LexTATA INDUSTRIES LTD. & ANR. versus GRASIM INDUSTRIES LTD.
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[2008] 10 S.C.R. 496 ' A TATA INDUSTRIES LTD. & ANR. v. GRASIM INDUSTRIES LTD. (Arbitration Petition No. 5 of 2007) B JULY 9, 2008 [V.S. SIRPURKAR, J] · A,rbitration and Conciliation Act, 1996: ss.11(6) and (12)(a) - International Commercial Arbitra- c tion - Appointment of arbitrators - Live arbitrable issue - Shareholders Agreement between parties - Applicants invok- ing arbitration clause for alleged breach of terms of agree- ment- Subsequently respondent agreeing to purchase shares of applicants - Share Purchase Agreement containing "with- D out prejudice" clause - HELD: Issue whether there was breach of Shareholders Agreement, continued to be in existence and was never given up by applicants - 'Without pmjudice' clause in the subsequent Share Purchase Agreement clearly indi- cated live arbitrable issue between the parties -- Arbitral tribu- E nal appointed - Whether there was breach of Shareholders Agreement and what would be its effect would be matter in the realm of arbitration. Applicant no. 1 (TIL), acting on its behalf and on be- F half of TATA Group, .the respondent acting. on its behalf ,. and on behalf of A.V. Birla Group, and a foreign based company, namely, AT&T Wireless Services Inc. which was the holding company of AT&T Cellular Pvt. Ltd. (Mauritius) incorporated under the laws of Mauritius, agreed to pro- vide CTMS service through a single entity, and to merge G themselves to form IDEA Cellular Limited (l[ 1)EA). A Share- holders Agreement came into existence cin 15.12.2000. AT&T Cellular Pvt. Ltd. (Mauritius) was subsequently re- named as Apex Investment (Mauritius) Ltd. (applicant no. 2). Applicant no. 1 served notices dated 31.1.2006 and H 496 ) ., • • TATA INDUSTRIES LTD. & ANR. v. GRASIM 497 INDUSTRIES LTD. 27.2.2006 upon the respondent alleging violation of non- A competition and confidential clauses of the Sharehold- ers Agreement. The respondent by its letters dated 28.2.2006 and 1.3.2006 disputed and denied the allega- tions. In the meantime, consequent upon an offer of pur- chase, applicant no. 1, on its behalf and on behalf of ap- s plicant no. 2, sent a notice offering sale of their shares in IDEA to the respondent, which accepted the offer. The parties, made it clear that the offer of purchase and ac- ceptance thereof was without prejudice to their rival con- tentions with regard to Termination Notices dated C 31.1.2006 and 27.2.2006. In response to applicants' no- tice dated 24.4.2006 to commence process of consulta- tion, the respondent, on 27.4.2006, replied that there was no arbitral dispute surviving between the parties and, therefore, there was no longer a basis for arbitration re- 0 garding the issues set forth in the two Termination No- tices. On 5.5.2006, the applicants issued a formal arbitra- tion notice. Thereafter two Share Purchase Agreements were entered into between the parties on 1.6.2006. A spe- cific reference was made to the claim of arbitration made on behalf of applicant no. 1 stipulating that execution and con- E summation of the transaction contemplated by the Share Purchase Agreements would not prejudice or affect the pen- dency or continuation of the arbitration proceedings be- tween TIL and A.V. Birla Group arising out of the breach of Shareholders Agreement. The applicants ultimately filed an F application u/s 11 (6) of the Arbitration and Conciliation Act, 1996, before the High Court. The application was resisted by the respondent contending that it would amount to an international commercial arbitration and, therefore, the Chief Justice of India alone would have powers to constitute the G Arbitral Tribunal. The applicants withdrew the said applica- tion and filed the instant application. It was contenderf for the applicants that there was a clear incurable breach of the Shareholders Agreement as H 498 SUPREME COURT REPORTS [2008] 10 S.C.R. A mentioned in the Termination Notices dated 31.1.2006 and 27.2.2006 which was disputed by the respondent in its replies dated 28.2.2006 and 1.3.2006 and, therefore, the dispute clearly fell within the arbitration clause and was a live issue between the parties. On behalf of the respon- . B dents it was contended that by virtue of the Share Pur- chase Agreements the applicants had made an exit from the company and they were left with no rights under the Shareholders Agreement and, as such, there was no live issue pending between the parties. C Allowi
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