IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE K.P.BALACHANDRAN WEDNESDAY, THE 29TH OCTOBER 2008 / 7TH KARTHIKA 1930 Arb.A.No. 37 of 2008() ---------------------- ARBOP.224/2005 of VI ADDL.DISTRICT COURT, ERNAKULAM .................... APPELLANTS/PETITIONERS: ------------------------------------------ 1. SRI.B.NARAYANA MURTHY, M/S.VIJAYA SHRIMP FARM EXPORTS LIMITED, 8-2/269/19/5/B, SRI RESIDENCY, IST FLOOR, ROAD NO.2, BANJARA HILLS, HYDERABAD - 500 034. 2. SRI.G.VENKATESWARA RAO, BEHIND ZP QUARTERS, H.NO.6-2-117, KHAMMAM, ANDHRA PRADESH. 3. SRI.G.S.RAMACHANDRA RAO, MIG 25/668, KPHB COLONY, KUKATPALLY, HYDERABAD - 500 072. 4. M/S.VIJAYA SHRIMP FARM EXPORTS LIMITED, 8-2/269/19/5/B, SRI RESIDENCY, IST FLOOR, ROAD NO.2, BANJARA HILLS, HYDERABAD - 500 034, REPRESENTED BY ITS MANAGING DIRECTOR. BY ADV. SRI.A.V.THOMAS SRI.JOJO GEORGE SRI.NIDHI SAM JOHN RESPONDENT(S): RESPONDENT: ------------------------------------------------- THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY, MPEDA HOUSE, PANAMPILLY NAGAR, COCHIN - 682 036, REPRESENTED BY ITS SECRETARY. BY SRI. JOSEPH KODIANTHRA THIS ARBITRATION APPEALS HAVING COME UP FOR ADMISSION ON 29/10/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss J.B.KOSHY & K.P.BALACHANDRAN, JJ. -------------------------------------- Arb.A.No.37 of 2008 ------------------------------------- Dated 29th October, 2008 JUDGMENT Koshy,J . The appellants herein approached the court below for setting aside the arbitration award passed against them under section 34 of the Arbitration and Conciliation Act, 1996. The respondent is a statutory authority incorporated for development of marine product industry under the control of the Union of India. As a part of its functions, it formulated a scheme to render promotional support and financial assistance for the establishment of project for seafood processing etc. At the request of the appellants, the respondent agreed to subscribe equity shares of the fourth appellant company. Appellants 1 to 3 are its promoters. The financial agreement is dated 25.10.1993. As per the agreement, the Marine Products Export Development Authority was allotted with 2,50,000 equity shares of Rs.10/= each and paid share value of Rs.25,00,000/=. Appellants were bound to buy the said shares upon expiry of five years from the date of commencement of commercial production by the company for the price to be calculated in the manner provided in the agreement. The company started commercial production on 1.10.1994. The appellants failed to purchase the shares as per the Arb.A.37/2008 2 agreement inspite of repeated letters and reminders. On 9.12.1999 the appellants expressed their inability to buy back the shares at that time. The reason stated is that because of various loss, supreme court orders on environmental protection, financial difficulties etc., they were running on a huge loss. Subsequently, the industry was also closed. They were unable to function the factory with profit and the factory was ultimately closed. But, the Arbitrator held that as per the agreement, they were bound to buy back the shares on the terms of the agreement and award was passed strictly in terms of the agreement. The award was challenged before the District Court. The District court found that no grounds are made out to set aside the award. The award of the Arbitrator cannot be set aside on mere asking unless specific grounds mentioned under the Act are established. It is true that there was financial difficulties, but, the amount taken as advance has to be repaid and in any event, no grounds are made out for interfering in the said award. Therefore, we refuse to set aside the award passed or the well reasoned order of the District Court. We make it clear that this will not preclude the appellants from applying to the statutory authorities to grant them time or some indulgence regarding payment of the amount. It is also prayed by the counsel for the appellants that assets of the company should be proceeded first as substantial amount can be realised from Arb.A.37/2008 3 the assets. In fact, the respondent authority wants the money back. It is for the respondent to proceed against the assets of the company first and if it is not realised only steps need be taken for personal execution unless unnecessary obstructions are created by the appellants in proceeding against the company assets. The appeal is dismissed. J.B.KOSHY JUDGE K.P.BALACHANDRAN JUDGE tks