Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Astonfield Renewables Pvt. Ltd. & Anr. - Petitioner
Versus
Ravinder Raina - Respondent
OMP 388 of 2015
Decided On : 15-01-2018
ARBITRATION - Common Arbitration - Two Agreements - Composite Transaction - Interpretation of Contract - Construction of Contract - Jurisdiction of Arbitrator - Breach of Contract - Entitlement to Shares - Valuation of Shares - Grant of Interest - Joint and Several Liability.
Fact of the Case:
The respondent was appointed as the President of Petitioner No.1 Company under Letter of Appointment & Employment dated 17.09.2008. The respondent tendered his resignation on 02.01.2013, which was immediately accepted by the petitioners by return email of the same date. The respondent, vide its letter dated 11.01.2013, called upon the petitioner to settle his accounts, inter-alia claiming that he is entitled to 3.08 shares of petitioner no. 2 valued at USD 275,000 per shares as part of his compensation. The petitioners sent an alleged full and final settlement which was payable to the respondent. The respondent, however, did not sign the same and called upon the petitioners to clear all his dues. The respondent vide its legal notice dated 01.08.2013, alleged certain breaches of the Agreement against the respondent and raised a claim against the respondent. The respondent filed a petition under Section 9 of the Act, being OMP No.777/2013 before this Court, which was disposed of vide order dated 10.12.2013 inter-alia directing that the petition be placed before the Arbitrator appointed by the Indian Council of Arbitration, who may treat the same as an application under Section 17 of the Act. The arbitration resulted in the impugned award holding the respondent to be entitled to 2.43 shares of petitioner no.2 valued at USD 275,000 per share and the salary amount of Rs.27.20 lacs, which had been directed to be deposited with the Registrar of this Court in terms of the order dated 10.12.2013 passed by this Court in OMP 777/2013 and also interest @ 12% p.a. from the date of respondent’s resignation till the date of award and further interest @ 18% till the date of payment.
Finding of the Court:
1. The two agreements form part of the same transaction and contain the terms and conditions of the employment of the respondent. The disputes having arisen in relation to the employment, were rightly referred to a common Arbitration by the Indian Council of Arbitration. 2. The interpretation given to the Clause 2(a) of the Appointment Agreement is most reasonable and cannot be faulted. 3. The objection raised by the petitioners is merely trying to take advantage of a typographical error in the Statement of Claim, which caused no prejudice to the petitioners inasmuch as the petitioners were at all time aware that the respondent’s claim was to 3.08 shares and not 1.08 shares. 4. The Arbitrator has taken the fair market value to be USD 275,000. He has held as under: III: The parties have not produced any basis for calculating the “fair market value” of the share entitlement beyond the first 2 shares as required under Clause 2(a) of the SIA. It is therefore decided that the value of these shares will be the same as for the first 2 shares, i.e. US$275,000 per share. The value of 0.43 shares therefore works out to US$119,041 (one lakh nineteen thousand and forty one). In absence of evidence, the arbitrator has taken the value of the first two shares to be also applicable for the next 0.43 shares. The same is a reasonable approach and I do not find any infirmity with the same. 5. Grant of interest @ 12% p.a. cannot be said to be so unreasonable so as to warrant interference by this Court in exercise of its power under Section 34 of the Act. Award of interest is at the discretion of the Arbitrator and until and unless it is shown that said discretion is exercised in a perverse manner, the same cannot be interfered with by the Court in exercise of its power under Section 34 of the Act. 6. The petitioners cannot take benefit of corporate veil to deny their joint and several liability under the Award.
Issues: None
Ratio Decidendi: None
Final Decision: The petition is dismissed with cost, quantified at Rs.50,000/-.
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) challenging the award dated 16.03.2015 passed by the Sole Arbitrator appointed by the Indian Council of Arbitration.
2. The disputes between the parties arise out of two agreements, the first one is Appointment & Employment Agreement (hereinafter referred to as the ‘Appointment Agreement’) dated 17.09.2008 and the second one being Stock Issuance Agreement (hereinafter referred to as the ‘SIA’) dated 01.12.2008.
3. The respondent was appointed as the President of Petitioner No.1 Company under Letter of Appointment & Employment dated 17.09.2008. The letter inter-alia provided as under:
“The terms and conditions of the said employment are annexed hereto and also in the accompanying Stock Issuance Agreement to be entered between you and our parent company Astonfield Renewable Resources Limited.”
It is important to note here that the so-called ‘Appointment Agreement’ was, in fact, an Annexure to this letter.
4. Clause 1.4 of the Appointment Agreement further provides that the respondent shall be eligible to participate in the Employee Stock Auction Plan/Scheme of the petitioner no.1 or its parent company i.e. petitioner no.2.
5. Clause 7 of the Agreement provides for termination of the employment and is reproduced herein below:
“7. Termination of Employment
7.1 Either you or the Company may terminate your employment without cause, upon written notice to the other Party. The termination would be effective after 3 (three) months from the date of the receipt (by the other Party) of such notice (hereinafter referred to as the ‘Notice Period’). Alternatively, the Company may terminate your employment with immediate effect, upon giving you three month’s remuneration as per Clause 1 of this agreement in lieu of notice or pro-rated remuneration for the balance Notice Period in case you have been permitted to work during the Notice Period.
7.2 The Company may terminate this employment agreement for Cause (hereinafter defined) with immediate effect without any severance pay, provided that notice of Cause has been served by the Company and you do not rectify, where capable of rectification, the breach/problem within 30 (thirty) days from receipt of the notice: provided, however, that no notice or thirty day cure period shall be required with respect to matters set forth in sub (ii) of the definition of Cause below.
For the purposes of this clause
“Cause” shall mean (i) the negligence or misconduct by you in complying with your duties, responsibilities, obligations and/or covenants or undertakings, which are either incapable of remedy or otherwise not remedied by you within 30 (thirty) days of a written notice being serviced on you by the Company stating the breach or (ii) your gross misconduct, theft from the Company, commission of any crime or breach of the Company’s confidence.”
6. Clause 11 of the Appointment Agreement restrained the respondent from engaging in any other employment or business activity during the term of the employment. The same is reproduced herein below:
“11. Conflicting Employment
You will devote your full time to the Company. During the term of your employment with the Company, you shall not engage in any other employment, occupation, consulting or other business activity, nor will you engage in any other activities that conflict with your obligations to the Company.”
7. Clause 23 of the Appointment Agreement provides for dispute resolution through arbitration. The said clause specifically provided that if a dispute arose under the said Agreement, as well as under the Stock Issuance Agreement entered into between the respondent and the petitioner no.2, the same shall be referred to and be heard by the same Arbitral Tribunal. The said Clause is reproduced herein below:
“23. Dispute Resolution
23.1 You shall discharge all your obligations in utmost good faith. You will, at all times, act i
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
