Regional Airport Holdings International Limited vs IL and FS Engineering and Constructions Company Limited and Others

H.N. Nagamohan Das, J.—Petitioner-Regional Airport Holdings International Limited contends that they entered into a share purchase agreement as per Annexure A and share holders agreement as per Annexure B both dated 09.07.2010 with the respondents. Subsequently the petitioners and respondents have also entered into a supplementary agreement as per Annexure C. In terms of Annexures A, B and C the petitioners established management control over respondent No. 6 and took the responsibility of setting up the Greenfield Airport at Shimoga. According to the petitioners, respondent No. 1 committed several breach of terms of Annexure A, B and C. Thus there are disputes between the petitioners and respondents. As per Clause 5.2 of the share purchase agreement and Clause 13 of the share holders agreement arbitration clause is provided and the same reads as under:

5.2 Arbitration (share Purchase Agreement)

5.2.1 Any dispute, controversy or claim arising out of or in relation to this Agreement or the interpretation of any of their provisions or upon the occurrence of any event of breach of any of the terms of this Agreement shall be resolved by Arbitration. For the purpose of such arbitration, the party referring the dispute to arbitration shall appoint the first arbitrator and the other shall appoint the second arbitrator and the third or presiding arbitrator shall be appointed by the two arbitrators chosen by the Parties.

5.2.2 The Arbitration shall be carried out in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

5.2.3 The arbitral proceedings shall take place in Bengaluru and shall be conducted in the English language.

5.2.4 The award of the Arbitral Tribunal shall be final and binding on the parties.

Dispute Resolution (Shareholders Agreement)

13.1 Any dispute, controversy or claim arising out of or in relation to this Agreement or the interpretation of any of their provisions or upon the occurrence of any event of breach of any of the terms of this Agreement shall be resolved by Arbitration. For the purpose of such arbitration, the party referring the dispute to arbitration shall appoint the first arbitrator and the other shall appoint the second arbitrator and the third or presiding arbitrator shall be appointed by the two arbitrators chosen by the parties.

13.2 The Arbitration shall be carried out in accordance with the provisions of the Arbitration and Conciliation Act, 1996.

13.3 The arbitral proceedings shall take place in Bengaluru and shall be conducted in the English language.

13.4 The award of the Arbitral Tribunal shall be final and binding on the Parties.

In order to resolve the disputes between the parties arising out of the agreements Annexure A and B petitioners invoked the arbitration clause and issued a notice on 02.07.2012 nominating Sri. H.B. Jairaj as arbitrator on their side and called upon respondent No. 1 to appoint their nominee within specified period. The petitioners'' notice is marked as Annexure H. The respondents, instead of complying the demand made in the petitioners'' notice, got issued a reply as per Annexure J dated 17.05.2012 inter alia contending that there are no disputes to be resolved and the petitioners have invoked the arbitration clause only with an intention to delay to perform their part of obligations under the agreements Annexure A and B. Therefore the petitioners are before this Court

Heard arguments on both the side and perused the entire petition papers.

The share purchase agreement-Annexure A and the share holders agreement-Annexure B both dated 09.07.2010 and the supplementary agreement-Annexure C are not in dispute. Further both Annexure A and B provides for arbitration clause. On one hand the petitioners contend that the respondents committed breach of several terms of agreements Annexure A and B; on the other hand the respondents contend that they have not committed any breach of terms of agreement. The petitioners got invoked the arbitration clause and filed the present petition with a mala fide intention to drag on the proceedings.

The Supreme Court in the case of Indian Oil Corporation Ltd. Vs. SPS Engineering Ltd., held that the Courts will not enter into the merits of the dispute while-considering the petition u/s 11 of the Arbitration and Conciliation Act. Therefore I decline to go into the question, whether the respondents committed breach of terms of agreement or petitioners committed breach of terms of agreement. In view of the rival stand taken by the parties, I am of the considered opinion, that there is a dispute. In terms of the arbitration clause in the agreements at Annexure A and B, the dispute between the parties is to be revolved by the arbitrators. Therefore the petitioners are entitled to succeed.

Secondly it is contended that Sri. Umeshkumar Baveja who has signed and verified the petition had no authority to institute the present petition and as such the petition is liable to be dismissed. Sri. Umeshkumar Baveja is the Chairman of the petitioner company and he is holding 99.9% shares. Annexure K is the authorized letter authorizing Sri. Umeshkumar Baveja to represent the company in the Court proceedings. The Supreme Court in the case of United Bank of India Vs. Naresh Kumar and others, held as under:

It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the CPC a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil Procedure, therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6 Rule 14 together with Order 29 Rule 1 of the CPC it would appear that even in the absence of any formal Utter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorize any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 of the Code of Civil Procedure. A person may be expressly authorized to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The court can, on the basis of evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleadings by its officer.

In view of the above dictum of the Supreme Court I find no substance in the contention of the learned counsel for the respondents that Sri. Umeshkumar Baveja has no authority to sign, verify and present the petition. For the reasons stated above, the following;

ORDER

i. Petition is hereby allowed.

ii. Hon''ble Mr. Justice Chandrashekaraiah (Retd) is appointed as the arbitrator on behalf of respondent No. 1.

iii. The arbitrators, Justice Chandrashekaraiah and Sri. H.B. Jairaj are requested adjudicate the dispute between the parties in terms of Clause 5 of the share purchase agreement and Clause 13 of the share holders agreement.

iv. The arbitrators are requested to conduct the proceedings in the Arbitration Centre at Bangalore and in accordance with the Rules framed by it.

v. Registry is hereby directed to send a copy of this order to the learned arbitrators and also to the Arbitration Centre.