Introduction:
The parties were the shareholders of the investment holding company named Atlas Equifin Private Limited, India. It held 11,05,829 equity shares of Rs.10 each in Multi Screen Media Pvt. Ltd.
The appellant attempted to sell the shares in Multi Screen Media Pvt. Ltd. in 2002. Standard Chartered Bank (SCB) made their agent identify the purchaser for the appellant’s shares in Atlas by signing a placement instruction dated 15.11.2005.
Facts:
The dispute aroused when the Respondent claimed that his signature was forged on the placement instruction.
The parties entered into a Deed of Settlement dated 03.11.2011 to resolve their dispute.
As per Clause 4.1, the amount of US$ 1.5 Million was to be paid to the respondent. The amount was held by M/s. D.M. Harish & Co., in an escrow. When it was confirmed that the respondent had withdrawn his complaint the amount would be handed over to him.
Clause 6 clearly states that if the terms of the deed are violated it will result in the termination of the same and the release of US$ 1.5 Million held in escrow to the appellate.
Clause 9 of the deed also contains an arbitration clause for resolving the dispute. Some events led to the arbitral proceedings. On 10.11.2014 the arbitrator made the final award awarding the claim of damages to the appellant.
Under Sec. 34 of the Arbitration and Conciliation Act, 1996, the respondent filed a petition on 24.01.2015 before the Bombay High Court. In judgment dated 19.05.2020 the award was set aside by the learned Single Judge of the High court. Under the Deed of Settlement for a limited period of time, the Court also granted interim protection against the withdrawal of the amount specified.
The Division Bench dismissed the appeal filed by the respondent under Sec. 37 of the said act in terms of the impugned judgment dated 20.04.2021
Submission/ Contentions of Appellant/s:
Clause 9 of the settlement deed said “the Arbitration proceedings shall be governed by the Arbitration and Conciliation Act, 1996 of India or any amendment thereto.”
Submission/ Contentions of Respondent/s:
The possibility of any future amendments to the said Act being made applicable to the arbitration in question is included in Clause 9 of the Deed.
On basis of the patent, an illegal award could be contested under Sec.34 of the Arbitration & Conciliation Act, 1996.
Principles and Observations of the Court:
- In S. P. Singla Constructions Pvt Ltd v. State of Himachal Pradesh, the general terms of the contract cannot be construed as an agreement between the parties to apply the provisions of the 2015 Amendment Act.
- The 2015 Amendment Act would only apply to arbitral proceedings that began on or after that date.
- The scope of interference by the Court became more restrictive with the amendments coming into force.
- The award would be a Domestic Award arising out of an International Commercial Agreement.
Judgment:
Sec. 34 of the Arbitration and Conciliation Act will apply to the applications made after the amendment of 2015. The award was set aside by the Court and ruled in favor of the respondent.
Opinion:
Sec. 34 as amended will apply only to Sec. 34 applications that have been made to the Court on or after 23.10.2015, irrespective of the fact that the arbitration proceedings may have commenced prior to 23.10.2015
Judgment Name: Ratnam Sudesh Iyer Vs. Jackie Kakubhai Shroff
Judgment Date: 10 November 2021
Judges/Bench: J. Sanjay Kishan Kaul, J. M. M. Sunderesh
Name of Writer: Sakshi Sharma
College: Akola Law College