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(c) Arbitration: Any controversy or claim arising out of or relating to this Agreement, or the breach thereof [unless subject to Section 7.2(b)], which cannot be settled by friendly negotiation and agreement between the parties, shall be finally settle by arbitration conducted in accordance with the procedural Rules of Conciliation and Arbitration of The International Chamber of Commerce. The arbitration proceedings shall be held in London, England''.

3. The Petitioner has submitted that the approval of the Foreign Investment Promotion Board (hereinafter referred to as `FIPB') for setting up the Company was given on 12.2.1996, inter alia, on the following conditions:

10. On behalf of the Respondent it has been averred that the FIPB approval contemplated the investment of US$ 2 million in the first year which was to be increased up to US$ 7 million in five years, predicated on the projection of the sale of 5,00,000 cases in one year. However, this projection was not even proposed by the Petitioner in any of the marketing plans for any year. It is further contended that in the FIPB approval no time limit was prescribed for the investment of said US$ 2 million and that at no stage had FIPB expressed any comments in this regard. Attention is drawn to Article 43 of the JVA to buttress this contention. Reliance is also placed on Article 26 (a) (4) of the Articles of Association of the Company to underscore that unanimous consent of the nominee Directors of the Petitioner as also the Respondent present at any Board Meeting was essentially for the issuance of any further shares or debentures. Article 26 reads as follows:

11. So far as the Petitioner's submission on the non transfer of 500 KL of licensed capacity is concerned the Respondent contends that it is without any basis and is contrary to facts which are within the specific knowledge of the Petitioner. The Respondent has a pre-existing licensed capacity to manufacture 19,500 KL of alcoholic beverages per annum and the Joint Venture did not envisage the setting up of any manufacturing facility by the Company. For this reason no capital investment in the plant, machinery, factory etc. was either envisaged or contemplated; all that was envisaged was that the Company would utilise the designated part of the existing licensed capacity of the Respondent. The Respondent was to blend, manufacture and bottle the alcoholic beverages for the Company and there was accordingly no occasion for the Respondent to transfer any of its licensed capacity. It is explained that the FIPB approval only requires utilisation of 500 KL out of the existing licensed capacity. Nevertheless, by its letter dated 7.8.1997 the Respondent had made the following request to the Ministry of Industries - that ''as per Clause 6 of the above approval, out of the total licensed capacity of 19,500 KL, 500 KL is to be utilised for the Joint Venture project. Accordingly, we enclose herewith our Industrial license No. CIL:79(92), dated 28th August, 1992 with a request to make necessary endorsements for providing licensed capacity to M/s. Jagatjit Brown-Forman India(P) Ltd''. The Respondent followed this up with a letter dated 3.1.1998 to the Commissioner, Excise and Taxation, Punjab informing him of requiring the earmarked 500 KL distillation capacity for manufacturing various products of the Company and also assuring him that this utilisation will not affect the Respondent's supply to Punjab licensees. It was, therefore, requested that a No Objection Certificate be issued, which was so done by the Commissioner's letter dated 13.2.1998. In paragraph 16 of its Reply the Respondent has, inter alia, blamed the Petitioner for not establishing a reliable and strong network in India capable of sourcing consumer durables for its retail operations in the United States of America. It has been averred that the production of alcoholic beverages at the peak of the second year of its operations never exceeded 19,000 cases which is less than 4 per cent of the sales for which FIPB permission had been obtained. The Respondent invested a total sum of Rs.1.52 crores on 31.3.1997 towards capital contribution; and in addition indirectly invested Rs.1.90 crores over a period of time towards bottling and distribution charges of the Company which has till date not been repaid to the Respondent. Furthermore, it is alleged that a sum of Rs. 1.40 crores has been paid by the Respondent to the Hongkong and Shanghai Banking Corporation Ltd. towards repayment of the loan payable by the Company. It is averred that it will be evident that the Respondent has contributed in excess of its proportionate requirement. Whereas the Company was expected to produce 5,00,000 cases of alcoholic beverages in the three years of its operation, it succeeded in producing only 45,000 cases in all up to August, 1999. It is further pleaded that due to ineffective marketing by the Petitioner the Company's products did not find favor with the consumers. The inexperience of the Petitioner and ignorance of the ground realities of the Indian market compelled the Respondent to advise against investment of further monies. The Respondent has assailed the Petitioner's insistence on the infusion of more funds with the hope of reviving the financial fortunes of the Company. It has also been pleaded that penal tariffs and duties amounting to almost Rs. 96,45,000 have been borne by the respondent.

and that the circumstances prevailing prior to and at the time of the filing of the petition should only be considered.

15. The Petitioner's application for FIPB approval contemplates investment up to US $ 2 million in the first year to be stepped up to US $ 7 million in five years based on projection of 5 lacs cases in one year. This projection of 5 lacs cases was never proposed by the Petitioner in any of the marketing plans for any year FIPB approval dated 12-02-1996 does not prescribe any time limit for the investment of US $ 2 million. No letter from FIPB was ever issued complaining that the condition of investment of US $ 2 million had not been complied with. No attempt to resolve differences was undertaken by the Petitioner on any grievance regarding infusion of funds and even otherwise arbitration was the proper remedy. When considering winding up on just and equitable grounds the absence of attempts at reconciling differences through consensus would be a vital and relevant factor. The Petitioner's submission on non-transfer of 500 KL of licensed capacity is without any basis and is contrary to facts within the specific knowledge of the Petitioner. Manufacture f alcoholic beverages at the material time was governed by the provisions of Industries (Development and Regulation) Act as it is a controlled industry. Government grants licenses to set up manufacturing facility for production of alcoholic beverages. Jagatjit has a pre-existing licensed capacity to manufacture 19500 KL of alcoholic beverages per annum. The proposal of joint venture between Brown Forman and Jagatjit did not envisage setting up of a manufacturing facility by the joint venture company and as such no capital investment in the plant, machinery, factory was either envisaged or contemplated or put up by Brown Forman in its application before FIPB. What was contemplated was that the joint venture company would utilise a part of the existing licensed capacity of Jagatjit. The FIPB approval only requires utilisation of 500 KL out of existing licensed capacity. The Respondent applied to the Excise and Taxation Commission, Punjab for giving its no objection.