V.V.S.Rao

Introduction

1. This revision petition under Article 227 of Constitution of India is by Satyam Computer Services Limited (Satyam) against the order, dated 03.11.2009 in I.A.No.1331 of 2009 in O.P.No.390 of 2008 passed by the Court of II Additional Chief Judge, City Civil Courts, Hyderabad. By the said order, learned Chief Judge while granting permission to Venture Global Engineering LLC (Venture) having its principal office in Michigan, to file additional pleadings took on record the additional pleadings in O.P.No.390 of 2008. The order is impeached mainly on the ground that Section 34 of the Arbitration and Conciliation Act, 1996 (the Arbitration Act or the Act) bars any additional pleadings being brought on record in a petition to set aside an arbitral award.

Fact of the matter

2. The admitted factual position in brief is as follows. Satyam and Venture formed Satyam Venture Engineering Services Private Limited (SVES) – second respondent herein; for providing engineering and computer services to automotive industry. The capital participation is in the ratio of about 50:50. The joint venture formation, ownership pattern etc., are governed by inter alia J.V.Agreement, shareholders’ agreement (both of 20.10.1999) and Non-Compete Agreement, dated 11.02.2000 to which SVES is also Party. Article VIII of shareholders’ agreement contemplates the ‘events of default’ as to mean bankruptcy, breach of agreement in material aspect and failure to cure within thirty (30) days, transfer or attempt to transfer any shares in violation of transfer restrictions set fourth in Article VII and change in control of the respective shareholders. As per Section 8.02, upon the occurrence of an event of default, non-defaulting shareholder shall have an option to purchase the defaulter’s shares at book value or cause immediate dissolution and liquidation of SVES. As per Section 11.05, the laws of State of Michigan, govern the shareholders’ agreement and provides for submission of disputes to London Court of International Arbitration (LCIA). Further as per Section 11.05(c), Satyam, Venture and SVES are required to act in accordance with the Indian Companies Act, 1956 and other applicable Acts/Rules being in force in India at any time, even if such laws are contrary to the shareholders’ agreement.

3. In 2000, Satyam Manufacturing Technologies (SMTI) entered into agreement with TRW – a manufacturer and supplier of automotive equipment – to provide engineering and IT services. They agreed to sub-contract to automotive engineering works to SVES. Satyam levied US $3 an hour towards administrative charges. According to Satyam, they retained US $859,899 from the TRW receipts. Venture disputed alleging that Satyam retained a total of US $ 2,188,000 and also alleged concealment and dereliction of duty as JV partner. This led to a dispute and Satyam requested for LCIA arbitration. The sole arbitrator considered Venture’s alleged breach by Satyam of its obligations and passed reasoned award dated 03.04.2006 ordering delivery of share certificate to Satyam and payment to Venture US $ 622,656 with interest .

4. After Venture failed in itschallenge of the award before the Courts in States of Michigan and Illinois, Satyam filed petition before Michigan Courts for its enforcement. The same was allowed and was confirmed in appeal. At that stage, Venture filed O.S.No.80 of 2006 on the file of the Court of Chief Judge, City Civil Courts, Secunderabad. The same was dismissed. The resulting appeal being C.C.C.A.No.26 of 2007 was also dismissed. The matter was carried to Supreme Court. In Venture Global Engineering v Satyam Computer Services Limited (2008) 4 SCC 190 = AIR 2008 SC 1061, apex Court held that the foreign award can be challenged under Section 34 of the Arbitration Act and remanded the matter with direction to dispose of the matter within six months from the date of the said Judgment. The suit was then transferred and marked as O.P.No.390 of 2008 befo