The court upheld the arbitral award, emphasizing the limited scope of review under Section 34 of the Arbitration and Conciliation Act, confirming that findings on readiness and willingness are factual and not subject to reappraisal.

JUDGMENT :

R.I. CHAGLA, J.

1. By the Commercial Arbitration Petition No. 44 of 2016, the Petitioners are seeking setting aside of the impugned Award dated 5th April 2016 as corrected vide Sole Arbitrator’s letter dated 27th May 2016. Both the Commercial Arbitration Petitions are connected and arise from the same impugned Award dated 5th April 2016. During the course of arguments, Mr. Sharan Jagtiani, learned Senior Counsel appearing for the Respondents in Commercial Arbitration Petition No. 44 of 2016 and the Petitioner in Commercial Arbitration Petition No. 113 of 2017 on instructions states that the Petitioner in Commercial Arbitration Petition No. 113 of 2017 is not pressing the Commercial Arbitration Petition.

2. By the impugned Award dated 5th April 2016, the Petitioner Nos. 2 to 4 (referred to hereinafter as “Panchamias”/“Pachamias Group”) and the Petitioner No. 1 (referred to as “Ganatra Hotels”), who were the Respondents in the arbitration proceedings were directed to make payment of sums of money to the Respondents herein and Claimants therein (referred to as “Ganatras”/”Ganatra Group”), and which payment is corresponding to the Ganatra Group’s shares in Ganatra Hotels. The impugned Award has thus granted a complete exit to the Ganatra Group from Ganatra Hotels by giving them monetary value of their shareholding and entitlement.

3. The brief background of facts are necessary and which are set out as under:

(i) Ganatra Hotels was incorporated in the year 1985 and at the relevant time, Kiran Ganatra, i.e. Respondent No. 1, was the Promoter and Chairman cum Managing Director of the Ganatra Hotels.

(ii) In the year 1987, Ganatra Hotels purchased land at Shivaji Nagar, Pune bearing Survey 132 A/2A/2/1, corresponding to C.T.S. 2687/A admeasuring about 3991.5 sq. mtrs.

(iii) After acquisition of the property Anil Popat and Girish Popat (“the Popat Group”) joined Ganatra Hotels as shareholder. Under the two groups i.e. Ganatra Group and Popat, the Company i.e. Ganatra Hotels operated its business of two divisions namely construction and hotel division.

(iv) Post 1996-97 the Panchamias approached the Ganatra Group for setting up a star category hotel and multiplex centre by joining as shareholders. It is necessary to note that the Popat Group was not interested in the hotel and multiplex entertainment centre. Hence, it was contemplated by the parties that the construction business will be a separate division under the control of the Ganatra Group.

(v) On 5th January 1999, a Shareholders Agreement was executed by and between the Ganatra Group and the Panchamias and Ganatra Hotels as the Confirming Party:

(a) The Shareholders Agreement recorded that the Ganatra Hotels owned land admeasuring 3891.50 sq. mtrs at Village Shivaji Nagar, Pune on which Ganatra Hotels was constructing a star category hotel comprising of 96 rooms.

(b) The object of the Shareholders Agreement was to enable the Panchamias and the Ganatra Group to jointly own and manage the hotel business of Ganatra Hotels after the exit of the Popat Group therefrom.

(c) Under Clauses 3.3.1 to 3.3.3, the Ganatra Group was to ensure transfer of the construction business, which was thereafter to be separately carried out by the Ganatras and the Popat Groups.

(d) Further, under Clause 3.3.4, the Ganatra Group was to ensure within 90 days from the execution of the Shareholders Agreement that Ganatra Hotels issued 70,00,000 shares of each Types ‘A’ and ‘B’ which were to relate to and facilitate the ownership and control of the construction business and of the hotel business respectively.

(e) Under Clause 3.5 of the Shareholders Agreement, till separation of construction business, the Panchamias were to be allotted Fully Convertible Debentures which were thereafter to be converted into Type ‘B’ shares.

(f) Under Clause 4.1 of the Shareholders Agreement, the value of Ganatra Hotels’ land was quantified at Rs. 6,50,00,000/-. The Ganatra Group’s initial contribution was to be 50% of the cost of t