The main legal point established in the judgment is the application of the Chloro Controls principle to determine the binding nature of a guarantee to an arbitration agreement.

JUDGMENT

G S Patel, J. - Over a year has gone past since this Petition was fled. In that time these two Respondents, undoubtedly indebted to the Petitioner, have done three things One, they have repeatedly promised to pay. Two, they have then attempted to deny liability, only to admit it later. Three, they have made payment of an amount of only Rs. 50 lakhs just a few days ago. Including contractually stipulated interest, the Petitioner's claim is a little more than Rs. 23 crores The principal component itself (without reckoning the Rs. 50 lakh payment) is Rs. 14.88 crores.

2. I have noted these broad factors at the very beginning just to give a conspectus of where the matter stands.

3. The factual background is this The Petitioner ("Kotak Mahindra"), is a banking company The 1st Respondent, Williamson Magor, carries on a variety of businesses The 1st Respondent itself is a corporate promoter of other companies including one McNally Bharat Engineering Co Ltd ("McNally Bharat"). The 2nd Respondent ("Khaitan") is the chairman and one of the promoters of Williamson Magord The Respondents have various other associated corporate entities including Eveready Industries India Ltd, McLeod Russel India Limited and so on All these are part of the Khaitan Group.

4. In early 2018, Williamson Magor, Khaitan and McNally Bharat asked Kotak Mahindra to take up equity in McNally Bharatd After negotiations, the parties agreed that Kotak Mahindra bank would purchase 24 lakh shares of McNally Bharat at a price of Rs. 62/- per share, said to be the then prevailing share priced For reasons that do not matter, but do suggest themselves, and to ensure that a major financial institution such as Kotak Mahindra remained invested as a shareholder, the parties agreed: (1) Kotak Mahindra would remain invested for a period of 15 to 30 months from April 2018; (2) at any time after that period, Kotak Mahindra could call on Williamson Magor to buy, either itself or through a third party, the entirety of Kotak Mahindra's shareholding in McNally Bharat (a 'put option'); (3) the put option, if exercised, required Williamson Magor to take up Kotak Mahindra's equity in Bharat McNally at the initial acquisition price of Rs. 62/- per share plus an assured 16% Internal Rate of Return or IRR; and (4) if Williamson Magor could not or did not comply with this demand, Khaitan would discharge these obligations, that is to say, Khaitan would either buy Kotak Mahindra's shareholding himself at this price (Rs 62/- per share with an IRR of 16%) or would cause a third party to do sod These, Kotak Mahindra says, were the representations made to it and on the basis of which it made an investment of Rs. 14.88 crores in McNally Bharat Engineering It was allotted 24 lakh shares of the face value of Rs. 10/- per share at Rs 62 per share, ided with a premium of Rs. 52/- per shared This is documented.

5. To give effect to this agreement and the put option, Williamson Magor and Kotak Mahindra entered into an agreement dated 12th April 2018d It provided that within 15 to 30 months after the date of initial investment, Kotak Mahindra could call upon Williamson Magor to take up its equity either itself or through a third party at Rs. 62/- per share plus a 16% IRR A copy of this agreement is at Exhibit "B" to the Petition from page 22 The put option is described in clause (2) at pages 24 to 25 About this there is no dispute at all.

6. This agreement also contains a provision for arbitration in clause 111 The reference is to be a three-Member Tribunal and the arbitration is to be in Mumbai The clause is broadly worded.[1]

7. As I noted above, according to Kotak Mahindra there was an understanding that Williamson Magor's obligation under the put option would also be assured or guaranteed by Khaitan himself This meant that if Williamson Magor did not fulfil its contractual obligations upon Kotak Mahindra exercising the put option, Khaitan had agreed to fulfil those put option obligations himself As we