Published on: 05 November 2022 at 20:13 IST
Supreme Court appointed Justice K Ravichandrababu, a former judge of the Madras High Court, to arbitrate the case between the company running India’s first walkthrough aquarium and a New Zealand-based company.
The order was given by Justices MR Shah and Krishna Murari while dismissing the Madras High Court order regarding it.
“Justice K Ravichandrabaabu, former Judge, Madras High Court is hereby appointed as an Arbitrator to resolve the dispute between the parties arising out of the Share Subscription and Shareholders Agreement dated April 27, 2016.”
The Court further stated that the arbitrator would be responsible for deciding whether or not the dispute may be arbitrated.
According to the schedule of the Arbitration and Conciliation Act of 1996, the arbitrator’s fees shall be determined by the arbitrator with the consent of the parties.
On August 5, 2021, the Madras High Court declined to appoint an arbitrator on the grounds that the National Company Law Tribunal was currently hearing several cases of mismanagement and oppression against the petitioner company (NCLT).
The Supreme Court while hearing the matter was not satisfied with the HC order. As per the court, under Section 11(6) of the Act, same cannot be a ground to dismiss an application regarding appointment of arbitrator. The bench observed that,
“As far as the fact that the proceedings at the instance of the respondent as minority shareholder for oppression and mismanagement is pending before the NCLT is concerned, on the pendency of such proceedings the application under Section 11(6) of the Act, 1996 cannot be dismissed. It should be left to the arbitrator to consider the entire aspect,”
The bench ruled that the dispute in the current case related to the parties’ shareholders agreement and share subscription, which was wholly irrelevant to the respondent firm’s claims of mismanagement and oppression at the behest of a minority shareholder.
It was observed by the bench that, “Considering the fact that share subscription and shareholders agreement dated April 27, 2016 entered into between the parties contains the arbitration clause in case of dispute between the parties arising out of the said agreement, we are of the opinion that the High Court ought to have allowed the application under Section 11(6) of the Act and ought to have left the issue on arbitrability of dispute between the parties to the arbitrator,”
The court after directing its order dispose of the matter.