Chatterjee Petrochem Co. & Anr vs Haldia Petrochemicals Ltd

On 21st March, 2012, the appellant Chatterjee Petrochem (Mauritius) Company (hereinafter referred to as ‘CPMC’) filed a request for arbitration in International Chamber of Commerce (ICC), Paris in relation to an agreement of restructuring which was entered into between CPMC, Government of West Bengal, West Bengal Industrial Development Corporation (in short ‘WBIDC’) and Haldia Petrochemical Limited (in short ‘HPL’) on 12th January, 2002. As per the Agreement, the Government of West Bengal was to cause WBIDC to transfer existing shareholding to CPMC to ensure that CPMC holds 51% of the total paid up capital of HPL. Clause 15 of the Agreement provides for reference of all disputes, in any way relating to the said Agreement or to the business of or affair of HPL to the Rules of the ICC, Paris.

3. A dispute arose between the parties regarding the allotment of shares and the appellant filed Company Petition No. 58 of 2009 before the Company Law Board (in short ‘CLB’)on the grounds of oppression and mismanagement. The appellant also sought transfer of 155 million shares in favour of Chatterjee Petrochem (India) Pvt. Ltd. (in short “the CPIL”), the Indian counterpart of CPMC as was decided in the Agreement.

4. The Company Petition was disposed of by the CLB by upholding the decision of the Company to allot 155 million shares by Indian Oil Corporation (in short ‘IOC’). The transfer of 155 million shares to CPIL by WBIDC was also confirmed. The CLB further directed the Government of West Bengal and WBIDC to transfer 520 million shares held by them in HPL to Chatterjee Groups.

6. Aggrieved by the same, the appellant preferred appeal Nos. 5416-5419, 5420, 5437 and 5440 of 2008 before this Court. Vide judgment dated 30.09.2011, this Court held that the claim of the appellant transferring shares to IOC has changed the private character of the Company and was not an act of oppression on the part of the Company. According to this Court, the transfer of shares to IOC was a result of failure on the part of the appellant to infuse adequate funds into the Company by way of equity as promised and to participate in its rights issues. The Company was therefore, constraint to induct IOC as a member and the 155 million shares which was to be transferred to the appellant was instead transferred to the IOC. The relevant paragraph of the judgment reads as under:

Answer to Point nos.2 and 3

32. We answer point nos. 2 and 3 together since they are interrelated.

Since, we have already held that the arbitration clause is valid, suit filed by the respondent no.1 for declaration and permanent injunction is unsustainable in law and the suit is liable to be dismissed.

38. In view of the above, we direct the parties to resolve their disputes through arbitration as mentioned in clause 15 of the letter of Agreement dated 12th January, 2002 in accordance with the Rules of ICC. We have also seen from the written submission of the appellants counsel that the appellants have already initiated an arbitration proceeding. In such case, the parties shall continue with the arbitration proceeding since the suit filed for permanent injunction against the arbitration proceeding is dismissed by setting aside the impugned judgment and final order in A.P.O. No. 13 of 2013 passed by the High Court of judicature at Calcutta on 04.06.2013. Accordingly, the appeal is allowed, but no costs.