IMPORTANT POINT
Court has limited jurisdiction under Section 11 of Arbitration and Conciliation Act, 1996.

JUDGMENT :

R.F. NARIMAN, J.

Civil Appeal No. 975 of 2021

1. This appeal arises out of the dismissal of a petition under Section 11 of the Arbitration and Conciliation Act, 1996 [“1996 Act”] filed before the High Court of Delhi. The Appellant, Sanjiv Prakash, is a member of a family which also consists of his sister, Seema Kukreja (Respondent No.1 herein), his mother, Daya Prakash (Respondent No.2 herein), and his father, Prem Prakash (Respondent No.3 herein). The Appellant and Respondents are hereinafter collectively referred to as the “Prakash Family”.

2. The facts, briefly stated, are as follows:

2.1. A private company was incorporated on 09.12.1971 under the name and style of Asian Films Laboratories Private Limited [“the company”] by Prem Prakash, the entire amount of the paid-up capital being paid for by him from his personal funds. He then distributed shares to his family members without receiving any consideration for the same. On 06.03.1997, the name of the company was altered to its present name – ANI Media Private Limited.

2.2. Owing to the extensive efforts of Sanjiv Prakash at a global level, Reuters Television Mauritius Limited (now Thomson Reuters Corporation), a company incorporated in Mauritius [“Reuters”], approached him for a long-term equity investment and collaboration with the company on the condition that he would play an active role in the management of the company.

2.3. Pursuant to this understanding, a Memorandum of Understanding [“MoU”] was entered into sometime in 1996 between the four members of the Prakash Family. The MoU recorded that Sanjiv Prakash, supported by the guidance and vision of Prem Prakash, had been responsible for the tremendous growth of the company. The paid-up share capital of the company was held as follows:

The Prakash Family was to divest 49% of this shareholding in favour of Reuters or its affiliates, subject to necessary permission of the authorities, as follows:

“And whereas ANI for the past many years has been doing considerable business with Reuters Television (Reuters). The relationship between them has been close and cordial. In order to strengthen the relationship and make optimum use of the tremendous growth potential in the TV media sector, including to cater to the ever expanding news video demands of Reuters in its satellite transmissions to subscribers worldwide, it has been found expedient by the existing members of the company to divest 49% of their shareholding in favour of Reuters or its affiliates subject to necessary permission of authorities. This would cement the relationship built over the years between Reuters and the company.”

The MoU went on to record:

“1. The Prakash family will divest its 49% shareholding as under:

2. That Prakash family recognises the leadership provided by S.P. and the role he has played in steering the company to new heights with the name ANI which is respected internationally.

3. D.P. has been the Managing Director of the company from the beginning and Prakash family recognises her role in bringing the company to a very sound financial base as a result of very ably handling the accounts and finances of the company. She would continue to be Managing Director after Reuters’ participation in equity.

4. The Prakash family would continue to own 51% shareholding in the company after Reuters becomes a 49% shareholder. As they would continue to have the controlling interest it is the intention and desire of the Prakash family members that their actions and voting must be in a mann