Arbitration Tribunal's misinterpretation of rights as obligations invalidated contractual claims, shocking judicial conscience.

JUDGMENT:

Context and Factual Background:

1. The captioned proceedings are cross petitions filed under Section 34 of the Arbitration and Conciliation Act 1996 (“the Act”) challenging an arbitral award dated December 23, 2017 and an additional award dated February 16, 2018 (collectively, “Impugned Award”) passed by a Learned Arbitral Tribunal comprising a sole arbitrator.

2. The Impugned Award is related to disputes and differences in connection with an equally-owned joint venture between the claimants in the arbitral proceedings, namely Rakesh S. Kathotia (“Kathotia”) and Subhkam Ventures (I) Pvt. Ltd. (“Subhkam”) (Kathotia and Subhkam are collectively referred to as the “Subhkam Group”); and the various respondents other than Milton Global Ltd. (“Milton JV”) in the arbitral proceedings (collectively, the “Vaghani Group”). Milton JV is the 50:50 joint venture company in which each of the Subhkam Group and the Vaghani Group hold equal ownership.

3. The aforesaid bipartite classification is not only convenient but also appropriate for purposes of these proceedings. The Learned Arbitral Tribunal has returned very detailed and well-reasoned findings in the Impugned Award on how all the Respondents in the arbitral proceedings were inter-related and one collective economic and family unit with aligned interests, and how their initial defences of attempting to indicate separability broke down.

4. The peculiar nature of the Impugned Award has both sides in challenge under Section 34 of the Act.

5. The Subhkam Group is aggrieved by nothing in the Impugned Award except for one vital facet. The Learned Arbitral Tribunal has treated its rights in the joint venture agreement as obligations. Based on that finding, the Learned Arbitral Tribunal held that the Subhkam Group had not demonstrated its readiness and willingness to perform such (perceived) obligations. On every other count and every single allegation levelled by the Subhkam Group, the Learned Arbitral Tribunal has found in favour of the Subhkam Group but solely on the premise of the Subhkam Group not having been ready and willing to perform its obligations, the Learned Arbitral Tribunal has ruled that specific relief against violation of non-compete obligations by the Vaghani Group could not be granted, and as a result, damages too could not be granted.

6. The Vaghani Group is aggrieved by the Impugned Award containing extensive findings of, among others, default, deceit, breaches, violative conduct, and misleading conduct on the part of the Vaghani Group. However, since the Impugned Award grants no relief to the Subhkam Group on the premise of the Subhkam Group not having been ready and willing to perform the joint venture agreement, the Vaghani Group has sought a “partial setting aside” of what it terms the aforesaid “would have been” observations that are not warranted, when no relief is being granted.

7. Before analysing the record and the Impugned Award, a short overview of the factual matrix would be appropriate and is set out below:-

a) The Subhkam Group and the Vaghani Group hold 50% each in the equity share capital of the Milton JV. Towards this end, the parties executed a joint venture agreement on September 13, 2000 (“First JVA”), which was later amended and restated by a joint venture agreement dated July 14, 2001 (“JVA”);

b) The Vaghani Group was in the business of manufacturing, logistics, trading and sales of various products in the nature of consumer durables and kitchenware and this was the subject matter of the