1. Zuari Maroc Phosphate Ltd. (‘Zuari’) has filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (‘the Act’) challenging the majority Award dated 9th May, 2012 passed by a three-member Arbitral Tribunal (‘AT’), in the disputes between Zuari and the Respondent, Union of India, Department of Fertilizers, Ministry of Chemical & Fertilizers.

Background facts

2. The background facts are that Pradeep Phosphate Ltd. (‘PPL’) was incorporated in 1981 as a Joint Venture (‘JV’) in the ratio of 51:49 between the Republic of Nauru and the Government of India (‘GoI’). Later the GoI acquired the entire shareholding of the Republic of Nauru sometime in 1993-94.

3. PPL was referred to the Disinvestment Commission in July, 1998. In 2000-2001, GoI decided to disinvest 74% of its shares in the total restructured equity share capital in PPL to a ‘strategic partner’. Deloitte Touche Tohmac India Pvt. Ltd. (‘DTT’) was appointed as Advisor for the said purpose. In 2001, GoI invited ‘Expression of Interest’ from various bidders through an International Competitive Bidding Process. On 8th February, 2002, Zuari submitted its bid based on the audited account of PPL for the year ending 31st March, 2001. It made an offer of Rs. 151.70 crores (@ Rs. 473.82 per share). As on 31st March, 2001, the net worth of PPL was around Rs. 1.15 crores. Its total liability was approximately Rs. 900 crores.

4. GoI accepted the above bid. A Share Purchase Agreement (‘SPA’) and a Shareholders’ Agreement (‘SHA’) was executed between the parties on 28th February, 2002.

5. Article 3.4 of the SPA provided for ‘Post Closing Adjustment’. (It may be noted that at various places in the impugned Awards of the majority and the minority as well as in the pleadings reference is made to 'Clause 3.4' whereas the SPA itself terms it as ‘Article’. For the sake of uniformity in this judgment, the clauses of the SPA are referred to as 'Articles'). The objective behind Article 3.4 was to neutralize the effect of operation and business during the transitional phase between 31st March, 2001 and 28th February, 2002 so that neither party was a gainer nor a loser as a result of the business operations conducted during the said period. Under Article 3.4(a) of the SPA, Zuari (described as a ‘Strategic Partner’) acknowledged that the value of the net assets, as reflected in the last balance sheet consequent upon restructuring, was Rs. 1,15,38,000/- which it accepted as true and correct. As per Article 3.4(b), within 90 calendar days following the ‘closing date’ (defined in Article 1.1 to mean the date on which closing occurs and is the later of (a) the date of the execution of the Agreement, or (b) the date mutually agreed to between the parties Zuari and PPL (described as a ‘Company’) were to cause an accounting firm jointly selected by the Government and Zuari to prepare and deliver to each of the strategic partners (i.e., Zuari and Maroc Phosphate SA, a company duly incorporated under the laws of Morocco) a statement showing in reasonable detail the computation of (i) the current and non-current assets of PPL, (ii) the current and non-current liabilities of PPL as of the close of business on the Closing Date and computed in a manner consistent with the computation of the current and non-current assets and the current and non-current liabilities of PPL reflected on the Last Balance Sheet and in accordance with the accounting principles used to complete the ‘2001 Net Assets Amount’ referred to as the ‘Closing Date Statement’. The sum constituting the difference between the current and non-current assets of PPL reflected in the ‘Closing Date Statement’ and the sum of the current and non-current liabilities of PPL reflected on the ‘Closing Date Statement’ was referred to as the ‘Closing Date Net Assets Amount’.

6. Under Article 3.4(c), the said determination was to be ‘final and binding on the parties’. Under Article 3.4(d), if the ‘2001 Net Assets Amount’ (already de