Case: Rodemadan India Limited Vs. International Trade Expo Centre Limited

disputed by Mr. Nariman, appearing for the Petitioner-Company. 17. It is not possible to accept the correctness of the disputed documents or to proceed on the footing that there was such a resolution passed in an Extraordinary General Meeting by which the Management Agreement of 29.10.2003 was not approved and, therefore, resolved to be treated as null and void. Mr. Ranjit Kumar then suggested that he be given an opportunity to lead evidence, including oral evidence to substantiate his stand. Exercising the discretion granted to me in Patel Engineering (supra), I decline Mr. Ranjit Kumars request as I do not believe that oral evidence is necessary to determine the present issue. I decline to do so far even if the power under Section 11(6) be judicial in the sense of requiring a judicial determination by the designate of the Chief Justice, it surely does not render the designate of the Chief Justice into a trial court. 18. Mr. Ranjit Kumar then placed reliance on Clause (6) of the Minutes of the Meeting of the Respondent-Company dated 29.10.2003 in which there was a Resolution passed with regard to "Management Agreement" which inter alia reads as under: "6. Management Agreement Mr. Roger Shashoua proposed to grant a (sic) exclusive Management Agreement to Rodemadan India Ltd. to manage the upcoming expocentre on a minimum guarantee basis. The way the Expocentre will have confirmed income from the beginning and will enjoy the worldwide experience of Rodemadan India Ltd. The Board members agreed to the proposals, subject to statutory approvals. Resolved that the management contract with Rodemadan India Ltd. for the management of the centre be approved by all board members present subject to statutory approvals from the respective authorities, if any..." 19. There is no dispute on this resolution. Admittedly, the Director of the Petitioner-Company had attended this meeting and, in fact, it is pursuant to this resolution that the Management Agreement dated 29.10.2003 was entered into between the Petitioner and the Respondent. Mr. Ranjit Kumar contended that the said resolution proved that the Management Contract was "subject to statutory approval from the respective authorities, if any". According to him, Mr. Roger Shashoua is a Director of Rodemadan India Limited (the Petitioner-Company) and another company, known as, Rodemadan Holdings Ltd., and also a shareholder in the Respondent-Company. He contends that Section 299 of the Companies Act, 1956 contemplates that: "Every director of a company who is in any way, whether directly or indirectly, concerned or interested in a contract or arrangement, or proposed contract or arrangement, entered into or to be entered into, by or on behalf of the company, shall disclose the nature of his concern or interest at a meeting of the Board of directors." 20. Under Section 300, such a Director is precluded from taking any part in the discussion of the Board of Directors nor allowed to vote with regard to a resolution touching upon such a contract. Learned counsel contended that Mr. Roger Shashoua was interested in the contract, and therefore, the Management Contract was null and void because an interested director had voted thereupon. 21. To say that least, the argument appears to be one of sheer desperation, in my view. It is nobodys case that Mr. Roger Shashoua is a party to the Management Agreement. The Management Agreement is between the Petitioner-Company and the Respondent-Company. Merely because Mr. Roger Shashoua happens to be a Director of the Petitioner-Company as well as, a shareholder in the Respondent-Company, I do not think that the provisions of Sections 299 or 300 of the Companies Act were attracted to the situation, which required approval of the Government. 22. The next contention raised by Mr. Ranjit Kumar is that the Petitioner is attempting to obtain specific performance when specific performance of the contract cannot be granted in arbitral proceedings. In fact, this contention has been squarely rejected by the judgment of this Court in Olympus Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and others (1999) 5 SCC 651 ) 23. Further, it was urged that Clauses 8.0 and 8.1 of the Management Agreement are mutually exclusive and, therefore, the relief for specific performance cannot be asked for and since no consideration had been paid the contract was void and unenforceable. In my view, these are not issues to be considered in a petition under Section 11(6) of the Act, as they can all be raised during the arbitral proceedings. 24. In short, I am not satisfied that the arbitral agreement was vitiated on any of the grounds, averred by Mr. Ranjit Kumar. I am satisfied that there exists a valid arbitration agreement which contemplates that all disputes between the parties under that agreement be referred to arbitration. 25. Finally, it is contended that as recourse had been taken by the Petitioner under Section 9 of the Act to obtain interim relief by moving the Delhi High Court by their Original OMP No. 98/2005 dated 24.3.2005, by reason of Section 42 of the Act that court alone could have jurisdiction upon the arbitral tribunal. In my view, this contention has no merit as I have held earlier, neither the Chief Justice nor his designate under Section 11(6) is a "court" as contemplated under the Act. Section 2(1)(e) of the Act defines the expression "court". The bar of jurisdiction under Section 42 is only intended to apply to a "court" as defined in Section 2(1)(e). The objection, therefore, has no merit and is rejected. 26. The situation is one of a dispute between the Petitioner, which is a foreign company and the Respondent and is therefore, an "International Commercial Arbitration" within the meaning of Section 2(1)(f) of the Act. There is a dispute between the parties where both parties are subject to an arbitration agreement. Further, the appointed arbitrators have failed to reach an agreement upon a Chairperson/ Presiding Arbitrator of the Arbitral Tribunal. Hence, I am satisfied that all the preliminary conditions specified in Section 11(6) and Patel Engineering (supra) have been met.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. In my view, this contention is entirely misconceived for two reasons. In the first place, Article 145 of the Constitution itself proceeds by declaring that the provisions of the Article were "subject to the provisions of any law made by Parliament". The Act is definitely a "law made by Parliament" and it does not prescribe that a petition under Section 11(6) has to be heard by a Bench consisting of at least two Judges. Second, the power under Article 145 of the Constitution and the Rules framed thereunder, are intended to govern the practice and procedure of the Supreme Court. I am unable to persuade myself to believe that, the power exercisable by the Chief Justice under Section 11(6) of the Act is the power of the Supreme Court under the ConstitutionSince this is the power of the Chief Justice and not the power of the Supreme Court, the specification in Order VII Rule 1 of the Rules as to the minimum number of Judges, would have no application thereto. If the argument of the learned counsel is right, then even the Chief Justice cannot pass such an order unless he is sitting in a Bench with one or more companion Judge. No such intention is evidenced by Parliament in enacting Section 11(6) of the Act. Since Parliament has enacted a law under which the power is exercisable by the Chief Justice or his designate, who could be "any person or institution", I do not think that the requirement of Order VII Rule 1 of the Rules would apply to such a situation at all. The contention is, therefore, rejected9. The Respondents main opposition to this petition is on the ground that there is no arbitration agreement in existence since the Management Agreement was merely a proposal, which was subject to approval of the shareholders of the company, that a meeting was called for the shareholders of the company at which the said proposal was put forward for approval and was specifically rejected by a resolution passed by the shareholders; that the nomination of Justice Jain was without prejudice to the rights and contentions of the Respondent and that this petition was misconceived and untenable as the High Court of Delhi would have exclusive jurisdiction in the matte, as it had already been moved under Section 9 of the Act. For the said reasons, the Respondent has sought dismissal of this petition20. Under Section 300, such a Director is precluded from taking any part in the discussion of the Board of Directors nor allowed to vote with regard to a resolution touching upon such a contract. Learned counsel contended that Mr. Roger Shashoua was interested in the contract, and therefore, the Management Contract was null and void because an interested director had voted thereupon21. To say that least, the argument appears to be one of sheer desperation, in my view. It is nobodys case that Mr. Roger Shashoua is a party to the Management Agreement. The Management Agreement is between they and the. Merely because Mr. Roger Shashoua happens to be a Director of they as well as, a shareholder in the, I do not think that the provisions of Sections 299 or 300 of the Companies Act were attracted to the situation, which required approval of the Government22. The next contention raised by Mr. Ranjit Kumar is that the Petitioner is attempting to obtain specific performance when specific performance of the contract cannot be granted in arbitral proceedings. In fact, this contention has been squarely rejected by the judgment of this Court in Olympus Superstructures Pvt. Ltd. vs. Meena Vijay Khetan and others (1999) 5 SCC 651 )23. Further, it was urged that Clauses 8.0 and 8.1 of the Management Agreement are mutually exclusive and, therefore, the relief for specific performance cannot be asked for and since no consideration had been paid the contract was void and unenforceable. In my view, these are not issues to be considered in a petition under Section 11(6) of the Act, as they can all be raised during the arbitral proceedings24. In short, I am not satisfied that the arbitral agreement was vitiated on any of the grounds, averred by Mr. Ranjit Kumar. I am satisfied that there exists a valid arbitration agreement which contemplates that all disputes between the parties under that agreement be referred to arbitration25. Finally, it is contended that as recourse had been taken by the Petitioner under Section 9 of the Act to obtain interim relief by moving the Delhi High Court by their Original OMP No. 98/2005 dated 24.3.2005, by reason of Section 42 of the Act that court alone could have jurisdiction upon the arbitral tribunal. In my view, this contention has no merit as I have held earlier, neither the Chief Justice nor his designate under Section 11(6) is a "court" as contemplated under the Act. Section 2(1)(e) of the Act defines the expression "court". The bar of jurisdiction under Section 42 is only intended to apply to a "court" as defined in Section 2(1)(e). The objection, therefore, has no merit and is rejected26. The situation is one of a dispute between the Petitioner, which is a foreigncompanyand the Respondentand is therefore, an "International Commercial Arbitration" within the meaning of Section 2(1)(f) of the Act. There is a dispute between the parties where both parties are subject to an arbitration agreement. Further, the appointed arbitrators have failed to reach an agreement upon a Chairperson/ Presiding Arbitrator of the Arbitral Tribunal. Hence, I am satisfied that all the preliminary conditions specified in Section 11(6) and Patel Engineering (supra) have been met.