IMPORTANT POINT
Arbitral award – In a domestic arbitration, there is mandatory period of twelve months for Arbitrator to render arbitral award – In contrast, period of twelve months would not be mandatory for an international commercial arbitration.

JUDGMENT :

DHANANJAYA Y. CHANDRACHUD, CJI.

1. The applicant Tata Sons Pvt. Ltd. is a company incorporated under the Indian Companies Act 1913. The first respondent, Siva Industries and Holdings Ltd. is a company incorporated under the Companies Act 1956 with a registered office at Chennai. The second respondent, C. Sivasankaran, who is the promoter of the first respondent is a resident of Seychelles.

2. The applicant, the first respondent and Tata Tele Services Ltd.¹ [“TTSL”] executed a share subscription agreement on 24 February 2006 for the issuance and allotment of shares of TTSL to Siva Industries in accordance with its terms and conditions.

3. Subsequently, a share subscription agreement dated 12 November 2008 was entered into between NTT Docomo Inc² [“Docomo”] a company incorporated in Japan, the applicant and TTSL. In terms of the agreement, Docomo sought to acquire 26% of the equity share holding of TTSL through a combination of primary shares (fresh shares issued and allotted by TTSL) and secondary shares (shares held by certain existing shareholders of TTSL).

4. The first respondent was an existing shareholder of TTSL and was invited to participate in the sale of secondary shares to Docomo. Accordingly, Docomo and the first respondent executed a secondary share purchase agreement dated 3 March 2009 in terms of which Docomo acquired 20.740 million equity shares of TTSL from the first respondent. The applicant, TTSL and Docomo executed a Shareholders’ Agreement dated 25 March 2009 to record the terms and conditions of the understanding between the parties regarding the rights, obligations and duties with respect to Docomo’s ownership of shares of TTSL. Thereafter, the applicant, TTSL and the respondents executed an Inter se agreement. The agreement, inter-alia, obliged the respondents to purchase the TTSL shares on a pro-rata basis in the event Docomo exercised its sale option under the Shareholder’s Agreement.

5. Docomo addressed a sale notice on 7 July 2014 to the applicant while invoking its sale option under clause 5.7 of the Shareholder’s Agreement dated 25 March 2009.

6. Disputes having arisen between the applicant and Docomo, the latter invoked arbitration against the applicant under the Rules of the London Council for International Arbitration. A three-member Tribunal made its award dated 22 June 2016, consequent upon which the applicant was called upon to make payment to Docomo and to acquire the shares of TTSL which were put by Docomo.

7. Thereupon, the applicant called upon the first respondent under the Inter se agreement to proportionately pay for and acquire back its shareholdings in TTCL from Docomo. Under the terms of the Inter se agreement, the second respondent, as promoter of the first respondent company, had agreed to be liable to the applicant in the event that the first respondent failed to fulfill its obligation.

8. The applicant issued a notice of arbitration on 15 June 2017 to the first respondent and to the second respondent (a foreign party, being a resident of Seychelles) under Clause 10 of the Inter se agreement and nominated an arbitrator. Clause 10 states that the Arbitration shall be at Mumbai and Mumbai Courts have exclusive jurisdiction. The number of arbitrators is fixed as three by the Clause.

9. The respondents did not appoint their nominee arbitrator despite the service of the arbitration notice. The applicant filed a petition before this Court under Section 11(6) of the Arbitration and Conciliation Act 1996³ [“Arbitration Act”] for the constitution of an arbitral tribunal in an international commercial arbitration. The Supreme Court had exclusive jurisdiction to entertain the arbitration petition since the proposed arbitration between the applicant and the respondents, of whom the second respondent is a foreign party, was an international commercial arbitration in terms of Section 2(1)(