While interpreting an arbitration agreement, a bench comprising of
Mohit S. Shah, CJ and M. S. Sonak, J held that in an agreement between two
groups, group entities which are not signatories to the agreement may also
be made party to the arbitration agreement if they are referred to in the
contract.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITON NO. 66 OF 2014
Rakesh S. Kathotia
vs.
Milton Global Ltd. & Ors.
CORAM : S.C. GUPTE, J.
PRONOUNCED ON: 02 JULY 2014
This Arbitration Petition, filed under Section 9 of the Arbitration and
Conciliation Act, 1996 (“Act”), seeks to restrain the Respondents from committing
breach of a Joint Venture Agreement (“JVA”) between the Petitioners and the
Respondents.
2 The Petitioners' case may be briefly stated thus :
Respondent No.1 is a Joint Venture Company, formed by the
Petitioners, representing the 'Subhkam Group' and Respondent Nos.2 to 15
representing the 'Vaghani Group'. Respondent Nos.5 to 9, who are claimed to be
relations of the Respondents representing the Vaghani Group, are signatories to
the JVA. The Vaghani Group owned the company – Respondent No.4, which
manufactured and marketed consumer durables and kitchen appliances under
the brand name 'Milton'. The JVA was entered into by the parties to carry on this
manufacturing and marketing business under the brand name of 'Milton'.
According to the Petitioners, they entered into the JVA under the bona fide belief
that the entire distribution and marketing network of Respondent No.4 would be
transferred to Respondent No.1. Under the JVA, the management of Respondent
No.1 was to be overseen by a Board of Directors to be appointed by the
Subhkam Group and the Vaghani Group in terms of the relevant clauses of the
JVA. Subhkam Group held 49.99% of the total issued and paid up capital of
Respondent No.1, whilst Vaghani Group held the balance 50.01%. It is the case
of the Petitioners that the Vaghani Group, in breach of the JVA, developed a
competitive business through Respondent No.2 and have transferred the
business of Respondent No.1 to Respondent No.2. The Petitioners seek to
enforce the arbitration agreement under the JVA and in the meantime, restrain
Respondent No.2 from manufacturing and marketing consumer durables, kitchen
appliances and other goods and products falling under the definition of “Goods” in
the JVA.
3 The main defence of the Respondents is that there is no identity of
the parties to the arbitration agreement contained in the JVA and the parties
hereto against whom relief is sought in the petition. If the parties against whom
relief is sought in the petition are not parties to the arbitration agreement, then
under the principle of the Supreme court ruling in the case of Sukanya Holdings
(P) Ltd. vs. Jayesh H. Pandya1 the subject matter of the Petition is not covered
by the arbitration agreement. It would then be impermissible to grant relief to the
Petitioners in a petition under Section 9 of the Act.
4 The parties to the JVA are (i) Petitioner No.1, (ii) Respondent No.4,
(iii) Respondent Nos.5 to 9 (described as “the Vaghani Group”), (iv) Respondent
No.1 (referred to as “the JVC” or “the Company”). Petitioner No.2, Respondent
Nos.2 and 3 and Respondent Nos.10 to 15 are not parties to the JVA. The main
allegations in the petition are against Respondent No.3 and the main relief is
sought against Respondent No.2. Prima facie, therefore, as the apparent state of
affairs indicates, the parties against whom reliefs are sought in the petition, are
not parties to the JVA and consequently to the arbitration agreement contained
therein.
1 (2003) 5 SCC 531
5 Mr.Nankani, the learned Senior Counsel appearing for the
Petitioners, however, submits that the capacity of the signatories to the JVA,
namely, Respondent Nos.5 to 9, was as representatives of the Vaghani Group
and the entire Vaghani Group is bound by the JVA and the stipulations therein,
including the arbitration agreement contained therein. It is submitted that the
other Respondents (Respondent Nos.2, 3 and 10 to 15) are part of the Vaghani
Group. Mr.Nankani submits that Respondent No.3 was the Chairman (and earlier
Managing Director) of Respondent No.1 and named in the JVA as 'Vaghani
Representative' and signed the JVA in his capacity as the authorised signatory of
Respondent No.1. Mr.Nankani relies on the judgments in the cases of Smita
Conductors Ltd. vs. Euro Alloys Ltd.2, Tata Industries Ltd. vs. Grasim
Industries Ltd.3, Girish Mulchand Mehta vs. Mahesh S. Mehta4, Housing
Development and Infrastructure Ltd. vs. Mumbai International Airport Pvt.
Ltd.5, Bharat Starch Industries Ltd. vs. Prudent International Shipping and
Trading Co.Ltd.6 and HIs Asia Ltd. vs. Geopetrol International Inc.7, in
support.
6 Mr.Thakkar and Mr.Madon, learned Senior Counsel appearing for
Respondent Nos.1,3,4,5,8 and 9 and Respondent Nos.2 and 10 to 15,
respectively, oppose the petition, submitting that 'Vaghani Group' referred to in
the JVA meant a different set of individuals and not 'Vaghani Group' as alleged in
the petition; that Respondent No.2 was not covered within 'Vaghani Group' as
defined in the JVA; and that no relief can be granted against Respondent Nos.2
and 10 to 15. The learned Counsel rely upon the judgments in the cases of
Sukanya Holdings (supra), Indowind Energy Ltd. vs. Wescare (I) Ltd.8,
Manish Estates Pvt.Ltd. vs. Official Assignee9, and Hemant D. Shah vs.
2 (2001) 7 SCC 728
3 MANU/SC/2869/2008
4 MANU/MH/1458/2009
5 2013 Indlaw MUM 1102
6 1995 (34) DRJ 72
7 2012 Indlaw DEL 3000
8 AIR 2010 SC 1793
9 Arbitration Petition No.18/2006 decided on 14.7.2006
Chittaranjan D. Shah10.
7 Respondent Nos.5 to 9, who have executed the JVA, are referred to
therein as “the Vaghani Group”. These Respondents are named as Promoters of
Respondent No.4. Each of Respondent No.4, its promoters (Respondent Nos.5 to
9) referred to as the Vaghani Group and Petitioner No.1 (referred to as the
Subhkam Group) are individually parties to the JVA with their own individual
obligations. The individuals, who are parties to the JVA, have no doubt
undertaken certain obligations on behalf of the others who are not parties to the
JVA. For instance, the obligations of Vaghani Group are undertaken on behalf of
Milton Plastic Limited (Respondent No.4), Respondent Nos.5 to 9 and “their
immediate relatives taken together and such other entities controlled by them or
their immediate relatives directly or indirectly”, whereas the Subhkam Group
under the JVA meant Petitioner No.1 and “such other entities controlled by him or
his immediate relatives or his group companies directly or indirectly”. The
signatories to the JVA may undertake obligations on behalf of other individuals or
entities who may be said to belong to a certain group – in our case, the
respective Vaghani and Subhkam Groups – and in an appropriate case, such
other individuals or entities may even be bound by these obligations. For
instance, in a case where the other individuals or entities represented to the
applicant that they would be bound by the agreement and relying on such
representation, the applicant entered into the agreement with the signatories, the
other individuals or entities may not be allowed to plead to the contrary and be
held bound by the agreement. But that still does not imply that these other
individuals or entities are themselves party to the JVA or the arbitration
agreement contained therein. These other individuals and entities will be party to
the JVA, and consequently, the arbitration agreement contained therein, only if
the signatories are proved to have executed the JVA as representatives of, or on
behalf of, these individuals and entities. For acting as representatives of, or on
behalf of, others, the others must be shown to have authorised the signatories to
enter into the JVA. There is nothing on record to show that. Respondent No.3 is
said to be the Managing Director of Respondent No.2. Respondent No.3 is said
10 Appeal No.658/2006 in Arbitration Petition No.295/2006 decided on 5.9.2006
to be “fully aware of and in the know of all the transactions, things, matters,
understanding and occurrences that have given rise to the present dispute”.
Respondent Nos.3,4,10, 11 and 12 are said to have entered into a Memorandum
of Understanding and Agreement for transfer of Business carried on in
partnership by them in the name of “Milton Exports” to the JV Company –
Respondent No.1. This is all that is averred in the petition against Respondent
Nos.2, 3 and 10 to 15. The authority of Respondent Nos.2, 3 and 10 to 15 to
represent them to Respondent Nos.5 to 9 cannot be spelt out from these
averments.
8 The gravamen of the charge in this petition is, Respondent Nos.3 to
15 carrying on business in the name of Respondent No.2, in contravention of the
terms of the JVA, and colluding with each other to do so. This may give rise to a
cause of action to the Petitioners who are party to the JVA, but this cause of
action cannot be agitated before an arbitral forum. None of Respondent Nos.2, 3
and 10 to 14 have consented to this arbitral forum and it cannot be thrust upon
them.
9 On the principle of law enunciated by the Supreme Court in
Sukanya Holdings (supra), the subject matter of the present petition is not
covered by the arbitration agreement and it is not permissible to grant any interim
relief under Section 9 of the Act.
10 Respondent Nos.2 and 4 are separate entities and the mere fact
that they have common directors will not make the two companies a single entity
or lead to an inference that one company will be bound by the acts of the other.
Even if it is assumed for the sake of argument that Respondent No.2 is promoted
by Respondent No.4 or its promoters, that will not make Respondent No.2 a party
to the JVA or the arbitration agreement contained within it. There is no case of
any ratification, approval, adoption or confirmation of the JVA by Respondent
No.2. Since we are dealing here with an arbitration agreement, such acts as
would spell out a contract ought to be in writing. The judgment of the Supreme
Court in Indowind Energy Ltd. (surpa) bears out these prepositions.
11 There is no question of lifting of corporate veil in this case. Neither is
any such case made out nor is any such case permissible in a proceeding under
Section 9. What we have to examine here is whether Respondent No.2, which is
a separate legal entity, is a “party” to the arbitration agreement. Our Court in
Manish Estates Pvt.Ltd. (supra) held as follows :
“ The term ’party’ as defined by section 2(h) to
mean "a party to arbitration agreement". Thus, the
entity which is party to the arbitration agreement can
make an application for interim measure under section
17 and the Arbitrator can make an order under that
provision only against an entity which is a party to the
arbitration agreement. What is required is that the
entity should be actually a party to the arbitration
proceedings. The Arbitration and Conciliation Act does
not recognise the concept of somebody being deemed
to be a party to the arbitration agreement. Therefore,
in my opinion, the learned Arbitrator cannot be justified
in embarking on the enquiry as to whether the
Company can be deemed to be a party to the
arbitration agreement.”
The observations quoted above also equally apply to an application under
Section 9 of the Act.
12 None of the judgments cited by the learned Counsel for the
Petitioners helps him get over this difficulty. In Smita Conductors (supra), the
Supreme Court found the contract to be affirmed by reason of the conduct of the
parties as indicated in the letters exchanged and held that there was an
agreement in writing to refer the disputes to arbitration. In Tata Industries' case
(supra), the Supreme Court found that the party raising a challenge on the ground
of the applicant not being a party to the arbitration agreement had earlier
proceeded before the High Court on the footing that it was a party and did not
allow the objector to go back on that. In Girish Mulchand Mehta (supra), our
Court held that in an arbitration petition under Section 9 of the Act, the jurisdiction
of the court is not limited to passing orders only against parties to an arbitration
agreement. The Court affirmed the principle that Section 9 can be invoked even
against a third party, if he were to be a person claiming under a party to the
arbitration agreement and likely to be affected by the interim measures. There is
no question in our case of Respondent No.2 claiming under any of the parties to
the arbitration agreement. In Housing Development and Infrastructure Ltd.
(supra), there was an umbrella agreement and other separate agreements
thereunder, performance of each depending on the performance of the other or
others. In such a case, the fact that a party was not a signatory to one or the
other of the agreements was held to be not of significance and the existence of
an arbitration agreement between the parties was affirmed. The facts and the
ratio of that judgment have nothing to do with the facts of our case. Even in the
Delhi case of Bharat Starch Industries (supra), though the MOU in that case
was not signed by a party, the subsequent correspondence showed that it had
accepted the MOU. These facts are clearly distinguishable. Even in the other
case of HIs Asia Ltd. (supra), the Delhi High Court affirmed the proposition that
when a third party, i.e. non-signatory party, is claiming or sued as being directly
affected through a party to the arbitration agreement and there are principal and
subsidiary agreements, and such third party is signatory to a subsidiary
agreement, but not to the principal agreement containing the arbitration clause,
then depending on the facts of a given case, it may be possible to hold that even
such party can be referred to arbitration. This proposition has no relevance to the
facts of our case.
13 For all these reasons, the reliefs claimed cannot be granted. The
petition is, accordingly, dismissed. There shall be no order as to costs.
(S.C. Gupte, J.)
Print Page
In the present case, a joint venture company was set up by two
groups through a joint venture agreement. Under the agreement, the definition
of the appellant group included “such other
entities controlled by him or his immediate relatives or his group companies
directly or indirectly”. Similarly, the definition of the respondent group included “…and their immediate relatives taken together and such other entities
controlled by them or their immediate relatives directly or indirectly”. Disputes arose between the parties when the appellant group
alleged that the respondent group were carrying on a competitive business. The
appellant group thus approached the Court to seek interim relief under Section
9 of the Arbitration and Conciliation Act, 1996.
The
Court after listening to the arguments on both sides, observed that the joint
venture agreement was entered into between the two groups and not between
specific individuals or entities. Thus, the immediate relatives and the
entities controlled by the respective groups were also held to be bound by the
terms of the agreement. The Court also observed that the legislative intent of
the Act was to encourage arbitration. Therefore it was held that the aforesaid
principles were required to be applied to the agreement and the arbitration
agreement therein.
The
Court thus reiterated that an arbitration agreement ought to be construed in a
broad and common sense manner and that the arbitration agreement should be
interpreted having regard to words and phraseology therein and no term or
phrase should be treated as meaningless, especially if they are consistent with
the other parts of the agreement.IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITON NO. 66 OF 2014
Rakesh S. Kathotia
vs.
Milton Global Ltd. & Ors.
CORAM : S.C. GUPTE, J.
PRONOUNCED ON: 02 JULY 2014
This Arbitration Petition, filed under Section 9 of the Arbitration and
Conciliation Act, 1996 (“Act”), seeks to restrain the Respondents from committing
breach of a Joint Venture Agreement (“JVA”) between the Petitioners and the
Respondents.
2 The Petitioners' case may be briefly stated thus :
Respondent No.1 is a Joint Venture Company, formed by the
Petitioners, representing the 'Subhkam Group' and Respondent Nos.2 to 15
representing the 'Vaghani Group'. Respondent Nos.5 to 9, who are claimed to be
relations of the Respondents representing the Vaghani Group, are signatories to
the JVA. The Vaghani Group owned the company – Respondent No.4, which
manufactured and marketed consumer durables and kitchen appliances under
the brand name 'Milton'. The JVA was entered into by the parties to carry on this
manufacturing and marketing business under the brand name of 'Milton'.
According to the Petitioners, they entered into the JVA under the bona fide belief
that the entire distribution and marketing network of Respondent No.4 would be
transferred to Respondent No.1. Under the JVA, the management of Respondent
No.1 was to be overseen by a Board of Directors to be appointed by the
Subhkam Group and the Vaghani Group in terms of the relevant clauses of the
JVA. Subhkam Group held 49.99% of the total issued and paid up capital of
Respondent No.1, whilst Vaghani Group held the balance 50.01%. It is the case
of the Petitioners that the Vaghani Group, in breach of the JVA, developed a
competitive business through Respondent No.2 and have transferred the
business of Respondent No.1 to Respondent No.2. The Petitioners seek to
enforce the arbitration agreement under the JVA and in the meantime, restrain
Respondent No.2 from manufacturing and marketing consumer durables, kitchen
appliances and other goods and products falling under the definition of “Goods” in
the JVA.
3 The main defence of the Respondents is that there is no identity of
the parties to the arbitration agreement contained in the JVA and the parties
hereto against whom relief is sought in the petition. If the parties against whom
relief is sought in the petition are not parties to the arbitration agreement, then
under the principle of the Supreme court ruling in the case of Sukanya Holdings
(P) Ltd. vs. Jayesh H. Pandya1 the subject matter of the Petition is not covered
by the arbitration agreement. It would then be impermissible to grant relief to the
Petitioners in a petition under Section 9 of the Act.
4 The parties to the JVA are (i) Petitioner No.1, (ii) Respondent No.4,
(iii) Respondent Nos.5 to 9 (described as “the Vaghani Group”), (iv) Respondent
No.1 (referred to as “the JVC” or “the Company”). Petitioner No.2, Respondent
Nos.2 and 3 and Respondent Nos.10 to 15 are not parties to the JVA. The main
allegations in the petition are against Respondent No.3 and the main relief is
sought against Respondent No.2. Prima facie, therefore, as the apparent state of
affairs indicates, the parties against whom reliefs are sought in the petition, are
not parties to the JVA and consequently to the arbitration agreement contained
therein.
1 (2003) 5 SCC 531
5 Mr.Nankani, the learned Senior Counsel appearing for the
Petitioners, however, submits that the capacity of the signatories to the JVA,
namely, Respondent Nos.5 to 9, was as representatives of the Vaghani Group
and the entire Vaghani Group is bound by the JVA and the stipulations therein,
including the arbitration agreement contained therein. It is submitted that the
other Respondents (Respondent Nos.2, 3 and 10 to 15) are part of the Vaghani
Group. Mr.Nankani submits that Respondent No.3 was the Chairman (and earlier
Managing Director) of Respondent No.1 and named in the JVA as 'Vaghani
Representative' and signed the JVA in his capacity as the authorised signatory of
Respondent No.1. Mr.Nankani relies on the judgments in the cases of Smita
Conductors Ltd. vs. Euro Alloys Ltd.2, Tata Industries Ltd. vs. Grasim
Industries Ltd.3, Girish Mulchand Mehta vs. Mahesh S. Mehta4, Housing
Development and Infrastructure Ltd. vs. Mumbai International Airport Pvt.
Ltd.5, Bharat Starch Industries Ltd. vs. Prudent International Shipping and
Trading Co.Ltd.6 and HIs Asia Ltd. vs. Geopetrol International Inc.7, in
support.
6 Mr.Thakkar and Mr.Madon, learned Senior Counsel appearing for
Respondent Nos.1,3,4,5,8 and 9 and Respondent Nos.2 and 10 to 15,
respectively, oppose the petition, submitting that 'Vaghani Group' referred to in
the JVA meant a different set of individuals and not 'Vaghani Group' as alleged in
the petition; that Respondent No.2 was not covered within 'Vaghani Group' as
defined in the JVA; and that no relief can be granted against Respondent Nos.2
and 10 to 15. The learned Counsel rely upon the judgments in the cases of
Sukanya Holdings (supra), Indowind Energy Ltd. vs. Wescare (I) Ltd.8,
Manish Estates Pvt.Ltd. vs. Official Assignee9, and Hemant D. Shah vs.
2 (2001) 7 SCC 728
3 MANU/SC/2869/2008
4 MANU/MH/1458/2009
5 2013 Indlaw MUM 1102
6 1995 (34) DRJ 72
7 2012 Indlaw DEL 3000
8 AIR 2010 SC 1793
9 Arbitration Petition No.18/2006 decided on 14.7.2006
Chittaranjan D. Shah10.
7 Respondent Nos.5 to 9, who have executed the JVA, are referred to
therein as “the Vaghani Group”. These Respondents are named as Promoters of
Respondent No.4. Each of Respondent No.4, its promoters (Respondent Nos.5 to
9) referred to as the Vaghani Group and Petitioner No.1 (referred to as the
Subhkam Group) are individually parties to the JVA with their own individual
obligations. The individuals, who are parties to the JVA, have no doubt
undertaken certain obligations on behalf of the others who are not parties to the
JVA. For instance, the obligations of Vaghani Group are undertaken on behalf of
Milton Plastic Limited (Respondent No.4), Respondent Nos.5 to 9 and “their
immediate relatives taken together and such other entities controlled by them or
their immediate relatives directly or indirectly”, whereas the Subhkam Group
under the JVA meant Petitioner No.1 and “such other entities controlled by him or
his immediate relatives or his group companies directly or indirectly”. The
signatories to the JVA may undertake obligations on behalf of other individuals or
entities who may be said to belong to a certain group – in our case, the
respective Vaghani and Subhkam Groups – and in an appropriate case, such
other individuals or entities may even be bound by these obligations. For
instance, in a case where the other individuals or entities represented to the
applicant that they would be bound by the agreement and relying on such
representation, the applicant entered into the agreement with the signatories, the
other individuals or entities may not be allowed to plead to the contrary and be
held bound by the agreement. But that still does not imply that these other
individuals or entities are themselves party to the JVA or the arbitration
agreement contained therein. These other individuals and entities will be party to
the JVA, and consequently, the arbitration agreement contained therein, only if
the signatories are proved to have executed the JVA as representatives of, or on
behalf of, these individuals and entities. For acting as representatives of, or on
behalf of, others, the others must be shown to have authorised the signatories to
enter into the JVA. There is nothing on record to show that. Respondent No.3 is
said to be the Managing Director of Respondent No.2. Respondent No.3 is said
10 Appeal No.658/2006 in Arbitration Petition No.295/2006 decided on 5.9.2006
to be “fully aware of and in the know of all the transactions, things, matters,
understanding and occurrences that have given rise to the present dispute”.
Respondent Nos.3,4,10, 11 and 12 are said to have entered into a Memorandum
of Understanding and Agreement for transfer of Business carried on in
partnership by them in the name of “Milton Exports” to the JV Company –
Respondent No.1. This is all that is averred in the petition against Respondent
Nos.2, 3 and 10 to 15. The authority of Respondent Nos.2, 3 and 10 to 15 to
represent them to Respondent Nos.5 to 9 cannot be spelt out from these
averments.
8 The gravamen of the charge in this petition is, Respondent Nos.3 to
15 carrying on business in the name of Respondent No.2, in contravention of the
terms of the JVA, and colluding with each other to do so. This may give rise to a
cause of action to the Petitioners who are party to the JVA, but this cause of
action cannot be agitated before an arbitral forum. None of Respondent Nos.2, 3
and 10 to 14 have consented to this arbitral forum and it cannot be thrust upon
them.
9 On the principle of law enunciated by the Supreme Court in
Sukanya Holdings (supra), the subject matter of the present petition is not
covered by the arbitration agreement and it is not permissible to grant any interim
relief under Section 9 of the Act.
10 Respondent Nos.2 and 4 are separate entities and the mere fact
that they have common directors will not make the two companies a single entity
or lead to an inference that one company will be bound by the acts of the other.
Even if it is assumed for the sake of argument that Respondent No.2 is promoted
by Respondent No.4 or its promoters, that will not make Respondent No.2 a party
to the JVA or the arbitration agreement contained within it. There is no case of
any ratification, approval, adoption or confirmation of the JVA by Respondent
No.2. Since we are dealing here with an arbitration agreement, such acts as
would spell out a contract ought to be in writing. The judgment of the Supreme
Court in Indowind Energy Ltd. (surpa) bears out these prepositions.
11 There is no question of lifting of corporate veil in this case. Neither is
any such case made out nor is any such case permissible in a proceeding under
Section 9. What we have to examine here is whether Respondent No.2, which is
a separate legal entity, is a “party” to the arbitration agreement. Our Court in
Manish Estates Pvt.Ltd. (supra) held as follows :
“ The term ’party’ as defined by section 2(h) to
mean "a party to arbitration agreement". Thus, the
entity which is party to the arbitration agreement can
make an application for interim measure under section
17 and the Arbitrator can make an order under that
provision only against an entity which is a party to the
arbitration agreement. What is required is that the
entity should be actually a party to the arbitration
proceedings. The Arbitration and Conciliation Act does
not recognise the concept of somebody being deemed
to be a party to the arbitration agreement. Therefore,
in my opinion, the learned Arbitrator cannot be justified
in embarking on the enquiry as to whether the
Company can be deemed to be a party to the
arbitration agreement.”
The observations quoted above also equally apply to an application under
Section 9 of the Act.
12 None of the judgments cited by the learned Counsel for the
Petitioners helps him get over this difficulty. In Smita Conductors (supra), the
Supreme Court found the contract to be affirmed by reason of the conduct of the
parties as indicated in the letters exchanged and held that there was an
agreement in writing to refer the disputes to arbitration. In Tata Industries' case
(supra), the Supreme Court found that the party raising a challenge on the ground
of the applicant not being a party to the arbitration agreement had earlier
proceeded before the High Court on the footing that it was a party and did not
allow the objector to go back on that. In Girish Mulchand Mehta (supra), our
Court held that in an arbitration petition under Section 9 of the Act, the jurisdiction
of the court is not limited to passing orders only against parties to an arbitration
agreement. The Court affirmed the principle that Section 9 can be invoked even
against a third party, if he were to be a person claiming under a party to the
arbitration agreement and likely to be affected by the interim measures. There is
no question in our case of Respondent No.2 claiming under any of the parties to
the arbitration agreement. In Housing Development and Infrastructure Ltd.
(supra), there was an umbrella agreement and other separate agreements
thereunder, performance of each depending on the performance of the other or
others. In such a case, the fact that a party was not a signatory to one or the
other of the agreements was held to be not of significance and the existence of
an arbitration agreement between the parties was affirmed. The facts and the
ratio of that judgment have nothing to do with the facts of our case. Even in the
Delhi case of Bharat Starch Industries (supra), though the MOU in that case
was not signed by a party, the subsequent correspondence showed that it had
accepted the MOU. These facts are clearly distinguishable. Even in the other
case of HIs Asia Ltd. (supra), the Delhi High Court affirmed the proposition that
when a third party, i.e. non-signatory party, is claiming or sued as being directly
affected through a party to the arbitration agreement and there are principal and
subsidiary agreements, and such third party is signatory to a subsidiary
agreement, but not to the principal agreement containing the arbitration clause,
then depending on the facts of a given case, it may be possible to hold that even
such party can be referred to arbitration. This proposition has no relevance to the
facts of our case.
13 For all these reasons, the reliefs claimed cannot be granted. The
petition is, accordingly, dismissed. There shall be no order as to costs.
(S.C. Gupte, J.)
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