MAHANAGAR TELEPHONE NIGAM LTD. versus CANARA BANK & ORS.

Citation: [2019] 11 S.C.R. 660 · Decided: 08-08-2019 · Supreme Court of India · Bench: ABHAY MANOHAR SAPRE · Disposal: Case Partly allowed

Cited by 2 judgment(s) · cites 9 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 11 S.C.R.
MAHANAGAR TELEPHONE NIGAM LTD.
v.
CANARA BANK & ORS.
(Civil Appeal Nos. 6202-6205 of 2019)
AUGUST 08, 2019
[ABHAY MANOHAR SAPRE AND INDU MALHOTRA, JJ.]
Arbitration and Conciliation Act, 1996:
Arbitration agreement – Existence of valid arbitration
agreement – Joinder of subsidiary company in arbitral proceedings
– On facts, transactions between the appellant and respondent no.
1 and its subsidiary, respondent no. 2 – Respondent no. 2 subscribed
to the bonds floated by appellant and subsequently transferred the
Bonds to its holding Company-respondent no. 1 – Case of appellant
that since respondent no. 2 did not pay the entire sale consideration
for the Bonds, appellant constrained to cancel the allotment of the
Bonds – Appointment of an arbitrator to settle the dispute through
arbitration – Objection by appellant with respect to existence of
valid arbitration agreement between the parties and objection by
respondent no. 1 to the joining of respondent no. 2 as party to
arbitration since respondent no. 2 was not party to the arbitration
agreement, it could not be impleaded in the proceedings – Held:
Agreement between appellant and respondent no. 1 to refer the
disputes to arbitration is evidenced from the documents exchanged
between the parties, and the proceedings and is final and conclusive
– Appellant after giving its consent to refer the disputes to arbitration
before the High Court, is now estopped from contending that there
was no written agreement to refer the parties to arbitration –
Respondent no. 1 had filed its statement of claim before the
Arbitrator, and appellant filed its reply to the statement of claim,
and also made a counter claim against respondent no. 1, which
would constitute evidence of the existence of an arbitration
agreement, and the same was not denied by the other party – As
regards an objection to the joinder of respondent No. 2 in arbitral
proceedings, it will be a futile effort to decide the disputes only
between appellant and Respondent no. 1, in the absence of
   [2019] 11 S.C.R. 660
660
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respondent no. 2, since undisputedly, the original transaction
emanated from a transaction between appellant and respondent no.
2-original purchaser of the Bonds – Disputes arose on the
cancellation of the Bonds by appellant on the ground that the entire
consideration was not paid – There is a clear and direct nexus
between the issuance of the Bonds, its subsequent transfer by
respondent No. 2 to respondent no. 1, and the cancellation by
appellant, which has led to disputes between the three parties –
Thus, respondent no. 2 is a necessary and proper party to the
arbitration proceedings – Given the tri-patite nature of the
transaction, there can be a final resolution of the disputes, only if
all three parties are joined in the arbitration proceedings, to finally
resolve the disputes which have been pending – respondent no. 2
has participated in the proceedings before the High Court, and the
Committee on Disputes, was represented by its separate counsel
before the Sole Arbitrator – Respondent no. 1 filed before the High
Court, had joined respondent No. 2, even though it was joined as a
proforma party – objection to respondent No. 2 being impleaded as
a party to the arbitration proceedings was raised by Respondent
no. 1, and not respondent No. 2 – There is no merit in the objection
raised by Respondent no. 1 opposing the joining of respondent No.
2 as a party to the dispute. Respondent no. 1 had enclosed a Draft
Arbitration Agreement to appellant, wherein it has clearly stated
that the arbitration would be between three parties i.e. Respondent
no. 1 and respondent No. 2 as party of the first part, and appellant
as party of the second part – There was implied or tacit consent by
respondent No. 2  to being impleaded in the arbitral proceedings,
which is evident from the conduct of the parties – Respondent No. 2
has throughout participated in the proceedings before the Committee
on Disputes, before the High Court, before the Sole Arbitrator, and
was represented by its separate counsel before this Court in the
instant appeal – There was a clear intention of the parties to bind
both Respondent no. 1, and its subsidiary- respondent No. 2to the
proceedings – There can be no final resolution of the disputes, unless
all three parties are joined in the arbitration – Group of Companies
doctrine is invoked to join respondent No. 2 in the arbit

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