C.M.P. No. 33/2013. Case: Citicorp Finance India Limited Vs Raju M. Mahtaney and Ors.. High Court of Karnataka (India)

Case NumberC.M.P. No. 33/2013
CounselFor Appellant: P. Chinnappa, Adv. for V. Srinivasa Raghavan and V. Abhinay, Advs. and For Respondents: Dhananjay Joshi M., Adv.
JudgesA.S. Bopanna, J.
IssueArbitration and Conciliation Act, 1996 - Sections 11(6), 7(5), 9; Indian Contract Act, 1872 - Section 62
Judgement DateMarch 30, 2017
CourtHigh Court of Karnataka (India)


A.S. Bopanna, J.

  1. The petitioner in this petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 ('Arbitration Act' for short) is seeking that an Arbitrator be appointed in the manner as prayed in the petition.

  2. The petitioner is before this Court contending that it is a non-banking financial company incorporated under the Companies Act, 1956. The petitioner had entered into the Subscription and Share Holders agreement dated 16.05.2007 ('SSH agreement' for short) with Primus Retail Pvt. Ltd. (PRPL for short), the respondents and one Ms. Geethanjali R. Mahtaney. the said PRPL has been ordered to be wound up by an order dated 08.10.2012 in Company petition No. 181/2011, 1/2012 and 30/2012. The respondents No. 1 to 4 are the promoters and shareholders of PRPL and are parties to the said agreement. Through clause 4.8(iii) of the agreement they have given an unconditional and irrevocable guarantee to bridge the entire shortfall in the event of PRPL failing to redeem the debentures issued to the petitioner. Respondent No. 5 is an investor of the company and presently the other respondents have settled with respondent No. 5 and as such the consideration as against respondent No. 5 does not arise herein.

  3. Subsequently a supplemental subscription and shareholders agreement dated 04.07.2007 was entered into between the parties. The agreement dated 16.05.2007 provide for resolution of dispute between the parties through arbitration as provided under clause 18 of the agreement. Since certain disputes have arisen between the parties, the petitioner having invoked the said clause had got issued a notice dated 04.05.2012 seeking appointment of the Arbitrator. The respondent through their reply dated 12.01.2013 have contended that the reference to the agreement dated 16.05.2007 is misplaced as according to the respondent the agreement dated 04.07.2007 governs the rights and obligations amongst the parties. In that light it is contended that the agreement dated 04.07.2007 does not contain any provision for resolution of disputes by arbitration. It is in that view the petitioner is before this Court in this petition.

  4. The respondents No. 1 to 4 have filed their objection statement. The contention in the objection statement is in fact a magnification of the contention that was put forth in the reply notice. Though contentions are also raised with regard to the nature of the transaction between the parties, they have further...

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