M-S. EVEREST HOLDING LTD. v. SHYAM KUMAR SHRIVASTAVA & ORS

Citation: [2008] 14 S.C.R. 1221

Court: Supreme Court of India

Bench: MUKUNDAKAM SHARMA

Case summary

M-S. EVEREST HOLDING LTD. v. SHYAM KUMAR SHRIVASTAVA & ORS.pdf

Judgment text

[2008] 14 S. C. R. 1221 MIS. EVEREST HOLDING LTD. v. SHYAM KUMAR SHRIVASTAVA & ORS. (Arbitration Petiton No. 13 of 2007) OCTOBER 24, 2008 [DR. MUKUNDAKAM SHARMA, J] } Arbitration and Conciliation Act, 1996: ss.

2(f), 11(6) and (9) - International Commercial arbitration - Appointment of arbitrator - Joint Venture Agreement containing arbitration clause - Joint Venture company constituted - Dispute regarding the amount paid by sister concerns of parties towards equity contribution or working expenses - Respondents pleading that the dispute related to transactions not between parties to agreement but between their sister concerns and, therefore, no reference could be made to arbitrator - HELD: There is a valid arbitration agreement between the parties as contained in the JVA, which the parties are required to adhere to - If there is any dispute between the parties to the agreement arising out of or in relation to the subject matter of the said JVA, all such disputes and differences have to be adjudicated upon and decided through process of arbitration by appointing a mutually agreed arbitrator - Though the JVA may have been terminated and can- ~ celled but it was a valid JVA containing a valid arbitration agreement for settlement of disputes arising out of or in re/ation to the subject matter of the JVA - Contributions made towards execution of the JVA and for the functioning of the Joint Venture Company by party or on its behalf by its affili- ,ates whether would and should be treated as contributions made by the party in specific term and the clause in the JVA ,.

are also matters to be adjudicated upon by the arbitrator - In the JVA it was agreed to by the parties that the equity shares of the Company could be subscribed by either of the parties or by its affiliates and that the shareholding of its affiliates ? should be considered as shareholdings of the party to the extent it is recognized - The affiliates were a/so made to be bound by the terms and conditions of the agreement - Therefore, the disputes which arise out of JVA, if referred to an arbitrator would not in any manner amount to bifurcation of the causes of action or bifurcation of parties - On the parties having mutually agreed, arbitrator appointed who would decide .... the dispute arising out of the JVA as expeditiously as possible. [para 16-19 and 21) SBP & GP v. Patel Engineering Ltd. and Another 2005 (4) Suppl. SCR 688 = (2005) 8 SCC 618; Rashtriya /spat Nigam Ltd. v. Verma Transport Co. 2006 (4) Suppl. SCR 332 = (2006) 7 sec 275 - relied on. Sukanya Holdings (P) Ltd. v.

Jayesh H. Pandya and Another 2003 (3) SCR 558 = 2003) 5 SCC 531 - distin- ~ guished. Arbitration - Power of arbitrator to adjudicate with regard to equity contribution towards constitution of company which may be a matter relating to winding up ofthe company- HELD: Though arbitrator would have no power to order for winding up of the company since such power is conferred on and vested with Court as envisaged under the Companies Act, but in terms of the arbitration agreement, the arbitrator can a/ways find out and adjudicate as to whether or not a Company is functional , and if it was not functional in that event he could always find out the nature and status of its assets and can a/so issue directions and pass orders regarding dues and liabilities and a/so for taking recourse to appropriate remedy [para 17-18] Haryana Telecom Ltd. v. Sterlite Industries (India) Ltd. 1999 (3) SCR 861 =(1999) 5 SCC 688 - referred to. I -. direction and pass orders regarding dues and liabilities and ....

also for taking recourse to appropriate remedy. 19. All such disputes whether relating to payment towards security deposit, deposited by the petitioner or on its behalf ~ and also relating to contribution made towards equity contribution or working expenses, if any, to be returned or not and if so, +what amount should be returned are to be deci_ded and adjudic~ted upon through the process of arbitration as agreed upon by the parties in the JVA. Contributions made tbwards execution of the JVA and for the functioning of the Joint Venture Com- _,...... ,.. _.. pany by party or on its behalf by its affiliates whether would and should be treated as contributions made by the party in specific term and clause in the JVA are also matters to be adjudicated upon by the arbitrator.

It is to be noted at this stage that in the JVA it was agreed to by the parties hereto that the equity shares of the Company could be subscribed by either of the parties or by its affiliates and that shareholding of its affiliates should be considered as shareholdings of the party to the extent it is recognized. The affiliates were-alsp made bound by the terms and conditions of the agreement. Therefore, in my considered opinion, the disputes which arise out of JVA, if referred to an arbitrator would not in any manner amount to bifurcation of the causes of action or bifurcation of parties. 20. There could be other disputes between the sister con- ( ' cerns of the petitioner and the respondent ~rising out of sepa- I' rate and independent agreements. Such disputes would have )> to be decided and adjudicated upon in accordance with law.

But all such disputes which are identified and mentioned hereinbefore and which arise out of and in relation to JVA have to be and must be decided by appointing an arbitrator in terms of the arbitration agreement. 21. During the course of the arguments the parties have agreed that in_ case the Court decides to refer the disputes to the arbitrator in that event the same-may be referred to Justice ), V. N. Khare, retired Chief Justice of this Court for adjudication .. and decision. The parties mutually agreed for him as the arbi- ,. trator for deciding these issues. Consequent to the said agreement, I appoint Justice V. N. Khare, retired Chief Justice of this • Court as the sole arbitrator with a request to him to decide the disputes between the parties arising out of the JVA as expedi- tiously as possible. It shall be open for the learned Arbitrator to -+ fix his remuneration after discussing with the parties. 22. Accordingly, the petition is disposed of.

It goes without saying that the observations made herein are only for the purpose of deciding the issue as to whether or not the disputes A should be referred to the arbitrator. Necessarily any observation made herein would not be construed as any views or opinion expressed on the merit of the claims. R. P. Arbitration Petition disposed of.