Karnataka High Court
Qatar Holding Llc vs Byjus Investments Pte Ltd on 16 April, 2025
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AP.IM No. 2 of 2024
C/W AP.IM No. 3 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF APRIL, 2025
BEFORE
THE HON'BLE MR JUSTICE ASHOK S.KINAGI
ARBITRATION PETITION-INTERIM MEASURE NO. 2 OF 2024
C/W
ARBITRATION PETITION-INTERIM MEASURE NO. 3 OF 2024
IN AP.IM No. 2/2024
BETWEEN:
QATAR HOLDING LLC
A LIMITED LIABILITY COMPANY INCORPORATED IN
THE QATAR FINANCIAL CENTER WITH LICENSE
NO.0004 AND HAVING ITS PRINCIPAL PLACE OF
BUSINESS AT OOREDOO TOWER (BUILDING 14)
AL DAFNA STREET, (STREET 801) AL DAFNA
Digitally (ZONE 61) DOHA QATAR,
signed by REP. BY ITS AUTHORIZED REPRESENTATIVE,
SUNITHA K S MILAN CHITALIA
Location: ...PETITIONER
HIGH COURT
OF (BY SRI. UDAYA HOLLA, SR. COUNSEL FOR
KARNATAKA SRI. HARISH B. NARASAPPA, SR. COUNSEL)
AND:
1. BYJUS INVESTMENTS PTE LTD
A COMPANY INCORPORATED UNDER THE LAWS OF
SINGAPORE WITH AN ADDRESS AT 30 CECIL STREET
NO.19-08, PRUDENTIAL TOWER
SINGAPORE 049712
REP. BY ITS AUTHORIZED SIGNATORY
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2. BYJU RAVEENDRAN
SON OF RAVEENDRA,
AGED ABOUT 44 YEARS,
IBC KNOWLEDGE PARK, 2ND FLOOR,
TOWER D 4/1, BANNERGHATTA MAIN RAOD,
BENGALURU
KARNATAKA INDIA 560029
...RESPONDENTS
(BY SRI. PRAMOD NAYAR, ADVOCATE)
THIS AP.IM / ARBITRATION PETITION INTERIM
MEASURE, IS FILED UNDER SECTION 9 OF THE ARBITRATION
AND CONCILIATION ACT, 1996 R/W RULE 9 OF THE
ARBITRATION (PROCEEDINGS BEFORE THE COURTS) RULES,
2001 PRAYING TO A. PASS AN ORDER OF INJUCTION
RESTRAINING RESPONDENT NO.1 INCLUDING ITS PARTNERS,
OFFICERS, SERVANTS, AGENTS, AND ASSIGNS FROM, IN ANY
MANNER DEALING/PARTING WITH, SELLING, CHARGING,
PLEDGING, TRANSFERRING, DISPOSING OF, ALIENATING, OR
ENCUMBERING, OR IN ANY MANNER CREATING ANY RIGHT,
TITLE OR INTEREST IN ANY OF THEIR ASSETS, INCLUDING
THE IDENTIFIED ASSETS, WHETHER RESPONDENT NO.1 IS
INTERESTED IN THEM LEGALLY, BENEFICIALLY, OR
OTHERWISE, UP TO THE VALUE OF USD 235,187,165,.78,
UNTIL THE CONCLUSION OF THE ARBITRATION, AND FOR A
PERIOD OF NINETY(90) DAYS THEREAFTER.
B. PASS AN ORDER DIRECTION RESPONDENT NO.1 TO
DISCLOSE ON OATH FULL AND ACCURATE DETAILS OF ALL ITS
ASSETS, INCLUDING THE VALUE, LOCATION AND FULL
DESCRIPTION OF EACH OF SUCH ASSETS, AS MAY BE
SUFFICIENT TO FULLY IDENTIFY THE SAME, WHETHER IN ITS
OWN NAME OR NOT AND WHETHER SOLELY OR JOINTLY
OWNED AND WHETHER RESPONDENT NO.1 IS INTERESTED IN
THEM LEGALLY, BENEFICIALLY OR OTHERWISE
C. PASS AN ORDER GRANTING AD INTERIM AND INTERIM
RELIEF IN TERMS OF PRAYER CLAUSES(A) AND (B) ABOVE.
D. COSTS OF THIS PETITION AND THE ORDER TO BE MADE
THEREON BE PROVIDED FOR, AND ETC.
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IN AP.IM NO. 3/2024
BETWEEN:
QATAR HOLDING LLC
A LIMITED LIABILITY COMPANY INCORPORATED IN THE
QATAR FINANCIAL CENTER WITH LICENSE NO.0004 AND
HAVING ITS PRINCIPAL PLACE OF BUSINESS AT OOREDOO
TOWER (BUILDING 14) AL DAFNA STREET,
(STREET 801) AL DAFNA (ZONE 61) DOHA QATAR,
REP. BY ITS AUTHORIZED REPRESENTATIVE
MR. MILAN CHITALIA
...PETITIONER
(BY SRI. UDAYA HOLLA, SR. COUNSEL)
AND:
1. BYJU RAVEENDRAN
SON OF RAVEENDRA,
AGED ABOUT 44 YEARS
IBC KNOWLEDGE PARK
2ND FLOOR, TOWER D, 4/1
BANNERGHATTA MAIN ROAD,
BENGALURU, KARNATAKA, INDIA 560029
2. BYJU'S INVESTMENTS PTE. LTD.,
A COMPANY INCORPORATED UNDER THE LAWS OF
SINGAPORE WITH AN ADDRESS AT 30 CECIL STREET
NO.19-08, PRUDENTIAL TOWER
SINGAPORE 04971
REP. BY ITS AUTHORIZED SIGNATORY.
...RESPONDENTS
(BY SRI. PRAMOD NAYAR, SR. COUNSEL)
THE ADVOCATE FOR THE PETITIONER HAS FILED THE
ABOVE AP.IM/ ARBITRATION PETITION INTERIM MEASURE
UNDER SECTION 9 OF THE ARBITRATION AND
CONCILIATION ACT, 1996 R/W RULE 9 OF THE
ARBITRATION (PROCEEDINGS BEFORE THE COURTS)
RULES, 2001 PRAYING TO A. PASS AN ORDER OF
INJUCTION RESTRAINING RESPONDENT NO.1 INCLUDING
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HIS SERVANTS, AGENTS, AND ASSIGNS FROM, IN ANY
MANNER DEALING/PARTING WITH, SELLING, CHARGING,
PLEDGING, TRANSFERRING, DISPOSING OF, ALIENATING,
OR ENCUMBERING, OR IN ANY MANNER CREATING ANY
RIGHT, TITLE OR INTEREST IN ANY OF THEIR ASSETS,
INCLUDING THE IDENTIFIED ASSETS, WHETHER
RESPONDENT NO.1 IS INTERESTED IN THEM LEGALLY,
BENEFICIALLY, OR OTHERWISE, UP TO THE VALUE OF USD
235,187,165.78, UNTIL THE CONCLUSION OF THE
ARBITRATION, AND FOR A PERIOD OF NINETY(90) DAYS
THEREAFTER.
B. PASS AN ORDER DIRECTION RESPONDENT NO.1 TO
DISCLOSE ON OATH FULL AND ACCURATE DETAILS OF ALL
ITS ASSETS, INCLUDING THE VALUE, LOCATION AND FULL
DESCRIPTION OF EACH OF SUCH ASSETS, AS MAY BE
SUFFICIENT TO FULLY IDENTIFY THE SAME, WHETHER IN
ITS OWN NAME OR NOT AND WHETHER SOLELY OR
JOINTLY OWNED AND WHETHER RESPONDENT NO.1 IS
INTERESTED IN THEM LEGALLY, BENEFICIALLY OR
OTHERWISE.
C. PASS AN ORDER GRANTING AD INTERIM AND INTERIM
RELIEF IN TERMS OF PRAYER CLAUSES(A) AND (B) ABOVE
D. COSTS OF THIS PETITION AND THE ORDER TO BE
MADE THEREON BE PROVIDED FOR, AND ETC.
THESE PETITIONS, HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 04.03.2025, COMING ON FOR
PRONOUNCEMENT THIS DAY, THE COURT MADE THE
FOLLOWING:
CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI
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CAV ORDER
These petitions are filed under Section 9 of the Arbitration
and Conciliation Act, 1996 read with Rule 9 of the
Arbitration(Proceedings before the Court) Rules, 2001.
2. The Petitioner is a company duly incorporated under
the laws of Qatar and has its principal place of business at
the address as mentioned in the cause title. The Petitioner
makes investments in companies world wide with the
objective of capital formation for the investee companies,
to generate long-term capital appreciation for itself. The
petitioner entered into a Cash-Settled Option Transaction
pursuant to a long-form confirmation letter dated 7th
September, 2022 with respondent No. 1 to part-finance
the acquisition by the letter of 17,891,289 equity shares
("Aakash Shares") of a public limited company named
Aakash Educational Services Limited having its registered
office at Bengaluru (Aakash).
2.1. Respondent No. 1 is a company incorporated
under the laws of Singapore. Respondent No. 1 is an
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investment vehicle of Respondent No. 2; it is a wholly-
owned subsidiary of Byju's Global Pte. Ltd., an entity
registered under the laws of Singapore ("Global"), in which
Respondent No. 2 is the sole shareholder. Respondent No.
1 is also an affiliate of and owns shares in, a company
called Think & Learn Private Limited ("T&L"), which is co-
founded and majority-owned by Respondent No. 2.
2.2. On 7th September, 2022, Global executed a Share
Security Agreement in favour of the Petitioner, to secure
the Transaction. Respondent No. 2 is an Indian national,
and is a co-founder of the ed-tech platform named BYJU
which is owned and operated by T&L. Respondent No. 2
executed a Deed of Personal Guarantee in favour of the
Petitioner on 7th September, 2022 regarding the
obligations of respondent No.1 under the confirmation
letter (personal guarantee). The Petitioner filed these
petitions under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred as the
"Arbitration Act") seeking specific interim measures of
protection for respondent no.1's breaches of its obligations
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under the Transaction. The arbitration clause relevant for
the purposes of the present petition is Clause 13 of the
Confirmation Letter read with the ISDA Master Agreement.
On 7th March, 2024, the petitioner invoked arbitration
under the Singapore International Arbitration Centre
(hereinafter referred to as 'SIAC') Rules against the
respondents in accordance with, and obtained an interim
award dated 28th March, 2024 passed by the Emergency
Arbitrator appointed by SIAC on 8th March, 2024. The
Emergency Arbitrator passed an Award restraining the
respondents until the conclusion of the Arbitration or until
further order from dealing in, parting with, selling,
charging, pledging, or in any other way, disposing of or
encumbering any of their assets, up to the value of USD
235,187,165.78.
2.3. Respondent No.2 on 18.4.2024 disclosed certain
assets of Respondent No.1 and himself, by way of an
affidavit filed by him in the arbitration, in partial
compliance with the Emergency Arbitrator's direction in
the Emergency Arbitrator award. These disclosures further
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evidence the malafides of the respondents. Respondent
No.2 has failed to specify the value of any of the disclosed
assets. It is contended that, the respondents breaches,
and their conduct in transferring/encumbering/disposing of
their assets, which would inevitably result in the
frustration of the petitioner's claim in the arbitration. The
petitioner is constrained to approach this Court seeking
urgent protective interim relief restraining respondent
no.1, including its partners, officers, agents, servants etc.
from, in any manner dealing with, transferring, selling,
disposing of the alienating, encumbering or creating any
rights, title, interest inter alia, the assets, more
particularly listed in the schedule to the present petition. It
is contended that the Arbitral Tribunal has not yet been
constituted. In the absence of the constitution of the
Arbitral Tribunal, the petitioner is left with no other
efficacious remedy in India than to approach this Hon'ble
Court Hence, prays to allow the petitions.
3. Respondents No.1 and 2 filed the statement of
objections. In the statement of objections, it is contended
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that the petitions and I.A.s arise in context of an
Arbitration between the parties. The Arbitration is seated
in Singapore, and is conducted as per the arbitration rules
of SIAC. The petitioner commenced the Arbitration in
accordance with the Arbitration Agreement contained in
certain financing documents, i.e., the confirmation letter
and Deed of personal guarantee, executed between the
parties. It is contended that the contractual framework
between the parties includes an English law governed by
the "confirmation letter" between the petitioner and
respondent no.1 and a deed of personal guarantee was
executed by respondent no.2 in favour of the petitioner,
both dated 7.9.2022. These agreements were to facilitate
a loan of USD 150 Million given by the petitioner to
respondent no.1, which was to be repaid in accordance
with the confirmation letter. The financing documents
each contained an arbitration clause which provide for
disputes to be referred to arbitration, seated in Singapore,
to be conducted in accordance with the Singapore
International Arbitration Centre Rules (SIAC Rules).
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4. The arbitration clause was invoked as the disputes
arose between the parties, with the petitioner alleging
various breaches of the confirmation letter by respondent
no.1. The petitioner on 27.02.2024 issued a notice of
termination of the confirmation letter to the respondents
on the basis of various alleged events of default. The
petitioner issued a demand notice on 4.3.2024 under the
Deed of Personal Guarantee. On 7.3.2024, the petitioner
commenced the Arbitration by filing its notice of
arbitration with the SIAC Registrar. At the same time, the
petitioner also filed an application for urgent emergency
reliefs in accordance with the Emergency Arbitration
procedures under the SIAC Rules. The respondents refuted
the petitioner's allegations and disputed the termination
notice.
5. It is contended that the Arbitral Tribunal is
constituted. An Emergency Arbitrator was appointed. The
Emergency Arbitrator allowed the parties to participate in
the proceedings. The Emergency Arbitrator has passed an
award on 28.3.2024. The said Emergency Award passed
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by the Emergency Arbitrator was enforced by the
Singapore High Court, and the respondent had already
complied with the Emergency Arbitrator's Award, and the
Emergency Arbitrator's Order (as converted into the order
of the Singapore High Court)
6. Pursuant to the enforcement of the Emergency
Arbitration Award by the Singapore High Court, the
respondents were required to disclose their assets to the
petitioner. Pursuant to the order passed by the Singapore
High Court, the respondents furnished sworn affidavits of
respondent no.2 to the petitioner's counsel, setting out the
details of all the assets of the respondents. The
petitioner's counsel wrote to the respondents' counsel,
alleging deficiencies, and inconsistencies in the First
Disclosure Affidavit, wherein the affidavit did not disclose
the value of the respondents' assets. The respondents'
counsel responded to the petitioner's counsel by E-mail
dated 29.4.2024, clarifying the matters vide Annexure-
R.2. It is contended that the respondents have already
complied with the Emergency Arbitration Order and Award.
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It is contended that, under the Arbitration Agreement, in
the Financing Documents, the parties had agreed to refer
the disputes between them, to an Arbitral Tribunal
comprising of three arbitrators. The Arbitral Tribunal is
been constituted and the parties to the agreement have
already presented their case before the Arbitrator. It is
contended that, in view of the Arbitral Tribunal being
constituted, the petitioner cannot obtain efficacious relief
from this Court. He also contended that the application
filed by the petitioner is not maintainable, after the
Arbitral Tribunal is constituted. It is contended that the
petitioner has no reason to consider interim relief from the
Arbitral Tribunal to be inefficacious as the Arbitral Tribunal
cannot pass an award against a person who is not a party
to the Arbitration. It is contended that the reliefs sought
by the petitioner as sought in the proceedings have to be
sought before the Emergency Arbitrator. Substantially, the
same is the reliefs; it seeks in the captioned petitions.
Hence, on these grounds, prays to dismiss the petitions.
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7. The petitioners filed a rejoinder to the statement
of objections filed by respondents No.1 and 2. It is
contended that, the arbitration has commenced in the
Singapore International Arbitration Centre is foreign
seated and International Commercial Arbitration. Section
2(2) of the Arbitration Act permits a party to approach the
High Court under Section 9 of the Arbitration Act even if
the place of arbitration is outside India, subject to an
agreement to the contrary. It is contended that the
respective agreements between the petitioner and the
respondents explicitly permit the petitioner to approach
the Courts under Section 9 of the Arbitration Act in India,
for interim measures. The petitioner has a cause of action
under Section 9 of the Arbitration Act regarding the
Emergency Arbitrator Award. It is contended that, under
Section 9, the Court can independently apply its mind to
the reliefs sought by the petitioner, and thereafter, grant
reliefs after satisfying itself. It is contended that, the
constitution of the Arbitral Tribunal in a foreign-seated
arbitration does not take away the petitioner's right to
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approach the High Court under Section 9 of the Arbitration
Act. This is because the Section 9 remedy is also a
mechanism to enforce the Emergency Arbitrator Award.
Therefore, it is the only efficacious remedy available to the
Petitioner. Hence, on these grounds, prays to allow the
petitions.
8. Heard Sri Udaya Holla, learned Senior counsel for the
petitioner and Sri.Harish B Narasappa, learned Senior
counsel for the petitioner; and Sri.Pramod Nayar, learned
Senior counsel for the respondents.
9. Sri Udaya Holla, learned Senior Counsel for the
petitioner, submits that, the Emergency Arbitrator Award
does not exclude the Aakash Shares from the purview of
the freezing order regarding the respondents' assets,
granted in favour of the petitioner. He also submits that
the operative portion of the Emergency Arbitrator Award
states that the Respondents, whether by themselves, their
agents or servants or howsoever otherwise, are restrained
from dealing in, parting with, selling, charging, pledging,
or in any other way disposing of or encumbering any of
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their assets, whether the respondents are interested in
them legally, beneficially or otherwise, up to the value of
US$235,187,165.78 until the conclusion of this Arbitration
or until further orders. He submits that the Emergency
Arbitrator Award specifically covers all assets of the
Respondents, insofar as that they are legally, beneficially,
or otherwise owned by them. The portion of the transcript
immediately after the portion relied upon by the
respondents notes that Byju Raveendran is the 100%
owner of Beeaar, due to which the relief sought relating to
Aakash shares, which are beneficially owned by
respondent no.2 won't be futile. He submits that the
Emergency Arbitrator noted that, the respondent No.2's
actions were not in the ordinary course of business and
there were added factors which give rise to the risk of
dissipation. On this basis, the Emergency Arbitrator Award
was passed for all assets that were legally, beneficially or
otherwise, owned by the respondents.
(Emphasis supplied)
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10. He further submits that, Byju Raveendra beneficially
owns the Aakash shares. Beeaar currently holds the
Aakash shares and Beeaar is wholly owned by respondent
no.2 since 100% of Beeaar's shares are held by
respondent No.2. Respondent No.2 has declared himself
as the beneficial owner of the Aakash Shares as per
Section 90 of the Companies Act, 2013. This is also
confirmed by Aakash's BEN-2 form filing, which states that
while Beeaar holds the 17,891,289 equity shares in
Aakash, the beneficial owner of these shares is respondent
No.2. He submits that the Byju beneficially owns Aakash
shares, and are, therefore, covered within the ambit of the
EA Award. He submits that the High Court, under Section
9 of the Arbitration Act has the jurisdiction to grant an
injunctive relief regarding the shares of a company that is
incorporated within its jurisdiction. Further, to buttress his
arguments, he places reliance on the following judgments:
1. PASL Wind solutions Private Ltd v. GE Power
Conversion India Pvt Ltd [(2021) 7 SCC 1];
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2. Raffles Design International India Pvt Ltd &
Anr. v. Educamp Professional Education Ltd and
Ors [2016 SCC ONLINE DEL 5521];
3. Shanghai Electric Group Co. Ltd v. Reliance
Infrastructure Ltd [2022 SCC ONLINE DEL
2112];
4. Arvind Constructions Co.(P) Ltd v. Kalinga
Mining Corporation and Others [(2007) 6 SCC
798];
5. Essar House Private Ltd v. Arcelar Mittal
Nippon Steel India Ltd [2022 SCC ONLINE SC
1219];
6. Niko Resources Ltd v. Union of India and Anr
[2001 SCC ONLINE DEL 615]
Hence, prays to allow the petitions.
11. Per contra, the learned counsel for the respondents
submits that, the petitions are filed on the ground that,
no arbitral Tribunal was constituted. He submits that, the
Arbitral Tribunal is constituted. Hence, the petitions filed
under Section 9 of the Arbitration and Conciliation Act is
not maintainable. He also submits that the Aakash shares
could not have been the subject matter of the
Emergency Arbitrator Award. He further submits that the
Aakash Shares are now held by a third party, not a party
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to the present proceedings or the SIAC Arbitration. He
submits that this Court has no jurisdiction to pass orders
on behalf of an entity that, is not a party before this Court.
He submits that since the Arbitral Tribunal has been
seized of the dispute, the jurisdiction to determine the
beneficial ownership vests only with the Arbitral Tribunal
and not under Section 9 of the Arbitration and Conciliation
Act. He submits that the EA Award is detailed and well-
reasoned. It is an accepted position that no application has
been moved by either the petitioner or the respondents to
clarify/modify/supplement the EA Award. The petitioner
has enforced the Emergency Arbitration Award in
Singapore, and the same has attained the status of a
decree passed by a court of law. The respondents have
complied with the Emergency Arbitration Award and filed
the requisite disclosure affidavits pursuant to the
Emergency Arbitration Award. By filing the present
petitions under Section 9 of the Act of 1996, the petitioner
has sought reliefs over and above, what was contemplated
in the Emergency Arbitration Award, and the petitioner is
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attempting to modify/supplement or better the scope of
the Emergency Arbitration Award, which is legally
untenable. The competent forum to approach in such a
situation, as per the SIAC Rules, is the duly constituted
Arbitral Tribunal. It is a settled position of law in India
that the Court cannot sit in appeal over an emergency
award passed in a foreign seated arbitration. To buttress
his argument, he has places reliance on the following
judgments, and accordingly, prays to dismiss the petitions.
1. Arcelar Mittal Nippon Steel India Ltd. v. Essar Bulk
Terminal Ltd [(2022) 1 SCC 712];
2. Ashwani Minela v. U Shin Ltd [ 2020 SCC ONLINE
DEL 721];
3. Jaya Industries v. Mother Dairy Calcutta and Anr
[2023 SCC ONLINE Cal. 2051];
4. Pacific Development Corporation Ltd v. DMRC Ltd
[2023 SCC ONLINE DEL 521];
5. Ganga Prasad Memorial Trust and Anr. v. DHK
Eduserve Limited [2024 : AHC : 76378-DB]
6. Welspun Enterprises Ltd v. Kasturi Infra projects
(P) Limited [2024 SCC ONLINE DEL 4849];
7. M. Ashraf v. Kasim V.K., [2018 SCC ONLINE KAR
4913];
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8. Kundan Lal v. Jagan Nath Sharma [1962 SCC
ONLINE AII 38];
9. Sunita Garg v. Scraft Product (P) Limited and Ors
[2023 SCC ONLINE DEL 2668];
10. Fedders Electric and Engineering Ltd v. Srishi
Constructions [2023 SCC ONLINE DEL 2356];
11. Asad Mueed and Anr v. Hammad Ahmed and
Others [2023 SCC ONLINE DEL 820];
12. A.V. Venkateswaran v. Ramchand Sobhraj
Wadhwani [1961 SCC ONLINE SC 16]
13. Uphealth Holdings INC v. Global Healthcare
Systems Pvt Ltd and Ors [2023 SCC ONLINE CAL
2442];
14. RKD Niraj JV v. Union of India and Ors [2024 SCC
ONLINE CAL 4027];
15. Manbhupinder Singh Atwal v. Neeraj Kunarpal
Shah [2019 SCC ONLINE GUJ 6871];
16. Natrip Implementation Society v. IVRCL limited
[2016 SCC ONLINE DEL 5023];
17. Sanghi Industries Ltd v. Ravin Cables Ltd [2022
SCC ONLINE SC 1329];
18. Skypower Solar India (P) Ltd v. Sterling and
Wilson International FZE [2023 SCC ONLINE DEL
7240];
19. Shoney Sanil v. Coastal Foundations (P) Ltd.
[2006 SCC ONLINE KER 38];
20. Asma Lateef v. Shabeer Ahmed [(2024) 4 SCC
696];
21. Ashwani Minda v. U.-Shin Ltd [2020 SCC ONLINE
SC 1123].
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12. Per contra, learned Senior counsel for the petitioner,
in reply, submits that the petitioner has sought a relief
under Section 9 of the Act, and the interim application
that, are in furtherance of the Emergency Arbitrator
Award. No attempt has been made by the petitioner to
modify the EA award. In the event, the petitioner has an
independent right under Section 2(2) of the Arbitration Act
r/w. Section 13b of the ISDA Agreement (Master
Agreement) and clauses 17.3 to 17.7 of the Personal
Guarantee to approach the High Court for interim reliefs
under Section 9 of the Arbitration Act, 1996. He submits
that this Court has jurisdiction to entertain the petitions
filed by the petitioner, and he prays to restrain the
respondents from parting with or disposing of or alienating
or creating encumbrance on all the assets, including the
Aakash shares. Hence, on these grounds prays to allow
the petitions.
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13. Perused the records, and considered the
submissions of the learned counsels for the parties.
14. The point that arises for consideration is,
"Whether the petitioner has made a grounds to grant
an interim injunction restraining the respondents from
creating any charge over the assets of respondents'
Company ?"
15. It is not in dispute that the petitioner provided US $
150 Million to respondent No.1 to part finance the
purchase of 17,891,289 shares under a long-form
confirmation letter, which was executed between the
petitioner and respondent No.1, supplementing/amending
the 2002 ISDA Master Agreement. As a security for the
US $ 150 Million, respondent No.2 had undertaken that
the Aakash shares would not be disposed of and/or
alienated which provides as follows :
Section 5(a)(ii) of the confirmation letter :
"ii) Paragraph (i) above does not apply to:
(A) any sale, lease, transfer or other disposal of T&L
Shares for the purpose of funding the payment of the
Mandatory Exchange Amount, the Option Cash
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Settlement Amount or any other amount due to
Party A under or in connection with any Transaction
Document;
(B) the conversion and/or exchange of the Aakash
Shares into T&L Shares pursuant to the Framework
Agreement;
(C) any Excluded Transfer (provided that in the case
of an Excluded Transfer to a holding company not
already listed, all or substantially all of the T&L
Shares are intended to be transferred to such holding
company and an IPO completes within the period
stipulated by the Calculation Agent acting reasonably
and provided further that Party B receives shares in
the relevant transferee entity in connection with such
Excluded Transfer corresponding to the T&L Shares
subject to the Excluded Transfer and
contemporaneously therewith);
(D) any sale, lease, transfer or other disposal of any
assets other than Security Assets or Funded Shares
provided that the proceeds of such sale, lease,
transfer or other disposal are applied by Party B
towards the repayment of its Specified Indebtedness;
or
(E) any sale, lease, transfer or other disposal of
Aakash Shares provided that at a time substantially
contemporaneously as such sale, lease transfer or
other disposal, Party B acquires T&L Shares intended
to be funded by the Initial Exchange Amount or the
proceeds of a Parallel Transaction."
As per the confirmation letter, the respondent no.2
has to repay US $ 300 million to the petitioner by March
31st 2025, the end of the term under the transaction.
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C/W AP.IM No. 3 of 2024
Respondent No.1 provide a personal guarantee up to US
$300 Million to secure the respondent no.2's obligation
under the transaction. Respondent No.2 purchased 1,
78,91,289 shares in Aakash on 21.9.2022.
16. The dispute between the parties arises about
respondent No.1's alleged failure to comply with its
obligations under the ISDA agreement, giving rise to
multiple events of default under the ISDA agreement and
entitling the petitioner to terminate the transaction and to
demand the payment of early termination amount in the
sum of US $235,187,165.78 thereby also engaging
respondent no.2 liability under the personal guarantee.
17. Respondent No.2 is the founder of Think and Learn
Private Ltd., an Educational Technology Company in
Bengaluru, India, and he being major shareholder,
acquired an interest in the Company called Aakash
Educational Services Ltd. The original co-founders of
Aakash is one Mr J C Chaudhry and Mr Aakash Chaudhry.
The T&L and the Blackstone Entities entered into an Option
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Agreement dated 30 July 2022 granting respondent No.1
the option to acquire the part of the Blackstone Entities
shares in Aakash, amounting to 26.8% of Aakash's total
share capital price of around US$270 million. The source
for acquiring 26.8% stakes in Aakash came from three
different sources. Pursuant to the ISDA Agreement, the
petitioner agreed to advance an Initial Exchange Amount
of US$150 million to Investments to part-finance the
purchase of a certain number of shares in Aakash, which
would convert upon completion of the Merger into 50,561
T&L Shares. Respondent No.2 executed a personal
guarantee to set out the Aakash merger, and conversion
process for respondent No.1. The condition mentioned in
the personal guarantee is that, if Aakash shares have not
been exchanged pursuant to the merger of Aakash and
T & L Private Ltd. by 3.10.2022, then, respondent No.2
shall take the necessary action to procure the issuance of
series F CCCP shares in T & L to respondent no.1 in
exchange for Aakash shares held by respondent no.1. The
transaction documents were executed. The plan merger
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C/W AP.IM No. 3 of 2024
between T & L and Aakash failed to take place, and the
respondent, did not acquire an additional 50,561
unencumbered T & L shares. The petitioner requested the
respondents, detailed information, and relevant
documentary evidence concerning those matters, i.e.,
copies of the register of shareholder of Aakash as well as
confirmation by the following day that, the respondents
would abide by their obligation, and would not enter into
any transaction affecting the Aakash shares. On 5.2.2024,
the Solicitor sent a letter to the respondent requesting
inter alia, an undertaking by them that they would not
dispose of their shares either T & L or Aakash.
18. From the perusal of the informal list of Aakash
shareholders and an informal capitalisation table in
relation to T & L, respondent no.1 was not listed as a
shareholder in the list. However, BEEAAR was shown as a
shareholder having a 16% stake (diluted from 26.8%).
According to the list, the Manipal Group held a 39.94%
stake in Aakash. In response to the petitioner's repeated
requests for signed non-disposal undertakings regarding
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the holding in Aakash and T & L shares, respondent No.1
provided the petitioner with a signed non disposal
undertaking regarding the shares held by respondent no.1.
The petitioner immediately drew respondent No.2's
attention to the fact that the document was not signed,
and full details of the shares were not completed in the
documents.
19. Respondent No.2 replied through E-mail that, he
corrected the number of shares held by respondent no.1,
although the figure of 1,42,996 series F CCCP shares in T
& L was unchanged from the original draft prepared by the
petitioner. The respondents due to non-disposal
undertaking given to the petitioner, the petitioner
terminated the transaction based on the occurrence of
several events of default, and demanded early termination
amount to US $235,187, 165.78 in accordance with the
ISDA agreement and called upon the respondents to pay
the amount on or before 1.3.2024. The respondents have
not paid the said amount. The petitioner invoked the
arbitration clause, and approached the Emergency
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C/W AP.IM No. 3 of 2024
Arbitrator at Singapore International Arbitration Centre.
The Emergency Arbitrator, after perusing the records
produced by the parties, has passed an award, which
reads as under :
"(1) Subject to the provision by the Claimant of the
undertaking set out in paragraph (3) below, the
Respondents, whether by themselves, their agents,
or servants or howsoever otherwise, are restrained
from dealing in, parting with, selling, charging,
pledging or in any other way disposing of or
encumbering any of their assets, whether the
Respondents are interested in them legally,
beneficially or otherwise, up to the value of
US$235,187,165.78, until the conclusion of this
arbitration or until further order, save that this
injunction shall not prohibit the Respondents from:
1. spending such sums as are reasonably necessary
for legal advice and representation at a rate to be
agreed between the Claimant and the Respondents;
and
ii. dealing with or disposing any of their assets in the
ordinary and proper course of business, provided
that any disposals be at fair market value and the
proceeds of such disposal remain subject to the
injunction and their identity be disclosed to the
Claimant.
(2) Subject to the provision of the undertaking
referred to in paragraph (3) below, the Respondents
shall disclose, under a sworn affidavit, to the
Claimant, full and accurate details of all their assets,
whether in their own name or not and whether solely
or jointly owned and whether the Respondents are
interested in them legally, beneficially or otherwise,
within 21 days from the date of this Award.
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(3) The Claimant shall forthwith provide the
Respondents with an undertaking in the following
terms:
"If the Arbitral Tribunal in SIAC ARB093/24/RHM
later finds that this order has caused loss to the
Respondents or either of them and decides that the
Respondents or either of them are to be
compensated for that loss, the Claimant undertakes
to comply with any order the Arbitral Tribunal may
make."
(4) The legal costs of the Application are initially
apportioned such that the Respondents shall pay the
Claimant the sum of SGD 800,000.00 in respect of
its legal costs of the Application, subject to the power
of the arbitral tribunal to finally determine the
apportionment of such costs.
(5) The costs of arbitration in relation to the
Application are initially apportioned such that the
Respondents shall bear in full such costs of
arbitration to be determined by the Registrar of the
SIAC Court at the conclusion of the arbitration,
subject to the power of the arbitral tribunal to finally
determine the apportionment of such costs.
20. After passing of the award by the Emergency
Arbitrator dated 28.3.2024, the petitioner approached the
Singapore High Court for an enforcement of the
Emergency Award passed by the Emergency Arbitrator,
wherein the Singapore High Court passed an order
enforcing the Emergency Arbitrator's award vide order
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C/W AP.IM No. 3 of 2024
dated 1.4.2024. The petitioner has given an undertaking
as set out in Schedule I to the order of the Singapore High
Court.
21. Pursuant to the order passed by the Singapore
High Court, respondent No.2 filed an affidavit on
18.4.2024 disclosing the assets and liabilities, and also
shares held by respondent No.1. Which discloses that
respondent no.2 is holding 17,891,289 ordinary shares in
Aakash Educational Services Ltd. The petitioner Solicitor
issued a communication dated 23.4.2024 to the
respondents' Solicitor stating that, the respondents have
failed to comply with the disclosure orders i.e., the un
notarised affidavit filed by respondent No.2, signed on
18.4.2024, is deficient, inadequate; and utterly lacking as
to the extent, value and location and details of the
respondents' assets, and it is also stated that the
respondents have not disclosed the value of the assets' list
therein. It is stated that respondent No.2 has suppressed
the shares, and the value of shares in the Aakash shares.
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22. Respondent No.2 has submitted a supplementary
affidavit as per Annexure-N. He has stated that he is the
director of respondent No.1, and is authorised to make s
supplementary affidavit on behalf of respondent No.1 in
SIAC ARB No.93/24. He has taken a contradictory stand
in the supplementary affidavit stating that he had set out
all the shares he owned, and he had inadvertently omitted
to list out the fact that he also owned 1000 ordinary (fully
paid up) shares in 'Byju holdings 2 Pte. Ltd.' and that he
had inadvertently omitted BIPL (respondent no.1) as a non
operating entity with no assets. He had inadvertently listed
out 17,891,289 ordinary (fully paid up) shares in Aakash
Educational Services Ltd as BIPL's (respondent No.1's)
assets. This is erroneous, and the Aakash shares are not,
in fact, part of the respondent's assets.
23. The respondent no.2 took a contradictory stand in
the supplementary affidavit vide Annexure-N. A litigant
can take a different stand at different times, but cannot
take a contradictory stand in the same case. A party
cannot approbate and reprobate on the same facts, and
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take inconsistent shifting stands. The doctrine of election
is based on the rule of estoppel-the principle that one
cannot approbate and reprobate inheres in it. The doctrine
of estoppel by election is one of the species of estoppel in
pais (or equitable estoppel), a rule in equity. Taking
inconsistent pleas by a party makes its conduct far from
satisfactory. A party should not blow hot and cold by
taking inconsistent stands, and prolong proceedings
unnecessarily. The said view is supported by the Hon'ble
Apex Court in the case of Suzuki Parasrampuria Suiting
Private Limited vs. Official Liquidator of Mahendra
Petrochemicals Limited (in liquidation) and Others
reported in (2018) 10 SCC 707.
24. The perusal of the award passed by the
Emergency Arbitrator discloses that the Emergency
Arbitrator has passed an award restraining the
respondents from encumbering any of the assets where
the respondents are interested in them legally or
beneficially or otherwise.
(Emphasis supplied)
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25. Rule 2(h) of the Companies (Significant Beneficial
Owners) Rules, 2018 (hereinafter referred to as 'SBO
Rules') defines the term "significant beneficial owner",
which reads as follows:
"2(h) "significant beneficial owner" in relation to a
reporting company means an individual referred to in
sub-section (1) of section 90, who acting alone or
together, or through one or more persons or trust,
possesses one or more of the following rights or
entitlements in such reporting company, namely:-
(i) Holds indirectly, or together with any direct
holdings, not less than ten per cent. of the shares;
(ii) Holds indirectly, or together with any direct
holdings, not less than ten per cent. of the voting
rights in the shares;
(iii) Has right to receive or participate in not less than
ten per cent. of the total distributable dividend, or
any other distribution, in a financial year through
indirect holdings alone, or together with any direct
holdings;
(iv) Has right to exercise, or actually exercises,
significant influence or control, in any manner other
than through direct holdings alone:
Explanation 1. For the purpose of this clause, if an
individual does not hold any right or entitlement
indirectly under sub-clauses (i), (ii) or (iii), he shall
not be considered to be a significant beneficial owner.
Explanation II. For the purpose of this clause, an
individual shall be considered to hold a right or
entitlement directly in the reporting company, if he
satisfies any of the following criteria, namely.-
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(i) the shares in the reporting company representing
such right or entitlement are held in the name of the
individual;
(ii) the individual holds or acquires a beneficial
interest in the share of the reporting company under
sub-section (2) of section 89, and has made a
declaration in this regard to the reporting company.
Explanation III. For the purpose of this clause, an
individual shall be considered to hold a right or
entitlement indirectly in the reporting company, if he
satisfies any of the following criteria, in respect of a
member of the reporting company, namely:-
(i) Where the member of the reporting company is a
body corporate (whether incorporated or registered in
India or abroad), other than a limited liability
partnership, and the individual,-
(a) Holds majority stake in that member; or
(b) Holds majority stake in the ultimate holding
company (whether incorporated or registered in India
or abroad) of that member;
(ii) Where the member of the reporting company is a
Hindu Undivided Family (HUF) (through karta), and
the individual is the karta of the HUF;
(iii) Where the member of the reporting company is a
partnership entity (through itself or a partner), and
the individual,-
(a) Is a partner; or
(b) Holds majority stake in the body corporate which
is a partner of the partnership entity; or
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(c) Holds majority stake in the ultimate holding
company of the body corporate which is a partner of
the partnership entity.
(iv) Where the member of the reporting company is a
trust (through trustee), and the individual,-
(a) is a trustee in case of a discretionary trust or a
charitable trust;
(b) is a beneficiary in case of a specific trust;
(c) is the author or settlor in case of a revocable
trust.
(v) Where the member of the reporting company is,-
(a) a pooled investment vehicle; or
(b) an entity controlled by the pooled investment
vehicle, based in member State of the Financial Action
Task Force on Money Laundering and the regulator of
the securities market in such member State is a
member of the International Organization of
Securities Commissions, and the individual in relation
to the pooled investment vehicle,-
(A) is a general partner; or
(B) is an investment manager; or
(C) is a Chief Executive Officer where the investment
manager of such pooled vehicle is a body corporate or
a partnership entity.
Explanation IV. Where the member of a reporting
company is,
(i) a pooled investment vehicle; or
(ii) an entity controlled by the pooled investment
vehicle,
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based in a jurisdiction which does not fulfil the
requirements referred to in clause (v) of Explanation
III, the provisions of clause (i) or clause (ii) or clause
(iii) or clause (iv) of Explanation III, as the case may
be, shall apply.
Explanation V. For the purpose of this clause, if any
individual, or individuals acting through any person or
trust, act with a common intent or purpose of
exercising any rights or entitlements, or exercising
control or significant influence, over a reporting
company, pursuant to an agreement or
understanding, formal or informal, such individual, or
individuals, acting through any person or trust, as the
case may be, shall be deemed to be 'acting together'.
Explanation VI. For the purposes of this clause, the
instruments in the form of global depository receipts,
compulsorily convertible preference shares or
compulsorily convertible debentures shall be treated
as 'shares'.
(i) "significant influence" means the power to
participate, directly or indirectly, in the financial and
operating policy decisions of the reporting company
but is not control or joint control of those policies.]
(2) Words and expressions used in these rules but not
defined and defined in the Act or in Companies
(Specification of Definitions Details) Rules, 2014 shall
have the meanings respectively assigned to them in
the Act and the said Rules.
26. Rule 3 and 4 of the said Rules reads as follows :
"3 Declaration of significant beneficial ownership
under section 90.-(1) On the date of commencement
of the Companies (Significant Beneficial Owners)
Amendment Rules, 2019, every individual who is a
significant beneficial owner in a reporting company,
shall file a declaration in Form No. BEN-1 to the
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reporting company within ninety days from such
commencement.
(2) Every individual, who subsequently becomes a
significant beneficial owner, or where his significant
beneficial ownership undergoes any change shall file
a declaration in Form No. BEN-1 to the reporting
company, within thirty days of acquiring such
significant beneficial ownership or any change
therein.
Explanation. Where an individual becomes a
significant beneficial owner, or where his significant
beneficial ownership undergoes any change, within
ninety days of the commencement of the Companies
(Significant Beneficial Owners) Amendment Rules,
2019, it shall be deemed that such individual became
the significant beneficial owner or any change therein
happened on the date of expiry of ninety days from
the date of commencement of said rules, and the
period of thirty days for filing will be reckoned
accordingly."
4. Return of significant beneficial owners in shares.
Upon receipt of declaration under rule 3, the
reporting company shall file a return in Form No.
BEN-2 with the Registrar in respect of such
declaration, within a period of thirty days from the
date of receipt of such declaration by it, along with
the fees as prescribed in Companies (Registration
offices and fees) Rules, 2014."
27. A perusal of Rule 3 of the SBO Rules
contemplates that, every individual, who is a significant
beneficial owner in a reporting company, shall file a
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C/W AP.IM No. 3 of 2024
declaration in Form No. BEN-1 to the reporting company
within ninety days from the commencement.
27.1 Pursuant to Sub Rule (1) of Rule 3 of the said
Rules, respondent no.2 has filed Form No.BEN-1 on
15.5.2023, wherein the name of the significant beneficial
owner is shown as respondent No.2 Annexure-P discloses
the company's name as Aakash Educational Services Ltd.
and the significant beneficial owner is respondent No.2.
Rule 4 states that upon receipt of the declaration under
Rule 3, the reporting company shall file a return in Form
No.BEN-2 with the Registrar in respect of such declaration,
within thirty days from the date of receipt of such
declaration by it, along with the fees as prescribed in
Companies (Registration offices and fees) Rules, 2014.
Pursuant to Rule 4 of the said Rules Aakash Educational
Services Ltd., submitted a Form in BEN-2 showing the
name of respondent no.2 as the significant beneficial
owner.
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28. Though, the petitioner has filed these petitions
on the ground that the Arbitral Tribunal is not yet been
constituted, in the absence of constitution of Arbitral
Tribunal, the petitioner is left with no other efficacious
remedy in India than to approach the Court by way of the
present petition. It is brought to the notice of this Court
that the Arbitral Tribunal is constituted, and the
proceedings are currently in progress.
29. To consider the case on hand, it is necessary to
examine Section 9 of the Arbitration and Conciliation Act,
1996, which reads as follows :
"9. Interim measures, etc., by Court - (1) A party
may, before or during arbitral proceedings or at any
time after the making of the arbitral award but
before it is enforced in accordance with section
36, apply to a court--
(i) For the appointment of a guardian for a minor or
person of unsound mind for the purposes of arbitral
proceedings; or
(ii) For an interim measure of protection in respect of
any of the following matters, namely:--
(a) The preservation, interim custody or sale of any
goods which are the subject-matter of the arbitration
agreement;
(b) Securing the amount in dispute in the arbitration;
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(c) the detention, preservation or inspection of any
property or thing which is the subject matter of the
dispute in arbitration, or as to which any question
may arise therein and authorising for any of the
aforesaid purposes any person to enter upon any
land or building in the possession of any party, or
authorising any samples to be taken or any
observation to be made, or experiment to be tried,
which may be necessary or expedient for the purpose
of obtaining full information or evidence;
(d) Interim injunction or the appointment of a
receiver;
(e) Such other interim measure of protection as may
appear to the Court to be just and convenient,
and the Court shall have the same power for making
orders as it has for the purpose of, and in relation to,
any proceedings before it.
(2) Where, before the commencement of the arbitral
proceedings, a Court passes an order for any interim
measure of protection under sub-section (1), the
arbitral proceedings shall be commenced within
a period of ninety days from the date of such order
or within such further time as the Court may
determine.
(3) Once the arbitral tribunal has been constituted,
the Court shall not entertain an application under
sub-section (1), unless the Court finds that
circumstances exist which may not render the
remedy provided under section 17 efficacious.
29.1. Section 9(1) enables the parties to an arbitration
agreement to approach the appropriate court for interim
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measures before the commencement of the arbitral
proceedings, during arbitral proceedings or at any time
after the making of an arbitral award, but before it is
enforced and in accordance with Section 36 of the
Arbitration Act. The bar of Section 9(3) operates where the
application under Section 9(1) had not been entertained
till the constitution of the Arbitral Tribunal. Of course, it
hardly need be mentioned that even if an application
under Section 9 had been entertained before the
constitution of the Tribunal, the Court always has the
discretion to direct the parties to approach the Arbitral
Tribunal, if necessary, by passing a limited order of interim
protection, particularly when there has been a long time
gap between hearings and the application has for all
practical purposes, to be heard afresh, or the hearing has
just commenced and is likely to consume a lot of time.
30. The Hon'ble Apex Court in the case of Arcelor
Mittal Nippon Steel India Limited vs. Essar Bulk
Terminal Limited reported in (2022) 1 SCC 712 has
held that, with the law as it stands today, the Arbitral
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Tribunal has the same power to grant interim relief as the
Court, and the remedy under Section 17 is as efficacious
as the remedy under Section 9(1). There is, therefore, no
reason why the Court should continue to take up
applications for interim relief, once the Arbitral Tribunal is
constituted, and is in seisin of the dispute between the
parties, unless there is some impediment in approaching
the Arbitral Tribunal, or the interim relief sought cannot
expeditiously be obtained from the Arbitral Tribunal.
Further, in the case of Natrip Implementation
Society v. IVRCL Limited, reported in 2016 SCC
OnLine Del 5023 the Hon'ble Delhi High Court held as
under:
"18. It is also well settled that the granting of
orders under section 9 of the Act are discretionary
in nature and equitable considerations would
apply for grant of such orders. Thus, orders as
prayed under section 9(1) of the Act would be
granted only if it is necessary and equitable."
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C/W AP.IM No. 3 of 2024
In the case of Manbhupinder Singh Atwal v. Neeraj
Kumarpal Shah, reported in 2019 SCC OnLine Guj 6871 the
Hon'ble Gujarat High Court held as follows:
"7. The proceedings under Section 9 are not
appellate proceedings. Nor Section 9 of the Act can
be converted or used as an appeal when the Arbitral
Tribunal is available to look into the merits for the
similar prayers which is pending in this case, or in a
given case could be made to the Tribunal, under
Section 17 of the Act.
8. The whole arbitral dispute is pending
consideration before the Arbitral Tribunal. The
interim measures prayed for by the applicant has a
necessary interaction to the aspects of main
controversy. The issues relate to main controversy
and the question of interim measures prayed for
have to be decided in that light and context.
Therefore when the dispute is already before the
Arbitral Tribunal, the proper and expedient remedy
for interim protective measures is, in all ordinary
circumstances, under Section 17 of the Act. It is
before the Arbitral Tribunal that the dispute between
the parties regarding interim protection could be
better appreciated and adjudicated".
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In the case of Sunita Garg v Scraft Product (P)
Limited & Ors., reported in 2023 SCC OnLine Del
2668, the Hon'ble Delhi High Court held as under:
"12. According to Section 9(3) of the Act, 1996
the remedy under Section 9 can be availed after
the commencement of the Arbitral Tribunal only if
the Court is of the view that remedy cannot be
efficaciously rendered by the Arbitral Tribunal.
Thus, it must be exercised only in exceptional
cases."
31. Admittedly, in the instant case, the Arbitral Tribunal
is constituted. The proceedings are currently in progress.
The petitioner can approach the Arbitral Tribunal, and seek
an interim relief. The petitioner, instead of seeking for an
interim relief before the Arbitral Tribunal, has continued
this proceeding even after constituting the Arbitral
Tribunal. Hence, this Court is of the opinion that, in view
of the subsequent development i.e., the Arbitral Tribunal
has already been constituted, the parties have appeared
before the Arbitral Tribunal, and the proceedings are
pending before the Arbitral Tribunal, the petitioner can
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approach the Arbitral Tribunal, and can make an
application seeking for an interim measure. The petitioner
can also seek for clarification and modification of the
Emergency Arbitrator's Award. The Tribunal may
reconsider, modify or vacate any interim order or award
issued by the Emergency Arbitrator, including a ruling on
its on jurisdiction. The Tribunal is not bound by the
reasons given by the Emergency Arbitrator. Any interim
order or award issued by the Emergency Arbitrator was, in
any event, ceases to be binding if the Tribunal is not
constituted within 90 days of such order or award or when
the Tribunal makes a final order if the claim is withdrawn.
32. In view of the said provision, the petitioner can
seek a clarification from the Emergency Arbitrator
regarding the significant beneficial owner, whether the
injunction granted by the Emergency Arbitrator covers the
shares of Aakash or the petitioner can approach the
Arbitral Tribunal and seek an interim relief. This Court
granted interim orders, and the same was extended from
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time to time to safeguard the interest of the petitioner. If
the said interim orders are continued for limited purpose,
no injustice would cause to the respondents. However, a
liberty is reserved to the petitioner to make necessary
application before the Emergency Arbitrator, seeking
clarification or before the Arbitral Tribunal, seeking an
interim relief.
33. Learned senior counsel Sri. Uday Holla places
reliance on the following judgments:
i) PASL WIND SOLUTIONS PRIVATE LIMITED v/s GE
POWER CONVERSION INDIA PRIVATE LIMITED reported in
(2021) 7 SCC 1, wherein, the Hon'ble Apex court has held that, a
proviso inserted to Section 2(2) which only makes it clear that
where, in an arbitration which takes place outside India, assets of
one of the parties are situated in India and interim orders are
required qua such assets, including preservation thereof, the courts
in India may pass such orders. The factual matrix of this case is
different from the case on hand. This case revolves around the
question as to whether an award made at a forum outside India, to
which the New York Convention applies, can be said to be a
Foreign Award and enforceable as such. This case does not deal
with Emergency Arbitrator's Award and subsequent constitution of
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Arbitral tribunal. Accordingly, this case does not apply to the case
on hand.
ii) Raffles Design International India Private Limited &
Anr. V/s Educomp Professional Education Limited & Ors
reported in 2016 SCC OnLine Del 5521, wherein, the Delhi High
Court has held that, a party seeking interim measures cannot be
precluded from doing so only for the reason that it had obtained a
similar order from an arbitral tribunal, that the question whether the
interim orders should be granted under section 9 of the Arbitration
Act or not would have to be considered by the courts independent
of the orders passed by the Arbitral Tribunal, and that the court can
independently apply its mind and grant interim relief in cases where
it is warranted. Also held that, a court would be unfettered by the
findings or the views of the Arbitral Tribunal. To the contrary, in
Para 99, the Delhi High Court has held that the Emergency Award
cannot be enforced under the Arbitration Act. Though, this case is
similar to the case on hand, in this case the parties had expressly
agreed that seeking interim order from the courts would not be
incompatible with the arbitration proceedings, and moreover, in this
case, an application to set aside the Award passed by the
Emergency Arbitrator was filed under Para 7 to Schedule I of the
SIAC Rules. Hence, this case is not aptly applicable to the case on
hand.
iii) Shanghai Electric Group Co. Ltd v/s Reliance
Infrastructure Ltd. Reported in 2022 SCC OnLine Del 2112,
wherein, the Delhi High Court held that, the applicability of Section
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9 stands excluded by choosing foreign seated arbitration cannot be
countenanced. An award of emergency arbitrator cannot be
enforced directly since there is no provision corresponding to
Section 17 for enforcing the interim orders and the meaningful
provisional reliefs could be granted by the courts of competent
jurisdiction in India. The remedy under Section 9 can be invoked
notwithstanding the constitution of Arbitral Tribunal. A party can
invoke the jurisdiction of the Court under Section 9 of the Act on
the basis of location of the assets. In this case, however, the
Arbitral Tribunal was constituted, and though, the court held that,
Section 9 application is maintainable. The court dismissed the
petition on the ground of not satisfying the ingredients of interim
injunctions and kept all the contentions of the parties open before
the Arbitral tribunal already constituted. Hence, this case does not
apply to the present case as this case does not deal with EA
Award, and subsequent constitution of Arbitral Tribunal.
iv) ARVIND CONSTRUCTIONS CO. (P) LTD. V/s KALINGA
MINING CORPORATION AND OTHERS reported in (2007) 6
SCC 798, the Hon'ble Apex court held that, the court entertaining
an application under Section 9 of the Act shall have the same
power for making orders as it has for the purpose and in relation to
any proceedings before it and that the general rules that govern the
court while considering the grant of an interim injunction at the
threshold are attracted even while dealing with an application under
Section 9 of the Act. There is also the principle that when a power
is conferred under a special statute and it is conferred on an
ordinary court of the land, without laying down any special
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condition for exercise of that power, the general rules of procedure
of that court would apply and that the exercise of power under
Section 9 of the Act must be based on well recognized principles
governing the grant of interim injunctions. The case quoted above
is not applicable to the case on hand, as this case does not deal
with Emergency Arbitrators Award or the Foreign Seated
Arbitration. It merely states that, section 9 application must be
entertained taking into consideration the well recognized principles
governing the grant of interim injunctions.
v) Essar House Private Limited v/s Arcellor Mittal Nippon
Steel India Limited reported in 2022 SCC OnLine SC 1219,
wherein, the Hon'ble Apex court held that, the proof of actual
attempts to deal with, remove or dispose of the property with a view
to defeat or delay the realization of an impending Arbitral Award is
not imperative for grant of relief under Section 9 of the Arbitration
Act. A strong possibility of diminution of assets would suffice. To
assess the balance of convenience, the Court is required to
examine and weigh the consequences of refusal of interim relief to
the applicant for interim relief in case of success in the
proceedings, against the consequence of grant of the interim relief
to the opponent in case the proceedings should ultimately fail.
Since, the case on hand revolves around a question, whether the
Award passed by the Emergency Arbitrator includes the Shares of
Aakash, however the Arbitral Tribunal is constituted subsequent to
the E A Award, the relief sought before this Hon'ble court is same
as that of the relief before the Emergency Arbitrator, and the
Emergency Arbitrator has passed an Award, no question of
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assessing the consequence of refusal of interim relief would arise.
Accordingly, this case is not applicable to the case on hand.
vi) Niko Resources Ltd v/s Union of India & Anr.
Reported in 2001 SCC OnLine Del 615, wherein, the Delhi High
Court held that, it cannot be disputed that the three basic legal
principles of existence of prima facie case, balance of convenience
and irreparable loss and injury have always to be taken into
account before any interim order is passed either under Order 39
Rules 1 and 2 or under Section 9 of the Act. While the aforesaid
principles cannot be given a go-bye the power to grant interim
measures of protection under Section 9 of the Act is wider in view
of the phraseology used in Section 9 of the Act. This case does not
apply to the instant case, as this case does not deal with
Emergency Arbitrators Award / Subsequent constitution of Arbitral
Tribunal or with the foreign seated Arbitration. It merely states that,
the ingredients of Order 39 Rule 1 and 2 have to be looked into
before granting an interim order under section 9. In the present
case, as the Arbitral Tribunal is already constituted and the parties
have appeared before it and participated in its proceedings, the
question of looking into the ingredients of granting interim order
does not arise. Hence, this case is not aptly applicable to the case
on hand.
34. In view of the above discussion, I answer the
point for consideration in the negative and proceed to pass
the following order :
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ORDER
i) The petitions are rejected;
ii) However, the liberty is reserved to the petitioner to make necessary application either before the Emergency Arbitrator, seeking clarification or before the Arbitral Tribunal, seeking interim relief. In the meantime, the interim orders, undertaking and status-quo, shall continue for a period of three months.
In view of the disposal of the petitions, all pending applications are disposed of.
Sd/-
(ASHOK S.KINAGI) JUDGE rs