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2025 Supreme(Online)(Mad) 64534
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. ANAND VENKATESH, J
Flavorite Technologies Private Limited – Appellant
Versus
Mr. RAMAN DHOOT – Respondent
A. Nos.2332, 2333, 2334 & 2335 of 2025
For the Appellants/Petitioners: Mr. S. Aravindan for M/s. Fox Mandal and Associates
For the Respondents: Mr. Manoj Munshi, Senior Counsel for M/s. Jaishankar Ramakrishnan
The court clarified that sections 17 and 27 of the Arbitration and Conciliation Act serve different purposes, emphasizing proper procedural adherence in arbitrations.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 27 - Court’s role in assisting arbitral proceedings - Applicants sought directions for documents and information disclosure from respondents. Court held that arbitrator has authority to compel document production but procedural flaws were noted. (Paras 12-20)
(B) Actions under Sections 17 and 27 of the Act are distinct, and what cannot be done under Section 17 cannot be converted to an application under Section 27. (Paras 19)
Facts of the case:
Dispute arose from non-compete obligations under Share Purchase Agreement; arbitration initiated but interim relief sought in court due to non-compliance by respondents. The arbitrator previously denied certain requests that sparked this application under Section 27.
Findings of Court:
Court finds procedural infirmity as unilateral directions against the spirit of the Act were attempted. Arbitrator has power to issue directions on merits concerning document demand by the applicants.
Issues: Legitimacy of seeking document production under Section 27 after prior denials under Section 17.
Ratio Decidendi: Court clarified differences in application of Sections 17 and 27 and emphasized the need for arbitrator scrutiny, directing the arbitrator to decide merits based on objections.
Result: Applications disposed of with no costs.
| Table of Content |
|---|
| 1. dispute arose from non-compete obligations. (Para 2 , 3 , 4 , 5 , 10) |
| 2. clarification of procedural norms under the arbitration act. (Para 12 , 19) |
| 3. court’s role and powers regarding evidence and document production. (Para 13 , 14 , 15 , 16) |
| 4. final direction for the arbitrator to decide merits and validity. (Para 20 , 21) |
COMMON ORDER
These applications have been filed under Section 27(1) of the Arbitration and Conciliation Act, 1996 [for brevity hereinafter referred to as 'the Act'], seeking for the following directions:
A. To direct the Respondents to provide the documents and information as detailed in Schedule A of the Judges Summons.
B. To direct the Respondent No.1 (including in his capacity as Director of S.M.Food Engineering Private Limited) and Respondent No.2 (including in his capacity as shareholder of S.M.Food Engineering Private Limited) to provide the documents and information stated in part II of Schedule A of the Judges Summons
C. To direct the Respondents to disclose details of all body corporates, partnerships, proprietorships, trusts, estates, associations or other business entities in which each of Respondent No.1 and the late Mrs.Renu Dhoot, either alone or jointly with any other person, directly or indirectly owned, managed, operated, joined, have or had an interest in, or participated in, the ownership, management, operation or control of, or have otherwise been connected in any manner, from the year 2011 till date.
D. To direct the Respondents to provide a report from an independent chartered accountant certifying whether or not the Respondent No.1and the late Mrs.Renu Dhoot have undertaken (directly or indirectly) any transactions/dealings with S.M.Food Engineering Private Limited, Able Technotrade Private Limited,and Dealstrikers Advisors (India) Private Limited based on an audit of the bank accounts and records (as applicable) from the year 2011 till date of Respondent No.1 and the late Mrs.Renu Dhoot, and if yes, providing the details of such transactions/dealings such as transaction amount, date of transaction and purpose of transaction.
2.The applicants are engaged in the business of fabricating, manufacturing, marketing of food processing, inspection and packaging equipments etc. The 1st applicant is a wholly owned subsidiary of the 2nd applicant.
3.The 1st respondent is a former employee and erstwhile shareholder of the 1st applicant Company. Respondents 2 and 3 are the son and daughter of the 1st respondent. Originally, the wife of the 1st respondent was also a party in the arbitration case and during the pendency of the arbitration proceedings, she died on 31.01.2024 and hence, the 2nd and 3rd respondents were impleaded in the proceedings.
4.The dispute between the parties arose out of breach of non-compete and non-solicitation obligations by the 1st respondent and his wife under the Share Purchase Agreement (SPA) dated 18.03.2011.
5.The dispute was referred to arbitration before the Nani Palkhivala Arbitration Centre (NPAC) as per the terms of the arbitration agreement contained in the SPA. A sole Arbitrator was also appointed.
6.The applicants approached this Court and filed application under Section 9 of the Act in OA.No.275 of 2021.
7.This Court by an order dated 07.07.2021 granted interim injunction as prayed for in OA.No.275 of 2021. Insofar as the interim relief sought for in the other applications in A.Nos.2139 - 2141 of 2021, liberty was granted to the applicants to move the Arbitral Tribunal.
8.The notice that was sent to the respondents were served and inspite of the same, the respondents did not enter appearance. Hence, when these applications came up for hearing on 11.11.2021, this Court granted liberty to the applicants to approach the arbitral Tribunal under Section 17 of the Act, with regard to the relief sought for in A.Nos.2139 - 2141 of 2021.
9.The scene shifted to the arbitral Tribunal and the applicants moved the necessary applications seeking for interim directions
