TaxTMI 
TaxTMI 
2017 (1) TMI 1662
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....almia group') and Calcom Cement India Ltd. ('the company') would also be referred to hereinafter as the applicant No. 1 and applicant No. 2, respectively. The shareholder's agreements dated 16th January, 2012 and in the shareholder, agreement dated 30th November, 2012 would be referred to hereinafter as SHA-I and SHA-II, respectively. 2. I have heard Dr. U.K. Chaudhary, learned senior counsel for the applicant No. 2, assisted by learned counsel Mr. Atul Sood, Mr. Soumitra Saikia, Mr. Raktim Gogoi, Mr. Himanshu Vij, Mr. Pabitra Saikia. I have also heard Mr. D Baruah and Miss Nirmala Upadhya, learned counsel for applicant No. 1. 3. Also heard Mr. S.N. Mukherjee, Mr. S. Dutta, learned senior counsel, appearing for the non-applicants/petitioner Nos. 1-9 assisted by Mr. S. Mitra, advocate, Ms. S. Dalmia, advocate. I have also heard Mr. P. Chatterjee, learned senior counsel appearing for non-applicants/petitioner Nos. 10-15, assisted by counsel, Mr. O. Chatterjee, and Ms. N. Modi. 4. Before proceeding further, I find it necessary to recount briefly the facts and circumstances, so narrated in the petition under section 397/398 of the Companies Act, 1956, ('the....
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....t in a position to discharge its part of the obligations under the SHA-I and was ultimately compelled to handover the management of the company to Dalmia group. 9. In order to facilitate such changes in the management, several agreements including SHA-II were also executed by and between Bawri group and Dalmia group on 30th November, 2012 laying down terms and conditions agreed to by the parties and the AoA of the company was once again suitably amended so as to incorporate therein the terms and conditions in SHA-II. In view of the aforesaid agreements, the control and management of the company stood transferred to Dalmia group. 10. Under the SHA-II too, it was agreed upon between the parties that the maximum number of the directors of the company shall be 12 but out of total number of 12 directors, Dalmia group shall nominate 5, Bawri group shall nominate 3 and AIDC shall have right to nominate one director. It has also been agreed upon between the parties that there shall be no independent directors in the Board, vide clause No. 3.6 of the SHA-II. 11. Very unfortunately, despite aforesaid agreements between the parties aforementioned, Dalmia group started indulging in se....
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.... loans in excess of Rs. 150 crore at high rate of interest from R2 without express consent of Bawri group. (ii) Non-resolution of 2 deadlock events in accordance with requirement of article 92. The company was not given an opportunity to exercise its right of first refusal to invest in R19 up to a maximum of 25 per cent of its full diluted share capital. (iii) Dalmia group has not caused the company to assign the Brand names in favour of Bawri group or its nominee for Re. 1. (iv) Dalmia group has wrongfully withheld the project information flow and did not hold any review meetings for project and operations. (v) Dalmia group caused the company to change the scope of concurrent audit contrary to the manner specified in AoA. (vi) Company and Dalmia group failed to complete the said plants by 31st March, 2014. (vii) Article 66(a) was introduced in AoA which declares that all the disputes relating to conflict of interest of Dalmia group vis-a-vis R-19 shall be untenable and would be deemed to have settled. (viii) Dalmia group has violated article 66(d) of the AoA. (ix) Dalmia group has failed to appoint a managing ....
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....thout first disposing section 8 application. However, after hearing the parties, hon'ble High Court was pleased to reject such appeal/revision but leaving the section 8 application to be decided by the CLB, Kolkatta. 20. Dr. U.K. Chaudhary, the learned senior counsel appearing for Dalmia group, now, submits that though the disputes in company petition are basically commercial disputes which reportedly occurred for alleged violations of various clauses in the agreements and, therefore, only the 'arbitrator', and not the 'CLB', has necessary jurisdiction to adjudicate such disputes, yet, the petitioners drafted the company petition in such a way that it creates a false impression that the allegations in the company petition constitute what is contemplated in section 397/398 of the Act as "mismanagement and oppression". 21. In simple words, according to the learned counsel for Dalmia group, the company petition is nothing but a dressed up petition which is designed to avoid the resolution of disputes through the mechanism of arbitration, so incorporated in the agreement itself. Mr. D Baruah, counsel, appearing for applicant No. 1 too supported the contention,....
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....ions 7 and 8 of the Act of 1996 and which are necessary for requiring the judicial authority to refer the parties before it to arbitration are met in the case in hand. 24. In elaborating such an argument further, it has been stated that the conditions specified in sections 7 and 8 of the Act of 1996 are as follows: (i) A valid arbitration agreement between the parties is required to be in existence. (ii) The "subject-matter" of the proceedings which are sought to be referred to arbitration by way of the section 8 application has to be the same subject-matter covered by the arbitration agreement in question. (iii) There has to be commonality of parties. This means that all the parties to the proceeding which are sought to be referred to arbitration by way of the section 8 applications have to be 'parties' to the arbitration agreement in question. (iv) The mandatory provisions of section 7(2) of the said Act which provides that the arbitration agreement must not only be in writing but it must be signed by all the parties to the agreement are to be met. (v) The mandatory provisions of section 8(2) of the said Act which provides t....
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....rthy AIR 1958 Mad. 587 (DB) 19. Sangramsinh P. Gaekwad v. Shantadevi P. Gaekwad [2005] 64 CLA 364 (SC) : [2005] 11 SCC 314 20. Harmer (HR) Ltd., In re. [1959] 1 WLR 62 21. Sukanya Holdings (P.) Ltd. v. Jayesh H Pandya [2003] 5 SCC 531 22. Vimal Kishor Shah v. Layesh Dinesh Shah [2016] 134 CLA 412 (SC) : [2016] 8 SCC 788 23. Atul Singh v. Sunil Kumar Singh [2008] 2 SCC 602 24. State of West Bengal v. Associated Contractors [2014] 123 CLA 1 (SC) : [2015] 1 SCC 3 25. Cellfone Ltd. v. RPG Cellular Investments & Holdings (P.) Ltd. (order of Madras High Court) 26. Needle Industries (India) Ltd. v. Needle Industries Newey (India) Holding Ltd. [1981] 3 SCC 333 27. Ajay Kirti Dalmia v. Company Law Board [2009] 91 CLA 351 (Del.) : [2009] 148 Comp Cas 742 28. Premier Automobiles Ltd. v. Fiat India (P.) Ltd. [2006] 74 CLA 214 (CLB) : [2007] 137 Comp Cas 737 29. Keshav Mimani v. Indu Kocher [2012] 4 CHN 157 30. Vodafone International Holdings BV v. Union of India [2012] 107 CLA 63 (SC) : [2012] 6 SCC 613 26. In Sukanya Holdings (P.) Ltd. (supra), it has been held that one of the fundam....
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....arbitral tribunal. 32. The reliefs which are made available under sections 402 and 403 are statutory reliefs and, therefore, only statutory bodies like CLB can grant such reliefs. The arbitral tribunal has no authority whatsoever to grant reliefs, so specified in sections 402 and 403 of the Act of 1956. In support of such claim, the decision in Sporting Pastime India Ltd. (supra) and Apex FRP Chemicals (P.) Ltd. (supra) are relied upon. 33. Referring to the decisions in Sporting Pastime India Ltd. (supra) and Premier Automobile Ltd. (supra). It has also been contended that if the allegations of oppression and mismanagement can be adjudicated upon by a Tribunal without any reference to the arbitration agreement, then, there is no question of referring the parties to the arbitral tribunal even if the arbitration agreement covers the same issue before the CLB. 34. Referring to the decision in Sangramsinh P. Gaekward (supra), it has been submitted that there are certain matters, such as, transfer of shares in violation of AoA and Companies Act, increase in capital to gain control over the company, removal of directors, amendment of articles violating the statutory right, and n....
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.... to Dr. U.K. Choudhury, have no application to the case under consideration since the disputes projected through the company petition are nothing but disputes over various breaches of agreements in the SHAs which are quite contractual in nature. 40. Since the disputes which are the subject-matters of the company petition are actually contractual dispute, and, not management disputes and since the actual parties to the petition and the parties to the arbitration agreements are identical and since the section 8 application satisfies all the requirements of law, there cannot be any escape from the conclusion that the parties to the company petition are to be referred to the arbitration, more so, when both SHA-I and SHA-II had in them a valid arbitration clause requiring the parties thereto to settle any dispute arising out or in connection with the implementation of such agreement only by arbitrator and by no other authority - argues the counsel for the applicant No. 2. 41. Repeating the arguments, advanced by the counsel for the applicant No. 2, Mr. D Baruah, learned counsel for applicant No. 1, further submits that when the applicant No. 2 was allowed to join the company as a ....
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....TION AND GOVERNING LAW 17.1 The provisions of this Agreement shall be governed by, and construed in accordance with the laws of India. 17.2 Any party(ies) who claims that a claim, dispute or difference in accordance with this agreement or the performance of any provision hereunder ('Dispute') has arisen ('Disputing Party') must give notice seeking amicable settlement thereof to the other party(ies) ('Non-Disputing Parties') as soon as applicable after the occurrence of the event, matter or thing which is the subject of such Dispute and in such notice such party(ies) shall provide particulars of the circumstances and nature of such Dispute and of its claim(s) in relation thereto. 17.3 Any Dispute between the Parties under this agreement shall be referred for negotiation and discussion between Mr. Binod Kumar Bawri on behalf of the promoter group and Mr. Y.H. Dalmia on behalf of the Dalmia group (together hereinafter referred as 'Representatives') who shall meet as soon as practicable and attempt to resolve the Dispute. 17.4 Any dispute between the parties, which cannot be settled by such negotiations and discussions....
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....d counsel for the petitioners submits that they have, no doubt, annexed the copies of aforesaid agreements along with the petition under section 397/398 but they did so only for the purpose of elucidating their case properly. Therefore, under no circumstances, the annexing of copies of agreements aforesaid along with the company petition could be interpreted to mean that the existences of arbitration agreements in question have been admitted by the petitioners. 46. I have considered the rival submissions having regard to averments made in company petition as well as the pleadings of the parties in the proceeding under section 8 of the Act. On making such an exercise, I have found that admittedly, the petitioners had annexed copies of said SHAs along with the company petition. There is nothing on record to suggest, even remotely that arbitration agreements in the SHAs are not valid for any reason whatsoever. 47. On further perusal of the relevant materials on record, it is found that the petitioners annexed the copies of those agreements, not only for the purpose of elucidating their case properly but they did so to lay the foundation of their case in the company petition as w....
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.... fixed assets or in respect of shareholding of the petitioners in the company and the fact that Delhi High Court was pleased to grant some of those reliefs of interim nature are also testimonies to the fact that all the disputes in the proceeding under section 397/398 of the Act of 1956 having been covered by the arbitration agreements. 52. Despites above being the situations, the petitioners approached the CLB, Kolkatta with a petition under section 397/398 of the Act which was drafted in such a manner that it created an illusion of oppression and mismanagement in running the affairs of the company and same having been committed by Dalmia group along with many others perpetuating oppression not only on the members of Bawri group but on some other entities as well. 53. Situation being such, according to the applicants, the disputes, which were projected through the company petition, being commercial/contractual disputes, cannot be adjudicated by the CLB inasmuch as same is meant for purposes different altogether and, therefore, the disputing parties are required to be sent to the arbitral tribunal for settlement of their disputes in accordance with the mechanism, so prescribe....
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.... company for the consideration, on the terms and conditions and in the manner set out in the share purchase agreement. C. The parties now wish to amend certain terms of the shareholders' agreement. In terms of clause 22.1 of the shareholders' agreement, the parties have agreed to execute this agreement to set out the mutually agreed amendments to the shareholders' agreement. Now, therefore, in consideration of the mutual agreements, covenants, representation and warrantees set forth in the agreement, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged by the Parties, the Parties hereby agree as follows:" 58. The introductory part of SHA-II, more particularly, the recitals in italic letters, undoubtedly show that the SHA-II was entered into by the parties out of their free will without they being coerced and compelled by any party/authority, whatsoever. Such revelations overwhelmingly demonstrate that the very claim of the petitioners that they had to hand over the management of the company to Dalmia group under compulsion is found to be wholly without any substance. 59. This apart, section 92 of the....
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....and SHA-II. 64. In that connection, I also deem it necessary to compare the allegations in the petition with the various clauses in the SHAs as well as with the various articles in the AoA of the company. On making an exercise as above, I have prepared two charts which are as follows: CHART A A comparative statement to ascertain the connection, if any, between the allegations of breach of articles of association of respondent No. 1 and the alleged breaches of various clauses in the SHA-I/SHA-II CHART B A comparative statement to ascertain the connection, if any, between the allegations pertaining to day-to-day management of company and the alleged breaches of various clauses in the SHA-I/SHA-II 65. The Chart A - above shows that the various allegations in the company petition, which were shown in serial Nos. 1 to 12 of the Chart A - above, match with clause 3.16 of SHA-II, (clause 3.19 and clause 4.9 of SHA-II), clause 21.1 of SHA-II, clause 11 of SHA-II, clause 3.4 of SHA-II, (clause 4.8 and 4.9 of SHA-II), clause 4.9 of SHA-II, clause 4.11 of SHA-II, clause 3.7 of SHA-II, (clause 3.9, clause 3.26 and clause 3.27) and clause 3rd December, 1.3 of SHA-I),....
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....n the SHAs and, therefore, the disputes, projected through the company petition, in my considered opinion, are entirely commercial/contractual disputes and not at all management disputes as claimed by the counsel for the petitioners. 71. It is in those backdrops, let me consider yet another important aspect of the section 8 proceeding, the decision on which would greatly shape the outcome of the proceeding in hand. It may be stated here that the applicants persistently contend that though all the clauses in the SHA-I and SHA-II have their own importance in one way or other, yet, there were certain clauses in the SHA-I/SHA-II, which carry enormous importance and, therefore, the parties to the agreements were expected to perform their part of duties under such agreements with unfailing dedication since the success or otherwise of various schemes, in the agreements, is dependent on meticulous execution of those schemes. 72. The project conditions, so incorporated in the SHA-I, were said to be one of such sets of very vital and very fundamental clauses in the agreements. Project conditions are incorporated in clause 9.1 of the SHA-I. Evidently and admittedly too, the task of comp....
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.... well as the lease deed for the factory land situated at Umrangshu, Assam. In case of unforeseen delays to the completion of the project conditions, the time period to ensure completion of the project conditions to the satisfaction of the Dalmia group shall stand extended to 31st March, 2014 ("Project CP Satisfaction Date"). However, if the clinker unit is ready to commence production during the period 1st July, 2013 and 31st March, 2014 but unable to commence production because of non-availability of limestone, then the last date for the completion of the project conditions, i.e., the Project CP Satisfaction Date shall be the date on which the clinker unit is unable to operate because of nonavailability of limestone. On or before the Project CP Satisfaction Date, the Bawri group shall issue a notice to the Dalmia group stating that the project conditions have been completed. Within 10 days, the Dalmia group shall issue a notice ("Project CP Satisfaction Notice") to the Bawri group, indicating that (i) all the project conditions have been completed to its satisfaction; or (ii) the project conditions which have not been completed to the reasonable satisfaction of t....
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.... of completing project conditions even under the SHA-II was again left with Bawri group, but then, the time for completion of the project conditions was extended further. In support of such contention, my attention has been drawn to various clauses including clause 3.20 of the SHA-II. For ready reference, clause 3.20-of the SHA-II is also reproduced below: '3.20 The parties hereby agree that within 60 days from the effective date, the parties shall mutually agree on the amendments to clause 9.1 with respect to project conditions, the support required to be given by the parties for completion of the project conditions and the effect thereof, if any. Such amended project conditions shall be deemed to form a part of this agreement. The parties hereby agree to forthwith effect necessary changes to the articles of association of the company to give effect to the change in understanding with respect to the amended project conditions.' 75. Unfortunately, according to Dr. U.K. Chaudhary, learned senior advocate, appearing for the applicant No. 2, once again, Bawri group could not complete such project conditions even within the extended time for which Dalmia group in....
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....since, according to the petitioners, soon after the execution of SHA-I, Dalmia group started violating the various terms and conditions incorporated in the SHA-I (which were subsequently made part of the AoA) which had unfortunately forced Bawri group, not only to hand over the management of the company to the Dalmia group but also paved the way for putting in place a modified agreements (SHA-II). 80. Since the management of the company was handed over to Dalmia group in October 2012, it was no longer possible for Bawri group to complete the project conditions for which an understanding was reached between the parties whereunder Bawri group was no longer required to complete the project conditions and in that connection, it was also agreed upon between the parties that all the relevant clauses including clause No. 3.20 in SHA-II would also be suitably amended. That being the position, one cannot find fault with Bawri group for its not completing the project conditions aforesaid within the time specified in agreements. 81. I have considered such submissions having regard to the materials on record and found that there was no dispute over the fact that the responsibility of com....
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....i group would no longer remain in the control of the management of the company, the later would be relieved off completely of the liability of completing the project conditions. 86. More importantly, it was also agreed to between the parties that all the relevant clauses, including the clause 3.20 of the SHA-II would be suitably amended recording the fact that Bawri group was relieved off the liability of executing the project conditions. But once again, it is alleged, Dalmia group did a U-turn and did nothing to bring about the necessary amendment to the clause aforesaid. 87. Such a contention was, however, hotly opposed to by Dalmia group stating that at no point of time, there was any understanding between the parties to the effect that Bawri group would be relieved off the liability of completing the project conditions. According to Dr. U.K. Chaudhary, learned senior counsel appearing for the applicant No. 2, all such claims are afterthought and invented just to get rid of quagmire which the Bawri group was in following its inability to perform the conditions, stated in clause 9.1 of the SHA-I. 88. In order to ascertain the veracity of rival pleas, I have carefully per....
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.... may be stated that in para 6.11(f) of the petition, it was alleged that Dalmia group caused the company to obtain loan from R-2 and R-19 beyond 150 crore at a high rate of interest, same being interest at 18 per cent par annum, forcing the company to suffer huge loss. But then, the clause 5.2 of the SHA-II shows that even under the original agreement, Dalmia group was allowed to obtain loan up to 150 crore with interest up to 18 per cent par annum. 93. Similarly, Bawri group claims (f) that Dalmia group had caused the company to purchase clinker from related parties at gross over value and (ii) that the transportation contract with R-24 (who is a related party to Dalmia group) was made in total violation earlier agreement, etc. However, materials, found available on record, prima facie do not support such contentions. The above revelations, in turn, not only show that the allegations aforesaid are contractual disputes, but, more importantly, those revelations also establish that the petitioners had employed every possible measure to colour some commercial disputes as management disputes. 94. We have already found that following the service of the notice dated 15th May, 2015 ....
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....ents are only petitioner No. 1 (representing entire Bawri group) and Saroj Sunrise (P.) Ltd. (a member of Bawri group) and respondent Nos. 1 and 2, yet, there are as many as six other petitioners and as many as twenty-three other respondents in the proceeding before the Tribunal. 99. These are revealing testimonies to the fact there is no commonality of the parties in the proceedings under section 397/398 of the Act of 1956 and in the arbitration agreements. Since there is no commonality of the parties in the proceedings under consideration in view of the law laid down in Sukunya Holdings (P.) Ltd. (supra), the proceeding under section 8 of the Act of 1996 is required to be dismissed on this count alone - argues counsel for the petitioners. 100. Such contention was, however, sought to be grounded on counts more than one. First, it was contended that the petitioner Nos. 10 to 15, along with the petitioner Nos. 1 to 9 are integral part of Bawri group and in the agreements in question, the petitioner Nos. 10 to 15 were duly represented by Bawri group. In support of such contention, it has been contended that there are umpteen numbers of clauses and sub-clauses in SHA-I and SHA-I....
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....e petitioner Nos. 10 to 15 are independent identities, and, not at all part and parcel of Bawri group as claimed by the applicants. 105. In support of such claims, it is being argued that the contention that clause 1.2(x), clause 1.2(xi), clause 1.2(xi)(b) show that the petitioner Nos. 10 to 15 are integral part of Bawri group was without any substance, since, according to learned counsel for petitioners, clauses 1.2(x) and 1.2(xi)(b) merely say that for the purpose of calculating the shareholding and/or voting shareholding of the promoter group, voting shareholding/shareholding of the persons in Schedule XII to the SHA-I shall be aggregated to the shareholding of the promoter group. Such provisions do not, in any manner, make petitioner Nos. 10 to 15 an essential part of Bawri group. 106. In regard to argument, based on clause 6.5.1 and clause 6.7.1, it has been stated that clause 6.5.1 only serves to show that after a certain period, Dalmia group shall have the right, but not the obligation, to acquire all shareholdings of Bawri group/promoter group in the company. Similarly, after a certain period, in view of clause 6.7.1 Bawri group/promoter group shall have the right, bu....
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...., which, according to the learned counsel for the petitioners, supply the final seal of approval to the claim that the petitioner Nos. 10 to 15 are not part of Bawri group. The facts, stated above, are: (a) Dalmia group never called upon petitioner Nos. 10-15 to discharge any obligation under SHA-I and SHA-II. (b) Dalmia group did not serve any notice of demand upon petitioner Nos. 10-15 although such notice was served on petitioner Nos. 1-9. (c) No notice of any proceeding or arbitrating meetings or mutation suites were served on petitioner Nos. 10-15. (d) No consideration/price of shares held by petitioner Nos. 10-15 has been specified nor was there any machinery for fixing of price thereof and Dalmia group never made any offer to acquire any shares of petitioner Nos. 10-15. 112. Regarding the contention that the respondent Nos. 3 to 25 are the part of Dalmia group, it has been argued by the learned counsel for the petitioners that the respondent Nos. 3 to 25 are not the part of Dalmia group. Rather they are different identities altogether and they have been arraigned as respondents in the company petition inasmuch as they too took very acti....
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....holding assigned/transferred to in favour of the Dalmia group in accordance with the Share Pledge Agreement-2 and this Agreement shall be subtracted from such calculation of voting shareholding of the promoter group. 6.2B notwithstanding anything to the contrary contained herein, it is agreed between the parties that Dalmia group shall not directly or indirectly, purchase any securities held by persons mentioned in Schedule XII. Further it is hereby clarified that, notwithstanding anything contained herein, the Bawri group shall have the right at all times to freely acquire any or all equity shares held by the persons mentioned in Schedule XII, provided it exercises such right only through the persons mentioned in Schedule I and/or their affiliates. 6.5.1 At any time after 31st July, 2017 and for a period up to 31st July, 2020 (the "Put Option Period"), the promoter group shall have the right to but not the obligation to issue a notice ("Put Notice") to the Dalmia group, to sell all, and not less than all, of the equity shares held by it in the company ("promoter Put Option Shares") to the Dalmia group or its Affiliates or any person nominated by the Dalm....
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.... shall be aggregated to the shareholding of the promoter group. Such provisions hardly show that petitioner Nos. 10 to 15 are the essential part of Bawri group. 116. Similarly, clause 6.5.1 - I find only serves to show that after a certain period, Dalmia group shall have the right, but not the obligation, to acquire all the shareholdings of Bawri group/promoter group in the company. Likewise, clause 6.7.1 of the SHA-I show that after a certain period, Bawri group/promoter group shall have the right, but not the obligation, to sell their entire shareholding in the company to Dalmia group or to its nominees, etc. However, such clauses do not augur well to advance the cause of the applicants in the proceeding in hand. 117. Rather, they support the claim of the petitioners that the petitioner Nos. 10 to 15 are not the part of Bawri group. The fact that after a certain period, Dalmia group shall have the right to acquire all shareholdings of Bawri group/promoter group only, but, not the shareholding of the petitioner Nos. 10 to 15. coupled with the fact that after a certain period, Bawri group/promoter group, shall have the right to sell their shareholding in the company to Dalmia....
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....the Act of 2013 makes such a conclusion inevitable - argues counsel for the applicants. 122. I have found little force in such submissions. It is true that the petitioner Nos. 10 to 15, who are admittedly the shareholders of the company, had never objected to the inclusion of clause 8.4 and clause 5.4 in SHA-I and SHA-II, respectively. It is also true that they never objected to the inclusion of SHA-I and SHA-II in the AoA with the aforesaid clauses till the time of preferring the section 397/398 proceeding in 2015. But then, such lapses on the part of the petitioner Nos. 10 to 15 do not automatically make them part of Bawri group. 123. This is because of the fact that the various definitions, so given in the SHAs in the introductory part of the agreements including the definition of Bawri group/promoter group, are so explicit and so clear that such definitions do not provide any scope either for admission of any third party to the grouping, so made in the agreements or for deletion of someone therefrom as far as the matters covered by agreements are concerned. The enlargement or constriction of such definition may be possible only by the way of amendment to such clause which....
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.... in such way giving an impression that they all closely associated entities as well as an impression that that they are part and parcel of Dalmia group, yet, those respondents, including respondent Nos. 24 and 25, despite they having been posted with such information, did nothing to object such representations vis-`-vis. their roles under the agreements are concerned. 128. Such revelations, in the facts and circumstances of the present case, further show that at least in respect of the matters, covered by the arbitration agreements, are concerned, all the respondents including respondent Nos. 24 and 25 too are part and parcel of the R-2 (Dalmia group) and, therefore, R-2 duly represents them not only in the agreements aforesaid but it duly represents them in the company-proceeding as well. 129. The fact that during the course of argument, too, the counsel for appearing for the applicants made a clear commitment that R-3 to R-25 would be bound by the commitments made in the SHAs makes such a conclusion more and more inevitable. Situations being such, in my considered opinion, the respondent Nos. 3 to 25 too are the part and parcel of Dalmia group at least insofar as the matter....
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....tion 9 proceeding before Delhi High Court and such a state of affair is clear proof of the fact that the petitioner Nos. 10 to 15 are not the part of Bawri group which, in turn, requires this court to dismiss the section 8 proceeding on holding that the parties before the Tribunal and the parties in the agreements are not identical. 135. I have considered such submission too having regard to the materials on record as well as the discussions I have indulged in here-in-before and found that such a contention from the side of the petitioner Nos. 10 - 15 are partially true. Non-impleadment of the petitioner Nos. 10 to 15 by the applicant No. 2 in the proceeding under section 9 of the Act of 1996, certainly demonstrates that they are not the part and parcel of Bawri group. But such fact supports the claim of petitioner Nos. 10 to 15 up to that far and no further. 136. This is because of the fact that our foregoing discussion now vividly shows that the actual parties in the company petition are the petitioner Nos. 1 to 9 on the one hand and the respondent Nos. 1 to 25 on the other hand, they being the integral part of Bawri group or Dalmia group respectively. Being so, the petitio....
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....the applicants has disputed such contention stating that whereas the petitioner Nos. 10 to 15 are integral part of Bawri group, the respondent Nos. 3 to 25 too are part and parcel of Dalmia group. Since the petitioner Nos. 10 to 15 or for that matter, the respondent Nos. 3 to 25 are integral part of Bawri group and Dalmia group, respectively and since Bawri group and Dalmia group represent the petitioner Nos. 10 to 15 and the respondent Nos. 3 to 25, respectively in the aforesaid agreements, there is hardly any necessity on the part of those petitioners and respondents to sign the said arbitration agreements on their own. 141. I have considered the submissions advanced by the parties having regard to materials on record as well as the discussions, made here-in-before. It may be stated here that while considering the point No. (ii) and point No. (iii) above, we have already found that the disputes in the proceeding under section 397/398 of the Act of 1956 were essentially and entirely between Bawri group, on one side and Dalmia group on the other side. While Bawri group represents the petitioner Nos. 1 to 9, Dalmia group represents R-2 to R-25. That being the position, in such di....
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.... of 1996 was completely ignored. In support of such contention, the decision in Atul Singh (supra) was relied on. In Atul Singh (supra), hon'ble Apex Court held that the directions in section 8(2) of the Act of 1996 are mandatory. 147. Dr. U.K. Choudhury, on the other hand, contends that above argument is bereft of law and logic since the counsel for the petitioner Nos. 1-9 had wrongly interpreted the requirement of section 8(2) of the Act of 1996. This is because of the fact that the section 8(2) never requires that the original agreement or a duly certified copy thereof must be submitted along with the application under section 8 of the Act. 148. What section 8(2) of the Act ordains is that the original arbitration agreement or a duly certified copy thereof must be there with application under section 8 of the Act when such application is entertained by the court. In other words, when such application is taken up for consideration by the Tribunal, the original arbitration agreement or a duly certified 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 ....
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....in accordance with the prescription of law. In this connection, it needs to be stated that SHAs are undoubtedly private documents. Then the question is who is to certify such private documents. Is only a public servant entitled to do such job as argued by the learned counsel for the petitioners. 155. My answer to such a query is a clear "NO". Section 76 of the Evidence Act, which is fundamental law on the subject, firmly demonstrates that only public documents are required to be certified by public servants. For ready reference, section 76 of the Evidence Act is reproduced below: "Certified copies of public documents. - Every public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate 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 call....
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....gal formalities. Being so, in view of status, attached to the post of Notary, in my firm view, the Notary has necessary authority to certify even a private document and, therefore, the authentication, done by the Notary is good authentication and it satisfies the requirement of section 8(2) of the Act of 1996. 161. So situated, let me consider what the term "entertainment", so used in section 8(2) of the Act means. Does the word "entertainment" and the term "initiation of the proceeding" carry same meaning. The contention of the learned advocates appearing for applicants was that the term "entertainment", so used in section 8(2) of the Act, is different from the term "initiation of proceeding". 162. According to the counsel for the applicants, the term "entertainment" means when the matter is taken up for consideration by the court or Tribunal but the term "initiation of proceeding" means the point of time when the application, 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 Bha....
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....for consideration. The High Court had rejected the said contention. The above view of the High Court was approved by this court in paragraph 4 of the judgment. Following was stated: "4. Before the High Court it was contended on behalf of the applicant and that contention was repeated in this court, that clause (b) of the proviso did not govern the present proceedings as the application in question had been filed several months before that clause was added to the proviso. It is the contention of the applicant that the expression 'entertain' found in the proviso refers to the initiation of the proceedings and not to the sage when the court takes up the application for consideration. This contention was rejected by the High Court relying on the decision of that court is Kundan Lal v. Jagen Nath Sharma AIR 1962 All. 547. The same view had been taken by the said High Court in Dhoom Chand Jain v. Chamanlal Gupta 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....
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....that submission of application in the aforesaid manner is violative of section 8 of the Act. 166. The relevant part of the judgment is produced below: "Section 8(2) has to be interpreted to mean that the court shall not consider any application, filed by the party under section 8(1) unless it is accompanied by original arbitration or certified copy thereof. The filing of the application without such original or certified copy, but bringing original agreement on record at time when the court is considering the application shall not entail rejection of the application under section 8(2)." 167. Since facts and circumstances of the case in hand are very similar to the facts and circumstances in Ananthesh Bhakta (supra), I have no hesitation in concluding that the submitting of the section 8 application and submitting of original or duly certified copy of the agreement on different dates 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 Dha....
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....relief, prayed for by the petitioners in the proceeding under section 397/398, can be granted by the arbitrator for the simple reason that the disputes projected through the petition are management disputes and being so, such disputes call for adjudication of matters involving right in rem and arbitral tribunals, being a private forum, have no authority, whatsoever, to adjudicate such disputes inasmuch as the arbitral tribunal could try only those matters, the decisions on which create right in persona as against right in rem. 173. In that connection, it has been stated that the nature of reliefs, sought for in the petition, more particularly, the reliefs, sought for in article 9(a), 9(r) and 9(dd) are of such nature that such reliefs can be granted only by CLB, in view of its wide power conferred on it under section 402/403 of the Act of 1956, and 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 th....
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....ird contention, above, is required to be rejected. 181. Secondly, it has been argued that relief, sought for in para 9(r), is nothing but relief for compensation/monetary relief against the consideration for sale shares to be paid to the Bawri group by the Dalmia group and such a claim by no stretch of imagination can be termed as management disputes. Being so, the appropriate reliefs in such a case would be compensation to be determined by the arbitrator in accordance with the prescription of the Law, and, not the reliefs, so specified in section 402/403 of the Act of 1956. I have considered such arguments, and found that the materials on record support such a claim from the side of the applicants. 182. As far as the relief in para 9(a) of the company petition is concerned, it has been contended 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 ....
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....s, unfortunately for the petitioners, become a fluent testimony to the fact that the petition under section 397/398 of the Act of 1956 is nothing but a vexatious one. 188. Close on the heels of above disclosures, come some other revelations which further fortify the above conclusion of mine. It is now found well evident that the actual players in the disputes under consideration were Bawri group on one side and Dalmia group on the other side, and no one else. Surprisingly, in the company petition, things were arranged in such a way which shows that in the disputes in question, there are some players, other than Bawri group who were affected adversely for the alleged illegal conduct of Dalmia group, they being the petitioner Nos. 10 to 15. 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 so....
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....ection 8 of the application. Since such a vital plea was not incorporated in the section 8 of the application, it is no longer possible for the applicants to argue that the company petition was a dressed up one. However, such an argument too cannot be accepted in the facts and circumstances of the case under consideration. 195. This is because of the reason that stuff in company petition hardly disclose the mismanagement and oppression, as contemplated in section 397/398 of the Act of 1956. Rather, the materials therein prima facie show that disputes, so projected through the company petition, are nothing but commercial disputes and parties to such disputes are Bawri group on one side and Dalmia group on 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 chang....
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....upra), the CLB, Chennai, on noticing that the petitioner therein impleaded one respondent without seeking any reliefs against him, was pleased to follow the ratio laid down in Cekop v. Asian Refractoriness Ltd. 73 CWN 192 and was pleased to hold that a party to an arbitration agreement cannot frustrate arbitration by merely joining third parties to the proceeding against whom no reliefs are claimed. 202. In Escorts Finance Ltd. v. GR Solvents & Allied Industries Ltd. [1999] 33 CLA 124 (CLB) : [1999] 20 SCL 23 (CLB) New Delhi, E-Logistics (P.) Ltd. v. Financial Deck India Ltd. [2007] 78 CLA 175 (CLB) : [2007] 79 SCC 424 (CLB), it was held that if most 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....
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....ing to entertain a petition which in fact is based on a breach of contract with an arbitration clause. On the excuse and pretext of "oppression and mismanagement" the petitioner cannot be given a colour of a dispute of "oppression and mismanagement". Therefore, we do not find any substance in the arguments of the counsel for the non-applicants-petitioners that the company petition is aimed at only preventing the "oppression and mismanagement". 206(a). In view of decisions in Rakesh Malhotra (supra) and in Ramnish Kumar Sharm (supra), I find no difficulty, whatsoever, in concluding that section 8 application needs to 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....
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....t of first refusal to invest in Adhunik (R19) up to a maximum of 25 per cent of its fully diluted share capital. (iv) Use of brand names : Breach of article 56 - Dalmia group has not caused the company to assign the Brand names in favour of members of Bawri group or its nominee at Re.1 (v) Disclosure of project information/review meetings. Dalmia group has wrongfully withheld the project information flow and not held any review meetings for projects and operations. Scope of Mandate of internal Auditors & Concurrent Auditors: Dalmia group caused the company to change the scope of concurrent audit contrary to the manner specified in the article and excluded audit procurement at Central Office. Completion of Lanka & Umrangshu Plants: Company and Dalmia group failed to complete the said plants by 31st March, 2014. Umrangshu plant has since been commissioned in April 2015. Conflict of Interest of DCBL vis-a-vis respondent No. 19: Article 66(a) provides that all disputes relating to conflict of interest of Dalmia group vis-a-vis the respondent No.19 shall be untenabl....
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....of AoA Articles 78(iii), 84 and 86 of AoA Articles 92(j) and 93 of AoA Article 96(iii) of AoA Document 4 Sl. No. Allegation Nature of allegations in para No. of SHA-I clause No. of CP 143 AoA article No. CP 143 CP 143 Impropriety in Financial Transactions 1 2. 3. and 6.14 Para 6.13 Awarding contracts to Gammon Dunkerley & Co. Ltd. at a price much higher by Rs. 21.97 crore than the prevalent market prices and knowing that their credentials were not suitable for the project of the company. Para 6.17 The audit report on concurrent audit reported a shortfall of material to the extent of a value of Rs. 2.75 crore. Para 6.17 Bawri group had assessed the unaccounted loss of about 1006 tons of steel having an approximate value of 4. Para 6.19 Rs. 5.03 crore. Rs. 10.64 crores was sanctioned by the Dalmia. group from the company on account of excavation work as against and agreed fixed budget Clause 3.7 of amended SHA of 30th November, 2012 which adds clause 3.7.3 to the original SHA read with clause 3.1 of the original SHA ....
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....ause 3.1 of the original SHA of 16th January, 2012 (power of MD) Clause 4.11 of amended SHA of 30th November, 2012 which adds clause 14.11.1 to the original SHA Clause 4.11 of amended SHA of 30th November, 2012 which adds clause 14.11.1 to the original SHA Clause 3.7 of amended SHA of 30th November, 2012 which adds clause 3.7.3 to the original SHA read with clause 3.1 of the original SHA of 16th January, 2012 (power of MD) Respondents indicated include only related parties and GDC. Related parties Article 66(a) the of AoA Article 66(a) the of AoA Article 78(iii) the of AoA read with article 86 of the AoA For related party transactions refer article 92 of AoA Document 6 higher than prevailing market rate and entering in to contracts with other related entities (respondent Nos. 22 to 24) Related Party Transactions (RPT) 9. 10. 11. Para 6.50 (A) Dalmia group has caused the company to purchase clinker from third party sources at a higher rate than spot market. Over a period of 24 months a total quantity of ....