Bangalore District Court
Cln Properties Pvt vs Shan Global Manufacturing And Trading ... on 31 January, 2023
IN THE COURT OF LXXXIX ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU. (CCH-90)
Present: Sri.S.J.Krishna, B.Sc., LL.B.,
LXXXIX Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 31st JANUARY 2023
Com.A.P.No.14/2022
PLAINTIFF : CLN Properties Pvt., Ltd.,
a private limited company having its
registered office at
No.677, 1st Floor,
27th Main, 13th Cross,
HSR Layout Sector 1,
Bengaluru-560 102
represented herein by its
Director and duly authorised signatory
Mr.Amit Dangi.
(By Sri.K.S.Devaraj, Advocate)
Vs.
DEFENDANTS: 01. Shan Global Manufacturing and Trading Pvt.,
Ltd.,
a private limited company having its
registered office at
No.2005, Anand Bhavan, 100 ft Road,
HAL II Stage,
Bengaluru-560 038.
(By M/s.Agraa Legal, Advocates)
/2/
Com.A.P.No.14/2022
02. Mr.Santosh Kumar.C.L.,
S/o C.Lakshminarasimha Murthy,
Major,
Residing at No.43, 14th Main,
15th Cross, HSR Layout Sector 4,
Bengaluru-560 034.
(Exparte)
03. Mrs.Vanishree Nanjundaiah,
D/o Nanjundaiah Subba Rao,
Major,
Residing at No.43, 14th Main,
15th Cross, HSR Layout Sector 4,
Bengaluru-560 034.
(Exparte)
Date of Institution of suit : 15-02-2022
Nature of suit : U/sec.34 of the Arbitration
(suit on pronote, suit for Conciliation Act.
declaration and
possession suit for
injunction, etc.,)
Date of commencement : -
of recording of evidence
Date of judgment : 31.01.2022
Total duration : Year/s Month/s Day/s
00 11 16
(S.J.KRISHNA)
LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU.
(CCH-90)
/3/
Com.A.P.No.14/2022
JUDGMENT
The Plaintiff/M/S.CLN PROPERTIES PVT., LTD., has filed this Arbitration suit U/Sec.34 of the Arbitration & Conciliation Act, 1996 praying the Court to call for the records in the proceedings in A.C. No.90/2021 before the learned Arbitrator in the matter of dispute between the plaintiff and defendant herein from the Arbitration & Conciliation Centre, Bengaluru;
b) set aside the arbitral award dated:16.12.2021 passed by the learned arbitrator in A.C.No:90/2021;
c) grant such other and further reliefs as the Hon'ble deem fit, in the facts and circumstances of the case, in the interest of justice and equity.
02. The arbitration proceedings in A.C.No:90/2021 was initiated in pursuance of the order dated:08.01.2021 passed by the Hon'ble High Court of Karnataka passed in CMP No:167/2016 filed by the defendant No:1/ claimant against the Respondents/plaintiff herein.
03. For the sake of convenience, the parties to the present suit are referred to as 'claimant' and 'respondent' as before the learned Sole Arbitrator in A.C.No:90/2021.
/4/ Com.A.P.No.14/2022 The summary of the case of the Claimant before the Arbitral Tribunal in A.C.No:90/2021 is as under:
04. The claimant is a private limited Company incorporated under the provisions of Companies Act, 1956 involved in business of trading and investment activities called as the Investor in the Share Subscription Agreement (SSA) and Shareholders Agreement (SHA).
05. The Respondent No:1 is involved in the business of real estate development and are called Company in the SSA and SHA and the purpose of these agreements for real estate project proposed to be executed by the Respondents on property Bg.Sy.No.96, 96/1, 96/2 measuring 15 acres situated at Kodathi Village, Varthur Hobli, Bengaluru South Tq.,(Now Bengaluru East Tq.,) and the Respondent No:2 and 3 were the original directors and who had originally signed the contract such as SSA and SHA.
06. The First respondent offered the claimant to subscribe for redeemable preference shares and accordingly the claimant accepted the offer and subscribed for the redeemable preference shares in the first respondent Company.
/5/ Com.A.P.No.14/2022
07. On 29.01.2010 SSA was entered between the Claimant and the First Respondent Company.
08. As per the SSA the Claimant was allotted 5,00,000 series A preference shares having face value of ₹.10/- (Rupees Ten only) each valued at a premium of ₹.190/- (Rupees One Hundred and Ninety only) totally amounting to ₹.200/- (Rupees Two Hundred only) for real estate project to be executed by Respondents on the afore said property and subsequently share certificate was also issued.
09. As a result of said SSA on 29.01.2010 SHA was also entered by and between the Claimant and the First Respondent on 29.01.2010 effective from first closing and recording the terms and condition governing relationship of share holders as shareholders of the First Respondent.
10. As per SSA in Clause 7 i.e. Redemption of series A Preference Shares, as per it the last date of redemption is on or before 30th September, 2015 and further it is stated that shares shall be redeemed by the Company at the rate of ₹.290/- per series A preference share plus ₹.10/- face value i.e. totally for a sum of ₹.300/- per series A preference shares and as such the First Respondent should have paid to the claimant a sum of ₹.15,00,00,000/- (Rupees Fifteen Crores only) as on /6/ Com.A.P.No.14/2022 30th September 2015. Though time has elapsed the respondents had not redeemed the shares.
11. Whenever the Claimant tried to contact the Respondents in this regard and tried to remind them about the commitment there was no reply from none of the Respondents and hence the effort of the Claimant went in vein and since there was no response from none of the Respondents dispute arose between the Claimant and the Respondents.
12. AS per the provisions of SHA under Clause 10.1 the Claimant issued an intimation letter dated:16.01.2016 and had requested respondents to redeem the shares and resolve the dispute amicably so arisen within a period of 45 days (Forty Five days). The letter was served on 18.01.2016.
13. The obligation of first respondent to redeem the preference shares held by the Claimant is categorically stipulated under the SSA dated:29.01.2010. In spite of receipt of letter dated:16.01.2016 the Respondents did not redeem the shares or issue any response. The Respondents did not express their inability to redeem the outstanding preference shares as per the terms of issue or express any intention to seek the consent of the Claimant or the approval of the Hon'ble NCLT to issue further redeemable preference shares /7/ Com.A.P.No.14/2022 equal to the amount due in respect of the unredeemed preference shares in terms of Section 55(3) of the Companies Act, 2013. This failure of the respondents to show any willingness or intent to redeem the outstanding preference shares clearly reveals their mala fides to unjustly enrich themselves at the cost of the Claimant and also amounts to breach of the provisions of the SSA dated:29.01.2010.
14. The Respondents have unlawfully withheld ₹.15,00,00,000/- from the claimant for a period of six years. The time value of this due amount over these six years is substantial, and considerable interest has accrued on such due amount. Therefore, the Respondent's failure to repay the due amount on 30.09.2015 or thereafter till date has put the Claimant to severe hardship and grave loss. Hence, the claimant is entitled to interest on the due amount at the rate of 18% p.a.
15. Owing to the failure of the Respondents to redeem the outstanding shares or even issue a response, the Claimant got issued a notice dated:17.03.2016 invoking the Arbitration Clause contained in the SSA dated:29.01.2010 to the Respondents.
/8/ Com.A.P.No.14/2022
16. As there was no reply from the respondents the Claimant approached the Hon'ble High Court of Karnataka, Bengaluru and filed a petition under Section 11(6) of Arbitration & Conciliation Act, 1996 in CMP No.167/2016 seeking appointment of an Arbitrator for the purpose of solving the disputes between the parties.
17. The Hon'ble High Court was pleased pass order dated:09.01.2021 appointing Sole Arbitrator to resolve the dispute between the Claimant and the Respondents.
18. The Respondent No:1 has mentioned in its Audited financial statement maintained by it for the financial years until 31.03.2019 that the Claimant is a preference shareholder of Respondent No.1. It is also specifically mentioned therein that the preference shares ought to have been redeemed latest by 30.09.2015 but have not yet been redeemed.
19. The Claimant has repeatedly requested the Respondent No:1 to rectify this and mention the claimant's name in the list of unsecured lenders of Respondent No:1 since the term of the preference shares has expired and the contribution towards preference shares has become an unsecured loan due from Respondent No:1 to the Claimant. However, the Respondent No:1 neither took steps to redeem the preference shares nor took any effort to repay the amount.
/9/ Com.A.P.No.14/2022
20. In its audited financial statement for the financial year ended on 31.03.2017, the Respondent No:1 slyly showed the Claimant as a promoter shareholder in order to try and evade its liability to repay the redemption amount. The Claimant called upon the Respondent No:1 to immediately explain this change, as the Claimant ought to have been paid ₹.15,00,00,000/- if the preference shares were indeed redeemed in accordance with the SSA dated:29.01.2010. Since there was no response from the Respondent No:1, the Claimant was forced to issue a letter dated:11.04.2018 to the Auditor of Respondent No;1 seeking an explanation in this regard, as it was his duty to verify the records while auditing the financials of the Respondent No:1 and before certifying the same. Upon being inquired, the auditor informed the Claimant that the accounts were audited based on the instructions provided by the Management of Respondent No;1. The Claimant also raised these concerns by way of letter dated:20.04.2018 issued to the Auditor. Since no proper explanation was provided by the Auditor or Respondent No:1 the Claimant apprehended that Respondent No:1 has redeemed the preference shares held by the Claimant without payment of due consideration as required under the SSA dated:29.01.2010. Respondent No.1 was repeatedly elusive towards the claimant's attempts to seek clarifications from them. The Audited Financial statements of the Respondent /10/ Com.A.P.No.14/2022 No;1 for the Financial Year ended on 31.03.2018 did not mention the Claimant to be a promoter. These acts of the respondents confirm that they tried to evade their liability to make payment of the redemption amount in respect of the preference shares to the Claimant while maliciously and surreptitiously removing the name of the Claimant as the holder of preference shares from the financial statements and showing Claimant as a promoter shareholder.
21. In response to the demands of the Claimant for repayment of the due amount, the Respondent No;1 has sought to evade its liability by citing untenable reasons. Admittedly, the Respondent No:1 has committed itself to repay the entire investment amount along with premium to the Claimant as can be evidenced under the SSA.
22. The cause of action to file this petition arose on 30.09.2015, 16.01.2016, 17.03.2016 and on the date when the claimant approached the Hon'ble High Court of Karnataka seeking appointment of an Arbitrator and on all subsequent dates where the respondents denied the claim of the claimant. The petition is filed within the period of limitation.
23. The Claimant has prayed the Tribunal to pass order/s, directing the Respondents jointly and severally:
/11/ Com.A.P.No.14/2022
1. Direct the Respondents to redeem the preference shares of the Claimant in accordance with the Share Subscription Agreement dated:29.01.2010 and pay the Claimant a sum of ₹.15,00,00,000/-(Rupees Fifteen Crore only);
Or Direct the Respondents to pay to the Claimant a sum of ₹.15,00,00,000/-(Rupees Fifteen Crore only) together with interest at the rate of 18% p.a. from 01.10.2015 towards damages on account of breach of provisions of the Share Subscription Agreement dated:29.01.2010.
2. To pay to the Claimant an interest calculated at the rate of 18% on ₹.15,00,00,000/- (Rupees Fifteen Crores only) per anum from the date of redemption till payment.
3. Cost of the proceeding;
4. Pass such other order/s as the Hon'ble Tribunal deems fit in the facts and circumstances of the case in the interest of justice and equity.
The Summary of the Statement of Objections filed by the Respondent No:1 before Arbitral Tribunal in A.C.No:90/2021 is as under:
The Respondent No:1 has raised following preliminary objections to the Claim Statement filed by the Claimant:
24. The present dispute is non-arbitrable as the relief of the claimant may possibly lie under the provisions of Companies Act. The NCLT is the singular Forum for all remedies under the Companies Act. Hence, the Arbitral /12/ Com.A.P.No.14/2022 Tribunal has no jurisdiction to adjudicate upon the matter in dispute.
25. The Claim made by the Claimant for specific performance of SSA is not enforceable under the provisions of Specific Relief Act and the Companies Act specifically bars redemption in the manner prayed by the Claimant before the Tribunal.
26. The Tribunal has no jurisdiction to grant any of the other reliefs provided for under the Companies Act. The disputes are expressly or by necessary implication, non-
arbitrable as per the mandatory provisions of the Companies Act. A special Forum has been created under the Companies Act for consideration or adjudication of disputes where shares cannot be redeemed, owing to the statutory bar. Under the Companies act, the parties are barred from contracting out and waiving the adjudication by the designated Court/forum and there is no choice.
27. The Claimant knowing full well about the transfer of shareholding of the Company in favor of present day shareholders, and transfer of the management in favor of the present day directors of the first respondent company has not arrayed them as parties in the CMP 167/2016 before the /13/ Com.A.P.No.14/2022 Hon'ble High Court of Karnataka. It was the duty of the Claimant to impleaded the present day shareholders and directors of the first respondent company in Section 11 proceedings, itself, to enable proper adjudication and to ensure due appointment and constitution of the Arbitral Tribunal. In the absence of such proper and legal appointment and constitution of the Arbitral Tribunal, the present proceedings are bad in law and without jurisdiction.
28. The present day directors and shareholders of the first Respondent Company have not been made parties to the present claim, the present claim ought to be dismissed for non-joinder of parties.
29. The claim made by the Claimant is barred by limitation and hence not maintainable.
30. The Claim petition is field by 'Shan Global Manufacturing and Trading Private Limited' whereas all the alleged transaction related documents, including SSA dated:29.01.2010 is standing in the name of Shan Technology Services Private Limited. The claimant has not furnished any evidence to show the relationship between these two entities. The Claim petition deserves to be dismissed for mis joinder of parties.
/14/ Com.A.P.No.14/2022
31. The First Respondent has admitted the execution of SSA dated:29.01.10. between the STSPL and First Respondent. The Respondent No:1 has culled out various clauses of SSA. And contended that as per the provisions of the SSA the investment of the entire Share Subscription Amount of ₹.22,00,00,000/- was a critical condition under the Agreement. The Claimant has not made further investments after the first tranche. The Claimant has failed to infuse the second tranche of Share Subscription Amount, which was a substantial portion amounting to ₹.12,00,00,000/- and which investment was an essential terms of the contract, which immensely and adversely impacted the budgeting and the business of the Respondent Company. The investment was to be infused by STSPL was meant for investment in to this Respondents' real estate projects. Such being the case, when STSPL defaulted in infusing the second tranche of the share subscription amount, the claimant is not entitled claim any benefit under SSA.
32. The claimant has invested the first tranche of the share subscription amount of ₹.10,00,00,000/- in to the respondent in tranches between October 2009 and March 2010. Towards the said investment, in terms of the share subscription agreement dated:29.01.2010, the Respondent allotted 5,00,000 non-cumulative redeemable preference shares of ₹.10/- each at a premium of ₹.190/-In terms of the /15/ Com.A.P.No.14/2022 SSA, the NCRPS that were allotted to STSPL would be redeemable "at the option of the Company" on or before September 30,2015. The First Respondent has culled out Clause 7 of SSA and Section 43, 55 of Companies Act, 2013 and Rule 9 of Companies (Share Capital and Debentures) Rules, 2014.
33. The Respondent No:1 is contending that the redemption of preference shares can be made only on the conditions enshrined under Section 55 of the Companies Act and Rule 9 of Companies (Share Capital and Debentures) Rules, 2014. The Respondent No:1 is contending that in order to maintain the capital of the Company intact the redemption of preference shares must be made strictly in accordance with statutory provisions. The Respondent No;1 has not made any profit in the relevant financial years, from out of which the redemption of the preference shares could have been carried out by it.
34. The Respondent No:1 is contending that in terms of Section 55 of the Companies Act and the redemption being at the option of the Respondent as agreed under SSA, the relief claimed by the Claimant is not maintainable under section 14 of Specific Relief Act. The Respondent No:1 is relying on Clause 7.6 of the SSA, which provides that 'If for reasons not /16/ Com.A.P.No.14/2022 attributable to the Company, the Company is unable to credit eh redemption amount to the investor in such a circumstance shall not hold the Company responsible for non-payment of the redemption amount and the same shall not constitute a breach of the terms of this Agreement'. The Respondent No:1 is contending that in the absence of breach of contract on its part there cannot be a dispute and the Arbitration Clause could not have been invoked by the Claimant, as such the Tribunal has no jurisdiction to resolve the dispute.
35. The Respondent No;1 has denied the averments made in paragraphs 1 to 21 save those expressly admitted by it. The Respondent No;1 has prayed the Tribunal to dismiss the Claim with exemplary costs.
36. The learned Tribunal has formulated the following points for its determination:
1. Whether the Claimant proves that there was a breach committed by the Respondent No.1 on the Share Subscription Agreement (SSA) dated:29.01.2010?
2. Whether the Claimant proves that it is entitled to the relief of specific performance of the contract, of the SSA, by way of redemption of shares as per law?
3. Whether the Claimant proves that it would be entitled to the relief of damages in an alternative to the relief of specific performance of contract, of the SSA?
/17/ Com.A.P.No.14/2022
4. Whether the Respondent No.1 proves that this Tribunal would be acting without its jurisdiction in granting any alternative relief of damages, to the remedy of specific relief of contract, which is the primary relief, sought by the Claimant?
5. Whether the respondent No.1 proves that the non-joinder of M/S.Shan Technology Services Private Limited, which entity had originally entered into the above SSA, is fatal to the Claim?
6. Whether the respondent No.1 proves that the Claimant has committed breach of contract by its failure to infuse a second tranche of the SSA amount and is hence disentitled to any reliefs?
7. Whether the respondent No.1 proves that the Claim is barred by the law of Limitation?
8. Whether the respondent No.1 proves that it made bonafide efforts to redeem the preference shares held by the Claimant, in terms of the SSA?
9. Whether the respondent No.1 proves that the Claimant is provided with an efficacious remedy, other than in arbitration?
10. Whether the respondent No.1 proves that there is a bar to the jurisdiction of this Tribunal for the adjudication of this dispute?
37. The parties to the Arbitral Proceedings have not adduced any oral evidence. They have submitted their written arguments apart from oral arguments. The Learned Tribunal after considering the materials before it has passed the Award on 16.12.2021 as under:
/18/ Com.A.P.No.14/2022 a. The respondent shall pay to the Claimant -a sum of ₹.15,00,00,000/-(Rupees Fifteen Crore only) together with interest at the rate of 18% from 01.10.2015 till the date of payment, by way of damages, on account of the above said breach of contract;
b. The respondent shall also pay to the Claimant, the costs incurred by the Claimant, in these proceedings, in terms of Section 31A of the Arbitration and Conciliation Act, 1996; c. The respondent shall pay the amount of Stamp duty payable on this Award, in terms of Article 11 of the Schedule to the Karnataka Stamp Act, 1957, which amount shall be recoverable from the Claimant, at the instance of the Respondent.
d. The parties, the Claimant and Respondent No.1, shall be provided with signed copies of this Award.
38. The Respondent No:1 being aggrieved by the impugned award dated:16.12.2021 passed in A.C.No:90/2021 has filed this suit under section 34 of Arbitration & Conciliation Act, 1996 for the following among other grounds:
39. The Respondent No:1 has reiterated in detail the averments made in the statement of objections in the plaint apart from urging grounds to set aside the impugned award.
40. The arbitral award under challenge relates to a share subscription agreement and shareholders agreement executed between the Plaintiff and the Defendants and therefore falls /19/ Com.A.P.No.14/2022 within the definition of a "commercial dispute" under the provisions of the Commercial Courts Act 2015, and hence the present petition.
41. The Plaintiff, CLN Properties Private Limited, is a company incorporated under the laws of India and is engaged in the business of real estate development, dealing in the business of construction and building related activities including but not limited to infrastructure projects. The company is promoted by United Estates Builders and Developers Pvt. Ltd. ("United") having CIN:
U70102KA2009PTC051157 and registered office at No.677, 1 st floor, 27th main, 13th cross, HSR Layout Sector 1, Bengaluru - 560 102. United was originally promoted by one Mr.Santhos Kumar C.L. and one Mrs. Vanishree Nanjundaiah; i.e. the 26bcaniatedar Defendants herein. However, present the shareholding of United is now held by Mentor Capital Limited and others.
42. The 1st Defendant approached the Plaintiff sometime in October 2009 to envisage an investment of up to ₹. 22,00,00,000/- (Rupees twenty two Crores only) in the Plaintiff company. This is clearly evident from the Share Subscription Agreement dated 29.01.2010 ("SSA").
/20/ Com.A.P.No.14/2022
43. The investment of the entire Share Subscription Amount of ₹.22,00,00,000/- (Rupees twenty two Crores only) as contemplated in terms of the SSA was a critical condition in the understandings between Plaintiff and the Defendants. However, for reasons best known to it, the 1st Defendant failed to infuse the second tranche of the Share Subscription Amount, which was a substantial portion amounting to ₹. 12,00,00,000/- (Rupees twelve Crores only) and which investment was an essential term of the contract, which immensely and adversely impacted the budgeting and the business of the Plaintiff company. It is an admitted fact that the investment that was to be infused by the 1st Defendant was meant for investment into the Plaintiff's real estate projects. Such being the case, when the 1st Defendant defaulted in infusing the second tranche of the share subscription amount, the same adversely impacted the business of the Plaintiff, since the Plaintiff had based its projections on the basis of such investment.
44. Pursuant to the SSA, the 1 st Defendant invested the first tranche of the share subscription amount of ₹.10,00,00,000/- (Rupees ten Crores only), into the Plaintiff in tranches between October 2009 and March 2010. Towards such investment, in terms of the share subscription agreement dated 29.01.2010, the Plaintiff allotted 5,00,000 non-
/21/ Com.A.P.No.14/2022 cumulative redeemable preference shares ("NCRPS") of ₹. 10/- each to the 1st Defendant, at a premium of ₹. 190/- (the value of each NCRPS issued thereby being ₹.200/-). It is submitted that, in terms of the SSA, the NCRPS that were allotted to the 1st Defendant would be redeemable "at the option of the company" on or before September 30, 2015. The relevant provisions of the SSA are extracted below:
"7. REDEMPTION OF SERIES A PREFERENCE SHARES 7.1 Notwithstanding anything to the contrary contained elsewhere, First Closing Shares and/or Second Closing Shares shall be redeemed at the option of the Company on or before September 30, 2015.
7.2 If First Closing Shares are redeemed by the Company on or after March 31, 2015, a premium of ₹. 290/- (Rupees Two Hundred Ninety Only) per Series A Preference Share shall be payable to the Investor by the Company.
7.3 If Second Closing Shares are redeemed by the Company on or after March 31, 2015, a premium of ₹. 363.33/- (Rupees Three Hundred Sixty Three and Thirty Three Paise Only per serve 4 Preference Share shall be payable to the Investor by the Company.
7.4 The Company at any time, after the First Closing and/or the Second Closing, as may be the case, may at the Company's option, redeem, either the First Closing Shares and/or the Second Closing Shares. In case of any such redemption by the Company, the redemption price per Series A Preference Shares shall be equivalent to the amount which will give a maximum of 14% (Fourteen) average annual return to the Investor on its First Closing /22/ Com.A.P.No.14/2022 Subscription Money and /or Second Closing Subscription Money as may be the case, from the date of allotment by the Company till the date of redemption by the Company ("Early Redemption Price").
7.5 In the event of any redemption of shares, the Company will give an advance 15 (fifteen) days redemption notice to the Investor expressing its intention to redeem Series A Preference Shares. 7.6 Upon receiving redemption notice from the Company, the Investor shall within 7 (Seven) days from the receipt of redemption notice notify the Investors, the bank details to the Company in which redemption amount will be credited by the Company. If for reasons not attributable to the Company, the Company is unable to credit the redemption amount to the Investor, the Investor in such a circumstance shall not hold the Company responsible for non-payment of the redemption amount and the same shall not constitute a breach of the terms of this Agreement."
45. It is submitted that the above mentioned provisions of the SSA have been incorporated into the Articles of Association of the Plaintiff company and therefore, legally binding between the Plaintiff Company and its members.
46. Without prejudice to the other contentions, it is submitted that the provisions of the SSA clearly evidence that the redemption of the NCRPS was at the sole option of the Company namely the Petitioner.
/23/ Com.A.P.No.14/2022
47. Preference shares are defined under Section 85 (1) of the Companies Act, 1956, and the issue and redemption of preference shares are dealt in Section 80 of the Companies Act, 1956. Section 80 of the Companies Act 1956 clearly states that redemption of preference shares shall only be from (a) "out of the profits of the company which would otherwise be available for dividend", or (b) "out of the proceeds of a fresh issue of shares made for the purposes of such redemption", and subject to the conditions set out in the said provisions and the terms on which they were issued. The reason for such a provision is the fundamental principle that the capital of the company must be maintained intact, since redemption of preference share capital would deplete the capital of the company.
48. The Companies Act 1956 has since been repealed and substituted with the Companies Act 2013. Preference shares are defined under Section 43 the Companies Act, 2013, and the issue and redemption of preference shares are dealt in Section 55 of the Companies Act, 2013. Further, the issue and redemption of preference shares are also dealt with in Rule 9 of the Companies (Share Capital and Debentures) Rules, 2014. Section 55 of the Companies Act read with Rule 9 of the Companies (Share Capital and Debentures) Rules clearly states that redemption of preference shares shall only be from (a) /24/ Com.A.P.No.14/2022 "out of the profits of the company which would otherwise be available for dividend", or (b) "out of the proceeds of a fresh issue of shares made for the purposes of such redemption and subject to the conditions set out in the said provisions and the terms on which they were issued. Again, the reason for such a provision is the fundamental principle that the capital of the company must be maintained intact, since redemption of preference share capital would deplete the capital of the company.
49. It is submitted that the Plaintiff Company had not made any profits in the relevant financial years, from out of which the redemption of the preference shares could have been carried out by the company. The audited financial statements of the Plaintiff company from 2013-14 till 2020-21 (8 nos.) are produced herewith evidence the same. Under the circumstances, the question of redemption of shares in a manner as to create a liability on the Plaintiff to pay the 1 st Defendant, as claimed by the 1st Defendant, does not arise.
50. A reading of the provisions of the SSA vis-à-vis the provisions of Section 55 of the Companies Act and the Rules detailed above, would clearly demonstrate the fact that redemption is to be in terms of Section 55 of the Companies Act and is at the sole option of the Plaintiff as agreed under /25/ Com.A.P.No.14/2022 the SSA, and that, as on September 30, 2015, no right to payment had arisen.
51. The 1st Defendant thereafter purportedly issued several communications and notices to the Plaintiff calling upon the Plaintiff to redeem the preference shares. Thereafter, the 1st Defendant purportedly got issued a notice dated 17.03.2016 invoking the arbitration clause contained in the Share Subscription Agreement 22 dated 29.01.2010.
52. The 1st Defendant approached the Hon'ble High Court of Karnataka and filed a petition under Section 11 (6) of the Arbitration and Conciliation Act, 1996 requesting the Hon'ble Court to appoint an Arbitrator for the purpose of adjudicating the purported disputes that had arisen, and the said petition came to be registered as CMP No. 167/2016 before the Hon'ble High Court of Karnataka.
53. After having filed the proceedings in CMP No. 167/2016 before the Hon'ble High Court of Karnataka, instead of diligently prosecuting the matter, the 1st Defendant filed proceedings in C.P. (IB) No. 151/BB/2018 under Section 7 of the Insolvency and Bankruptcy Code before the National Company Law Tribunal, Bengaluru Bench, claiming to be a financial creditor to the Plaintiff and seeking initiation of /26/ Com.A.P.No.14/2022 corporate insolvency resolution proceedings against the Plaintiff. The Plaintiff defended the said proceedings, which finally culminated in an order dated 04.07.2019, in terms of which petition was disposed of, whereby the parties were directed to resort to arbitration, as per the proceedings in CMP No. 167/2016 before the Hon'ble High Court of Karnataka.
54. In the proceedings in CMP No. 167/2016 before the Hon'ble High Court of Karnataka, after hearing both the parties, the Hon'ble High Court, on 08.01.2021, appointed Hon'ble Mr. Justice Anand Byra Reddy (Retd.), a former judge of the Hon'ble High Court of Karnataka, as the sole Arbitrator to adjudicate the issues/disputes that had arisen between the Plaintiff and the Defendants All claims and contentions of any of the parties, including jurisdiction, limitation, etc, were left / kept open to be decided by the tribunal. It is pertinent to state here that the 2nd and 3rd Defendants were served and unrepresented in the Section 11 proceedings before the Hon'ble High Court.
55. The Hon'ble Arbitrator then entered upon reference and conducted the first meeting of the parties on 10.03.2021, pursuant to which the 1st Defendant filed its claim petition. In the said claim petition, the 1st Defendant sought the relief of a direction to the Plaintiff and the 2nd and 3rd Defendants to /27/ Com.A.P.No.14/2022 jointly and severally comply with the provisions of the Companies Act 1956 and / or amended Act, 2013 with respect to redemption of preference shares and redeem the 1 st Defendant's preference shares of ₹. 15,00,00,000/- (Rupees fifteen crores only) as on 30.09.2015 which was allegedly due to the 1st Defendant as per the provisions of the agreements (sic), and to also pay the 1st Defendant an interest calculated at the rate of 18% per annum on ₹. 15,00,00,000/- (Rupees fifteen crores only) from the date of redemption till payment. Along with the claim petition, the 1st Defendant also sought to implead the 3 individuals as proposed Respondents to the said arbitral proceedings, which application came to be dismissed by the Hon'ble Arbitrator. It is pertinent to state here that no notice was issued to the 2nd and 3 rd Defendants in the arbitral proceedings and resultantly, the said defendants are neither notified nor represented in the said arbitral proceedings in A.C. 90/2021. This is a gross irregularity going to the root of the proceedings rendering the entire proceeding illegal in law.
56. Thereafter, on 09.07.2021, the 1st Defendant sought an amendment to the claim petition seeking the following reliefs:
(i) direct the Plaintiff to redeem the preference shares of the 1 st Defendant in accordance to the Share Purchase Agreement /28/ Com.A.P.No.14/2022 dated 29.01.2010 and pay the Defendant a sum of ₹. 15,00,00,000/- (Rupees fifteen Crores only);
OR direct the Plaintiff to pay to the 1st Defendant a sum of ₹.15,00,00,000/- (Rupees Fifteen Crores only) together with interest at the rate of 18% p.a from 01.10.2015 towards damages on account of breach of provisions of the Share Subscription Agreement dated 29.01.2010;
(ii) to pay to the 1st Defendant an interest calculated at the rate of 18% on ₹.15,00,00,000/- (Rupees Fifteen Crores only) per annum from the date of redemption till payment.
57. The said application came to be allowed by the Hon'ble Arbitrator vide an order dated 30.08.2021.
58. As a matter of fact, the Plaintiff herein also raised the ground regarding non-arbitrability of the dispute, and even filed an application under Section 16 (2) of the Arbitration and Conciliation Act taking up the plea of jurisdiction. However, vide an order dated 02.08.2021, the said application filed by the Plaintiff came to be dismissed.
/29/ Com.A.P.No.14/2022
59. Pursuant to the amendment being allowed, without evidence being led, the parties, by consent, addressed final argument petition, and the Hon'ble Arbitrator passed an award on 16.12.2021.
60. The Plaintiff herein seeks setting aside of the impugned award dated 16.12.2021, on the following, amongst other grounds:
61. The impugned award dated 16.12.2021 passed by the Hon'ble Arbitrator is in conflict with the public policy of India and that the arbitral award is liable to be set aside on this ground alone. The impugned award is contrary to settled propositions of law and judicial precedents, and on that ground also, the award is liable to be set aside. The award is liable to be set aside as it is in contravention with the fundamental policy of Indian law and is patently illegal. The impugned award is in conflict with the most basic notions of morality and justice and is therefore liable to be set aside.
62. The arbitral award deals with a dispute not contemplated by and not falling within the terms of the submission to arbitration, and contains decisions on matters beyond the scope of the submission to arbitration. Resultantly, the impugned award is liable to be set aside.
/30/ Com.A.P.No.14/2022
63. For a prayer of specific performance, there must necessarily be an existing right, and it is for the enforcement of such right that the relief of specific performance can be sought. Only if there exists an enforceable right can there be a breach, and only for the enforcement of such right can specific performance be sought. When there exists no enforceable right, they can be no breach and resultantly, there can be no claim for damages. It is also not axiomatic that if specific performance cannot be granted, damages ought to be awarded. This is a settled position of law and forms part of the public policy of India and the fundamental policy of Indian law. However, the Hon'ble Arbitrator has presumed the existence of such legal right, contrary to the provisions of the Companies Act, 2013, and has therefore pre-supposed a breach and has resultantly held the 1st Defendant entitled to damages. The impugned award is therefore in violation of the public policy of India and is contrary to the fundamental policy of Indian law.
64. The SSA does not contain a right in favour of the 1 st Defendant to seek redemption of the preference shares. The option to redeem the preference shares has been given only to the Plaintiff to be exercised on or before 30.09.2015. Such an option for redemption, and that too, an option available to the Plaintiff and not to the 1st Defendant, cannot be the subject matter of specific performance. It is well settled law, and also /31/ Com.A.P.No.14/2022 is a part of the public policy of India and the fundamental policy of Indian law, that the performance of an option cannot be compelled by the person who has granted the option. In the case of an option, a concluded contract for purchase or repurchase arises only if the option is exercised and upon the exercise of the option. It is respectfully submitted that the Hon'ble Arbitrator has completely misread and misinterpreted the SSA and observed, at Paragraph 88, that the option available to the Plaintiff was only to redeem on or before 30.09.2015 and that if the shares were not redeemed on or before that date, the option would lapse and the obligation would become mandatory after that date. No such provision regarding the lapse of the option or the obligation becoming mandatory was set out in the SSA. The Hon'ble Arbitrator has read clauses into the SSA and has re-written the terms of the SSA, which is impermissible in law and is in conflict with public policy.
65. It is settled law that where the interpretation provided by an arbitral tribunal to a contractual provision in an award was not reasonably possible upon a reading of the contract, such an award would have to be set aside. The reading of Clause 7 of the SSA has been interpreted in a manner contrary to the express language of the clause itself. The Hon'ble Arbitrator has read into the clause language which /32/ Com.A.P.No.14/2022 is not contained in the clause itself. Such a wholly erroneous interpretation placed on Clause 7 has resulted in passing of the impugned award. If an interpretation as placed on Clause 7 is accepted, then the very foundation of contracts and contract law in this country will be affected. Arbitral Tribunals are bound by the terms of the contract and cannot add words to the contract in such a manner that the very basis on which the contract has been entered into will be defeated. In any event, the interpretation placed on Clause 7 is contrary to what is provided for in Section 80 of the Companies Act, 1956 and Section 55 of the Companies Act, 2013.
66. The impugned award passed by the Hon'ble Arbitrator is liable to be set aside on the ground that it is contrary to the public policy of India. The impugned award is in contravention to the provisions of the Companies Act, 2013, in that there exists a statutory bar against redemption of preference shares under Section 55 of the Companies Act 2013, unless there exist profits in the company from out of which payment can be made. When admittedly the Plaintiff company has made no profits till date, the question of a breach of the terms of the SSA would not arise, and the Plaintiff could not have been held to be in breach of the provisions of the SSA and liable to pay damages to the 1 st Defendant. It is thus submitted that the said award is in /33/ Com.A.P.No.14/2022 contravention to the fundamental policy of Indian law and is liable to be set aside on that ground.
67. The Hon'ble Arbitrator has completely misinterpreted the provisions of the Companies Act, 2013. The Hon'ble Arbitrator observes, at paragraph 88 of the impugned award, that there is an option available only to the Plaintiff company to redeem the preference shares held by the 1st Defendant, on or before 30.09.2015; however, if the shares are not so redeemed by that date, the option would lapse and the obligation would become mandatory after that date. The Hon'ble Arbitrator further holds that otherwise, the nomenclature 'redeemable' preference shares would have no meaning, and that no company can issue irredeemable preference shares. This interpretation is completely contrary to the provisions of Section 55 of the Companies Act and the Rules detailed above. In understanding the redeemable nature of preference shares, the date of issue of shares is relevant. If the shares are redeemable at the option of the company, then the shares are redeemable. That the shares were not redeemed by the company exercising its option not to do so does not change the character of the shares as irredeemable. However, completely contrary to the provisions of law, the Hon'ble Arbitrator has proceeded on the presumption that, in any case where redemption is at the /34/ Com.A.P.No.14/2022 option of the company, such preference shares are automatically irredeemable and therefore prohibited under the provisions of the Companies Act. This interpretation by the Hon'ble Arbitrator is in complete contravention of the provisions of Section 55 of the Companies Act 2013 read with Rule 9 of the Companies (Share Capital and Debentures) Rules 2014, and renders the said provisions a dead letter. While it is settled law that a Tribunal is entitled to provide interpretation of the terms of the contract, such interpretation cannot be unreasonable or opposed to law. Further, the arbitrator would have to interpret the law in the manner as provided in the enactment and cannot read the law in a manner as to render it a dead letter. When an arbitrator commits such an illegality, the consequent award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act.
68. The Hon'ble Arbitrator completely failed to note that, in terms of Clause 7.1 to 7.6 of the SSA, the NCRPS that were allotted to the 1st Defendant would be redeemable "at the option of the company" on or before 30.09.2015. Redemption of the NCRPS was at the sole option of the Company. In any event, a preference shareholder is only a holder of shares in terms of Section 43 of the Companies Act, 2013 Section 43 provides for the rights of a preference shareholder and inter alia also deals with the fact that even if a preference /35/ Com.A.P.No.14/2022 shareholder has other rights then in terms Explanation (iii) to Section 43, the capital shall always be treated as preference capital. Other words, even with any right to redeem, the right of a preference shareholder does not convert itself into a debt but remains and continues to be a right of a shareholder. This is substantiated even in the Indian Accounting Standards Paragraphs 17-20 and AG 25 placed before the Hon'ble Arbitrator. It is submitted that the 1 st Defendant remains a preference shareholder and his rights as a shareholder remain intact. His entitlement in the company as a shareholder also remains intact. All of this is completely ignored by the Hon'ble Arbitrator which has resulted in a miscarriage of justice and an award has been passed which is opposed to all notions of justice.
69. It is submitted that, when the 1st Defendant remains a preference shareholder in the Plaintiff company and when his rights and entitlement as a shareholder remain intact, the 1st Defendant cannot be said to have suffered any injury owing to the non- redemption of the preference shares. As a matter of fact, and without prejudice it is possible that the preference shares may be redeemed at any time even in the future as and when the company makes profits. Resultantly, when the 1st Defendant has not suffered an injury, the question of its entitlement for damages does not arise. This is in terms of the /36/ Com.A.P.No.14/2022 well-known maxim "damnum sineinjuria", which means when no legal right has been infringed, no action lies.
70. It is submitted that there exists a statutory bar to redemption of preference shares in Section 55 and there exists a statutory bar to make payment unless there exist profits in the company from out of which payment can be made. This statutory bar disentities the Defendant from making any claim and the Plaintiff is barred from making any payment whatsoever. Despite such statutory bar, the impugned award, holding that the Plaintiff is in breach of the provisions of the share subscription agreement, and therefore directing the Plaintiff to pay damages to the 1 st Defendant, is liable to be set aside on the ground that the same is in violation of the fundamental policy of Indian law. It is settled law that when a statute bars something the same cannot be done in an indirect manner by awarding damages.
71. A reading of the provisions of the SSA vis-à-vis the provisions of Section 55 of the Companies Act and the Rules detailed above, would clearly demonstrate the fact that redemption is to be in terms of Section 55 of the Companies Act, 2013 and is at the sole option of the Plaintiff as agreed under the SSA, and that, as September 30, 2015, no right to payment had arisen. Redemption being mandated to be in /37/ Com.A.P.No.14/2022 terms of Section 55 of the Companies Act and being at the sole option of the Plaintiff as agreed under the SSA, the relief that is granted to the 1st Defendant in terms of the impugned award is unsustainable in law and is in violation of the public policy of India.
72. Clause 7.6 of the SSA clearly states that "if for reasons not attributable to the Company, the Company is unable to credit the redemption amount to the Investor, the Investor in such a circumstance shall not hold the Company responsible for non- payment of the redemption amount and the same shall not constitute a breach of the terms of this Agreement. However, the 1st Defendant contended in its claim petition that the Plaintiff has breached the terms of the SSA, and has invoked the arbitration clause on such ground. When the inability of the Plaintiff to credit the redemption amount is not to be deemed as a breach of the terms of the agreement, under such circumstances, no arbitrable dispute can be deemed to have arisen and the arbitral proceedings initiated were thereby premature, misconceived and without jurisdiction, and was thereby, on that sole ground, liable to be dismissed. The arbitrator, being a creature of a contract, can assume jurisdiction only under the contract and not outside of it. When the contract does not contemplate a breach to have could not have assumed occurred, the Hon'ble Arbitrator /38/ Com.A.P.No.14/2022 jurisdiction of the matter outside of the contract. The Hon'ble Arbitrator having assumed such jurisdiction outside of the contract, the consequent award dated 16.12.2021 passed by the Arbitrator is without jurisdiction and illegal, and is able to be set aside. The Hon'ble Arbitrator could not have gone outside the scope of the contract to render a judgment which is clearly opposed to the contract itself. When parties have agreed that non-payment does not amount to breach, the Arbitrator cannot hold that there is breach and award damages. Being an award contrary to the contract itself, the award cannot be sustained.
73. In a claim seeking specific performance of a contract, it is settled law that a claimant must demonstrate his entitlement to specific performance. If all the elements necessary to grant the relief of specific performance is available and the Court/ Tribunal then decides not to grant specific performance, then and then alone can damages be considered. The first question which the Tribunal must consider is whether there is any bar to grant specific performance. If there is a bar in law, then damages cannot be awarded as a consequence of failure to grant specific performance. Judgments relied on to hold that when specific performance cannot be granted, damages can be awarded are all cases where the parties were able to establish their right to specific /39/ Com.A.P.No.14/2022 performance but owing to an impossibility (not a legal prohibition) the relief could not be granted and hence damages were granted. This is not the case in the present facts. In this case, there is a statutory bar to redeem preference shares in terms of the Companies Act, 1956 and the Companies Act, 2013 as the company did not earn any profits and was in loss. If there is a statutory bar, then specific performance is impermissible. If specific performance is impermissible, no damages can be awarded. This is settled legal position. Despite such clear enunciation of law by the Supreme Court in National Agricultural Cooperative Marketing Federation of India v Alimenta SA reported in 2020 SCC Online SC 381. Even though this judgment of the Supreme Court was brought to the notice of the Hon'ble Arbitrator, the same was ignored resulting in grave injustice to the Petitioner. It is settled legal position and a fundamental policy in Indian law that a person cannot be compelled to give effect to a contract when there is a prohibition in law. When the Companies Act prohibits redemption of preference shares except out of the profits of the Company, is it permissible to direct the Company to make payment of the said sums of money contrary to the Companies Act? The answer in the submission of the Petitioner is an obvious "No". If the Company cannot redeem preference shares because of a bar in the law, can a Court or Tribunal hold such party in breach of the contract? The answer in the /40/ Com.A.P.No.14/2022 submission of the Petitioner is an obvious "No". Further, if there cannot be any breach of a contract in this scenario, can there be an award of damages? In the submission of the Petitioner, the answer is also an obvious "No". This is the fundamental position of Indian law and this is the public policy of Indian law. The Hon'ble Arbitrator has violated all aspects of this fundamental policy of Indian law and awarded damages to the Respondent. The award therefore requires to be set aside. The disputes raised in the claim petition are non-arbitrable for the reason that the disputes are expressly or by necessary implication non-arbitrable as per the mandatory provisions of the Companies Act. When the mandatory provisions of Section 55 bar redemption of preference shares other than on the conditions set out therein, there exists no question of a dispute having arisen, and the question of adjudication of such a non- existent dispute by the Hon'ble Arbitrator also does not arise and the Hon'ble Arbitrator in the present case has acted in excess of his power in adjudicating the said claim of the 1 st Defendant. Resultantly, the consequent award dated 16.12.2021 passed by the Hon'ble Arbitrator is without jurisdiction and is liable to be set aside.
74. Even assuming that the 1st Defendant seeks relief under the other provisions of Section 55 of the Companies Act, the Hon'ble Arbitrator did not have the jurisdiction to grant /41/ Com.A.P.No.14/2022 such relief when a specific forum has been created for the said purpose. Further, the grant of such reliefs is also barred by the provisions of the Specific Relief Act. In any event, it is submitted that the Hon'ble Arbitrator could not have granted any relief when the statutory provisions bar the grant of such relief. It is thus submitted that under these circumstances, the proceedings before the Hon'ble Arbitrator were futile, frivolous and misconceived. Notwithstanding the same, the Hon'ble Arbitrator has proceeded to pass the impugned award which therefore deserves to be set aside.
75. It is respectfully submitted that the Hon'ble Arbitrator did not decide the matter at hand in accordance with the terms of the contract, nor did the Hon'ble Arbitrator construe the terms of the contract in a reasonable manner. The Hon'ble Arbitrator wandered outside the contract and dealt with matters not allotted, thereby committing a jurisdictional error, and therefore, the award is liable to be set aside on that ground also.
76. It is submitted that the 1st Defendant, after the expiry of 6 years sought to claim damages on account of alleged breach of provisions of the Share Subscription Agreement dated 29.01.2010, as a form of protection of the purported interests of the 1st Defendant "in the event that the /42/ Com.A.P.No.14/2022 Hon'ble Tribunal finds that redemption is not feasible". Such a claim for damages had never been raised by the 1 st Defendant till the date of amendment in any of its pleadings or in any of its notices, including but not limited to the notice purportedly issued invoking arbitration. The 1st Defendant had always sought redemption of the shares. Thereafter, the 1 st Defendant, by way of an amendment to the claim petition, has sought damages which relief, as on the date of the amendment, was already time-barred. It is the specific contention of the 1st Defendant in its claim statement that the 1st Defendant is entitled to get the amount of ₹. 15 crores as on 30.09.2015. In view of the same, the claim for damages is barred by limitation as on 09.07.2021; i.e., the date when the amendment claiming damages was sought, by when almost 6 years have elapsed from the purported date of redemption. Without examining any of such legal contentions, the Hon'ble Tribunal has proceeded to grant the relief as sought by the 1 st Defendant. Such discretionary relief is not contemplated under the Arbitration and Conciliation Act or under the arbitration agreement, and thus the impugned award dated 16.12.2021 is liable to be set aside. The award is clearly opposed to public policy and requires to be set aside.
77. The claim of the 1st Defendant as sought in its claim petition is barred by limitation as on 09.07.2021, which is the /43/ Com.A.P.No.14/2022 day the amendment of the claim statement had been sought by the 1st Defendant. In terms of Article 27 of the Schedule to the Limitation Act, a claim for compensation for breach of a promise to do anything within a specified time, or upon the happening of a specified contingency, is to be filed / sought within a period of 3 years from the date when the time specified arrives or the contingency happens. As stated above, it is the specific contention of the 1st Defendant in its claim statement that the 1st Defendant is entitled to get the amount of ₹. 15 Crores as on 30.09.2015. In view of the same, the claim for damages is barred by limitation as on 09.07.2021; i.e., the date when the amendment was sought by the 1st Defendant, by when almost 6 years have elapsed from the purported date of redemption, and a right has accrued in favor of the Plaintiff due to the lapse of time. Without considering the said contentions, the Hon'ble Arbitrator has passed the impugned award, in violation of the provisions of the Limitation Act, and therefore is in conflict with the public policy of India and is in contravention with the fundamental policy of Indian law. The Hon'ble Arbitrator, while answering the question of limitation, has not examined the decision of the Hon'ble Supreme Court of India in relation to limitation as held in the case of State of Goa v Praveen Enterprises reported in (2012) 12 SCC 581. Without any basis for the observation, the Hon'ble Arbitrator has held, at paragraph 114, that the /44/ Com.A.P.No.14/2022 additional player for damages is not a fresh claim, divorced from the claim for specific performance of the contract, and is an alternative relief sought in the event that specific performance cannot be ordered. Such an observation is completely contrary to the law as laid down in the above- mentioned decision, and as held in the Associated Builders case, disregarding orders passed by superior courts of India would also be contravention of the fundamental policy of Indian law. The Hon'ble Arbitrator has not considered any of the decisions of the Hon'ble Supreme Court of India and of High Courts, cited by the Plaintiff, and in the impugned award, the Hon'ble Arbitrator has not given any grounds on the basis of which the Hon'ble Arbitrator as distinguished from the ratio laid down in the said decisions. The Hon'ble Arbitrator has merely, at paragraph 119, recorded that the judgments "are not separately discussed..... as there was no such controversy that required reliance on case law to form an opinion, one way or the other". It is most respectfully reiterated that such disregard to settled decisions passed by superior courts and the law laid down by the Hon'ble Supreme Court of India is itself a ground to set aside the impugned award. It is most respectfully submitted that, merely because it is an award passed by an arbitrator appointed by consent of parties, such award is not immune from the principle of reasoning. Every arbitral award must be a speaking award and the grounds on /45/ Com.A.P.No.14/2022 which the arbitrator has arrived at his/her findings and the basis for the grant of relief must be apparent from a reading of the award. As a corollary, the arbitrator is mandated to examine the various decisions relied upon by the contesting parties and set out his or her views for agreeing/disagreeing with the same. This is the only manner in which the arbitrator could declare his or her mind on the subject and is also the only manner in which the Courts could test the award on the various grounds for setting aside as laid down under Section 34 of the Arbitration and Conciliation Act. he observations in paragraph 119 of the award creates a ground for setting aside of the award, as held in the Associated Builders case, where the 2022 Hon'ble Supreme Court has held that disregarding orders passed by the superior courts of India would also be contravention of the fundamental policy of Indian law. Without prejudice to any of the above contentions and the above detailed grounds raised by the Plaintiff seeking setting aside of the impugned award, the Plaintiff submits that the 1 st Defendant was well aware of its rights and entitlements, whether in law and / or in contract, and has now claimed interest on its own default. The 1st Defendant has slept over its purported rights and entitlements and attempted to contend that the same is an unlawful act on the part of the Plaintiff, and attempted to unjustly enrich itself in the form of interest for the period during which the 1 st Defendant itself /46/ Com.A.P.No.14/2022 delayed in enforcing its purported rights. The 1st Defendant has not demonstrated in its claim petition, in any manner, as to how it made efforts to mitigate the losses or damages that have allegedly been suffered by it. It is submitted that, the Hon'ble Arbitrator has erred in granting the 1 st Defendant interest on the due amount at the rate of 18% per annum from the Plaintiff, and to that extent also, the impugned award is liable to be set aside. This is contrary to the Arbitration and Conciliation Act, 1996 in the award of interest cannot exceed the percentage fixed by the Act. The claim for damages as sought by the 1st Defendant does not constitute a part of the arbitration agreement and such a claim is not contemplated to be part of the arbitrable disputes in terms of the Share Subscription Agreement. Resultantly, such a claim could not have been sought by the 1st Defendant nor could have been granted by the Hon'ble Arbitrator in terms of the impugned award.
78. The alternate relief claim for damages was not made by the 1st Defendant in its purported Section 21 notice invoking arbitration. The 1st Defendant's claim for damages was beyond the claim made by the Defendant in its arbitration notice under Section 21 and the Hon'ble Arbitrator had no jurisdiction to adjudicate the said relief. The impugned award deals with disputes not contemplated by and not falling within /47/ Com.A.P.No.14/2022 the terms of the submission to arbitration and contains decisions on matters beyond the scope of the submission to arbitration, and on this ground also, the award deserves to be set aside.
79. In any event, the SSA is always subject to the Companies Act, and an agreement between the parties cannot supersede the law applicable, namely the Companies Act. It is well settled that no Court can require performance of an agreement which is otherwise opposed to law. It is submitted that as the SSA cannot create any obligation for payment, the award dated 16.12.2021 passed by the Hon'ble Arbitrator creating an obligation for payment against the Plaintiff and imposing damages on the Plaintiff for breaching such alleged obligation, is contrary to the Companies Act, 2013, and is illegal and liable to be set aside.
80. It is submitted that the impugned award is against the public policy of India and is patently illegal for the various reasons enumerated above.
81. It is submitted that the impugned award suffers from various legal infirmities. It is submitted that the impugned award was passed by the Hon'ble Arbitrator on 16.12.2021, and the present suit is well within limitation. The arbitral /48/ Com.A.P.No.14/2022 proceedings were conducted in Bengaluru under the Arbitration and Conciliation Centre, Bengaluru within the jurisdiction of this Hon'ble Court, and therefore, this Hon'ble Court has territorial jurisdiction to entertain the present petition / suit. The subject matter of the present proceedings also falls well within the pecuniary jurisdiction of this Hon'ble Court.
82. Prior to the filing of the present proceedings, the Plaintiff has issued prior notice to the Defendants in compliance with the provisions of Section 34 (5) of the Arbitration and Conciliation Act, 1996, and an affidavit endorsing compliance with the said requirement is filed along with the present petition.
83. After the service of notice the Claimant appeared before the Court and has filed statement of objections. Even after paper publication in Indian Express and Kannada Prabha News papers dated:08.07.22, the Respondent No;2 and 3 remained absent and are placed exparte.
STATEMENT OF OBJECTIONS FILED BY RESPONDENT NO. 1:
84. The arbitration petition is devoid of any merit and is only a means to delay payment of the amount awarded by the Learned Arbitral Tribunal ("Learned Tribunal") by the Petitioner /49/ Com.A.P.No.14/2022 to Respondent No. 1 under the Award dated 16.12.2021 ("Award"). The grounds for challenge to the Award do not fall within the specific and well- recognized scope of Section 34 of the Arbitration and Conciliation Act, 1996 ("the Act").
85. It is submitted that the Petitioner has taken several grounds akin to an appeal from a suit, in the garb of this petition and has sought this Hon'ble Court to go into the factual aspects of the dispute and re-appreciate evidence, which is clearly impermissible under Section 34 of the Act.
86. The Petitioner is a private company engaged in real estate development. Respondent No. 1 is a private company which engages in investment activities. The other respondents are erstwhile directors of the Petitioner Company.
87. In terms of a Share Subscription Agreement dated 29.01.2010 ("SSA"), Respondent No. 1 invested ₹.10 crore into the Petitioner by subscribing to 5,00,000 Series A Preference Shares. In return, Respondent No. 1 was issued a share certificate. Clause 7 of the SSA provided that the preference shares allotted to Respondent No. 1 would be redeemed on or before 30.09.2015, and upon such redemption, a sum of ₹.15 Crore would be paid by the Petitioner to Respondent No. 1.
/50/ Com.A.P.No.14/2022
88. Contrary to the terms of the SSA, particularly Clause 7, the Petitioner failed to redeem the outstanding preference shares and pay the redemption amount to Respondent No. 1. Hence, the Petitioner committed breach of the SSA and put Respondent No. 1 to prejudice.
89. Aggrieved by the breach, Respondent No. 1 initiated arbitration against inter alia the Petitioner, seeking redemption of the preference shares or, in the alternative, damages for breach of the SSA. Both parties filed their pleadings and advanced their arguments before the arbitral tribunal.
90. By the Award dated 16.12.2021, the arbitral tribunal held the Petitioner to be in breach of the SSA and awarded Respondent No. 1 with damages of ₹.15,00,00,000/- (Rupees Fifteen Crore only) along with interest at the rate of 18% from 01.10.2015 till the date of payment. The Petitioner has challenged the Award by way of this petition.
91. The Learned Arbitral Tribunal comprehensively considered the pleadings and arguments of both parties and passed the Award based on sound reasons and with a just decision. The Award is also equitable, logical and judicial.
/51/ Com.A.P.No.14/2022
92. The simple grievance urged before the Learned Arbitral Tribunal was that the Petitioner had committed breach of the SSA and was hence liable to either redeem the preference shares or pay damages. The Petitioner attempted, as is being attempted in the present petition as well, to complicate the issue with various extraneous and irrelevant defenses to evade liability. However, the fact remained that the petitioner could not disprove the contractual breach committed. Therefore, based on the material produced before it, the Learned Arbitral Tribunal determined that on account of the breach, the Petitioner was liable to pay damages to Respondent No. 1. An award based on tenable reasons has been assailed with utter disregard to the scope of Section 34 of the Act.
93. Section 34 of the Act exhaustively sets out only very specific grounds on which an arbitral award can be interfered with. The provision upholds the sacrosanct principle that Courts shall not interfere with an arbitral award unless and until it is demonstrated that such award answers the grounds mentioned in that provision. Judicial opinion is well established that a party cannot seek the setting aside of an award as a matter of course, and a party seeking setting aside of an award must clearly demonstrate that the impugned award is afflicted by one of the parameters provided in Section 34 of the Act.
/52/ Com.A.P.No.14/2022
94. The scope of interference under Section 34 of the Act was laid down by the Hon'ble Supreme Court of India in Venture Global Engineering LLC v. Tech Mahindra Limited and another [(2018) 1 SCC 656], as follows:
121. The Award of an Arbitral Tribunal can be set aside only on the grounds specified in Section 34 of the Arbitration and Conciliation Act and on no other ground. The Court cannot act as an Appellate Court to examine the legality of Award nor it can examine the merits of claim by entering in factual arena like an Appellate Court.
It has to confine its enquiry only to the limited issue as to whether any ground specified in Section 34 of Arbitration and Conciliation Act is made out or not.
95. In light of the language of Section 34 as well as the position laid down by the Hon'ble Supreme Court, the present petition is not maintainable. The Petitioner has not established a single ground under Section 34 of the Act that merits interference of this Hon'ble Court with a well-reasoned Award. In light of the aforementioned facts, soundness of the Award and the narrow scope of Section 34 of the Act, each ground raised by the Petitioner is dealt with herein below.
96. The Petitioner has assailed the award on the ground that it deals with matters beyond the scope of reference / submission to arbitration, especially because the claim for damages was not mentioned in the notice issued under /53/ Com.A.P.No.14/2022 Section 21 of the Act. The Petitioner therefore claims that the Award suffers from lack of jurisdiction.
97. The Respondent No. 1 submits that it is of no consequence that the arbitration notice issued under Section 21 of the Act did not mention the claim for damages. The claim for damages is not a fresh or additional claim but is merely alternative to the prayer for specific performance. This argument is untenable since the claim for damages fell well within the scope of the reference / submission to arbitration. A claim for damages is not an independent claim divorced from the other claim, since damages also arise from breach of contract. Section 21 of the Specific Relief Act, 1963 also permits a party to prefer an additional claim for damages.
98. The Petitioner also contends that by virtue of clause 7.6 of the SSA, the Petitioner did not commit any breach. The Petitioner argues that such being the case, no dispute can be said to have arisen between the parties and the Award is thus contrary to the terms of the SSA. The Petitioner claims hence, the arbitral proceedings were premature, misconceived and without jurisdiction. The Petitioner contends that the Arbitrator being a creature of contract, he could not have assumed jurisdiction outside the SSA.
/54/ Com.A.P.No.14/2022
99. The Respondent No. 1 submits that it is absurd to contend that the Learned Arbitral Tribunal assumed jurisdiction outside the SSA. It is not the Petitioner's case that the Learned Arbitral Tribunal was appointed under an arbitration clause contained in an unrelated agreement or that the Learned Arbitral Tribunal granted a relief unconnected to the SSA. Merely because the Petitioner argues that it has not committed any breach, it cannot assail the jurisdiction of the Learned Arbitral Tribunal. For these reasons, this ground does not make out a case under Section 34(2)(iv) of the Act.
100. Before the Learned Arbitral Tribunal, the Petitioner sought to distort the meaning and import of Clause 7.6 of the SSA in order to evade its repayment obligation. The Petitioner's interpretation of clause 7.6 of the SSA, which dealt with inability to credit the redemption amount to the Respondent No. 1's account, leads to perversity. By misinterpreting such clause, the Petitioner attempted to wash its hands off its repayment obligations, and also evade being subjected to adjudication by an independent authority.
101. It is submitted that when read in entirety, the context and meaning of clause 7.6 become clear. However, the Petitioner sought to read the second half of clause 7.6 in isolation and in an absurd manner. Hence, the Learned Arbitral /55/ Com.A.P.No.14/2022 Tribunal rightly rejected the Petitioner's interpretation and found the Petitioner to be in breach, and hence awarded damages. Such a rational interpretation of the Learned Arbitral Tribunal cannot be made a ground to challenge the very jurisdiction of the Learned Arbitral Tribunal.
102. The Petitioner has assailed the award on the ground that the grant of damages is not an arbitrable dispute since it is barred by the provisions of the Companies Act, 1956 / 2013. The Respondent No. 1 submits that the provisions of the Companies Act, 1956 and the Companies Act, 2013 do not bar the arbitrability of the present dispute. The law on determining arbitrability of subject-matter of the dispute is well-settled. The Hon'ble Supreme Court, in Vidya Drolia and others v. Durga Trading Corporation reported in (2021) 2SCC 1 (Para
76), has laid down a four-fold test for such determination according to which a dispute is non-arbitrable in the following events:
a. When the cause of action and subject- matter of the dispute relate to actions in rem;
b. When the cause of action and subject matter of the dispute affect third party rights/have erga omnes effect and require centralized adjudication;
c. When the cause of action and subject- matter of the dispute relate to inalienable sovereign and public interest functions of the state;
/56/ Com.A.P.No.14/2022 d. When the subject-matter of the dispute is expressly or by necessary implication non- arbitrable as per mandatory statutes.
103. The claim for damages is not hit by any of the aforementioned disqualifiers and is therefore arbitrable. Further, the subject-matter of the present claim is purely commercial in nature and the clam is between private parties. There can be no doubt that the present claim is arbitrable.
104. While the petitioner only makes a cursory mention that the claim for damages is not arbitrable under provisions of the Companies Act, 1956/2013, it does not mention any provision of law that would specifically render the claim for damages incapable of adjudication by way of arbitration. If it is the contention of the Petitioner that Section 55 of the Companies Act, 2013 bars the redemption of preference shares, it is submitted that it only regulates the manner in which preference shares shall be redeemed. In any case, nothing in the Act including Section 55 bars awarding of damages for failure on part of the Company to issue preference shares. Viewed from any angle, the contention of the Petitioner would be rendered otiose.
105. Moreover, the possibility of another view being taken on a reading of Section 55 of the Companies Act cannot be urged before this Hon'ble Court as such a contention would /57/ Com.A.P.No.14/2022 be wholly outside the scope of Section 34(2)(a)(iv) of the Arbitration Act.
106. The Petitioner deliberately remains silent on the terms of the contract entered in to by the parties i.e. SSA, while advancing its contentions on Section 55 of the Companies Act. The Petitioner is only trying to mislead this Hon'ble Court by contending as though the provisions of Section 55 of the Companies Act, 2013 would obfuscate the right of the Claimant/ Respondent No.1 from making its legitimate claim under the SSA. The Petitioner has also lost sight of the fact that the jurisdiction and mandate of the Learned Arbitral Tribunal arose out of the arbitration clause in the SSA, and not under Section 55 of the Companies Act, 2013.
107. The Petitioner contends that the Arbitrator could not have granted relief when a specific forum has been created for the said purpose. It is well-established that the mere creation of a specific forum and conferment of jurisdiction upon it does not imply non-arbitrability of a dispute or bar the jurisdiction of an arbitral tribunal. There is no bar on the parties opting for arbitration as the mode of resolution of the present dispute.
/58/ Com.A.P.No.14/2022
108. The Petitioner wrongly contends that the Learned NCLT is a special forum created under the Companies Act, 2013 for adjudication of disputes regarding non-redemption of shares. This contention is grossly erroneous and has not even been supported by any specific legal provision. Section 55 of the Companies Act, 2013 provides an opportunity to the company issuing the shares to approach the Learned NCLT to seek permission for issuance of further redeemable shares, but does not provide a remedy for the preference shareholder to approach the Learned NCLT in the event of non-redemption of preference shares. Hence, it is wrong to contend that the Learned NCLT is a special forum for grievances of non- redemption of shares.
109. In any case, this argument of the Petitioner was indeed urged before the Learned Arbitral Tribunal. However, the Learned Arbitral Tribunal considered and rejected this contention. The Arbitral Tribunal, having comprehensively considered the issue of jurisdiction, by an order dated 02.08.2021, rejected the Petitioner's application filed under Section 16 of the Act and affirmed its jurisdiction. Accordingly, the Arbitral Tribunal aptly held at para 117 of the Award that on account of the arbitration clause, the Respondent No. 1 is barred from approaching any other forum for relief, and has no alternative efficacious remedy. This ground cannot be urged /59/ Com.A.P.No.14/2022 herein when the Petitioner voluntarily agreed before the Hon'ble High Court of Karnataka and the NCLT to resort to arbitration.
110. The Petitioner contends that the claim for damages is time-barred. The prescribed period of limitation for seeking compensation for breach is 3 years under Article 27 to the Schedule of the Limitation Act, 1963. It is the case of the Petitioner that by the amendment application filed on 09.07.2021, Respondent No. 1 sought damages after 6 (six) years from the due date of redemption. Such discretionary relief was not contemplated under the Act or the SSA.
111. The Respondent No. 1 submits that this ground does not merit interference under Section 34 of the Act. If at all, the Petitioner ought to have established that the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, which is admittedly not its contention with respect to limitation.
112. In any case, the claim for damages, which the Petitioner alleges is barred by limitation, was not the sole claim in the arbitration. The said relief was alternative to the claim for specific performance. On this ground alone, this ground deserves to be rejected.
/60/ Com.A.P.No.14/2022
113. Additionally, the Petitioner's contentions on limitation are of no avail since the claim for damages was not an independent relief sought by Respondent No. 1 which was divorced from the prayer for specific performance. It was only an alternative relief sought along with the prayer for specific performance. Such a prayer is in consonance with Section 21 of the Specific Relief Act, 1963.
114. Since the Petitioner issued the arbitration notice under Section 21 of the Act to commence arbitration, the claim for specific performance and the claim for damages were both within time. Therefore, there is no question of the bar of limitation affecting the claim of the Respondent No.1.
115. The Petitioner contends that since the Arbitrator granted a time-barred relief, the Award violates the Limitation Act, 1963 and is against public policy and the fundamental policy of Indian law. The Respondent No. 1 submits that the Petitioner has not made out a case for violation of public policy or the fundamental policy of Indian law under Section 34 of the Act, and has merely cited these terms in a mechanical manner. Section 34(2)(b)(ii) lists, exhaustively, the 3 circumstances when an award is in conflict with the public policy of India: (a) when the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section /61/ Com.A.P.No.14/2022 81 of the Act; or (ii) the award is in contravention with the fundamental policy of Indian law; or (iii) the award is in conflict with the most basic notions of morality or justice. The Petitioner has not established any of these in order to make out case that the Award is in conflict with the public policy of India.
116. Rather than demonstrating how the Award, if at all, is in conflict with the public policy of India, the Petitioner is trying to argue the case on merits. Explanation 2 to Section 34(2) b)(ii) clarifies that the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. Hence, the challenge of the Petitioner to the Award is liable to be rejected.
117. Even on merits, as stated above, the claim for damages was never time-barred and hence it follows that the grant of such relief cannot be time-barred. Since the Petitioner issued the arbitration notice under Section 21 of the Act to commence arbitration, the claim for specific performance and the claim for damages were both within time. Therefore, there is no question of the bar of limitation affecting the claim.
118. The Petitioner contends that since Respondent No. 1 had no right to redemption, there was no breach. Hence, there /62/ Com.A.P.No.14/2022 was no right to specific performance and therefore no entitlement to damages. The Petitioner contends that only if all elements of specific performance are present to grant specific performance could the Arbitrator have granted an award for damages and not otherwise.
119. The Petitioner has not demonstrated in any manner that the finding of breach and the consequential grant of damages were hit by the parameters set out in Section 34 of the Act. The contention of the Petitioner could only show that a different view was possible to be taken in the case. However, this far from being against the fundamental policy of Indian Law.
120. In any case, there can be no doubt as to the Petitioner's breach and consequent liability to pay damages. The Petitioner has made false and misleading contentions to evade liability. The Petitioner's failure to redeem the preference shares is recorded in the records of the Petitioner itself. The report issued by the auditors of the Petitioner company for the financial years ended on 31.03.2015 to 31.03.2020 clearly records the non-redemption of preference shares.
/63/ Com.A.P.No.14/2022
121. Since the Petitioner had an obligation to redeem preference shares under the SSA, it conferred a corresponding right in favor of Respondent No.1 to seek such redemption. In order to evade its obligation and deny the right of Respondent No.1, the Petitioner has sought to misrepresent that the right of redemption was merely an option of redemption. The Learned Arbitral Tribunal rightly interpreted and applied the clauses of the SSA, which the Petitioner has been trying to unlawfully alter, before this Hon'ble Court.
122. The Petitioner contends that if there is a bar to specific performance, then damages cannot be awarded. The Petitioner states that it relied upon the judgment in NAFED Case but the same was ignored by the Arbitrator. The Petitioner further contends that the judgments cited by the answering Respondent in seeking damages involved facts where grant of specific performance was impossible and not hit by any legal bar, and hence damages were awarded; but such is not the case herein. The Respondent No. 1 submits that the Petitioner has failed to establish any ground under Section 34 of the Act to interfere with the Award. Section 34 exhaustively sets out the grounds, none of which the Petitioner even refers to in this respect.
/64/ Com.A.P.No.14/2022
123. In any case, merely because the Arbitral Tribunal did not rely upon the NAFED Judgment, the Award cannot be set aside. The Learned Arbitral Tribunal did not apply the NAFED Judgment since it is wholly inapplicable to the dispute for various reasons, which were recorded in para 70 of the Award and upheld in para 103 of the Award. Hence, it is not fair to contend that the NAFED Judgment was ignored by the Arbitral Tribunal. The said judgment was considered and then held to be inapplicable to the present case.
124. As to the Petitioner's argument that specific performance is barred in the present case, such an argument was considered by the Learned Arbitral Tribunal and rejected. In para 104 of the Award, it was held that the Respondent No. 1 is entitled to specific performance and since the same could not be awarded due to certain factors relating to the profits and capital of the Petitioner Company, the Respondent No. 1 would be entitled to the award of damages. Accordingly, the Award is well-reasoned and deserves to be upheld.
125. The Petitioner contends that it is not axiomatic that where specific performance cannot be granted, damages must be granted. Such a view is contrary to public policy and the fundamental policy of Indian law.
/65/ Com.A.P.No.14/2022
126. The Respondent No. 1 submits that again, the Petitioner has mechanically used the terms 'contrary to public policy' and 'the fundamental policy of Indian law', without shedding any light on how these grounds are applicable to the present case. Mere reproduction of statutory language will not entitle the Petitioner to have a well- reasoned Award set aside. As stated above, conflict with public policy is said to have occurred only in 3 specific circumstances, none of which have been elaborated upon by the Petitioner herein.
127. In fact, the Petitioner's argument is legally unsustainable. Section 21(2) of the Specific Relief Act, 1963, in support of grant of damages where specific performance cannot be granted, states as follows:
21(2) If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the Petitioner is entitled to compensation for that breach, it shall award him such compensation accordingly.
128. The Petitioner contends that based on the maxim of Damnum Sine Injuria, since the rights of Respondent No. 1 as a shareholder remain intact, no injury was suffered by it due to the non-redemption. Hence, there is no entitlement to damages. It is possible that in the future, when the company makes profits, the shares may be redeemed.
/66/ Com.A.P.No.14/2022
129. In any case, the grant of damages was founded in the Petitioner's breach of its contractual obligation to redeem the preference shares and the non-receipt of the agreed payment by the Respondent No.1. The other rights vested in the Respondent No.1, apart from the right of redemption had no bearing on its entitlement to damages. Having violated the main right of the Respondent No. 1 to damages, the Petitioner is now arguing that the secondary rights were intact and therefore damages ought not to have been granted. This argument is untenable and deserves to be rejected.
130. The Petitioner contends that the claim for damages was never made earlier, either in the notice issued under Section 21 of the Act or in the arbitral proceedings, until the filing of the amendment application. Respondent No. 1 had always sought redemption.
131. The Respondent No. 1 submits that this is not a ground which merits interference with the Award under Section34 of the Act. The award of damages by the Learned Arbitral Tribunal was by an exercise of the jurisdiction vested in it under the SSA. Therefore, there is no question of transgression of jurisdiction. Reference in this regard is invited to clause 9 of the SSA and Section 21 of the Specific Relief Act, 1963, both of which permit a claim for damages. Accordingly, /67/ Com.A.P.No.14/2022 the Respondent No. 1 sought damages for breach and the Arbitral Tribunal, in its wisdom, awarded damages. The claim for damages being alternative to the claim for specific performance, it was not mandatory for the claim for damages to be specifically mentioned in the notice issued under Section 21 of the Act. The Respondent No. 1 was well within its contractual rights and the law to seek damages in the alternative by way of an amended statement of claim. The Petitioner did not suffer any prejudice or injustice on account of such alternative prayer and filed its additional statement of objections to the Respondent No. 1's amended statement of claim.54. The Petitioner contends that by virtue of Section 43(iii) of the Companies Act, 2013 and the Accounting Standards, the rights of Respondent No. 1 as a shareholder remained intact and it did not become a creditor. This was ignored by the Arbitrator and hence the Award is opposed to notions of justice and resulted in miscarriage of justice.
132. The Respondent No.1 submits that the Petitioner has failed to establish that the Arbitral Tribunal's reasoning is in conflict with the most basic notions of justice. It was held by the Hon'ble Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. National Highways Authority of India (NHAI) [(2019) SCCOnline SC 677] as follows:
76. However, when it comes to the public policy of India, argument based upon "most /68/ Com.A.P.No.14/2022 basic notions of justice", it is clear that this ground can be attracted only in very exceptional circumstances when the conscience of the court is shocked by infraction of fundamental notions or principles of justice. ...However, we repeat that this ground is available only in vert exceptional circumstances, such as the fact situation in the present case. Under no circumstance can any court interfere with an arbitral award on the ground that justice has not been done in the opinion of the court. That would be an entry into the merits of the dispute which, as we have seen, is contrary to the ethos of Section 34 of the 1996 Act, as has been noted earlier in this judgment.
133. The Petitioner has not demonstrated that the findings of the Award, could in any manner, shock the conscience of the court. In fact, the contention of the Petitioner is not even an accurate reflection of the stand taken before the Arbitral Tribunal by the Petitioner. Once again, the Petitioner is trying to complicate and cloud the issues in the arbitration by contending that Respondent No. 1 is not a creditor. It was never the case of Respondent No. 1 that it is a creditor. This was rightly observed in para 98 of the Award. When the Petitioner's contention as to the stand taken in the arbitration itself is flawed, it cannot mount any valid challenge to the Award before this Hon'ble Court.
134. In any case, what the Arbitral Tribunal rightly ignored / rejected among the Petitioner's contentions was that /69/ Com.A.P.No.14/2022 if the preference shares are not redeemed by 30.09.2015, then redemption can never be done subsequently and Respondent No. 1 remains a shareholder. The Petitioner seeks to make out a case that the rights of Respondent No. 1 are unaffected and hence the Award should not have granted damages.
135. This reason is preposterous to say the least, since the ownership of preference shares without the inseparable right of redemption is completely useless. The Petitioner's reason is clearly contrary to basic commercial sense, since it would mean that Respondent No.1 would simply hold on to preference shares without any attendant commercial benefit whatsoever. On the other hand, the reasoning of the Arbitral Tribunal that the preference shares cannot be rendered irredeemable is legally, logically and commercially sound.
136. The Petitioner contends that Respondent No.1 claimed interest despite itself causing delay in enforcement of its rights and without showing its efforts to mitigate losses. The Respondent No.1 submits that this is not a ground under Section 34 of the Act and is an argument on merits, which has been considered and rejected by the Learned Arbitral Tribunal. The delay was caused solely by the Petitioner who failed to redeem the preference shares. The loss being caused by the Petitioner on account of the non- redemption could have been /70/ Com.A.P.No.14/2022 mitigated by the Petitioner itself, by approaching the NCLT with an application seeking permission to undertake a fresh issuance of preference shares in place of the existing shares. However, the Petitioner failed to take any such action. The only action that could have been taken by the Respondent No. 1 was the issuance of an arbitration notice, which it did. The Respondent No. 1 also took other legal actions. In any case, the Respondent No. 1 cannot be faulted for the breaches and omissions of the Petitioner. The Petitioner contends that the Arbitrator erred in awarding interest at the rate of 18% which exceeds the limits of the Act. The Respondent No. 1 submits that this is not a ground under Section 34 of the Act. Section 34 of the Act exhaustively prescribes certain specific grounds which merit setting aside of an award, none of which have been elaborated by the Petitioner herein with respect to the award of interest.
137. In any case, it is misleading to argue that the interest awarded by the Learned Arbitral Tribunal exceeds the limits of the Act, because the Act does not set any limit on rate of interest which can be awarded. Section 31(7) of the Act recognizes the complete discretion enjoyed by an arbitral tribunal to award interest in accordance with the facts and circumstances of a particular case. The provision reads as follows: 31 (7)(a) Unless otherwise agreed by the parties, /71/ Com.A.P.No.14/2022 where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment.
138. From the above, it is evident that the award of interest by the Learned Arbitral Tribunal at the rate of 18% was in exercise of the absolute discretion conferred upon it by Section 31(7) of the Act. Hence, no fault can be found with the Award and this ground also deserves to be rejected.
139. The Petitioner contends that the Companies Act, 2013 permits redemption of preference shares only out of profits and since the Petitioner had not earned profits, it was not in breach of the SSA. Hence, no damages could have been granted and the Award is in violation of the fundamental policy of Indian law.
/72/ Com.A.P.No.14/2022
140. The Respondent No.1 submits that the crux of the Petitioner's ground is that the Learned Arbitral Tribunal has wrongly applied / interpreted Section 55 of the Companies Act, 2013. Section 34(2A) clearly provides that mere erroneous application of the law is no ground to set aside an arbitral award. While expounding on this provision, the Hon'ble Supreme Court in its judgment in Ssangyong Engineering & Construction Co. Ltd. v. NHAI [(2019) SCC OnLine SC 677] held as follows in para 38:
38...Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law... Therefore, this ground deserves to be rejected.
141. In any case, the Learned Arbitral Tribunal has correctly applied the law and arrived at the findings recorded in the Award. Contrary to what has been urged by the Petitioner, the Arbitral Tribunal did not direct specific performance / redemption. Hence, there is no question of violation of Section 55 of the Companies Act, 2013. It is in fact the Petitioner who violated and is trying to continue to violate the provisions of the Companies Act, by maintaining that its preference shares as irredeemable. The Petitioner contends that the Arbitrator presumed a right contrary to the Companies Act, 2013 and presupposed a breach. There is a /73/ Com.A.P.No.14/2022 statutory bar to redemption and hence the claim and grant of damages were both barred. The Award could not have granted indirectly what was barred by law. Hence, the Award is in violation of public policy and fundamental policy of Indian law.
142. The Respondent No. 1 submits that the Petitioner mechanically cites the ground of public policy but has failed to substantiate the ground to merit interference with the Award. This ground was elaborated by the Hon'ble Supreme Court in Sutlej Construction v. Union Territory of Chandigarh [(2017) 14 SCALE 240 (SC)] at para 11 as follows:
11. It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the Court and would not include what the Court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice".
143. The Arbitral Tribunal rightly distinguished the relief of specific performance directing redemption and the relief of grant of damages in para 96 of the Award. The Arbitral Tribunal noted that Section 55 only governs redemption. Further, it was also observed that the Petitioner had not undertaken any effort of further issuance of new shares to complete the redemption of the earlier shares.
/74/ Com.A.P.No.14/2022
144. The Petitioner contends that the Arbitrator presumed that where the redemption of preference shares is at the option of the issuer, such shares are irredeemable and are hence prohibited under the Companies Act, 2013. Such an interpretation contravenes Section 55 of the Act and Rule 9 of the Companies (Share Capital and Debentures) Rules, 2014.
145. The Respondent No. 1 submits that as stated above, mere erroneous application of the law does not amount to patent illegality which goes to the root of the matter. In any case, the Arbitral Tribunal's reading and application of the law are legally well-founded. While the Arbitral Tribunal based its reasoning on Section 55 and Rule 9, it is the Petitioner who is seeking to flout both provisions. The Petitioner intends to maintain irredeemable preference shares in violation of Section 55 and seeks to now alter the terms of issue in violation of Rule 9. In para 89 of the Award, the Arbitral Tribunal also noted that Rule 9 states that redemption may be at a fixed time, which the parties herein had agreed upon.
146. Contrary to the contention of the Petitioner, the Arbitral Tribunal did not make any presumption that where the redemption of preference shares is at the option of the issuer, such shares are irredeemable and are hence prohibited under the Companies Act, 2013. Far from being required to presume, /75/ Com.A.P.No.14/2022 the Arbitral Tribunal was clearly informed by the Petitioner, in its written and oral submissions, that the preference shares could not be redeemed going forward. Based on this contention of the Petitioner, the Arbitral Tribunal found that the Petitioner intended the preference shares to be irredeemable.
147. The Arbitral Tribunal rightly reasoned, and did not presume, that the Petitioner sought to maintain irredeemable preference shares, and held the same to be barred by Section 55 of the Companies Act, 2013.
148. The Petitioner contends that the SSA did not grant a right of redemption to Respondent No. 1; it gave an option to the Petitioner. An option in the hands of the Petitioner cannot be directed to be specifically performed. It is a matter of public policy and fundamental policy of Indian law that performance of an option by the person who granted such option cannot be compelled. A contract arises only if such option is exercised. The Respondent No. 1 submits that the Petitioner has not cited any authority in support of its contention that it is a matter of public policy and fundamental policy of Indian law that performance of an option by the person who granted such option cannot be compelled. The Petitioner contends that the Arbitrator misread and misinterpreted the SSA since it did not provide that if the preference shares are not redeemed before /76/ Com.A.P.No.14/2022 30.09.2015, then the option becomes mandatory. Hence, the Petitioner contends that the Arbitrator rewrote the SSA and that the same is in violation of public policy.
149. It is submitted that the interpretation of the SSA by the Learned Arbitral Tribunal in para 88 of the Award is well reasoned and logical. It was clearly evident even from a cursory reading of the SSA that the right of redemption of Respondent No.1 was an option in the hands of the Petitioner only until 30.09.2015 and not thereafter. On 01.10.2015, the option turned into an obligation. There is no question of the Learned Arbitral Tribunal having rewritten the SSA, since it merely gave a very plausible and logical interpretation to the clauses of the SSA.
150. This was the only interpretation which could give a working effect to the SSA and was in perfect consonance with the SSA and the parties' intent. Failure to interpret the said clause in this manner would have rendered the whole contract nugatory. In other words, a contrary reading of the said clause would mean that the Petitioner was never required to redeem the shares at all and could hold on to them in perpetuity. If the parties actually intended for clause 7.1 to be open- ended, then no time-limit would have been imposed and the word "shall" would not have been mentioned in the clause. The /77/ Com.A.P.No.14/2022 Petitioner's interpretation would militate against basic common and commercial sense since it would mean that Respondent No. 1 would hand over ₹.10 Crore to the Petitioner without receiving any commercial benefit, which would render the SSA itself a nullity.
151. There is nothing grossly wrong with the view taken by the Learned Arbitral Tribunal that the option pertained to the time period till 30.09.2015, after which the Petitioner was required to redeem the shares. It is settled law that an award cannot be challenged under Section 34 of the Act on the ground that an alternative view could have been taken by an arbitrator. In fact, it is the Petitioner's interpretation which is absurd and unworkable. If redemption was intended to be an option in the hands of the Petitioner perpetually, then there was no requirement for the parties to confine the option to a date, i.e., 30.09.2015.
152. The Hon'ble Supreme Court, in Associate Builders v. Delhi Development Authority [(2015) 3 SCC 49], held as follows: 33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the /78/ Com.A.P.No.14/2022 ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award.
153. The Petitioner contends that the Arbitrator wrongly held that if the above interpretation was not taken, then the nomenclature 'redeemable' would have no meaning, and he also held that no company can issue irredeemable preference shares; this is contrary to Section 55 of the Act and the Rules; the non-exercise of the option by the Petitioner did not change the nature of the preference shares to irredeemable preference shares.
154. The Respondent No. 1 submits that contrary to the Petitioner's misleading contention, there is no conflict between the Arbitral Tribunal's interpretation and the Companies Act, 2013. In fact, the Arbitral Tribunal rightly followed the letter and spirit of Section 55 of the Companies Act, 2013 and observed that irredeemable preference shares cannot be issued.
155. While the Petitioner advanced confounding arguments as to the shares being redeemable but the Petitioner choosing not to exercise them, the Arbitral Tribunal astutely separated the grain from the chaff and recognized that the Petitioner was actually trying to maintain /79/ Com.A.P.No.14/2022 irredeemable preference shares. For this reason, the Arbitral Tribunal rightly rejected the Petitioner's whimsical arguments in light of the clear language of Section 55 of the Companies Act, 2013. The Petitioner contends that the Arbitrator cannot add words which change the basis of the contract. Clause 7 of the SSA has been interpreted contrary to its own language and the foundation of contracts and contract law would be misapplied in this case. The Respondent No. 1 submits that it is settled law that the interpretation of a contractual clause in question by an arbitral tribunal cannot be challenged on the ground that a different interpretation was possible. This would result into entry to the merits of the dispute, which is against the letter and spirit of Section 34 of the Act. The interpretation accorded by the Learned Arbitral Tribunal to Clause 7 of the SSA is certainly plausible, to say the least, which means that the Award cannot be questioned on the ground of alternative interpretation.
156. The Hon'ble Supreme Court held in Sutlej Construction v. The Union Territory of Chandigarh [(2017) 14 SCALE 240 (SC)] as follows:
10. The dispute in question had resulted in a reasoned award. It is not as if the arbitrator has not appreciated the evidence. The arbitrator has taken a plausible view and, an in our view, as per us the correct view...
/80/ Com.A.P.No.14/2022
12. The approach adopted by the learned Additional District Judge, Chandigarh was, thus, correct in not getting into the act of re-
appreciating the evidence as the first appellate court from a trial court decree. An arbitrator is a chosen Judge by the parties and it is on limited parameters can the award be interfered with.
157. At best, this ground urged by the Petitioner could put forth an alternative interpretation of Clause 7 of the SSA, and nothing more. The view, as suggested by the Petitioner, would not even be remotely judicial to the parties. Solely with a view to make this one of the grounds under Section 34 of the Act, the Petitioner has made are reference to the foundation of contracts and contract law. There is no explanation whatsoever as to how the said award would be an adverse interpretation of foundation of contract law. Hence, this ground also deserves to be rejected.
158. In any case, the interpretation of the Learned Arbitral Tribunal is legally sound and valid in the circumstances of the case. Clause 7.4 of the SSA provided for a right of redemption in favor of the Respondent No. 1. For this reason as well, the Petitioner's challenge to the Award must fail.
/81/ Com.A.P.No.14/2022
159. The Petitioner contends that the interpretation of Clause 7 of the SSA is contrary to Section 80 / 55 of the Companies Act 1956 / Companies Act, 2013.
160. The Respondent No. 1 submits that as stated above, given that the interpretation of the Learned Arbitral Tribunal is plausible, no interference with the Award is called for. It is not within the scope of Section 34 of the Act to assess whether a better view could be taken in the award. Even otherwise, it is not even a valid ground for the Petitioner to a argue that the interpretation of Clause 7 by the Learned Arbitral Tribunal resulted in an erroneous application of Section 80 / 55 of the Companies Act 1956 / Companies Act, 2013. The proviso to Subsection (2-A) of Section 34 of the Act provides as follows:
Provided that an award shall not be set aside merely on the ground of erroneous application of law or by reapreciation of evidence.
161. In any case the interpretation of Clause 7 by the Award is in no manner violative of any statutory provision.
162. The Petitioner contends that the Arbitrator did not decide the dispute according to the SSA and construed the SSA in an unreasonable manner.
/82/ Com.A.P.No.14/2022
163. It has been often held that a Court under Section 34 will not substitute its view for that of an Arbitral Tribunal simply because the petitioner contends that there could be better view. The learned Arbitral Tribunal considered the arguments of both parties on their reading of the SSA for passing the and thereafter interpreted the clauses of the SSA for passing the Award. It was certainly a plausible view taken by the Learned Arbitral Tribunal that Clause 7 of the SSA conferred a right of redemption of the preference shares in favor of the Respondent No;1. Such being the case, the award does not call for any interference.
164. On the other hand, apart from simply calling the tribunal's interpretation unreasonable, the Petitioner has not established or even demonstrated one ground to set aside the Award. On this ground alone, the present petition deserves to be rejected.
165. The petitioner contends that the judgments cited by the petitioner were not considered and distinguished; this itself is a ground to set aside the award; the Arbitrator ought to have reasoned and declared his mind for the Court to test the award under Section 34 of the Act. The respondent No:1 submits that this is a not a ground which is permissible under Section 34 of the Act to interfere with an award. It is submitted /83/ Com.A.P.No.14/2022 that none of the judgments cited by the petitioner clearly applied.
166. It is submitted that the Arbitral Tribunal duly noted the judgments cited by the Petitioner in paras 61, 62 of the Award. Further, in para 119 of the Award, the Arbitral Tribunal specifically stated that the judgments cited by the parties do not relate to any issue in controversy which required reliance on such judgments. It was further specifically held that "It may therefore not be taken that the said authorities have been overlooked or ignored". Hence, to say that the judgments are completely ignored would be wholly incorrect and misleading.
167. The Petitioner seeks that the Arbitral Tribunal declare its mind by distinguishing each judgment cited by both parties only for this Hon'ble Court to test the Award under Section 34 of the Act. This argument is absurd since the Petitioner's approach is flawed. A challenge to an award is not a statutory first appeal where the Award is to be dissected and tested. The grounds of challenge are very narrow in scope, which the Petitioner has failed to establish.
168. The Petitioner contends that notice to Respondents No. 2 and 3 was not issued. This is gross irregularity which goes to the root of the matter.
/84/ Com.A.P.No.14/2022
169. Respondents No. 2 and 3 were erstwhile directors of the Petitioner Company, and were made parties to the arbitral proceedings. In any case, this is not a ground which can be urged by the Petitioner, who was in no manner prejudiced by the issuance or non-issuance of notice to Respondents No. 2 and 3. This has been specifically provided in Section 34(2)(a)
(iii) which states as follows:
(i) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
170. Therefore, the Petitioner has not made out any ground to interfere with the Award. Viewed from any angle, the present petition is entirely misconceived and requires to be rejected at the threshold. For all the aforementioned reasons, it is just and necessary to dismiss the present petition. All the contentions in the petition, which are not specifically traversed herein above, are hereby denied as false and the Petitioner is put to strict proof of the same.
171. I have heard the arguments addressed by the learned advocates on record.
/85/ Com.A.P.No.14/2022
172. The Learned Counsel for the Claimant has relied on the following citations in support of his case:
Sl.No. Names of Parties Citation
1. PSA SICAL TERMINALS PVT.LTD., 2021 SCC OnLine
Vs.THE BOARD OF TRUSTEES OF 508
V.O.CHIDAMBRANAR PORT TRUST
2. KAMAL KARMAKAR WALLDORF 2018 SCC OnLine
INTEGRATION SOLUTIONS Del. 11557
LIMTIED Vs.S.CHAND AND
COMPANY LIMITED AND OTHERS
3. JAGADISH SINGH Vs.NATTHU (19920 1 SCC 647
SINGH
4. URMILA DEVI AND OTHERS Vs. (2018)2SCC 284
THE DEITY, MANDIR SHREE
CHAMUNDA DEVI, THROUGH
TEMPLE COMMISSIONER AND
OTHERS
5. ASSET RECONSTRUCTION (2021)6 SCC 366
COMPANY (INDIA) LIMITED
Vs.BISHAL JAISWAL
6. HEGDE AND GOLAY LIMITED Vs. 1985 SCC OnLine
STATE BANK OF INDIA KAR 428
7. OLYMPUS SUPERSTRUCTURES (1999) 5 SCC 651
PVT LTD., Vs.MEENA VIJAY
KHETAN AND OTHERS
173. The Learned Counsel for the Respondent No.1 has relied on the following citations in support of his case:
Sl.No. Names of Parties Citation
1. DYA TECH PVT.LTD., (2019) 20 SCC 1
Vs.CROMPTON GREAVES LIMITED
2. SSANGYONG ENGG. & MANU/SC/
CONSTRUCTION CO., ltd Vs. NHAI 0705/2019
3. ASSOCIATE BUILDERS V DELHI (2015)3 SCC 49
DEVELOPMENT AUTHORITY
/86/
Com.A.P.No.14/2022
4. ONGC LTD V. WESTERN GECO MANU/SC/
INTERNATIONAL LTD., 0772/2014
5. NATIONAL AGRICULTURAL (2020)19 SCC 260:
COOPERATIVE MARKETING SCC OnLine SC
FEDERATION OF INDIA V. 381
ALIMENTA
6. MCX STOCK EXCHANGE LIMITED MANU/MH/
V. SECURITIES & EXCHANGE 0289/2012:
BOARD OF INDIA (2012) 172 Comp
Cas 602 Bom(DB)
7. V.PECHIMUTHU V. GOWARAMMAL MANU/SC/ 0407/2001:(1999) 5 SCC 651
8. SINNAKARUPPA GOUNDER V. MANU/TN/ M.KARUPPUSWAMI GOUNDER 0282/1965 AND OTS.
9. ADITYA PRAKASH MANU/MH/ ENTERTAINMENT PVT.LTD., 0522/2018::
Vs.MAGIKWAND MEDIA PVT.LTD., (2018)207 Comp.Cas.549(Bo
m)
10. 3A CAPITAL SERVICES LTD. V MANU/GJ/200/2018 GUJARAT POLY AVX ELECTRONICS LTD
11. NATIONAL COOPERATIVE DEVT MANU/DE/ CORP V.ASST COMMISSIONER OF 6642/2011 (DB) IT
12. HINDUSTAN GAS AND MANU/WB/ INDUSTRIES LTD., 0261/1978 V.COMMISSIONER OF INCOEM TAX
13. LALCHAND SURANA AND ORS. MANU/AP/ Vs.HYDERABD VANASPATHY LTD. 0009/1988
14. STATE BANK OF INDIA & ORS. 2003 SCC OnLine Vs.ALSTOM POWER BOILERS LTD. Bom 321 & ORS.
15. ULLASBA MAHAVIRSINH BARACH 2013 SCC OnLine /87/ Com.A.P.No.14/2022 & 1 V. UNION OF INDIA & 3 Guj 1131
16. INDIAN OIL CORPORATION LTD., C.A.Nos. 837-838 V. M/S.SHRE GANESH of 20222 (Arising PETROLEUM RAJURUNAGAR out of SLP(Civil) Nos. 335970-71 of 2016) DD February 01, 2022
174. I have gone through the materials available on record. I have gone through the precedents relied on by the parties and in the backdrop of the ratio of above precedents, the rival contentions raised by the parties are discussed.
175. The following Points arise for my determination. (1) Whether the Plaintiff(Respondent No.1 in A.C.No:90/2021) has made out any grounds set out under Section 34 of Arbitration & Conciliation Act, 1996 so as to Set aside the Award dated: 16th December 2021 passed by the learned Sole Arbitrator in the arbitration proceedings A.C.No.90/2021?
(2) What Order?
176. My findings on the above Points are as under:
Point No:1 : IN THE NEGATIVE Point No:2 : As per final Order for the following /88/ Com.A.P.No.14/2022 REASONS
177. POINT No.1 : The Plaintiff/M/S.CLN PROPERTIES PVT., LTD., has filed this Arbitration suit U/Sec.34 of the Arbitration & Conciliation Act, 1996 praying the Court to call for the records in the proceedings in A.C. No.90/2021 before the learned Arbitrator in the matter of dispute between the plaintiff and defendant herein from the Arbitration & Conciliation Centre, Bengaluru;
b) set aside the arbitral award
dated:16.12.2021 passed by the learned
arbitrator in A.C.No:90/2021;
c) grant such other and further reliefs as the Hon'ble deem fit, in the facts and circumstances of the case, in the interest of justice and equity.
178. In order to determine the suit it is useful to refer to Section 34 of Arbitration and Conciliation Act, 1996 which reads as under:
ARBITRATION AND CONCILIATION ACT, 1996 [Section : 34] Application for setting aside arbitral award (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by /89/ Com.A.P.No.14/2022 the Court only if- (a) the party making the application establishes on the basis of the record of the arbitral tribunal that-
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that-
(i) the subject-matter of the dispute /90/ Com.A.P.No.14/2022 is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33 , from the date on which that request had been disposed of by the arbitral Tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause /91/ Com.A.P.No.14/2022 from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.
[(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub- section (5) is served upon the other party.
179. It is useful to refer to the principles laid down by the Hon'ble Supreme Court of India in the following decision regarding the scope of Section 34 of Arbitration & Conciliation Act, 1996 /92/ Com.A.P.No.14/2022 2021 SCC OnLine SC 1027 STATE OF CHHATTISGARH Vs. M/S. Sal Udyog Private Limited LAWS(SC) 2021 11 2SUPREME COURT OF INDIA
14. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) [2019] 15 SCC 131, speaking for the Bench, Justice R.F. Nariman has spelt out the contours of the limited scope of judicial interference in reviewing the Arbitral Awards under the 1996 Act and observed thus :
"34. What is clear, therefore, is that the expression "public policy of India ", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law " as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar " understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA,(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sec- tions 18 and 34(2) (a)(iii) of the 1996 Act, /93/ Com.A.P.No.14/2022 these continue to be grounds of challenge of an award, as is contained in para 30 of Asso - ciate Builders [Associate Builders v. DDA(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be under- stood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], as it is only such Arbitral Awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now /94/ Com.A.P.No.14/2022 available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be per- mitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v DDA(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an Arbitral Award. Para 42.2 of Asso- ciate Builders [Associate Builders v DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
180. It is settled law that the Court while dealing with an application under Section 34 of Arbitration & Conciliation Act, 1996 is required to exercise its jurisdiction within the frame work of Section 34 and Section 34 (2A) of the Act. Where two views are possible in respect of a dispute, the view taken by /95/ Com.A.P.No.14/2022 the Arbitrator cannot be found fault with by the Court. The Court is not empowered to set aside an award under the Public Policy ground unless the award shocks the conscience of the Court. The Court shall not interfere with the award on the assumption that the award is unjust on the facts of the case and substitute its view for that of the arbitrator to do what it considers to be just. The Court acting under section 34 of the Act does not sit in appeal and correct the consequential errors of facts as the arbitrator is the ultimate master of the quantity and quality of evidence. The mere erroneous application of the law is not a ground to interfere with the award under the head 'patent illegality', unless the patent illegality is apparent on the face of record/award and must go to the root of the case. The Court has to consider the grounds raised by the plaintiff seeking interference with the award in the narrow corridors of the principles enunciated under Section 34 of the Act and the ratio of the precedents. The Court shall not interfere with the Award only on the ground that the reasoning and findings of the learned Arbitral Tribunal are not in consonance with the line of case/contentions raised by the aggrieved plaintiff.
181. On a careful perusal of the materials available on record it is evident that the learned Arbitral Tribunal has dealt each of the points for determination with reference to the pleadings of the parties, the arguments submitted by them /96/ Com.A.P.No.14/2022 and in the backdrop of ratio of judicial precedents and statutory provisions.
182. The arguments canvassed by the Respondent No;1 and the Claimant is not reproduced as they have submitted their respective arguments on the lines of the averments made in the petition filed under section 34 of the Act and the statement of objections field by the Claimant respectively. They have relied on the decisions quoted in their respective pleadings.
183. The learned Arbitral Tribunal has taken up Points No:1 to 3 together for discussion.
1: Whether the Claimant proves that there was a breach committed by the Respondent no.1 on the Share Subscription agreement (SSA) dated 29.1.2010?
2: Whether the Claimant proves that it is entitled to the relief of specific performance of the contract, of the SSA by way of redemption of hares and as per law?
3: Whether the Claimant proves that it would be entitled to the relief of damages in an alternative to the relief of specific performance of contract, of the SSA?
/97/ Com.A.P.No.14/2022
184. The Respondent No:1 by relying on '7.1 Notwithstanding anything to the contrary contained elsewhere. First Closing Shares and/or S Second Closing Shares shall be redeemed at the option of the Company on or before September 30, 2015' is contending that the redemption of shares is at the option of the Respondent No;1 Company and there was no obligation to redeem the shares.
185. The learned Arbitral tribunal has observed that 'From a plain reading of the above clause it is evident that there is an option available only to the Respondent company to redeem the preference shares, held by the Claimant, on or before 30.09.2015. However, if the shares are not so redeemed by that date, the option would lapse. The obligation would become mandatory after that date. For irredeemable preference shares, as contemplated under Section 55 of the Companies Act, 2013. It is also seen that Section 80 A of the Companies Act, 1956, was also introduced in the year 1988, to prohibit issuance of irredeemable preference shares. It follows that all companies would compulsorily, have to redeem preference shares as per the terms of any contract, or within 20 years, in the absence of a contract.
186. Rule 9 of the Companies (Share Capital and Debenture) Rules, 2014, also states that redemption may be /98/ Com.A.P.No.14/2022 'at a fixed time'. The parties hereto had in fact agreed on that fixed time. In the present case there is a time limit prescribed, namely September 30, 2015, after which date the said shares, shall be redeemed. Though an option was made available to the Respondent company to exercise the right of redemption even before that date. As already stated, that option available to the respondent company, ceased after 30.09.2015. It would be erroneous to accept the statement that the redemption of redeemable preference shares is purely at the sole option of the respondent company and that the claimant cannot compel redemption, even after the due date. If this were the correct legal position, there was no need for prohibition of issuance of irredeemable shares.
187. Further, the respondent company has relied on Clause 7.6 of the SSA, to contend that non-payment of the redemption amount would not constitute a breach of Agreement. This contention is sought to be made on the reading of the latter portion only, of the above said Clause. If the entire Clause is read, it would be clear that the latter portion of the said Clause is restricted to a situation in which the respondent company issues a redemption notice to the investor. In the present case, no such notice was issued to the Claimant, who is the investor. But, on the other hand, the respondent company is seen to have ignored the Claimant's several requests for redemption.
/99/ Com.A.P.No.14/2022
188. It is also seen that the obligation of redemption of the said shares is also seen acknowledged by the respondent company's statutory auditor in the Reports for the years ending 31.03.2015 through to 31.03.2020. One other contention on behalf of the respondent is that the non- redemption is due to non-accrual of profits, which can be characterized as a force majeure event, under clause 11 of the SSA. However, from a reading of the said clause, it is seen, that a force majeure event is one that is beyond a party's reasonable control, not A business being not arising out of any act or omission of such party. A business being susceptible to losses does not mean that the company has no control over the business or that the loss is not connected to the acts and omissions of the company. In any event the respondent has failed to demonstrate that it had complied with the procedure laid down in the above said clause, to set up this defense. The clause requires that a party claiming a force majeure event, should notify the other party, in writing, of such delay or failure in performance, the reasons therefor, the expected length of such period of delay and its possible effect. The respondent had not complied with any of the above.'
189. The Learned Tribunal has assessed the rival contentions in a proper manner and applied the provisions of relevant law and has come to a just conclusion that the /100/ Com.A.P.No.14/2022 Claimant has sufficiently demonstrated that the respondent company has an obligation to redeem the said shares, and the admitted failure to do so, by its own actions and by intentionally not complying with its obligations under the SSA, has breached the terms of the Share Subscription Agreement, dated 29.01.2010 and its failure to perform is for reasons not attributable to the Claimant and held that the claimant is entitled for specific performance of the agreement.
190. The Learned Arbitral Tribunal rightly rejected the contention of the Respondent No:1 that the agreement is not enforceable because it involves the performance of a continuous duty by the Tribunal, which it cannot supervise or that the contract is one which is determinable in nature by assigning proper and convincing reason that the redemption of the shares, involves payment of the amount due and return of the shares by the Claimant which requires no supervision by the Tribunal.
191. The contention of the Respondent No:1 that the shareholder is not a creditor of the company and therefore the claimant is not entitled to seek any relief, is concerned is rightly rejected by the Tribunal as the Claimant is not seeking any relief as a creditor of the Respondent or made the claim for recovery of money or winding up of the Respondent No:1.
/101/ Com.A.P.No.14/2022
192. The learned Tribunal has examined the applicability of section 21 of Specific Relief Act, 1963 in detail and referred to the principles stated in Jagadish singh V Natu Singh (1992) 1 SCC 647; Urmila Devi V. Diety Shree Chamunda Devi (2018) 2 SCC 284 and has upheld the right to seek damages by the plaintiff against Respondent No:1. Apart from considering statutory provisions and the ratio of precedents the learned Tribunal has gainfully employed the terms of Clause 9.1 of SSA and has opined that even a purported termination of the Agreement shall not prejudice the right of action for damages of the party who is aggrieved by such termination or a purported termination. The contention of the Claimant that the conduct of the Respondent No.1 and the demand of the Claimant for redemption, can be inferred as to there being a purported termination of the SSA, as the Claimant has categorically expressed its intention to exit from the shareholding of the Respondent Company, brings an end to the relationship. Therefore, the Claimant's right to seek damages being pursued before this Tribunal, is a plausible argument and is accepted.
193. The learned Arbitral Tribunal has also examined the applicability of the ratio of the judgment of the Supreme Court in the NAFED case relied on by Respondent No.1 and has held that the same is inapplicable, to the facts of the present case.
/102/ Com.A.P.No.14/2022 The learned Arbitral Tribunal has rightly answered Points No:1 to 3 in favor of the Claimant. The reasoning adopted and the findings given by the learned Tribunal does not call for any interference by this Court as the same are in conformity with the established principles of law.
194. POINT No.4 - Whether the Respondent No.1 proves that this Tribunal would be acting without its jurisdiction in granting any alternative relief of damages, to the remedy of specific relief of contract, which is the primary relief, sought by the Claimant?
195. The Tribunal has arrived at a conclusion that the Respondent No:1 has committed a breach of the SSA, by failing to redeem the preference shares. The learned Tribunal has held that the claimant is entitled for specific performance of the Contract and if for any reason the specific performance of contract cannot be awarded the claimant would be entitled for damages. In furtherance of said conclusion the learned Arbitral Tribunal has rightly concluded that the claim for damages made by the Claimant is inherent in the contract and the Tribunal has jurisdiction to determine the question of 'awarding damages'.
/103/ Com.A.P.No.14/2022
196. Section 21 of the Specific Relief Act, 1963, provides for awarding compensation for breach of contract, in addition to the relief of specific performance of contract Section 21 (5) Specific Relief Act provides that a claim for compensation can be permitted at any stage of the proceedings, if such a claim for compensation had not been raised in the first instance. The Tribunal had permitted the Claimant to raise a claim for compensation/damages and rightly treated the claim for damages as an alternate relief to the relief of Specific Performance of the Contract. The reasons adopted by the Learned Arbitral Tribunal and its findings on Point No.4 calls for no interference by this Court.
197. POINT No.5: Whether the respondent No.1 proves that the non-joinder of M/s Shan Technology Services Private Limited, which entity had originally entered into the above SSA, is fatal to the Claim?
It is evident from the records that M/s Shan Technology Services Private Limited (STSPL), had originally entered into the above SSA. There is no dispute that the claimant was earlier known by name STSPL. The learned counsel for the Respondent No:1 has declared before the Tribunal that that the above objection does not survive for consideration. Accordingly, the Learned Arbitral Tribunal has rejected Point No. 5.
/104/ Com.A.P.No.14/2022
198. POINT No.6: Whether the respondent no.1 proves that the Claimant has committed breach of contract by its failure to infuse a second tranche of the SSA amount and is hence disentitled to any reliefs?
The Respondent No:1 is contending that the Claimant has failed to infuse the second tranche of the SSA as such committed breach of the Contract. The Claimant is contending that non-infusing of second tranche of the SSA amount does not amount to breach of Contract.
199. Clause 4.1.4 of the SSA, provides that the parties had agreed that the Agreement would continue to remain binding if the second tranche was not infused for any reason; Clause 4.1.5 of the SSA, provides only consequence, in the event of a failure to infuse the second tranche that if there was a failure, as aforesaid, the respondent company would not be required to make payment of Additional Preference Dividend as envisaged in the Agreement. The learned Tribunal by considering Clause 4.1.4 and 4.1.5 of SSA has come to a just conclusion that non-infusion of second tranche of ₹.12 Crore does not amount to breach of SSA and accordingly held Point No. 6 in favor of the Claimant. The said findings of the learned Arbitral Tribunal call for no interference by this Court.
/105/ Com.A.P.No.14/2022
200. POINT No.7: Whether the respondent no. 1 proves that the Claim is barred by the law of Limitation?
The Respondent No:1 is contending that the Claim is barred by limitation as on 09.07.2021, which is the day of amendment of the claim statement, in terms of Article 27 of the Schedule to Limitation Act. It is the specific contention of the Claimant that it is entitled for ₹.15 Crores as on 30.09.2015. In view of the same the claim for damages is barred as on 09.07.2021. The claimant has denied the said contention and submitted that the Claim for damages is an alternate relief inherent with the claim for specific performance; as such the claim is not barred by limitation.
201. The Claimant has issued notice invoking arbitration clause on 17.03.2016 and the said notice has been received by the Respondent No.1 on 18.03.2016. Initially the Claimant has sought for specific performance of the Contract by virtue of amendment is claiming damages as an alternate relief. As per Section 21 of Specific Relief Act, claim for damages as an alternate relief can be made at any stage of the proceedings as the said claim arises out of breach of contract and inherent with the prayer for specific performance of the Contract. When the claimant has initiated arbitration proceedings by issuing notice under Section 21 of Arbitration & Conciliation Act, 1996 within the period of limitation, the question of bar of /106/ Com.A.P.No.14/2022 limitation on the claim of damages does not arise at all. In view of Section 43 of A & C Act, Article 27 and 54 of the schedule to the Limitation Act, the alternate claim for damages made by the claimant is within the period of limitation. Hence, the findings of learned Arbitral Tribunal on Point No:7 in the Negative calls for no interference by this Court.
202. POINT No. 8: Whether the respondent no. 1 proves that it made bona fide efforts to redeem the preference shares held by the Claimant, in terms of the SSA?
The Respondent No:1 is contending that the Claimant has not made any efforts to mitigate the alleged loss as such not entitled for the reliefs prayed in the claim petition. Clause 7.2 of SSA provides that 'If first closing shares are redeemed by the Company on or after March 31, 2015 a premium of ₹.290/- per Series A preference Share shall be payable to the Investor by the Company'; Clause 7.3 of SSA provides that 'If second closing shares are redeemed by the Company on or afer March 31, 2015, a premium of ₹.363.33 per series A Preference Share shall be payable to the Investor by the Company'.
203. The materials available on record show that the Respondent No:1 has not made any efforts to redeem the shares after March 31 2015 or before 30.09.2015.
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204. The Respondent No:1 has not informed the Claimant about its inability to redeem the preference shares as per the terms of SSA as the Company is not making profits. The Respondent No:1 was under an obligation to exhaust alternate measures to redeem the preference shares on or before 30.09.2015. In such circumstances the findings of learned Tribunal on Point No:8 in the negative calls for no interference by this Court.
205. POINT No.9: Whether the respondent no. 1 proves that the Claimant is provided with an efficacious remedy, other than in arbitration?
The Learned Arbitral Tribunal has rejected the contention raised by the Respondent No:1 regarding jurisdiction vide order dated:02.08.2021. Clause 10.1 of SSA provides for resolution of dispute through arbitration. The Hon'ble NCLT has permitted the parties to resolve their dispute by arbitration vide order dated:04.07.2019 passed in C.P.(IB) No.151/BB/2018. The Hon'ble High Court of Karnataka was pleased to allow CMP No.167/2016 field under section 11(6) of A & C Act, 1996 vide order dated:08.01.2021 appointing the Sole Arbitrator to resolve the dispute between the parties. The Respondent No:1 having actively participated in all these proceedings is not entitled to contend that the Claimant is /108/ Com.A.P.No.14/2022 provided with an efficacious remedy other than in Arbitration. The Learned Arbitral Tribunal has rightly held Point No:9 against the Respondent No:1, which calls for no interference by this Court.
206. POINT No.10: Whether the respondent no. 1proves that there is a bar to the jurisdiction of this Tribunal for the adjudication of this dispute?
The Learned Arbitral Tribunal has decided the question of jurisdiction by passing order dated:02.08.2021 rejecting application filed under Section 16 of the A & C Act, by the respondent No.1. Accordingly held Point No:10 against the Respondent No.1.
207. On going through materials available on record and the observations made by the learned Tribunal it is evident that the Learned Tribunal has considered every statutory provisions and the ratio of the decisions relied on by the parties meticulously and has scrutinized the facts of the case in detail. The learned Arbitral Tribunal at para 119 of the Award observed that ' Insofar as the judgments of the Hon. Supreme Court and the High Courts, that have been cited by the parties, in support of their respective contentions, in the course of their arguments are concerned are not separately discussed by this Tribunal, as there was no such controversy that /109/ Com.A.P.No.14/2022 required reliance on case law to form an opinion, one way or the other. In other words the facts and law having been laid threadbare in the respective submissions, the authorities cited in respect of particular aspects, have been reiterated and the contentions to demonstrate that a proposition put forth as not being tenable as contended by the parties, are recorded and left at that, wherever this Tribunal had no reason to disagree with the reasoning afforded, to defeat any such contention. It may therefore not be taken that the said authorities have been overlooked or ignored.' Hence, it is apparent on the record that the Learned Arbitral Tribunal has properly appreciated the materials before it in a proper perspective and applied the ratio of the precedents relied on by the parties and has come to a just conclusion that the respondent company has committed a breach of contract by its failure to redeem the preference shares, in accordance with the Share Subscription Agreement, dated 29.01.2010, between the Claimant and the Respondent, by 30.09. 2015. And by the Claimant seeking to sever the contractual relationship, it were, by seeking redemption the said shares and thereby putting an end to the contractual relationship, would result in a purported termination of contact. In the result, the Claimant may be compensated by the by the respondent by payment of damages according to law and passed the Award.
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208. The Learned Tribunal has assigned proper and convincing reasons while answering Claims put forth by the Claimant and rejecting the contentions raised by the respondent No:1. The materials available on record justify the reasoning adopted and findings given on Claims of the Claimant by the learned Arbitral Tribunal while coming to the conclusion to allow the claim of the claimant. The Respondent No.1 has not made out any grounds to interfere with the impugned award. In such circumstances, I answer Point No:1 in the NEGATIVE.
209. POINT No.2: In view of the discussion made above and findings on Point No:1 I pass the following ORDER The Arbitral suit filed by the Plaintiff under section 34 of Arbitration & Conciliation Act, 1996 to set aside the impugned award dated:16.12.2022 passed by the learned Sole Arbitrator in A.C.No.90/2021 is hereby dismissed with costs.
/111/ Com.A.P.No.14/2022 The Award dated: 6.12.2022 passed by the learned Sole Arbitrator in A.C.No.90/2021 is hereby confirmed.
(Dictated to the Stenographer, transcribed and typed by her, then corrected and pronounced by me in the Open Court on this 31st day of January, 2023) (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) ****