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IN THE HIGH COURT OF DELHI AT NEW DELHI
Jyoti Singh, J.
Ashwani Minda & Anr. - Appellant
Versus
U-shin Ltd. & Anr. - Respondent
Original Miscellaneous Petition (I)(Comm) No. 90 of 2020
Decided On : 12-05-2020
Arbitration and Conciliation Act, 1996 - Interim Relief - JVA and LTAA - [Exemption] - [Arbitration and Conciliation Act, 1996, Section 9] - [JVA, LTAA]
Fact of the Case:
The present petition was filed by the Applicants under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim reliefs on account of indirect/direct alleged breach of certain Clauses of the Joint Venture Agreement (JVA) dated 30.05.1986 and License and Technical Assistance Agreement (LTAA) dated 17.02.2014. The Applicants claimed that there was a fundamental breach of the JVA and LTAA by the Respondents due to the planned commencement of tender offer of shares for a mutual business integration between them, which led to a change in control-cum-management and majority shareholding as per the JVA.
Finding of the Court:
The Court found that the present petition was not maintainable under Section 9 of the Act as the parties had agreed to exclude the applicability of Part I of the Act and had invoked the mechanism of the Emergency Arbitrator under JCAA Rules. The Court held that the jurisdiction of the Court under Section 9 of the Act cannot be invoked and the petition is not maintainable. The Court also dismissed the contention that the parties had excluded the applicability of Section 9 of the Act and distinguished the case from Raffle Design (supra) where the parties had agreed that it would not be incompatible for them to approach the Courts for interim relief.
Issues: The main issue before the Court was whether the present petition was maintainable under Section 9 of the Act.
Ratio Decidendi: The Court held that the present petition was not maintainable under Section 9 of the Act as the parties had agreed to exclude the applicability of Part I of the Act and had invoked the mechanism of the Emergency Arbitrator under JCAA Rules. The Court also dismissed the contention that the parties had excluded the applicability of Section 9 of the Act and distinguished the case from Raffle Design (supra) where the parties had agreed that it would not be incompatible for them to approach the Courts for interim relief.
Final Decision: The petition was dismissed by the Court, and it was made clear that nothing in the judgment is an expression on the merits of the case, including the locus of the Applicants to raise claims against the Respondents. The Arbitral Tribunal will decide the matter uninfluenced by this order.
JUDGMENT
Jyoti Singh, J. - Exemption allowed, subject to all just exceptions.
2. Application stands disposed of.
I.A. 3707/2020 (Exemption in filing Process/procedures due to COVID-19 Epidemic Lockdown)
3. In view of the reasons stated in the application, the same is disposed of with a direction to the applicants to file duly signed and affirmed affidavits and pay the requisite court fee within a period of one week of lifting of the lockdown.
4. Application stands disposed of.
OMP (I) (COMM.) 90/2020
5. Present petition has been filed by the Applicants under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the "Act") seeking interim reliefs on account of indirect/direct alleged breach of certain Clauses of the Joint Venture Agreement (hereinafter referred to as "JVA") dated 30.05.1986 and License and Technical Assistance Agreement (hereinafter referred to as "LTAA") dated 17.02.2014.
Case of the Applicants on facts:
6. Applicant No. 1 is son of Mr. J.P. Minda (hereinafter referred to as "Minda"). A JVA was executed and signed on 30.05.1986 between Minda, for and on behalf of M/s Jay Industries, and Respondent No. 1 to establish a JV i.e. Applicant No. 2. By means of a Memorandum of Family Settlement dated 14.02.1988, Minda and Sons acquired all interests in M/s Jay industries, a partnership firm, in respect of the JVA and the JV. Transfer of interest was intimated to Respondent No. 1 and was acknowledged and assented to, by it.
7. Thereafter, Minda acquired the entire interest of M/s Jay industries in respect of the JV, through a Family Settlement executed on 21.02.2013 and finally, the said interest was transferred to Applicant No.1 through a Settlement Deed executed on 12.05.2019. Thus, Applicant No.1 now has the entire interest of M/s Jay industries in respect of the JV i.e. M/s. Jay Ushin Ltd.
8. Applicant No. 2 is a JV with Applicant No.1 as its Managing Director. Respondent No.1 is a Corporation incorporated in Japan, with one of its main business concerns being development, designing, manufacturing, sales, etc. of control machines, mechanical and electrical systems and components for automotive. Respondent No. 2 is also a Corporation incorporated in Japan. Respondent No.1 at present, is a wholly owned subsidiary of Respondent No.2.
9. As per Clauses 5.1 and 5.2 of JVA, Applicant No. 1 was to have majority in the Board of Directors and Clause 3.2 contemplated that he would hold majority shareholding in the JV and thus Applicant No. 1 had complete control over the JV, through day-to-day management responsibilities as well as majority voting rights at the Directors'' and Shareholders'' meetings. JVA imposed important restrictions on the parties under Clause 4.1 which was the pre-emptive Clause, restricting transfer of shares and Clause 7.1 which was a Non-Assignment Clause. Clauses 4.1 and 7.1 read as under:
| "ARTICLE-4
| TRANSFER OF SHARES
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| 4.1 - Neither YUHSHIN nor JAY shall sell the shares of New Co to any third parties unless it will first offer the other party to purchase such shares at the price to be offered to a third party. Should the party offered refuse to purchase the shares at such proposed price, the offering party may sell such shares to such third party not below the offered price
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| ARTICLE 7 | NON-ASSIGNMENT OF THE AGREEMENT |
| 7.1 - The benefits and obligations under this Agreement shall not be directly or indirectly assigned or transferred by any of the parties hereto without a prior consent in writing of the other; provided that nothing herein contained shall be construed as restricting the right of either hereto to transfer or assign the benefits and obligations hereunder to any parent company or any company with which either party hereto has amalgamated or merged or the subsidiaries of such amalgamated or merged companies. Parent company or subsidiary company in this paragraph respectively s | |
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