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The Private Participants and AAI (along with the AAI Nominees) hereinafter collectively referred to as the "Shareholders" and individually as "Shareholder".

"OMDA" means the Operation, Management and Development Agreement entered into, on or about the date hereof, between the AAI and the JVC;"

THE CONTROVERSY

5. In terms of the ROFR Clause, Respondent no. 1 offered its entire shareholding of 16,20,00,000 shares constituting 13.5% stake in the Company ("Shares") for sale to the Petitioner. The Petitioner contends that the offer was accepted and there is a binding agreement between the parties for the sale of shares. It is also inter alia contended that Respondent No. 1 is not ready and willing to fulfil its obligations and the shares are not in a deliverable state. Respondent No. 1 does not dispute that the Petitioner has ROFR in respect of the Shares, but contends that the right has expired/ lapsed since Petitioner has not completed the transaction within the period stipulated in the agreement and that the Shares now have to be offered to Respondent No. 3 in terms of Clause 3.7 of the SHA. It is also asserted that Petitioner does not have financial capacity to complete the transaction and is delaying the matter. Thus, the controversy revolves around the exercise of the Petitioner's ROFR under the Shareholders Agreement dated 4th April 2006.

34. Per contra, Mr. Sibal submitted that a ROFR is always triggered by a desire to ultimately sell to a third party, with the offer to the ROFR-holder being a condition precedent to the sale to the third party. With regard to contracts for the sale of shares, time is inherently of the essence of the contract given that the value of the shares could widely fluctuate. If one were to assume that the ROFR was in fact perpetual, then both an underlying decrease in the value of the shares (causing a re-negotiation with the third party and a re-trigger of the ROFR) and an increase in the value of the shares (causing a loss in consideration received since the ROFR-holder would buy at lower than fair market value) will effectively turn value destructive to the seller. Therefore, this can never be the true or meaningful construction of any pre-emptive right, including a ROFR. In support of this submission, learned counsel placed reliance on the decisions in Hare v. Nicoll [1966] 2 Q.B. 130, In Re Schwabacher ((1908) 98 L.T. 127).

36. With respect to the interpretation of the ROFR clause and the 30-day timeline, it was argued that the interpretation sought to be given by the learned counsel for the Petitioner is flawed as the 30-day period set out in Clause 3.7.1(iii) of the SHA was the result of a negotiation between sophisticated commercial entities in 2006, and reflects the bargain struck by the parties. This balanced the risks for the proposed seller (who would not want an extended ROFR period), and the buyer (who would want to ensure that enough time is available for the purchase to be consummated). Moreover, clause 3.7.1(vii) of the SHA contemplates a 90-day period for the sale of shares to a Third Party, thereby affording what can clearly be perceived as sufficient time for obtaining requisite regulatory and third party approvals. Under Clause 3.7.2 of the SHA, Respondent No. 3 has been granted the very same 30-day period for sale of its shares to a Private Participant in furtherance of a Private Participant's ROFR. In fact, even if Respondent 3 were a seller, the very same 30 day ROFR construct, and 90 day Third Party sale construct, have been envisaged in the SHA.

47. Mr. Sibal has rightly argued that ROFR is always triggered by a desire to ultimately sell the shares to a third party, with the preemptory ROFR condition for such sale. ROFR, by its very definition, has to be a time bound offer and can never be in perpetuity. Extending the ROFR Clause, would defeat the purpose and the intent of the Clause itself. In such matters, time is inherently of the essence of the Contract. The value of shares can skyrocket or nosedive in a short span of time and in case the sale is not matured within the short span of time envisaged in the agreement, the transaction would be frustrated. In case the timelines are not adhered and there is increase in the value of the shares, it can cause/incur depreciation/loss in consideration, since the ROFR holder would buy the shares at lower than fair market value. Likewise, decrease in the value of the shares can cause re-negotiations with the third party requiring the ROFR process to be initiated all over again. Respondent No. 1's right to sell the shares would be defeated, in case ROFR is not exercised in a time bound manner. Court can also not lose sight of the fact that after the ROFR period, the right of the other share holder gets crystallized and they can then acquire the underlying shares on the same terms. ROFR is the privilege given to a party and in the present case, the Petitioner, ought to have exercised its right strictly in accordance to the conditions stipulated in the agreement. It is critically important that this contract should be strictly and rigidly enforced within the time frame provided for under the Agreement as the subject matter of dispute relates to 'shares', which by its nature, is susceptible to continual variation unlike other contracts. The approvals prior to the issuance of the PP Offer Notice have not been recorded in the terms and conditions of the SHA. The Petitioner's contention that such prerequisite approvals ought to have been obtained prior to the PP Offer Notice is thus not correct. The Court also does not find merit in the submission of the Respondent that the Respondent's interpretation of 30 days ROFR period is absurd. What would be the correct interpretation of the time period mentioned in 3.7.1 of SHA and the conduct of the parties evidencing their understanding of this Clause would have to be decided by the Arbitral Tribunal after considering the evidence that could be led before it.