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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
S. Sunil Dutt Yadav, J.
Anheuser Busch Inbev India Limited, Mumbai – Petitioner
Versus
East Godavari Breweries Private Limited, Andhra Pradesh and ors. – Respondents
Civil Miscellaneous Petition No.304 of 2019
Decided On : 31-03-2021
Arbitration and Conciliation Act, 1996 - Sections 11, 11(6-A), 7(5) and 35 - Seeking appointment of remaining three Members' of the Arbitral Tribunal and to constitute the Arbitral Tribunal for reference of disputes between the parties - Petitioner-Anheuser Busch respondent were parties to a Customer Information Service Provider Agreement - Originally the 'CISP Agreement' was executed between and has been eventually taken over by petitioner - respondent No.3 and ILIOS represented to petitioner that respondent No.1 and ILIOS are affiliate Companies and had guaranteed performance of respondent No.1 under the brewing contract –
Finding of the Court:
Dispute only of petitioner and respondent No.1 is referred for arbitration while the dispute between the other respondents is relegated to Civil Courts, there would be a possibility of conflicting orders and it would also be incongruous adjudication of substantive breach of obligations under Brewing Agreement vis-à-vis petitioner and respondent No.1 would be conclusive and binding on other respondents - Petitioner has issued the legal notice to respondents - Disputes have arisen under Brewing Agreement as well as the disputes that have arisen in connection with the undertakings –
Result: Petition is disposed off
ORDER :
The present petition has been filed seeking appointment of remaining three Members' of the Arbitral Tribunal and to constitute the Arbitral Tribunal for reference of disputes between the parties as per Clause 24.1 of the Brewing Agreement dated 06.02.2015.
I. Facts of the case:-
1. It is stated that the petitioner-Anheuser Busch Inbev India Limited and the respondent No.2 were parties to a Customer Information Service Provider Agreement (hereinafter referred to as "CISP Agreement") entered into on 21.03.2012. It is stated that originally the 'CISP Agreement' was executed on 21.03.2012 between M/s.SKOL Breweries Limited (hereinafter referred to as 'SKOL') renamed to SABMiller India Limited (hereinafter referred to as 'SABMiller') in 2014 and has been eventually taken over by the petitioner on the one hand and ILIOS Business Solutions Private Ltd., (hereinafter referred to as 'ILIOS') the Company stated to have been promoted by respondent No.3-Mr.Satish Babu Sana.
2. It is further stated that on 31.01.2015, the respondent No.3 and ILIOS represented to the petitioner that respondent No.1 and ILIOS are affiliate Companies and had guaranteed performance of respondent No.1 under the brewing contract, which was still under contemplation.
3. It is stated that respondent No.3 representing ILIOS executed a "Guarantee" in favour of SABMiller on 31.01.2015 and it is asserted that on the basis of such Guarantee, the petitioner has executed the Brewing Agreement with respondent No.1 on 06.02.2015. The purpose of Brewing Agreement was setting up of a facility to manufacture and brew the beer of petitioner Company. The petitioner is stated to have granted an advance of Rs.17.50 Crores in terms of Clause 6.12 of the Agreement and the parties have also stipulated at Clause 24 of the Agreement that the dispute resolution mechanism is by recourse to arbitration.
4. It is further submitted that on 13.02.2015, the Directors/Promoters of respondent No.1 (including respondent No.3 and another) have given a second guarantee undertaking to perform all the obligations under the Brewing Agreement in case of default by respondent No.1 including return of the advance.
5. It is also stated that after the rights of CISP Agreement were assigned to respondent No.2 on 09.09.2015, the respondent Nos.2 to 5 have furnished fresh guarantee under which the promoters had guaranteed that they would be jointly and severally liable to ensure "due performance of the obligation" under the Brewing Agreement, extending to an undertaking for refund of the advance by respondent No.1 to the petitioner under the stated circumstances.
6. It was clarified that in the event of termination of Brewing Agreement and the advance having become due, they would be "jointly and severally" liable to repay the advance with applicable interest. It is also stated that the petitioner would be entitled to offset the amounts due to the respondent No.2 under the CISP Agreement against the refund of advance.
7. It is stated that as the petitioner's representative allegedly gave oral instructions to respondent No.1 to stop working on 11.11.2016, operations being stopped eventually resulted in notice of termination being issued by the petitioner on 03.08.2018. The petitioner has subsequently called upon the respondent No.1 to pay the advance with interest. The respondent No.1 had in turn replied that it paused all operations on the basis of instructions from the representative of the petitioner. The petitioner is also stated to have invoked the Guarantee of other respondents. Accordingly, the notice of arbitration having been sent to the respondents and in light of absence of concurrence as regards the appointment of Arbitrator, the present petition has been filed.
II. Contentions of Petitioner:-
8. The petitioner contends that the respondent No.3 (described as Promoter No.1 in Document No.2 of the memo dated 05.01.2021), respondent Nos.4 and 5 (described as Promoter Nos.(i) and (ii) in Document No.1 o
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