TaxTMI 
TaxTMI 
2024 (3) TMI 1351
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....m Mhatre, Amit Mishra, Sumer Dev Seth, Shreya Sethi, Riya Kumar, Advs., Harin P. Raval, Sr. Adv., Karan Bharihoke, Siddhant Sharma, Shreshtha, Advs., Nakul Dewan, Sr. Adv., Aditya Dewan and Parth Tiwari, Advs. JUDGMENT SACHIN DATTA, J. 1. The present petition has been filed by DLF Limited ("DLF"/ "petitioner") seeking appointment of a sole arbitrator to adjudicate the disputes between itself and PNB Housing Finance Limited ("PNBHFL"/ "respondent no.1"), Omkara Asset Reconstruction Company Limited ("Omkara"/"respondent no.2"), Joyous Housing Limited, ("JHL/ "respondent no.3"), Hubtown Limited ("Hubtown"/"respondent no.4"), Chinsha Property Private Limited ("Chinsha/"respondent no.5"), Twenty Five South Realty Limited ("Twenty-Five South"/"respondent no.6") and Akruti Nirman Private Limited ("Akruti/"respondent no.7"). Factual Background 2. DLF alongwith Hubtown and Chinsha have been shareholders in JHL, in the ratio of 37.5% (DLF Ltd.), 37.5% (Chinsha) and 25% (Hubtown). DLF had purchased 37.5% shareholding in JHL vide Memorandum of Understanding dated 15.04.2004. 3. In 2017, JHL had availed a loan of Rs. 800 Crores from PNBHFL under a Loan Agreement-cum-Mortgage Deed dated 20....
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....ith a reserve price of Rs. 1075 crores. 7. DLF, in response to PNBHFL default notice vide its letter dated 10.11.2022 offered an amount of Rs. 1450 crores for "100% of the legal ownership of the pledged shares and 100% of the control of JHL". 8. Thereafter, for removal of the nominee directors of existing shareholders of JHL and replacing them with the nominee directors of PNBHFL an Extra-ordinary General Meeting ("EGM") was held on 09.03.2023 and a resolution was passed appointing directors nominated by PNBHFL. 9. Consequent to the decisions passed at the aforesaid EGM, Hubtown filed a company petition no. CP/85(MB)2023 in NCLT, Mumbai, under Sections 241 and 242 of the Companies Act, 2013 alleging oppression and mismanagement. In the said petition, vide order dated 14.03.2023 a status quo order to the extent of resolutions passed in the alleged gathering held on 09.03.2023, was passed. PNBHFL was not made a party in the said company petition. The said order was challenged in NCLAT by PNBHFL however, the status quo order was not interfered with and liberty was granted to PNBHFL to approach the NCLT. 10. On 01.08.2023, Omkara submitted its offer to PNBHFL for assignment of the ....
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....e transferee is not known yet, in view of which, no order can be passed against the unknown transferees. However, it would be appropriate if pledged shares sold to a third party by Omkara are kept in a suspended animation by directing JHL not to recognise further sale, if any, undertaken by Omkara transferees. If any request is received by JHL by further transferees the same shall not be acted upon by JHL and further transferees shall not be recorded as members (shareholders) in the record of JHL. 43. Omkara is further directed to disclose the identity of the transferees to the petitioners, to whom it has sold the pledged shares, within a period of 7 days for the petitioners to take remedies that are available to them in law, against such transferees...." 17. The said order was assailed by PNBHFL, Omkara and Twenty-Five South before a Division Bench of this Court. After the judgement in the present petition was reserved, the said appeals were disposed of vide order dated 11.01.2024 passed in FAO(OS)(COMM) 218/2023 & Ors., as under: "17. Accordingly, the above-captioned appeals are disposed of with the following directions: (i) The impugned judgment is set aside. The learned ....
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....e dated 10.11.2022 of the proposal made by PNBHFL vide letter dated 02.11.2022 read with letter dated 08.11.2022, to sell 100% shares of JHL, at an enterprise value (reserve price) of over Rs. 1075 Crores. b. The legal effect of PNBHFL proceeding to invoke the pledge and simultaneously seeking to assign the debt without responding to or repudiating DLF's aforesaid acceptance of the proposal of PNBHFL. c. Legal validity of Omkara's sale of only 75% of the pledged shares belonging to DLF and Chinsha, despite being made expressly aware of DLF's acceptance to purchase 100% of the shares of JHL at a price of Rs. 1450 Crores, well above the outstanding debt of PNBHFL/Omkara. d. Collusion between PNBHFL, Omkara, Hubtown, Twenty-Five South, and Akruti to defeat the rights of the DLF. e. Declarations, injunctions, losses, damages to which DLF is entitled to. Submissions of the Parties 24. Learned senior counsel for DLF has submitted that the arbitration clause within the SPA is drafted in expansive terms to encompass the disputes, claims, and differences "arising out of", "in connection with", or "in the performance of'" the agreement (SPA). It is submitted, this c....
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....e provisions of the SPA. It is emphasized that the jurisdiction of the referral court is extremely limited. Once the existence of an arbitration clause is prima facie established, all issues and contentions raised by the parties are to be deferred for determination by the arbitral tribunal. Furthermore, it is argued that the inclusion of non-signatories in arbitration proceedings is contingent upon specific facts and can be justified under various legal theories and doctrines. It is emphasized that the Supreme Court has explicitly stated that the referral court should refrain from deciding whether a non-signatory is indeed a party to the arbitration agreement and should instead leave this determination to the arbitral tribunal. In support of these submissions reliance has been placed on Renusagar Power Co. Ltd. v. General Electric Co. (1984) 4 SCC 679, Black Law's Dictionary, National Insurance Co. Ltd. v. BogharaPolyfab (P) Ltd. (2009) 1 SCC 267, Vidya Drolia v. Durga Trading Corpn. (2021) 2 SCC 1, Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re 2023 SCC OnLine SC 1666 : 2023 INSC 1066, Cox & Kings Ltd....
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....ubmitted that all claims therefore, whatever be their merits, are to be pursued against the assignee, post the assignment. In support of these submissions reliance has been placed on Cox & Kings (supra), Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re (supra), R.N. Gosain v. Yashpal Dhir, (1992) 4 SCC 683 Union of India v. N. Murugesan and Ors. (2022) 2 SCC 25, Gurmeet Singh v. Essel Finance Business Loans Ltd. and Ors. 2020 SCC Online Bom 6369, BXH v. BXI [2020] SGCA 28, and Montedipe S.P.A and Anr. v. JTP-RO Jugotanker (The "Jordan Nikolov") [1990] 2 Lloyd's Rep 11. 27. Learned senior counsel for Omkara has submitted that DLF has concealed the MOU dated 27.10.2022 executed between the subsidiary of DLF and PNBHFL, which incorporated an alleged understanding to purchase the shareholding of the JHL by the subsidiary of DLF. It is submitted that disputes, if any, that have arisen between DLF and PNBHFL are under the letters dated 02.11.2022 and 10.11.2022, which letters, it is submitted, have been issued in pursuance of the MOU dated 27.10.2022. It is submitted that DLF have failed to disclose any provi....
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.... a confirming party to the SPA and had neither any right nor any obligation under the said agreement. It is submitted that disputes if any between JHL and DLF/Chinsha would arise under the Memorandum of Understanding and Shareholders Agreement both dated 15.04.2004, in respect of which DLF has already invoked arbitration. It is further submitted that under the SPA, DLF could have only redeemed its 37.5% pledged shares by paying the outstanding dues under the loan account. The SPA does not, and could not have contemplated a sale/purchase of shareholding of JHL and therefore the allegation of breach of alleged contract arrived at between PNBHFL and DLF under letters dated 02.11.2022 and 10.11.1022, does not result in any dispute under the SPA. 29. Learned senior counsel for Hubtown has submitted that even when an arbitration agreement exists, it does not prevent the court from declining a prayer for reference if the dispute in question does not correlate to the agreement. It is submitted that disputes that are sought to be referred to arbitration do not in any manner arise out of any defined legal relationship between DLF on the one hand and Hubtown, JHL, Chinsha, Twenty-Five South,....
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....ely separate and unrelated to the SPA. Additionally, it is asserted that DLF/Chinsha's right to redeem pledged shares is extinguished upon the actual sale. It is asserted that the criteria set forth by the Supreme Court to bind non-signatories to an arbitration agreement are not fulfilled in this case, as Twenty-Five South was not envisioned as a party to the arbitration agreement when SPA was executed. Furthermore, Twenty-Five South was not involved in the original negotiations, execution, or termination of the SPA, nor did it express any consent to be bound by the arbitration agreement at the time of entering into the SPA. It is further submitted that the assertion made by DLF/Chinsha regarding the interconnectedness of Hubtown, Twenty-Five South, and Akruti, and their portrayal as a single economic entity, is entirely baseless and misconceived. In support of these submissions reliance has been placed on PTC India (supra), Amit Jain v. Canara Bank 2022 SCC OnLine Del 3771, Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re (supra) and Cox & Kings (supra). 31. Learned senior counsel for the Akruti has su....
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....er (India) (P) Ltd. v. Reynders Label Printing (India) (P) Ltd. (2019) 7 SCC 62, MTNL v. Canara Bank (2020) 12 SCC 767, and Sudhir Gopi v. Indira Gandhi National Open University & Anr. 2017 SCC Online Del 8345 Analysis and Findings The scope of the examination in these proceedings 32. At the outset, it is noticed that the scope of inquiry by a referral court in a petition under Section 11 of the A&C Act is confined to examination of the existence of an arbitration agreement. The referral proceedings are preliminary and summary and not in the nature of a mini-trial. Rarely as a demurrer, the referral court may decline reference when there is not even a vestige of doubt that the claim is non-arbitrable. If there is a slightest doubt, the rule is to refer the dispute/s to arbitration. Further, when contentions relating to non-arbitrability are plainly arguable, or when facts are contested, the court by default would refer the parties to arbitration. See: Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, NTPC Ltd. v. SPML Infra Ltd., (2023) 9 SCC 385 33. Recently, in Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, ....
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....ort of using the word "examination" connotes that the legislature intends that the referral court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. Moreover, the expression "examination" does not connote or imply a laborious or contested inquiry. On the other hand, Section 16 provides that the arbitral tribunal can "rule" on its jurisdiction, including the existence and validity of an arbitration agreement. A "ruling" connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral court is only required to examine the existence of arbitration agreements, whereas the arbitral tribunal ought to rule on its jurisdiction, including the issues pertaining to the existence and validity of an arbitration agreement. A similar view was adopted by this Court in Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. xxx &nbs....
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.... Vidya Drolia (supra), Justice N.V. Ramana (as the learned Chief Justice then was) held that the amendment to Section 8 rectified the shortcomings pointed out in Chloro Controls (supra) with respect to domestic arbitration. He further observed that the issue of determination of parties to an arbitration agreement is a complicated exercise, and should best be left to the arbitral tribunals: "239. [...] Jurisdictional issues concerning whether certain parties are bound by a particular arbitration, under group-company doctrine or good faith, etc. in a multi-party arbitration raises complicated factual questions, which are best left for the tribunal to handle. The amendment to Section 8 on this front also indicates the legislative intention to further reduce the judicial interference at the stage of reference." 167. In Pravin Electricals Pvt Ltd. v. Galaxy Infra and Engineering Pvt Ltd., a Bench of three Judges of this Court was called upon to decide an appeal arising out of a petition filed under Section 11(6) of the Arbitration Act for appointment of sole arbitrator. The issue before the Court was the determination of existence of an arbitration agreement on the basis of the docu....
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....existence of an arbitration agreement. 170. In Deutsche Post Bank Home Finance Ltd. v. Taduri Sridhar, a two-Judge Bench of this Court held that when a third party is impleaded in a petition under Section 11(6) of the Arbitration Act, the referral court should delete or exclude such third party from the array of parties before referring the matter to the tribunal. This observation was made prior to the decision of this Court in Chloro Controls (supra) and is no longer relevant in light of the current position of law. Thus, when a non-signatory person or entity is arrayed as a party at Section 8 or Section 11 stage, the referral court should prima facie determine the validity or existence of the arbitration agreement, as the case may be, and leave it for the arbitral tribunal to decide whether the nonsignatory is bound by the arbitration agreement. 171. 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 non-signatory party itself seeks invocation of an arbitr....
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.... the arbitration clause is widely worded and any dispute "arising out of" or "in connection with" or "the performance of" the SPA is to be referred to arbitration thereunder. Given the width of the arbitration agreement, it cannot be said that the various facets with regard to which DLF has sought to raise disputes are unconnected with the SPA. 37. At this stage, this Court is not required to conduct an in-depth inquiry as to whether the disputes sought to be raised by the petitioner/DLF afford any valid cause of action to the petitioner on the basis of the provision of SPA or not. This is an aspect which necessarily requires an in-depth examination on merits and necessarily required to be gone into by a duly constituted arbitral tribunal. 38. The contention of the learned senior counsel for the Hubtown and Omkara that clause 17.12 of the SPA has the effect of whittling down or denuding the scope of the arbitration clause is misconceived. Clause 17.12 reads as under: "17.12 The Pledgors further agree that all claims, difference and disputes, arising out of or in relation to dealings/transaction made in pursuant to this Agreement including any question of whether such dealing, t....
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....her than to invalidate it on technicalities." 23. In A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, Dr. D.Y. Chandrachud, J. in his separate opinion observed that: "53. The Arbitration and Conciliation Act, 1996, should in my view be interpreted so as to bring in line the principles underlying its interpretation in a manner that is consistent with prevailing approaches in the common law world. Jurisprudence in India must evolve towards strengthening the institutional efficacy of arbitration. Deference to a forum chosen by parties as a complete remedy for resolving all their claims is but part of that evolution. Minimising the intervention of courts is again a recognition of the same principle." 24. In Govind Rubber Ltd. v. Louids Dreyfus Commodities Asia (P) Ltd., (2015) 13 SCC 477, it has been held as under:- "17. We are also of the opinion that a commercial document having an arbitration clause has to be interpreted in such a manner as to give effect to the agreement rather than invalidate it. On the principle of construction of a commercial agreement, Scrutton on Charter Parties (17th Edn., Sweet & Maxwell, London, 1964) explained that a commercial agreement has to be....
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.... "The "restrictive" presumption is generally explained on the grounds that arbitration is a derogation from otherwise available access to civil justice and the "natural judge" of the contract, and that such derogations must be construed narrowly. Thus, in an older decision, a French appellate court declared that "[t]he arbitration agreement must be strictly interpreted as it departs from the norm-and in particular from the usual rules as to the jurisdiction of the courts." 'This restrictive interpretative presumption is archaic and out of step with the ordinary intentions of commercial parties; it is generally not applied in contemporary decisions." 40. As such, the existence of a valid arbitration agreement, of sufficient width and amplitude, is not in doubt. As held in Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, (supra) "the scope of examination under Section 11(6A) should be confined to 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....
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....ment of a contract might result by transfer either of the rights or of the obligations thereunder. But there is a well-recognised distinction between these two classes of assignments. As a rule obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment either under the law or under an agreement between the parties." 46. Prima facie, despite assignment of the SPA to Omkara, PNBHFL would be a necessary party as regards pre-assignment disputes, including dispute/s relating to non-acceptance of the offer of DLF and/or dispute/s concerning purported irregularities in the assignment of debt. 47. The judgment of Singapore Court of Appeal in BXH vs BXI (supra), relied upon by the PNBHFL is clearly distinguishable inasmuch as the said judgment was rendered in a challenge to an award passed by the arbitral tribunal and not at the referral stage. Furthermore, in the said case, it was the assignor who had invoked the arbitr....
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....n defined in the SPA as "PNB Housing Finance Limited, ... (hereinafter referred to as the "Lender", which expression shall unless repugnant to the context or meaning thereof include its successors assigns)." accorded in the SPA itself, it is a party to the arbitration agreement contained in the SPA. There is no impediment to the impleadment of Omkara in the proposed arbitration proceedings. 51. The law is also well settled that where there is an assignment of a contract containing an arbitration agreement, the assignee will be bound by the arbitration agreement. The assignee would take both the benefit and burden of the arbitration agreement i.e., the assignee can invoke the arbitration agreement to pursue a claim and can be compelled to arbitrate a dispute raised by another party. Therefore, Omkara would be bound by the arbitration clause contained in the SPA. In Cox & Kings (supra), it has been inter alia held as under: "135. The Arbitration Act does not define the phrase "person claiming through or under" a party. A person "claiming through or under" a party is not a signatory to the contract or agreement, but can assert a right through or under the signatory party. Russel on....
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....ondent no.6/Twenty-Five South that title to the pledged shares acquired by the respondent no.6 is independent of the underlying rights and obligations under SPA. In the written submissions filed on behalf of the respondent no. 6, it has been contended as under: "4. ....... a. ....... b. Once the shares (75%) were held in dematerialized form, on the invocation of the Pledge by PNB, the same came to be recorded in the beneficial ownership of PNB, and hence the right to transfer/sell/assign the same vested in PNB in terms of Section 10(3) of the Depositories Act, 1996. c. Upon assignment of the loan to Omkara by PNB, the aforesaid right vested in Omkara, and therefore beneficial ownership of the shares was recorded under the Depositories Act in the name of Omkara. d. The transaction of purchase of shares by 25 South is therefore an independent transaction between the beneficial owner of the demat securities and 25 South and that too for valuable consideration of Rs. 894 Crores." 53. It is further contended that even if it be assumed that disputes exist in respect of assignment of debt together with the underlying security, the same would be in relation to the loan agreement....
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....and estoppel. They do not rely on the parties' intention but rather on the force of the applicable law." 57. In the present case, the petitioner/DLF has sought to invoke non-consensual theories as enumerated in para 103.2 of the Chloro Controls (supra), for seeking impleadment of respondent Nos. 6 and 7 in the proposed arbitration. 58. Reliance placed by counsels of the respondent Nos. 6 and 7 on observations made in Cox & Kings (supra), to contend that neither of the said parties had shown any intent or implied consent towards being a party to the arbitration agreement under the SPA, is misplaced. In Cox & Kings (supra), the Supreme Court was considering the "Group of Companies Doctrine", which doctrine forms part of the consent-based theories. For the purpose of consent-based theories, it is necessary to ascertain whether the non-signatory evinces intention or consent to be bound by the arbitration agreement. In Cox & Kings (supra), the Supreme Court has itself made it clear that "any authoritative determination given by this Court pertaining to the group of companies doctrine should not be interpreted to exclude the application of other doctrines and principles for binding....
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....s been sparingly used because it disregards the intention of the parties by emphasizing on the overriding considerations of good faith and equity to bind the non-signatories to an arbitration agreement. 93. Moreover, since the companies in a group have separate legal personality, the presence of common shareholders or directors cannot lead to the conclusion that the subsidiary company will be bound by the acts of the holding company. The statements or representations made by promoters or directors in their personal capacity would not bind a company. Similarly, the mere fact that the two companies have common shareholders or a common Board of Directors will not constitute a sufficient ground to conclude that they are a single economic entity. The single economic entity or the single economic unit theory imposes general enterprise liability on the corporate group. In D H N Food Distributors Ltd. v. Tower Hamlets London Borough Council, Lord Denning held that a group of three companies should be treated as a single economic entity on the basis of two factors : first, the parent company owned all the shares of the subsidiary companies to the extent that it controlled every movement o....
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....actor. 61. In Shapoorji Pallonji (supra), this court has reviewed the case laws where the courts have compelled non-signatories to arbitrate by disregarding their corporate facade or where the courts have found the signatory to be an alter ego of the non-signatory or vice versa. Relevant extracts of the said decision are as under: "28. There exists another set of cases where the Courts have compelled non-signatories to arbitrate by disregarding their corporate facade or where the Courts have found the signatory to be an alter ego of the non-signatory or vice versa. In Barcelona Traction, Light and Power Company Ltd. : (1970) ICJ Rep. 3, the International Courts of Justice had explained the doctrine of piercing the corporate veil in the following words: "the process of lifting the corporate veil' or 'disregarding the legal entity' has been found justified and equitable in certain circumstances or for certain purposes. The wealth of practice already accumulated on the subject in municipal law indicates that the veil is lifted, for instance, to prevent misuse of the privileges of legal personality, as in certain cases of fraud or malfeasance, to protect third persons ....
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....er must be bound by arbitration as well. 62. Similarly, in Builders Federal (Hong Kong) v. Turner Const. : 655 F. Supp. 1400, 1406 (S.D.N.Y. 1987), the court considered a construction case involving a foreign project where the sub-contractors sought to compel the American corporate parents to enter arbitration abroad of a dispute involving claims against the main contractor. The Court considered that the allegations that the parent corporation exercised dominance and control over the main contractor were sufficient to "state a claim for alter ego liability" even in the absence of any allegation of fraud. The relevant extract of the said decision is set out below: "The petition is replete with allegations that defendants exercised dominance and control over TEA, and that TEA was under-capitalized. Those allegations are not sufficient of themselves to "pierce a corporate veil" so as to visit upon parent corporations the obligations of a subsidiary. Walkovszky v. Carlton, 18 N.Y.2d 414, 276 N.Y.S.2d 585, 223 N.E.2d 6 (1966). But the petition alleges more than that. It alleges that the subcontract between plaintiffs and TEA obligated TEA to make certain payments to plaintiffs upon ....
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.... contrived by Hubtown to takeover 100% shareholding of the JHL, through companies closely linked to Hubtown, which were its proxy/alter ego, and which virtually constituted a single economic entity with Hubtown. It is contended that in pursuance of such collusion, Omkara, without rejecting DLF's acceptance of PNBHFL's offer in the SPA default notice dated 02.11.2022 (despite being put to notice of the same vide DLF's letter dated 25.08.2023 and 10.09.2023), proceeded to transfer 75% shares of JHL to the respondent no.6. It is further contended that issuance of board resolution of respondent no.3 on 02.10.2023, with a view to allocate certain shares/issue of optionally convertible debentures to respondent no.7, resulted in respondent no.7 acquiring 97% of shareholding in respondent no.3; was also in pursuance of an elaborate collusive device contrived by Hubtown to put its proxy/alter ego in charge of respondent no.3. 63. From the aforesaid pleas of the petitioner, it is evident that: a. The DLF/petitioner has invoked non-consensual "alter ego theory" referred to in para 103.2 of Chloro Controls (supra), b. It also invoked "direct benefits estoppel theory" and "thir....
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....from trying the issue fully rendering a final decision thereupon. If the arbitrator finds the agreement valid, there is no problem as the arbitration will proceed and the award will be made. However, if the arbitrator finds the agreement invalid, inoperative or void, this means that the party who wanted to proceed for arbitration was given an opportunity of proceedings to arbitration, and the arbitrator after fully trying the issue has found that there is no scope for arbitration." xxx xxx xxx 171. In case of joinder of non-....
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.... instead finds it apposite to leave it to the arbitral tribunal to make the final determination on this issue. This is mandated not only in view of the observations made in Cox & Kings (supra) but also in view of the observations made in Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In re, (supra) wherein it has been held as under:- "164. Section 11(6A) uses the expression "examination of the existence of an arbitration agreement." The purport of using the word "examination" connotes that the legislature intends that the referral court has to inspect or scrutinize the dealings between the parties for the existence of an arbitration agreement. Moreover, the expression "examination" does not connote or imply a laborious or contested inquiry. On the other hand, Section 16 provides that the arbitral tribunal can "rule" on its jurisdiction, including the existence and validity of an arbitration agreement. A "ruling" connotes adjudication of disputes after admitting evidence from the parties. Therefore, it is evident that the referral court is only required to examine the existence of arbitration agreements, wherea....
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....l be duly considered by the arbitral tribunal. Other issues raised by the Respondents 70. Apart from the aforesaid aspects, learned senior counsel for the respondents have raised various other extremely germane and relevant issues as regards the merits of the disputes sought to be raised by the petitioner. In particular, it has been contended that: (i) At no point did DLF sought to exercise any rights to redeem its pledged shares; the offer to purchase 100% shareholding of the JHL by DLF, cannot tantamount in law to redemption. (ii) The assignment in favour of Omkara cannot be questioned by virtue of Section 5(3) of the SARFAESI Act. (iii) The petitioner's right to the pledged shares is lost and extinguished upon actual sale i.e., when the beneficial owner (Omkara) sold the pledged shares to respondent no.6, prior to the pledged shares being redeemed. (iv) Without a proper tender of the amount due on the pledge, the only right of the pawnor/DLF in respect of even an unlawful or unauthorized sale is in tort for damages actually sustained by him. (v) DLF cannot as a pledgor challenge assignment of debt by a creditor as an assignment is an independent contract between ....