2024:BHC-OS:1697 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION IN ITS COMMERCIAL DIVISION COMM. ARBITRATION PETITION NO.25 OF 2021 Elster Instromet B.V. .. Petitioner Versus Mrunal Gandhi .. Respondent …

Mr.Vikram Nankani, Senior Advocate with Ashish Rao, Alok Jain, Ria Dalwani, Samartha Saxena and Atharva Diwe i/b Economic Laws Practice for the Petitioner.

Mr.Darius Khambata, Senior Advocate with Aditya Mehta, Karan Rukhana and Bhavya Shah i/b ANP Partners for the Respondent.

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CORAM : BHARATI DANGRE, J.

RESERVED ON : 31^st OCTOBER, 2023 PRONOUNCED ON : 08^th JANUARY, 2024 JUDGMENT:-

1. Commercial Arbitration Petition No.25 of 2021 fled by Elster Instromet B.V. (hereinafter referred to as, “Instromet”) raises a challenge to an order dated 09/10/2020, passed by the Arbitral Tribunal, on an application under Section 17 of the Arbitration and Conciliation Act, 1996 by the Claimant- Mr.Mrunal Gandhi, the Respondent in the present Petition, which restrained the Petitioner- Elster Instromet BV from carrying on business in Gas Flow Meters in India, directly or indirectly or through subsidiaries, except through the Joint Venture Company (“JVC”) formed through the Joint Venture Agreement (“JVA”) entered between the two. The order is assailed on various counts, the preliminary ground being the Arbitrator has ignored settled law and erroneously enforced a ‘non-compete’ clause beyond the terms of Contract and in holding that the JVC is akin to a Partnership.

The Petitioner-Elster Instromet B.V. is represented by the learned senior counsel Mr.Vikram Nankani and the Respondent-Mr.Mrunal Gandhi is represented by the learned senior counsel Mr.Darius Khambata.

BACKGROUND FACTS

2. In order to appreciate the rival claims, as set out in the pleadings and the arguments advanced by the respective senior counsel in support thereof, it would be necessary to set out the necessary background facts.

Instromet Investments B.V., a company incorporated in Netherlands in 1988 was a part of Instromet Group, which claimed specialization in the upsteam solutions i.e. non- domestic segment. On the other hand, Elster group of companies traditionally focused on the downstream and distribution solutions i.e. domestic segment and it’s product range included residential diaphragm gas meters.

On 14/02/2003, the Elster group incorporated a subsidiary in India in the name of Elster Metering Pvt. Ltd. (“EMPL”) for the promotion, sale, services and local manufacturing of it’s products in India. In November 2005, Instromet Investments BV entered into a JVA with Mr.Mrunal Gandhi, engaged in the trading of Gas Measurement Equipments and the JVA highlighted the purpose of JVC to promote and sale of gas metering products and solutions of Instromet, on an exclusive basis in India.

The company, which was agreed to be promoted and incorporated in accordance with Laws of India, was limited by the shares immediately after the effective date and the JVC, so registered, was styled as “Elster-Instromet India Pvt. Ltd.”, having its registered offce in Mumbai, India.

3. The discord featuring in the Arbitration Petition has it’s genesis in this document and it’s distinct clauses, the document being captioned as, “Joint Venture And Shareholders Agreement”.

It is, therefore, imperative to set out the pre-requisites/

stipulations of the Agreement executed at Silvolde, Netherlands, as Instromet Investments B.V., is a Company incorporated under the laws of Netherlands and having it’s registered offce in Silvolde, Netherlands.

As per the Agreement, the frst part i.e. “Instromet”, unless repugnant to the meaning and context thereof, included its successors and permitted assigns and the party on the other part, Mr.Mrunal Gandhi included his legal heirs and legal representatives.

The terms of the arrangement between the two, was set out in the Agreement by recording that Instromet is engaged in business of gas measurement and control, whereas Gandhi is engaged in the trading o