Back
2008(5) Supreme 142
Supreme Court of india
Hon’ble Justice V.S. Sirpurkar, J.
M/s. Tata Industries Ltd. & Anr. — Applicants
versus
M/s.Grasim Industries Ltd. — Respondent
Arbitration Petition No. 5 of 2007
Decided on : 09-07-2008
(b)Arbitration and Conciliation Act, 1996 – Section 11(6) – Under Section 11(6), the Chief Justice of India or the designated Judge acts in his judicial capacity – He has jurisdiction to decide existence or otherwiseof a live issue warranting arbitration, before appointing arbitrator. (Para 22)
(2005)8 SCC 618; (2007)4 SCC 599; - Relied upon.
(c)Arbitration and Conciliation Act, 1996 – Section 11(6) – Issue of breach of confidentiality raised by applicant – The share purchase agreements also signed without prejudice to earlier rights even in the face of an arbitral notice subsisting – suggests that indeed there was a live issue. (Para 29)
(2004)2 SCC 663 – Relied upon.
(1974) 4 A.L.R. 257; (2006)7 SCC 756; (2006)2 SCC 641; (1942) 1 All E.R. 337 – Distinguished.
(d)Arbitration and Conciliation Act, 1996 – Section 11(6) – Arbitration Agreement would be clearly autonomous of the Shareholders Agreement – Well settled that even if the whole Agreement is terminated, the Arbitration Agreement would still remain – Whether there was a breach of Confidentiality clause and whether the applicants were entitled to any damages on account of that clause in favour of the applicants, would be a matter in the helm of arbitration and the Court would not go into that question. (Paras 31 and 33)
(2004)2 SCC 663 – Relied upon.
(e)Arbitration and Conciliation Act, 1996 – Section 11(6) – The non-applicant having raised an objection on the ground that the applicant Apex Investments (Mauritius) Holding Private Limited was a foreign company, and, therefore, could not have filed an application before Bombay High Court, cannot now turn around and say that Apex Investments (Mauritius) Holding Private Limited was not a party to the Arbitration Agreement – That will not be permissible – The contention that this objection was raised without prejudice, would also be of no consequence – Having succeeded in stalling the decision of the application under Section 11(6) before the High Court, it cannot now raise the argument that Apex Investments (Mauritius) Holding Private Limited was never a party. (Para 36)
Facts of the case :
1.M/s.Tata Industries Limited (hereinafter referred to as “TIL”) is a company incorporated under the Indian Companies Act, 1956 (Applicant No.1) while Apex Investments (Mauritius) Holding Private Limited (Applicant No.2) is a company incorporated under the Laws of Mauritius. The Applicant No.2 has its registered office at Mauritius while non-applicant M/s.Grasim is also a company incorporated under the Indian Companies Act, 1956.
2.Tata Cellular Limited (“TCL”) had obtained a CMTS licence for Andhra Pradesh Circle on 19.12.2005. Similarly, Birla AT &T Communications Ltd. (“BACL”) which was a joint venture undertaking of A.V. Birla Group and AT&T Wireless Group held CMTS licences for Maharashtra and Gujarat Circles since 15.12.1995. Tata Teleservices Limited (“TTSL”) was granted abasic service licence for Andhra Pradesh Circle on 4.11.1997. A Memorandum of Understanding was arrived at between AT&T Wireless Inc., AV Birla Group and Tata Industries Limited on 1st March, 2000 whereby they agreed to provide CMTS service through a single entity. As per this Memorandum of Understanding AT&T Wireless Inc., AV Birla Group and TIL agreed to provide services through a single entity or an alliance of entities and agreed to merge themselves to form IDEA Cellular Limited (“IDEA”). The Memorandum of Understanding was entered into on 13.11.2000 by merging TCL with BACL.
3.The parties point out that in 2004 AT&T Wireless Services Inc., which was the holding company of AT&T Cellular Private Limited (Mauritius), merged with New Cingular Wireless Services Inc. (“NCW”) pursuant to a global restructure cum merger. Subsequently TIL acquired the entire shareholding of AT&T Cellular Pvt. Ltd. from NCW and the Birla Group acting through Aditya Birla Nuvo Ltd. (“ABNL”) acquired 16.45% shares in IDEA from AT&T Cellular Private Limited. AT&T Cellular Private Limited was subsequently renamed as Apex Investments (Mauritius) Limited.
4.On 31.1.2006, the Applicant No.1 served a notice on the non-applicant under Article 9.02 of the Shareholders Agreement stating that Aditya Birla Telecom Limited (“ABTL”), a subsidiary of ABNL had applied to the Department of Telecommunication for grant of UAS license for the Mumbai Metro Circle. It was further stated that the filing of the application for UAS licence by ABTL for the Mumbai circle was in clear violation of Article 3.04(b) of the Shareholders Agreement and amounting to a material breach by Aditya Birla Group and accordingly it was requested to cure the said material breach within 60 days of the receipt of the said letter by withdrawing the said application made by ABTL for grant of UAS licence for Mumbai Circle.
5.On 27.2.2006, Applicant No.1 sent the Termination Notice ststing that ABNL, which was an affiliate company of Aditya Birla Group, for the purposes of Shareholders Agreement had displayed confidential financial data of IDEA on its website. Since such confidential information was not in the public domain and since none of the exceptions to the protection of confidential information contained in Section 8.01 of the Shareholders Agreement were available to ABNL, the disclosure of confidential information was a clear breach of Article 8.02 of the Shareholders Agreement and such material breach was not capable of being cured and, therefore, the said letter was to be treated as the Termination Notice and the Applicant No.1 was proceeding to purchase the shareholding of AV Birla Group within 90 days of the receipt of the said notice.
6.However, in the meantime, the applicant received an offer for purchasing its stake as well as the stake of M/s. Apex Investments (Mauritius) Holding Private Limited in IDEA from Global Communication Services Holding Limited. In such an eventuality, in terms of Clause 10.06, the applicants were bound to offer the shares at the same price to the non-applicant. On the very next day of this Offer, the non-applicant vide its communication dated 6.4.2006 accepted the Offer of Purchase. Thereafter two share purchase agreements wereentered into between the applicants and the non-applicant. There was a specific reference made to the claim of arbitration made on behalf of the TIL.
7.In pursuance of this an application was filed before the Bombay High Court. A stand was taken by the non-applicant that this would amount to an international commercial arbitration and, therefore, it would be the Chief Justice of India alone who would have the powers to constitute the Arbitral Tribunal under Section 11(12) of the Act.
Finding of the Court :
There is a live issue which can only be resolved by arbitration.
Result : Arbitral tribunal cosisting of three retired Justices of tghe Supreme Court, including the Ex-CJI appointed.
Judgment
V.S. Sirpurkar, J. —
1.Two companies, first being M/s.Tata Industries Ltd., and the second being M/s. Apex Investments (Mauritius) Holding Private Limited (hereinafter referred to Applicant Nos.1 and 2 respectively) have approached this Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) for appointment of the Arbitrator in a commercial dispute which has arisen between them and Grasim Industries Limited (hereinafter referred to as “the non-applicant”). Initially the applicants had approached Bombay High Court by way of an application under Section 11(6) of the Act, however, a stand was taken by the non-applicant that this would amount to an international commercial arbitration and, therefore, it would be the Chief Justice of India alone who would have the powers to constitute the Arbitral Tribunal under Section 11(12) of the Act. It is, therefore, that the matter has come before this Court. The parties are ad idem on this jurisdictional issue that the jurisdiction to appoint the Arbitrator lies with the Chief Justice of India or as the case may be, his nominee.
2.There is no dispute between the parties that there is an arbitration agreement between the parties vide Clause 12.04 of the Shareholders Agreement dated 15.12.2000 and Clause 9 of the Share Transfer Agreement dated 1.6.2006. That issue need not, therefore, be dilated upon.
3.The parties are also ad idem that the claims are within limitation.
4.The only question to be decided, on which the parties have extensively argued, is whether there is a live arbitrable issue.
5.Following background facts would help to understand the controversy between the parties.
6.M/s.Tata Industries Limited (hereinafter referred to as “TIL”) is a company incorporated under the Indian Companies Act, 1956 (Applicant No.1) while Apex Investments (Mauritius) Holding Private Limited (Applicant No.2) is a company incorporated under the Laws of Mauritius. The Applicant No.2 has its registered office at Mauritius while non-applicant M/s.Grasim is also a company incorporated under the Indian Companies Act, 1956.
7.Tata Cellular Limited (hereinafter called the “TCL”) had obtained a CMTS licence for Andhra Pradesh Circle on 19.12.2005. Similarly, Birla AT &T Communications Ltd. (hereinafter referred to as “BACL”) which was a joint venture undertaking of A.V. Birla Group and AT&T Wireless Group held CMTS licences for Maharashtra and Gujarat Circles since 15.12.1995. Tata Teleservices Limited (hereinafter referred to as “TTSL”) was granted a basic service licence for Andhra Pradesh Circle on 4.11.1997. A Memorandum of Understanding was arrived at between AT&T Wireless Inc., AV Birla Group and Tata Industries Limited on 1st March, 2000 whereby they agreed to provide CMTS service through a single entity. As per this Memorandum of Understanding AT&T Wireless Inc., AV Birla Group and TIL agreed to provide services through a single entity or an alliance of entities and agreed to merge themselves to form IDEA Cellular Limited (hereinafter referred to as “IDEA”). The Memorandum of Understanding was entered into on 13.11.2000 by merging TCL with BACL.
8.A Shareholders Agreement came into existence on 15.12.2000 between AT&T Wireless Inc., AV Birla Group (through Grasim Industries Limited) and Tata Group through TIL. In this Agreement respective rights and obligations of the parties for the merger/amalgamation of the TCL into BACL and modalities and functions of merged entities were recorded. Under that Agreement, the applicants, the non-applicant and AT&T Wireless Services Inc., were to hold 44,72,35,136 shares being one-third of the subscribed and paid up Equity Share Capital of the merged entity, i.e., IDEA. Article 3.04(b) of the Shareholders Agreement provides as under :
“Each founder covenants and agrees that except as set out in Section 3.04(c) and Section 3.04(d), it will not engage in, either directly or indirectly though an affiliate, (i) any a
gpt-4
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
