TaxTMI 
TaxTMI 
2024 (9) TMI 1299
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............................. 31 D. SUBMISSIONS ON BEHALF OF THE RESPONDENT (SRG GROUP) ............................................................................................................ 32 E. ANALYSIS ................................................................................................. 38 i. Scope of jurisdiction of the referral court under Section 11(6) of the Act, 1996......................................................................................................... 38 ii. Whether on a prima facie view, the SRG Group being a nonsignatory to the FAA, can be referred to arbitration? .............................. 55 F. CONCLUSION .......................................................................................... 66 1. The present petition has been filed under Section 11(6) read with Section 11(9) of the Arbitration and Conciliation Act, 1996 (hereinafter, "the Act, 1996") seeking appointment of a Sole Arbitrator to adjudicate the disputes between the Petitioners and the Respondents in terms of Clauses 7.2 and 7.3 respectively of the Family Arrangement Agreement dated 28.02.2020 (hereinafter, "the FAA") read with the Amendment ....
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....Ltd. Rep. by its Director Respondent No. 8 SRG 23. Samarjitsinh R. Gaekwad (Shareholder & Director of Millenium Estates Pvt. Ltd. and Deegee Software Pvt. Ltd.) Respondent No. 9 SRG 24. Radhikaraje S. Gaekwad (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 10 SRG 25. Subhanginiraje R. Gaekwad (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 11 SRG 26. Gaekwad Services Ltd. now known as Gaekwad Enterprise Pvt. Ltd. Rep. by its Managing Director (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 12 SRG 27. Samarjitsinh Gaekwad HUF (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 13 SRG 28. Rajesh C. Patel (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 14 JRS 29. Shilpa R. Patel (Shareholder of Deegee Software Pvt. Ltd.) Respondent No. 15 JRS 30. Aditya Patel (Director of Deegee Software Pvt. Ltd.) Respondent No. 16 SRG 31. Nitin Shripadbhai Pujari (Director of Deegee Software Pvt. Ltd.) Respondent No. 17 SRG 4. The Petitioners herein are collectively referred to as the "AMP Group". The Petitioner Nos. 1 to 9 & 14 respective....
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.... It is pertinent to note that, of the aforesaid disputes, the respondent No.9 of the SRG Group is one of the respondents in CP/383/2017 pertaining to Deegee, filed by the AMP Group before the NCLT at Mumbai. 9. The Best Value Chem. Ltd. (hereinafter, "BVC") is an entity involved in the business of manufacturing aroma chemicals co-owned by the AMP and JRS Groups. The Premji Group had initiated a proposal to buyout BVC and indicated that the deal could only go through if the litigations filed against BVC were withdrawn. Therefore, the parties thought it fit to resolve all the issues between them once and for all with the understanding that the AMP Group would completely takeover various entities and that the JRS and SRG Groups would co-own other entities. 10. During negotiations that preceded the execution of the FAA, the following events/communications took place; * Vide emails dated 12.12.2019 and 02.01.2020, several internal documents required for the valuation of Millenium and Deegee were shared by Mr. Pankaj Agarwal with the AMP Group wherein a copy was marked to Mr. Kalpesh Parmar. * Vide email dated 14.01.2020 sent to the AMP Group, Mr. Kalpesh Parmar c....
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....RG Group is also required to undertake certain steps and actions specified viz, (a) Clause 2.1.4 read with Schedule 7 on Millenium Exit (presently AMP Group holds 36% while SRG Group holds 40%) where AMP Group is required to exit and SRG Group is required to purchase additional shares; (b) Clause 2.1.5 requiring Amendment of Lease Deed executed between Millenium, the Lessor and Aurosagar Estates Pvt. Ltd. (hereinafter, "Aurosagar"), the Lessee and; (c) Clause 2.1.6 read with Schedule 8 on Deegee Exit where JRS and SRG Groups are required to completely exit and AMP Group would purchase the shares. The relevant clauses of the FAA are reproduced hereinbelow: "2.1.4 Exit of AMP Group from Millenium (a) Within 30 (thirty) days from the Trigger Date("Millenium Transfer Date"), Parties shall execute duly stamped agreement(s) with SRG to record and finalize their understanding with respect to exit of AMP Group from Millenium by way of transfer/ buy back of all Class A equity shares in Millenium ("Millenium Exit") in the manner set out in Schedule 7. The Parties agree that the valuation of Millenium for the purposes of the Millenium Exit shall be INR 130,00,00,000 (Rupees ....
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....d SRG from Deegee Software, including (i) transfer of all shares held by JRS Group and SRG in Deegee Software ("AMP Deegee Transfer"); (ii) resignation of directors appointed by JRS Group/SRG from the board of directors of Deegee Software; and (iii) repayment of loan by Deegee Software to its lenders including the interest accrued thereon in the manner set out in Schedule 8 ((i), (ii) and (iii) are collectively referred as "Deegee Exit") (b) AMP Group shall complete due diligence of Deegee Software within 20 (twenty) Business Days from the Execution Date, in the event, there are any findings requiring indemnity by AMP Group from JRS Group and/or SRG the same will be mutually agreed between the parties. (c) Parties shall co-operate with each other for any actions required to be undertaken or documents required to be executed for giving effect to the actions contemplated under this Clause, including but not limited to exercising their voting rights to provide necessary board or shareholders' approval, execution and stamping of share transfer forms, endorsement of share certificates, filing forms with the registrar of companies and the Reserve Bank of India, maki....
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....off entire loan provided by JRS Group and SRG along with interest at the rate of 14.50% p.a. compounded annually; and (ii) shares of Deegee Software held by JRS Group and SRG shall also be transferred to AMP Group. 5. The above exercise to be completed within 12 months from the execution of relevant documents in this regard." ( Emphasis supplied ) 13. Post the execution of the FAA and in pursuance of the implementation thereof, the following communications were exchanged: * Vide emails dated 12.03.2020 and 13.03.2020 sent to the AMP Group, Mr. Pankaj Agarwal shared documents required for the due diligence of Deegee which were marked to Mr. Kalpesh Parmar and the latter email was additionally marked to the respondent No.9 of SRG Group. * Vide emails dated 24.04.2020 and 04.05.2020 sent to the AMP Group, the JRS Group lawyers shared the FAA Closing Tracker reflecting the status of implementation of the FAA which included the pending transfer of Deegee and Millenium. The same were marked to Mr. Kalpesh Parmar. * Vide email dated 08.05.2020 sent to a shareholder of BVC, Mr. Kalpesh Parmar acted as the representative of the SRG Group on di....
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....elevant to the present dispute are reproduced hereinbelow: "5. Clause 2.1.5(a) stands deleted in its entirety and is substituted with the following: On the Millenium Transfer Date, Aurosagar and Millenium shall simultaneously execute the following: (i) duly stamped amendment deed to the Aurosagar Lease Deed in the format set out in Annexure 1; (ii) duly stamped irrevocable special power of attorney in favour of Aurosagar in the format set out in Annexure 1A; and (iii) duly stamped deed of indemnity in the format set out in Annexure 1B. 6. Clause 2.1.6(b) stands deleted in its entirety and is substituted with the following: AMP Group shall complete due diligence of Deegee Software on or before June 30, 2020. In the event, there are any findings requiring indemnity by AMP Group from JRS Group and/or SRG the same will be mutually agreed between the parties in writing. xxx xxx xxx 12. Paragraph 27 in Schedule 4 stands deleted in its entirety and is substituted with the following : "Transaction Documents" means this Agreement, the Settlement Escrow Agreement and any and every document executed in connection with the t....
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....nt, including any question regarding its existence, validity or termination ("Dispute"), expediently and amicably to achieve timely and full performance of the terms of this Agreement or the Transaction Document/s. 7.1.2 Any Party which claims that a Dispute has arisen must give notice thereof to the other Parties as soon as practicable after the occurrence of the event, matter or thing which is the subject of such Dispute and in such notice, such Party shall provide particulars of the circumstances and nature of such Dispute and of its claim(s) in relation thereto and shall designate a Person as its representative for negotiations relating to the Dispute, which Person shall have authority to settle the Dispute. The other Parties shall, within 7 (seven) days of such notice, each specify in writing its position in relation to the Dispute and designate as their representative in negotiations relating to the Dispute, a Person with similar authority." 17. The first round of mediation was held between the representatives of the AMP and JRS Groups on 19.01.2022. However, the discussions on the issues did not lead to any conclusion. While the minutes of the same were shared wi....
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....Power of Attorney: Millennium and SRG are of the opinion that there is no required of a Special Power of Attorney. (5) Deegee (a) SRG will exit from Deegee, however, the same has been formed and promoted by SRG, SRG has also given its name in order to avoid the conflict of interest of AMP with Firmenich. SRG has taken care of the company for the last 20 years and has provided services without any renumeration. In view thereof, for exiting Deegee, SRG is expecting compensation of Rs.25 crores (b) Millennium and SRG are also expecting interest 14.50% till repayment of the amount lent to AMP JRS Group has suggested that we may have another meeting and try to take it forward". ( Emphasis supplied ) 20. Further on 21.11.2022, the JRS Group sent another WhatsApp message to the AMP Group stating that it had spoken to the SRG Group and that if the AMP Group was not ready to recognise SRG's contribution in the growth of Deegee, it would be difficult for them to agree with the AMP Group on any point. The contents of the message are reproduced hereinbelow: "Talked with SRG and here is the response- As he understands from me that AMP gro....
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....ce Kalpesh S. Jhaveri (Former Chief Justice, High Court of Orissa) to act as the sole arbitrator to resolve and adjudicate the disputes only between the AMP Group and JRS Group, in accordance with the FAA. The arbitration clause contained in the FAA is reproduced hereinbelow: "7.2 Any Dispute, if not resolved in accordance with Clause 7.1, shall be referred to and finally resolved by arbitration in accordance with the Arbitration and Conciliation Act, 1996 read with the rules framed thereunder ("Arbitration Act"). Subject to any interim reliefs/orders granted, this Agreement and the rights and obligations of the Parties contained in this Agreement shall remain in full force and effect pending issuance of the award in such arbitration proceedings, which award, if appropriate, shall determine whether and when any termination shall become effective. 7.3 The arbitral tribunal shall consist of a sole arbitrator mutually agreed upon and appointed by the Parties. Failing such agreement, either Party shall be at liberty to seek appointment of a sole arbitrator by preferring an appropriate application in accordance with the Arbitration Act before the jurisdictional Court o....
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.... email dated 14.01.2020 by which Mr. Kalpesh Parmar stated that the valuation of Respondent Nos. 7 and 8 respectively can be finalized only in consultation with the SRG Group; * A joint meeting that took place between Mr. Kalpesh Parmar, Mr. Ashit Patel and Respondent No.9 during which Respondent No.9 represented that Mr. Kalpesh Parmar was also representing the interest of the SRG Group in the negotiations and that SRG would be bound by the final terms agreed with Mr. Kalpesh Parmar and JRS Group; * The email dated 08.05.2020 by which Mr. Kalpesh Parmar asserts that SRG is ready to honour what was agreed in the FAA and that he has to safeguard the interest of SRG in the implementation of the FAA. * Even after the execution of the FAA, important emails dated 13.03.2020, 27.11.2020, 26.03.2021 and 03.04.2021 respectively were sent by the JRS Group/Kalpesh Parmar wherein SRG (Respondent No.9) was marked and has not objected to the contents thereof or raised any grievance. * During the mediation process, the SRG Group had communicated through a JRS Group representative that it is ready and willing to perform its obligations under the FAA if its dema....
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....ts of which were forwarded to the SRG Group on 27.11.2020. 30. It was submitted that the AMP Group has conducted the due diligence of the Respondent No.8 Company i.e., Deegee as contemplated in Clause 2.1.6(b) of the FAA with the full knowledge and consent of the SRG Group. The same is evident vide emails dated 01.07.2020, 23.10.2020, 10.04.2021 and 15.04.2021 respectively. This demonstrated that the FAA had also been partly implemented qua the SRG Group which is in management of the said company. 31. One another submission made by the counsel was that the nomenclature of the agreement i.e., "Family Arrangement Agreement" is irrelevant. In addition to that, the description and obligation of the parties under the FAA is also irrelevant since most cases of non-signatory parties will involve agreements, the terms of which do not expressly include the non-signatory. In support of the aforesaid, the counsel placed reliance on the decision of this Court in Sasan Power Ltd. v. North American Coal Corporation (India) Private Ltd. reported in (2016) 10 SCC 813 where it was settled that the nomenclature of an agreement is not determinative of its character. 32. The counsel submitted....
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....bers, whereas, the SRG Group is not part of the family. 36. The counsel submitted that the various clauses of the FAA indicate that the FAA binds only the AMP and JRS Groups. Clauses 2.1.4 and 2.1.6 respectively wherein the SRG Group is mentioned do not cast any obligations on the SRG Group since it merely states that "Parties shall execute..." & "Parties shall ensure...". There is also no exchange of consideration with the SRG Group in the FAA. 37. The counsel submitted that neither the JRS Group nor the chartered accountant, Mr. Kalpesh Parmar have ever represented the SRG Group, acted on their behalf or received any authority or power from the SRG Group. There is no evidence on record or otherwise to the contrary. 38. The counsel submitted that Clause 8.1 of the FAA on "Entire Agreement" categorically states that the FAA superseded any and all prior oral and written agreements. Therefore, the case of the AMP Group that SRG Group was effectively a part of the negotiations and is privy to the transactions is inconsequential. 39. The counsel finally submitted that the AMP Group and JRS Group have fulfilled part of their respective obligations under the FAA and are in a ....
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....it sets out the negotiation or dispute resolution mechanism or appointment procedure to be followed by the parties alone, and importantly, the factum that the AMP and JRS Groups shall continue to perform their respective obligations under the FAA, subject to the termination of the FAA. At no point does the arbitration agreement make any reference to the SRG Group nor does it fasten any obligations to be performed by it. 43. It was further submitted that there is no defined legal relationship between the SRG Group and the petitioners to justify the application of Section 7(1) of the Act, 1996. In other words, there is no 'arbitration agreement' between them either in the form of an arbitration clause in a contract or in the form of a separate agreement in terms of sub-sections (2) to (5) of section 7 of the Act, 1996. In fact, there is no contract at all between them and consequently, there is no privity of contract between the Petitioners and SRG Group in any manner whatsoever. 44. It was also submitted that bringing non-signatories within the scope of the arbitration agreement is an exception and not the rule. In support of this, the counsel relied on the decision of this Co....
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....20.12.2021, the AMP Group invoked mediation as per clause 7.1.2 of the FAA only against the JRS Group for resolving disputes between themselves. It has been admitted in the same email that the AMP Group had no contact with the SRG Group regarding any SPAs for Millenium and Deegee or otherwise and the AMP Group even castigated the JRS Group for pushing pending obligations inter se the parties on the SRG Group when "the SRG group is not even a party to the FAA". The minutes of the 1st mediation meeting dated 19.01.2022 also reflect that the same was not attended by the members or representatives of the SRG Group. The counsel further submitted that when the negotiations were resumed for the second time vide email dated 23.05.2022, the SRG Group neither attended nor was represented in the same. 48. The counsel submitted that the SRG Group at no point of time, appointed, engaged or authorised, either the JRS Group or Mr. Kalpesh Parmar to undertake any actions or make any representations on its behalf or bind it to any agreement that has been entered into by and between the AMP and JRS Groups either expressly or impliedly. It was submitted that even as per the petitioners' own case, ....
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....in the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The relevant observations are reproduced hereinbelow: "47. We, therefore, sum up our conclusions as follows: (i) The power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the Act is not an administrative power. It is a judicial power. xxx xxx xxx (iv) The Chief Justice or the designated Judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be his own jurisdiction to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the designated Judge would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises bu....
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....l Tribunal are: (i) Whether a claim made falls within the arbitration clause (as for example, a matter which is reserved for final decision of a departmental authority and excepted or excluded from arbitration). (ii) Merits or any claim involved in the arbitration. ( Emphasis supplied ) 55. On a closer look at the categories delineated in the aforesaid decision, it can be seen that the issues in the first category have to be mandatorily decided by the Chief Justice or his designate under Section 11 of the Act, 1996. This included the question whether there is an arbitration agreement and whether the party that has applied under Section 11 is also a party to such an agreement. 56. Later, on the suggestion of the 246th Report of the Law Commission of India, Section 11(6A) was inserted through the 2015 Amendment to the Act, 1996. The wide jurisdiction afforded to the referral courts by the decisions in SBP & Co (supra) and Boghara Polyfab (supra) was legislatively overruled by virtue of the non-obstante clause incorporated in Section 11(6A). Although the 2019 Amendment to the Act, 1996 omitted Section 11(6A), such an omission was not notified and there....
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....(2019) 9 SCC 209 considered the effect of Section 11(6A) which confined the jurisdiction of the Court to examine the "existence of an arbitration agreement" on an arbitration agreement contained in an unstamped document or contract. The Court was of the opinion that its enquiry as to whether a compulsorily stampable document, which contains the arbitration clause, is duly stamped or not, is only an enquiry into whether such an arbitration agreement exists in law and this does not in any manner amount to deciding "preliminary question(s)" that arise between the parties. However, in deciding so, the Court maintained that a referral court must confine itself to the question of existence of the arbitration agreement and observed as thus: "14. A reading of the Law Commission Report, together with the Statement of Objects and Reasons, shows that the Law Commission felt that the judgments in SBP & Co. [SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] required a relook, as a result of which, so far as Section 11 is concerned, the Supreme Court or, as the case ma....
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....raises complicated factual questions, which are best left for the tribunal to handle.[...] " ( Emphasis supplied ) 61. A Constitution Bench of this Court in In Re: Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 and Stamp Act, 1899 reported in (2024) 6 SCC 1, stated that an arbitration agreement contained in an unstamped or insufficiently stamped contract would not be non-existent in law as stated in Garware Wall Ropes (supra). It also clarified the position taken in Vidya Drolia (supra) and stated that the parameters for judicial review under Sections 8 and 11 respectively were different. The scope of examination under Section 11(6) should be confined to the "existence of the arbitration agreement" under Section 7 of the Act, 1996. Similarly, the "validity of an arbitration agreement" must be restricted to the requirement of formal validity such as the requirement that the agreement be in writing. Substantive objections pertaining to existence and validity on the basis of evidence must therefore be left to the arbitral tribunal. Moreover, it was stated that the expression "examination" under Section 11 does not connote or imply a l....
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.... the existence of an arbitration agreement on the basis of Section 7. Similarly, the validity of an arbitration agreement, in view of Section 7, should be restricted to the requirement of formal validity such as the requirement that the agreement be in writing. This interpretation also gives true effect to the doctrine of competence-competence by leaving the issue of substantive existence and validity of an arbitration agreement to be decided by Arbitral Tribunal under Section 16. We accordingly clarify the position of law laid down in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] in the context of Section 8 and Section 11 of the Arbitration Act. 166. The burden of proving the existence of arbitration agreement generally lies on the party seeking to rely on such agreement. In jurisdictions such as India, which accept the doctrine of competence-competence, only prima facie proof of the existence of an arbitration agreement must be adduced before the Referral Court. The Referral Court is not the appropriate forum to conduct a mini-trial by allowing the parties to adduce the evidence in regard to the existence or validity of an a....
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....application, there is a risk of leaving the claimant forum-less for the adjudication of its claims. It was stated that a detailed examination at this stage would also be counterproductive to the objective of expediency in deciding a Section 11 application and simplification of pleadings. It was also stated that even if ex-facie frivolity is made out by the referral court, the arbitral tribunal has the benefit of extensive pleadings and evidentiary material and therefore, it would be incorrect to doubt that the arbitral tribunal would not be able to arrive at a similar conclusion. The relevant observations are reproduced hereinbelow: "123. The power available to the referral courts has to be construed in the light of the fact that no right to appeal is available against any order passed by the referral court under Section 11 for either appointing or refusing to appoint an arbitrator. Thus, by delving into the domain of the arbitral tribunal at the nascent stage of Section 11, the referral courts also run the risk of leaving the claimant in a situation wherein it does not have any forum to approach for the adjudication of its claims, if it Section 11 application is rejected.....
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....sion empowers the Arbitral Tribunal to rule on its own jurisdiction, including any ruling on any objections with respect to the existence or validity of arbitration agreement. Section 16 is an inclusive provision which comprehends all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. [Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455 : (2020) 1 SCC (Civ) 570] The doctrine of competence-competence is intended to minimise judicial intervention at the threshold stage. The issue of determining parties to an arbitration agreement goes to the very root of the jurisdictional competence of the Arbitral Tribunal. xxx xxx xxx 169. In case of joinder of non-signatory parties to an arbitration agreement, the following two scenarios will prominently emerge : first, where a signatory party to an arbitration agreement seeks joinder of a non-signatory party to the arbitration agreement; and second, where a nonsignatory party itself seeks invocation of an arbitration agreement. In both the scenarios, the referral court will be required to prima facie rule on the existence of the arbitration agreement and whether the n....
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....at may arise for consideration in an application under Section 11. Of these, in the first category which had to be mandatorily decided by the referral Court, the question whether there was an arbitration agreement and whether the party who has applied under Section 11 of the Act, 1996 is a party to such an agreement, was also included. * The insertion of Section 11(6A) through the 2015 Amendment to the Act, 1996 stipulated that the Courts under Section 11 shall confine their examination to the 'existence' of an arbitration agreement. It legislatively overruled the decisions in SBP & Co. (supra) and Boghara Polyfab (supra) by virtue of its non-obstante clause. * Duro Felguera (supra), in clear terms, clarified the effect of the change brought in by Section 11(6A) and stated that all that the Courts need to see is whether an arbitration agreement exists - nothing more, nothing less. * Vidya Drolia (supra) endorsed the prima facie test in examining the existence and validity of an arbitration agreement both under Sections 8 and 11 respectively. However, it was clarified that in cases of debatable and disputable facts and reasonably good arguable case, etc. t....
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.... valid agreement, has to satisfy the requirements stipulated under Section 7 of the Act, 1996 along with the principles of law under the Indian Contract Act, 1872. Having regard to the submissions of both the Respondent Groups i.e., JRS and SRG, it can be said that they have raised manifold objections to the present petition, however, none of those objections question or deny the existence of the arbitration agreement under which the arbitration has been invoked by the Petitioner AMP Group. In fact, the JRS Group has no objection to resolve the disputes with the AMP Group by way of arbitration. Their primary objection is only that the SRG Group cannot be a part of the arbitration proceedings. Therefore, the requirement of prima facie existence of an arbitration agreement, as stated under Section 11 of the Act, 1996 is satisfied. 67. However, the core issue that falls for our consideration is whether the SRG Group, being a non-signatory to the FAA can also be referred to arbitration and whether they are "veritable" parties to the arbitration agreement. 68. This Court in Cox and Kings (supra) held that the definition of "parties" under Section 2(1)(h) read with Section 7 of the....
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....l signatories to an arbitration agreement are parties who will be bound by it. However, in exceptional cases persons or entities who have not signed or formally assented to a written arbitration agreement or the underlying contract containing the arbitration agreement may be held to be bound by such agreement. As mentioned in the preceding paragraphs, the doctrine of privity limits the imposition of rights and liabilities on third parties to a contract. Generally, only the parties to an arbitration agreement can be subject to the full effects of the agreement in terms of the reliefs and remedies because they consented to be bound by the arbitration agreement. Therefore, the decisive question before the Courts or tribunals is whether a non-signatory consented to be bound by the arbitration agreement. To determine whether a non-signatory is bound by an arbitration agreement, the Courts and tribunals apply typical principles of contract law and corporate law. The legal doctrines provide a framework for evaluating the specific contractual language and the factual settings to determine the intentions of the parties to be bound by the arbitration agreement. [ Gary Born, International Arb....
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....clusion of the contract; (d) the nature and purpose of the contract; (e) the meaning commonly given to terms and expressions in the trade concerned; and (f) usages. xxx xxx xxx 126. Evaluating the involvement of the non-signatory party in the negotiation, performance, or termination of a contract is an important factor for a number of reasons. First, by being actively involved in the performance of a contract, a non-signatory may create an appearance that it is a veritable party to the contract containing the arbitration agreement; second, the conduct of the non-signatory may be in harmony with the conduct of the other members of the group, leading the other party to legitimately believe that the non-signatory was a veritable party to the contract; and third, the other party has legitimate reasons to rely on the appearance created by the non-signatory party so as to bind it to the arbitration agreement. xxx xxx xxx 127. [...] The nature or standard of involvement of the nonsignatory in the performance of the contract should be such that the non-signatory has actively assumed obligations or performance upon itself under ....
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....ty shares amounting to 36%. According to the procedure contemplated therein, during Phase 1 of the Millenium exit, the SRG Group (which already holds 40% shares in Millenium) is supposed to additionally purchase approx. 11% of the shares in Millenium held by the AMP Group. It is stated therein that the JRS Group would provide the necessary funding to SRG Group to purchase the aforementioned shares. In Phase 2, Millenium would buy back the balance shares of the AMP Group i.e., approx. 25% from the funds to be received from Respondent No. 8 company i.e. Deegee. 74. Clause 2.1.6 read with Schedule 8 prima facie indicates that the JRS Group and SRG Group would completely exit from the Respondent No. 8 Company i.e., Deegee. The proceeds received by the AMP Group from the sale of its shares in Millenium as per Phase 1 of the Millenium exit would be brought into Deegee by the AMP Group. AMP Group is also required to bring further funds into Deegee to pay off the entire loan provided by Millenium to Deegee along with interest at the rate of 14.5% compounded annually. Simultaneously with the repayment of loans to Millenium as aforesaid, Deegee is also required to pay off the entire loan ....
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....nsent of the SRG Group to be bound by the underlying contract and/or the arbitration agreement; * Whether the documents required for the valuation and due diligence of Millenium and Deegee could have been shared by an employee of Deegee without the knowledge or consent of the SRG Group; and * Whether the demand of an additional Rs. 25 crore made by the SRG Group through the JRS Group as a condition for exit from Deegee indicates their intention to be bound by the underlying contract and/or the arbitration agreement? 79. A detailed examination of numerous disputed questions of fact are imperative in deciding whether the SRG Group participated in the negotiation and performance of the underlying contract and can be bound by the arbitration agreement. At the cost of repetition, we may state that under our limited jurisdiction afforded under Section 11(6) of the Act, 1996 we should not conduct a mini trial and delve into contested or disputed questions of fact. This has been categorically laid down in several decisions of this Court including Vidya Drolia (supra) and Krish Spinning (supra). Further, it is also the case of the SRG Group that a dual test needs to be ....