M/S. MEENAKSHI SOLAR POWER PVT. LTD. versus M/S. ABHYUDAYA GREEN ECONOMIC ZONES PVT. LTD. AND ORS.

Citation: [2022] 8 S.C.R. 756 · Decided: 23-11-2022 · Supreme Court of India · Bench: BHUSHAN RAMKRISHNA GAVAI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 8 S.C.R.
   [2022] 8 S.C.R. 756
756
M/S. MEENAKSHI SOLAR POWER PVT. LTD.
v.
M/S. ABHYUDAYA GREEN ECONOMIC ZONES PVT. LTD.
AND ORS.
(Civil Appeal No. 8818 of 2022)
NOVEMBER 23, 2022
[B. R. GAVAI AND B. V. NAGARATHNA, JJ.]
Arbitration and Conciliation Act, 1996: s. 11(6) – Appointment
of arbitrator – Novation of contract – Effect of – Appellant entered
into a share purchase agreement (SPA) with respondent No.1 as
also respondent Nos. 2 and 3 (promoters of respondent No.1) to
buy the power project of respondent No.1 – Respondent Nos. 2 and
3 agreed to sell 100% ownership of respondent No. 1 and appellant
agreed to purchase 100% Equity and Preference Shares of
respondent no. 1 by taking over the loans of respondent No. 1 and
paying the balance amount to sellers-respondent Nos. 2 and 3 –
Thereafter, a tripartite agreement entered into by the appellant
through its affiliate-respondent No. 4 with respondent no. 2 and 3 –
Tripartite Agreement recorded execution of SPA and payment made
to respondent Nos. 2 and 3 in terms of the SPA – An addendum to
SPA also signed whereby respondent No. 4 agreed to remit certain
amounts to respondent Nos. 1 to 3 to regularise the loan and facilitate
the transfer of the project company – However, disputes arose
between the parties – In terms with the arbitration clause under the
SPA, application s.11(6)by the appellant for appointment of an
arbitrator – High Court dismissed the application on the ground of
novation of contract between the parties – On appeal, held: High
Court not right in dismissing the petition u/s. 11(6) by giving a finding
on novation of the Share Purchase Agreement between the parties
as the said aspect would have a bearing on the merits of the
controversy between the parties – Thus, it must be left to the
arbitrator to decide on the said issue also – Impugned judgment
and order passed by the High Court quashed and set aside – Former
judge of the Supreme Court of India appointed as sole arbitrator to
adjudicate the disputes between the parties.
National Insurance Co. Ltd. vs. Boghara Polyfab Pvt.
Ltd. (2009) 1 SCC 267 : [2008] 13 SCR 638; SBP &
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Co. vs. Patel Engineering Ltd. (2005) 8 SCC 618; Vidya
Drolia vs. Durga Trading Corporation (2021) 2 SCC 1
: 2021 (6 ) JT 460; Indian Oil Corporation Ltd. vs.
NCC Ltd. 2022 SCC OnLine SC 896; Union of India
vs. Kishorilal Gupta and Bros. (1960) 1 SCR 493, Young
Achievers vs. IMS Learning Resources Pvt. Ltd. (2013)
10 SCC 535 : [2013] 2 SCR 252; M.B.S Impex Pvt.
Ltd. vs. Minerals and Metals Trading Corporation
(2020) 5 ALD 185; Damodar Valley Corporation vs.
K.K. Kar (1974) 1 SCC 141: [1974] 2 SCR 240 -
referred to.
Case Law Reference
[1960] 1 SCR 493
referred to
Para 12.5
[2013] 2 SCR 252
referred to
Para 12.5
[2008] 13 SCR 638
referred to
Para 14 (a)
[2005] 4 Suppl. SCR 688
referred to
Para 14 (a)
[1974] 2 SCR 240
referred to
Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No.8818
of 2022.
From the Judgment and Order dated 12.02.2021 of the High Court
for the State of Telangana at Hyderabad in Arbitration Application No.55
of 2020.
Ms. Meenakshi Arora, Sr. Adv., S.V.S. Chowdary, Yelamanchili
Shiva Santosh Kumar, Rudrajit Ghosh, Tarun Gupta, Abhishek Sharma,
Advs. for the Appellant.
D. Narendra Naik, Talha Abdul Rahman, N. Shaz Khan, Harsh
Vardhan Kediya, Bilal A. Khan, Advs. for the Respondents.
The Judgment of the Court was delivered by
NAGARATHNA, J.
Leave granted.
2. This Civil Appeal has been filed by assailing the impugned
judgment and order dated 12.02.2021 passed by the High Court of
Judicature for the State of Telangana at Hyderabad in Arbitration
M/S. MEENAKSHI SOLAR POWER PVT. LTD.  v. M/S. ABHYUDAYA
GREEN ECONOMIC ZONES PVT. LTD.
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[2022] 8 S.C.R.
Application No. 55 of 2020 whereby the High Court dismissed the
application filed under Section 11(6) of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as ‘Act of 1996’, for the sake of
convenience) filed by the appellant herein.
3. The appellant herein- M/s. Meenakshi Solar Power Pvt. Ltd. is
engaged in the business of producing power through running and operating
thermal/solar/hydro power plants. The respondent No.1 – M/s.
Abhyudaya Green Economic Zones Pvt. Ltd. is the owner of 4.128
MW Solar PV Power Project located in 20 acres at Kummera Village,
Chevella Mandal, Ranga Reddy District, Telangana. Respondent Nos. 2
and 3 are promoters and 100%
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