dated 26.03.2004 Everest Mining & Mineral Pvt. Ltd. was incorporated and various amounts were also deposited by the petitioner through sister concerns for the incorporation and functioning of the said company. The said company could not function due to disputes which arose between the parties. Such disputes which relate to the working of JVA and various deposits made and which arose out of and in relation to the said JVA are required to be considered and decided through the process of arbitration as envisaged under clause 14.3 of the JVA. Though the JVA may have been terminated and cancelled as stated but it was a valid JVA containing a valid arbitration agreement for settlement of disputes arising out of or in relation to the subject matter of the JVA. The argument of the respondent that the disputes cannot be referred to the arbitration as the agreement is not in existence....