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IN THE HIGH COURT OF DELHI
Vibhu Bakhru, J.
Ashav Advisory LLP - Appellant
Versus
Patanjali Ayurveda Limited - Respondent
Arb.P. 905 of 2021
Decided On : 31-01-2022
| Table of Content |
|---|
| 1. introduction of parties involved (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. overview of mou-i and mou-ii (Para 7 , 8 , 9 , 10 , 11 , 12) |
| 3. claim of rights and obligations under mous (Para 13 , 14) |
| 4. respondents' denial of arbitration agreement (Para 15 , 16) |
| 5. arguments about the nature of agreements (Para 17 , 18 , 19 , 20) |
| 6. discussion on claims and requirements for arbitration (Para 21 , 22 , 23) |
| 7. court's examination on the arbitration agreement (Para 24 , 25 , 26) |
| 8. contextual understanding of mou-i terms (Para 27 , 30 , 31 , 32 , 33) |
| 9. details of funding and claims by ashav (Para 34 , 35 , 36 , 37 , 38) |
| 10. relationship and adjustments between mous (Para 39 , 40 , 41 , 42 , 43 , 44) |
| 11. incorporation of previous agreements in mou-ii (Para 45 , 46 , 47 , 48 , 49) |
| 12. legal interpretation of incorporation clauses (Para 50 , 51 , 52) |
| 13. group of companies doctrine applicability (Para 53 , 54 , 55 , 56 , 57) |
| 14. evidence of shared intent among parties (Para 58 , 59 , 60 , 61 , 62) |
| 15. existence of arbitration agreement discussion (Para 63 , 64 , 65 , 66) |
| 16. decision on arbitration appointment (Para 67 , 68 , 69) |
JUDGMENT
Vibhu Bakhru, J. The petitioner has filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter referred to as `the A&C Act') praying that a Sole Arbitrator be appointed to adjudicate the disputes among the parties.
Parties
2. The petitioner (hereafter `Ashav') is a limited liability partnership firm registered under the Limited Liability Partnership Act, 2008. Respondent no.1 (Patanjali Ayurveda Limited - hereafter `PAL') is a closely held public company and holds 48.1% of the shares issued by respondent no.5 company.
3. Respondent no.2 (Patanjali Parivahan Private Limited - hereafter `PPPL') is a private company and holds 16.9% shares of respondent no.5. Respondent nos. 3 and 4 (hereafter referred to as `DYMT' and `PGN' respectively) are Public Charitable Trusts. Respondent no.4 holds 13.52% shares of respondent no.5.
4. Respondent no.5 (Ruchi Soya Industries Limited - hereafter `RSIL') is a public company.
5. The petitioner states that respondent nos. 1 to 4 are a part of one group (Patanjali Group) and are effectively controlled and managed by the same set of persons.
6. Respondent nos. 1 to 4 formed a Special Purpose Vehicle known as a Patanjali Consortium Adhigrahan Private Limited (hereafter also referred to `the SPV'), which has since merged with RSIL.
Factual Context
7. A petition under the Insolvency and Bankruptcy Code, 2016 (hereafter `IBC') was admitted by the National Company Law Tribunal (hereafter `NCLT') in respect of RSIL. It is stated that certain entities of the Patanjali Group proposed a Resolution Plan in respect of RSIL. Respondent nos. 1 to 4 formed the SPV, which acquired the shares of RSIL pursuant to the Resolution Plan
8. It is stated that the Resolution Plan for RSIL required a sum of Rs.1,104.75 crores to be infused for the acquisition and resolution of RSIL. The resolution proponents proposed that the amount be infused through the SPV.
9. In the aforesaid context, Ashav, PAL, PPPL and the SPV entered into a Memorandum of Understanding dated 25.11.2019 (hereafter the `MOU-I'), whereby Ashav agreed to make available a sum of Rs.40,00,00,000/- to PAL and a sum of Rs.15,25,00,000/- to PPPL to be used for the resolution of RSIL.
10. Thereafter, on 09.12.2019, Ashav entered into another Memoranda of Understanding (hereafter the `MOU-II') with respondent nos. 1 to 4. Ashav states that disputes have arisen between the parties in connection with the said Memorandums of Understanding (MOU-I and MOU-II) and prays that an arbitrator be appointed to adjudicate the said disputes.
11. Clause 15 of the MOU-I embodies an Arbitration Agreement. The said clause reads as under:
"15. Dispute Resolution and Governing Law
15.1 If any dispute, claim, controversy or disagreement of any kind whatsoever (a "Dispute") arises at any time betwe
The court confirmed that an arbitration agreement exists between the parties, supporting the connection between two MOUs and allowing for the appointment of a sole arbitrator to resolve disputes aris....
A binding arbitration agreement exists despite challenges to the validity of accompanying contracts, with disputes to be resolved by an appointed arbitrator.
Court has limited jurisdiction under Section 11 of Arbitration and Conciliation Act, 1996.
The issue of non-arbitrability is required to be decided at the referral stage, and the Court has the jurisdiction to review the non-arbitrability aspects at the initial stage.
An arbitration agreement must clearly express the parties' intention to submit disputes to arbitration, and an arbitrator cannot adjudicate disputes involving his own decisions to avoid bias.
The court upheld that an arbitration clause within a Share Pledge Agreement remains binding post-assignment, affirming that jurisdictional issues are to be determined by the arbitral tribunal, aligni....
The court ruled that allegations of fraud do not negate the enforceability of an arbitration agreement, which operates independently from the underlying contract.
The main legal point established is the court's authority to appoint an Arbitrator when an Arbitration Agreement is invoked, and the need for detailed examination of the effect of new agreements on t....
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