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HIGH COURT OF JUDICATURE AT MADRAS
M. JAICHANDREN & M.M. SUNDRESH, JJ.
Embassy Property Developments Limited & Another
Versus
Jumbo World Holdings Limited & Others
O.S.A. Nos. 1 to 4 of 2013 & 155 to 158 of 2013 & M.P. Nos. 1 & 1 of 2013
Decided on: 20-06-2013
Arbitration and Conciliation Act - Share Purchase Agreement - Section 9
Fact of the Case:
The case involved original side appeals against a common order passed by a single Judge in original applications filed under Section 9 of the Arbitration and Conciliation Act, 1996. The appeals were filed by two companies, Embassy Property Developments Limited and GWL Properties Limited, against the order dismissing their applications for interim injunctions to restrain the respondents from dealing with certain assets during the pendency of arbitral proceedings.
Finding of the Court:
The court found that the power under Section 9 of the Arbitration and Conciliation Act, 1996, extends to third parties and granted the interim relief prayed for by the appellant, GWL Properties Limited, despite it not being a party to the arbitration clause in the Share Purchase Agreement. The court allowed the original side appeals and dismissed the appeals filed by Embassy Property Developments Limited. It left all issues to be decided by the Arbitral Tribunal.
Issues: The core issues involved determining whether the Share Purchase Agreement was determinable in nature, whether the appellant was entitled to specific performance of the agreement, and whether there was a nexus between the agreement and the immovable properties vested in GWL Properties Limited.
Ratio Decidendi: The court held that the power under Section 9 of the Arbitration and Conciliation Act, 1996, extends to third parties and granted the interim relief to preserve and protect the subject matter of the arbitral proceedings. It also refrained from making a final finding on the core issues, leaving them to be decided by the Arbitral Tribunal.
Final Decision: The original side appeals were allowed, and the appeals filed by Embassy Property Developments Limited were dismissed. All issues were left open to be decided by the Arbitral Tribunal. No costs were awarded.
M. Jaichandren, J.
1. The original side appeals, in O.S.A.Nos.1 to 4 of 2013, have been filed against the common order passed by the learned single Judge, dated 12.12.2012, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009. Similarly, the original side appeals, in O.S.A.Nos.155 to 158 of 2013, had been filed against the same common order passed by the learned single Judge, dated 12.12.2012, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009.
2. The original side appeals, in O.S.A.Nos.1 to 4 of 2013, have been filed by the Embassy Property Developments limited (formerly known as M/s. Dynasty Developers Private Limited), a company incorporated as per the relevant laws, having its registered office at Embassy Point, 150, Infantry Road, Bangalore.
3. The original side appeals, in O.S.A.Nos.155 to 158 of 2013, had been filed by GWL Properties Limited (formerly known as Gordon Woodroffe Limited) a company incorporated as per the relevant laws, with its registered office at No.36, Rajaji Salai, Chennai.
4. The original applications, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009, had been filed, under Section 9 of the Arbitration and Conciliation Act, 1996, praying for orders of injunction against the respondents 1 to 4 therein, restraining them from, in any manner, alienating, transferring, encumbering, dealing with, leasing or changing the character of the schedule mentioned properties and for restraining the said respondents their men, agents and others from acting contrary to or in derogation of the Share Purchase Agreement, dated 21.12.2005.
5. The applicants in the original applications, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009, namely, M/s. Dynasty Developers Private Limited, (now known as Embassy Property Developments Limited), have filed the original side appeals, in O.S.A.Nos.1 to 4 of 2013. The appellant in the original side appeals, in O.S.A.Nos.155 to 158 of 2013, namely GWL Properties Limited (formerly known as Gordon Woodroffe Limited) was the fourth respondent in the original applications, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009.
6. All the original applications, in O.A.Nos.452 to 454 of 2006 and O.A.No.731 of 2009, had been filed under Section 9 of the Arbitration and Conciliation Act, 1996. Respondents 1 to 3 in the said original applications are the majority shareholders of Gordon Woodroffe Limited (now known as GWL Properties Limited). Gordon Woodroffe Limited, the fourth respondent in the said original applications and the appellant in the original side appeals, in O.S.A.Nos.155 to 158 of 2013, is said to be the owner of the lands and buildings at Zamin Pallavaram, Maramalai Nagar Industrial Estate, Rajaji Salai and at Mandwa. In addition to the said properties the said company was in possession of certain investments/bank balances and fixed deposits. The immovable properties and the securities owned by the said company are morefully described as schedule B items 1 to 6 and Clause B in O.A.Nos.452 to 454 of 2006 and in O.A.No.731 of 2009. The shares held by the respondents 1 to 3 in the original applications are morefully described in schedule A.
7. Gordon Woodroffe Limited, the fourth respondent in the original applications (now known as GWL Properties Limited) had floated a sale proposal through an Information Memorandum, in the month of September, 2005. The said Information Memorandum had contained the relevant particulars relating to the company, including the properties held by it, the share holding pattern, the particulars about the directors and other financial information, which were relevant for the negotiations relating to the sale of the shares of the company.
8. The applicant in the original applications, namely, M/s. Dynasty Developers Private Limited (now known as Embassy Property Developments Limited), the appellant in original side appeals, in O.S.A.Nos.1 to 4 of 2013, had agreed to purchase the entire equity and preference shares of respondents 1 to 3
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