Bharti Televentures Limited vs Dss Enterprises Private Limited & ...
2001 Latest Caselaw 689 Del

ORDER

J.D.Kapoor, J.

1. Through these applications moved under Section 45 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as `the Act'), the defendants 1 to 3 namely DSS Enterprises Limited (hereinafter referred to as the DSS), BellSouth International Inc. (hereinafter referred to as the 'BellSouth') and Millicom International Cellular S.A. (hereinafter referred to as 'Millicom') have questioned the maintainability of the instant suit filed by the plaintiff-Bharti Televenture Limited (hereinafter referred to as 'Bharti') being barred by the provision of Section 45 of the Arbitration & Conciliation Act, 1996 and have sought reference of the disputes raised by it to Arbitration. The defendants Bellsouth and Millicom are foreign shareholders holding 40.5% equity together while DSS, an Indian partner holds 10.8% equity. The defendant No. 4. Crompton Greaves Limited (hereinafter referred to as 'CGL') alone held 40.5% equity before it was purchased by the plaintiff. They all are partners/co-promoters of defendant no.5 company Skycell Communication Limited (hereinafter referred to as Skycell)

2. The plaintiff through this suit has sought a decree for declaration and permanent injunction as its claim of having acquired the status of a partner in the defendant No.5-skycell by virtue of having purchased the equity held by its erstwhile partner defendant no.4-CGL and its rights accruing from the Joint Venture Agreement (hereinafter referred to as the JVA) to which all the five defendants including CGL were parties is being resisted jointly by defendants 1 to 3.

3. The main ground of challenge is that the plaintiff, as per its own claims and pleadings has stepped into the shoes of the CGL as successor-in-interest and has given the undertaking to observe the terms of the JVA and is, therefore, refrained from seeking any remedy by way of a suit as Article 21 of the JVA provides that any and all disputes arising out of or in connection with the negotiations, execution, interpretation, performance and non-performance of this Agreement shall be solely and finally settled by a Board of three Arbitrators in accordance with the Rules and Conciliation And Arbitration of the International Chamber of Commerce (hereinafter referred to as the ICC Rules).

4. Relevant provisions of the Act are Sections 44 & 45. These fall in part-ii of Chapter - I of the Act which pertains to enforce of foreign awards. These are as under:-

"44. Definition - In this Chapter, unless the contest otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the laws in force in India, made on or after the 11th day of October, 1960 -

(a) in pursuance of an agreement in writing for arbitration to which the convention set forth in the First Schedule applies, and

(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.

"45. Power of judicial authority to refer parties to arbitration - notwithstanding anything contained in part I or in the Code of Civil Procedure, 1908, a judicial authority, when siezed of an action in a matter in respect of which the parties have made an agreement referred to an Section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

5. At the outset, the background leading to the policy of the Government in throwing open the sensitive and strategically important sector of Telecommunication to the foreign investors and the conspectus of facts in chronological events that led to the instant suit of the plaintiff and the applications of the defendants need to be put in brief.

6. Till early 1990's Telecommunication Sector was exclusively owned and operated by the Government and its instrumentalities owned and operated by the Government and its instrumentalities. It did not produce the desired results. Rather its existence became shaky. It was in 1992 that the Government of india came out with its decision popularly known as `New Telecom Policy' allowing private participation in providing the telecom services. The said policy also provided that the foreign equity holding in a Telecom Service Operator company must not exceed 49% whereas Indian shareholders shall not only have minimum of 51% of equity but also the management and control of the telecom service operation shall vest in their hands. Obviously the provisions of 51% equity to be held by the Indian shareholders and also the management and control of the company by them was to mainly protect the economic sovereignty. Thus the Indian domination by way of management was pre-dominant feature of the said policy.

7. Pursuant to this policy the Central Government decided to license out the entire operations in respect of Cellular Mobile Telephone Service initially in four metropolitan towns, namely Delhi, Mumbai, Calcutta and Chennai to various private entrepreneurs. By taking the advantage of the aforesaid policy a collaboration agreement was signed by the defendants on 22nd march, 1992 for carrying on the business of providing cellular services through defendant No. 5 skycell pursuant to a license proposed to be obtained from the Government of India. On being reasonably certain that the license would be granted in the name of defendant no.5-skycell, a draft JVA was duly and unanimously approved and signed at the meeting of the Board of Directors of skycell on 12th August, 1992.

8. The applications were made to the RBI & FIPB for their approval for allotment of shares to BellSouth and Millicom as they were foreign companies. Bid of defendant No.5-skycell was evaluated by the Department of Telecommunications (hereinafter referred to as the DoT). The defendant No. 5 was granted the license subject to the conditions that the management of the operating company shall vest in Indian hands. Of course, the benefit of expertise and experience of foreign partners was allowed to be availed by the defendant No. 5.

9. Unfortunately stars did not favor skycell. It started running into losses. There became an acute shortage of working capital and the Company was unable to cater to the demands of the customers due to financial constraints. Though it is disputed, as according to the defendants the decision to locate a buyer for their entire shareholding was taken for strategical reasons but it was agreed that all the members would simultaneously and together exist from defendant No. 5 after transfer of shares to any outside buyer. It was it this stage that the plaintiff-Bharti was introduced to the defendants.

10. On 5th October, 1999 a Memorandum of Understanding was entered into between the CGL and DSS as the proposed sellers and the plaintiff as the proposed buyer, for the sale of equity held by CGL and DSS aggregating 51%. However the agreement ran into rough weather and on 1st November, 1999 a supplementary Memorandum of Understanding was executed whereby the plaintiff was given the option to purchase the shareholding of either CGL or DSS . As per requirement of Article 7.2 of the JVA, CGL issued a transfer notice dated 11.10.1999 to Skycell, DSS, Bell South and Millicom informing them of its proposal to sell its entire 40.5% shares held by it in Skycell. DSS and BellSouth gave their consent in writing while Millicom gave its consent by transfer notice. DSS gave its consent through Satwant Singh. DSS also issued a similar transfer notice on October 28, 1999 pursuant to aforesaid agreement at about the same time as was done by CGL. However Millicom cautioned DSS against such sale except upon securing its interests. An escrow agreement was entered into between DSS and plaintiff-Bharti whereby an escrow agent was appointed. This process was delayed between DSS and Bharti along with that of CGL. On 14th of December 1999, a meeting of the Board of Directors took Place where they proposed sale of shares of CGL to Bharti and took note of the fact that CGL's offer of sale to Bharti was approved by two other Joint Venture Partners, namely, Millicom and DSS while the third Joint Venture Partners, namely, BellSouth sought certain information about the proposed buyer.

11. Volte-face of DSS has been attributed to its being a facade or a protege of Bell South and Millicom as injuries revealed that it is under their heavy financial obligation inasmuch as that equity participation of DSS in Skycell had been arranged and guaranteed by Millicom through CIA and it has subsistent agreement with Bell South wherein it is in its Consultancy service against payment of monthly fees and other considerations and thus it is wholly under the influence and control of Bell South and millicom and arm-twisting by them has forced DSS to retract. These facts came to the notice of the Plaintiff when it stumbled upon an agreement of DSS and Bell South dated 15. 7. 1986 which was amended on 8.8.1993 whereby it agreed to act as adviser to Bell South with regard to market objectives and proposed marketing and distribution plans against the payment of monthly fees and other considerations.

12. It is averred that bell South no only breached the agreement with Bharti but induced the other Joint Venture Partners, namely, CGL and DSS to join it to prevent the entry of Bharti into their realm. Was it a commercial back out or an unholy somer-sault? Bharti says - both because during the intervening period they were offered higher price.

13. Ultimately on 14th December, 1999 the Board of directors resolved to approve in principle the sale of 40.5% equity shares held by CGL to Bharti, Subject to receipt of consent from Bell South and approval from DoT and Institutional lenders. Approval of Government of Indian was granted subject to the conditions that the management and control of licensee company shall remain in Indian hands. Bell South withheld the consent and sough certain information form Bharti.

14. In the midstream and without waiting for the information, Bell South moved a petition under section 9 of the act against in the CGL before the Madras High Court wherein though an order of ex parte injunction was passed but ultimately the parties were directed to convene a meeting on May 3, 2000 and make an attempt to amicably resolve the disputes. Pursuant to the directions of the Madras High Court the meeting tool place on 3.5.2000 at the office of the Skycell in which all the promoters were present. At this meeting the sale of CGL/DSS shares to Bharti was reaffirmed. However, CGL, DSS, Bell South and Millicom conveyed their decision to Bharti and Bharti in turn conveyed its re-affirmation of acceptance.

15. On May 8, 2000 the plaintiff, pursuant to the agreements of 3rd May 2000 (hereinafter referred as MoU) forwarded three separate drafts of Share Purchase Agreements to each of the three promoters who had agreed to sell the shares. Accordingly, Bell South on 24th May 2000 caused Skycell to submit applications to the DoT, Government of India, ICICI limited and ABN Amro Bank N.V. for approvals of transfer of its shareholding to the plaintiff Bharti. Bharti and Bell South exchanged drafts was accepted. It was even not disputed by Bell south. Again the DoT, Government of India sent a communication of 29th June 2000 wherein it was stated that certain conditions were required to be accepted by the Board of Directors of Skycell before permission/approval for transfer of shareholdings of CGL, dss and Bell South in favor of Bharti Could be granted. The Condition was obvious. that the management and control of licensee company shall remain in Indian hands.

16. In their resolution dated 13th July 2000 the Board of Directors accepted all the conditions and informed the DoT accordingly. Again, Bharti forwarded the draft of Share Purchase Agreement on May *, 2000. Whoever, the millicom wrote to Bharti informing hat it was not satisfied with the amendment proposed by it and sought to secure the money owed by dss to CIA and proposed amendments to the aforesaid escrow agreement.

17. However, this forced the plaintiff to file an independent suit against the Bell South restraining the latter from selling or entering into sale of its shares to any third party then the plaintiff. Since the plaintiff had already acquired 40.5% equity of CGL and other rights for the value of Rs. 140 crores and had also made substantial investment in diverse manner s in CGL whereas the remaining three promoters did not invest any money in skycell, it is averred that by acting upon the agreement arrived at on May 3, 2000 i.e., MoU, the plaintiff-Bharti had purchased the shares and become partner of the Company in place of CGL on and w.e.f. August 7,2000. As per requirement of JVA, Bharti also executed an undertaking which was forwarded to all the parties to the JVA agreeing to the observation of term and be part of JVA agreeing to the observation of term and be pat of JVA as a successor of CGL.

18. On August 7, 2000 itself the Board of Directors of skycell approved the transfer of equity shares held by CGL in favor of Bharti and thereupon entered upon the name of the principal of the Company as required by the Articles of the company as per provisions of the companies Act. Since Article 9 of the JVA Provides that the Board of directors of Skycell shall consist of 10 members out of which 5 shall be nominated by CGL and two by Bell South and two by Millicom and one by DSS, the plaintiff asked for at least five Directors as successor-in-interest of CGL.

19. Since the original claim of Bharti was denied by Skycell in the Board meeting and instead the parallel meetings of the Board of Directors were held without informing or inviting the plaintiff inspite of its being the largest single shareholder who had made huge investment of Rs. 140 crores or so by way of acquiring 40.5 per cent equity on the understanding of the promoters that it will also acquire the equity held by DSS and Bell South which they had agreed to sell to the plaintiff on May 3,2000, a declaration has been sought that AGMs held by the defendants and particularly board meetings held by them on August 26 as also the resolutions passed by them be declared null and void and a decree be passed restraining them permanently from exercising their voting rights prejudicial to the interest of the plaintiff and also restraining from exercising their vomiting rights in respect of shares held by them in a manner prejudicial to the interest of Skycell and vomiting against the appointment and re-appointment of five Directors and also directing them to elect as Managing Director from the Directors nominated by the plaintiff to the Board of Directors of Skycell.

20. AS omens always have whiff of impending events, DSS rushed to file the reply to the injunction application while the defendants 1 to 3 filed the applications under Section 45 of the Act questioning the maintainability of the suit and for referring the parties to arbitration. Obviously they kept their cards close to their chest. DSS declared in unequivocal terms that the plaintiff is not a party to the JVA and there is no agreement between the plaintiff on the one hand and defendants 1 to 3 and 5 on the other hand and thus question of the plaintiff being a member of and vested with any right under the JVA does not arise. In further said that JVA clearly provides that no person shall be entitled to participated in the Company i.e. Skycell except with prior written consent of other shareholders and since the other shareholders have not given any prior consent, the question of the plaintiff participating in defendant No. 1 as a shareholder does not arise. Thus defendant No. 1 minced no words and refused to accept the plaintiff as one of the partners of defendant No. 5.

21. The rights the plaintiff seeks to enforce emanate fro article 9 of the JVA which provides that as long the shareholders continue to hold shares in Skycell in the proportions set forth in Article 3.1, five (5) Directors shall be nominated by CGL, two (2) shall be nominated by Bell south, two (2) shall be nominated by Millicom, and one (1) shall be nominated by DSS. Article 3.1 pertains to equity participation of shareholders and is as under:-

  CGL    forty & half per cent (40.5%)

Bellsouth  twenty four & half per cent (24.5%)

Millicom   twenty four & half per cent (24.5%)

DSS   ten & half per cent (10.5%)

 

22. Battery of senior counsel, namely, S/Shri P. Chidambaram, Rajeev Sawhney, Shanti Bhushan and P.N. Lekhi representing the defendants/applicants supplemented each other in contending that the dispute as to the validity of the purchase of shares by Bharti from the CGL is referable to the arbitration under Section 45 of the act and in term of Article 21.2 of the JVA.

23. In order to avoid repetition, the contentions of the learned counsel for he defendants need to be summed up in brief. these are:

(1) That the statement of facts pleaded by the plaintiff when read in totality demonstrates that as per its own understanding it has succeeded to and acquired the rights of CGL under the JVA after having obtained approval of all the co-promoters and consequently had furnished the undertaking as prescribed under Article 3.6 of the JVA that it shall observe and be bound by all the provisions of the JVA, it is no more open to the plaintiff to redress its grievance through the suit as the only remedy available to the plaintiff is under Articles 21.1 and 21.2 of the JVA which are as under:-

"21.1 - Amicable Resolution - If any dispute arises out of or in connection with the negotiation, execution, interpretation, performance or non-performance of this agreement, the parties shall seek to solve the matter amicably through discussions between them. only if the parties fails to resolve such controversy or claim within thirty (30) days by amicable arrangement and compromise, the aggrieved party may seek arbitration as set fort below.

"21.2 - Arbitration Agreement - Any and all disputes arising out of or in connection with the negotiation, execution, interpretation, performance and non-performance of this Agreement shall be solely and finally settled by a board of three(3) arbitrators in accordance with the Rules and Conciliation and Arbitration of the international Chamber of Commerce (ICC Rules)."

(ii) That Articles 3.4 and Article 7.4 of the JVA when read together will show that even the person claiming himself as a new shareholder binds himself to the terms of the agreement for settling the future or past dispute including the dispute as to the validity of his locus stands as a new shareholder and since the plaintiff is raising the dispute in the suit which is covered under Article 9 so the Arbitration Clause will come into play and not an independent suit. The above referred Articles of the JVA are as under:-

3.4 - "restriction on Transfer of Shares - Subject to Article 22, unless otherwise mutually agreed by all the shareholders, no shareholder shall sell or otherwise transfer or dispose of any of its shares in Skycell for the longer of (a) three years after the date the license is awarded to Skycell, or (b) such other period as may be required by the Department of Telecommunications, Government of India."

7.4 - Agreement of New Shareholders - If any shareholder shall shell, assign or otherwise transfer all or any part of its shares to a third party (including but not limited to an Affiliate of such shareholder) in accordance with this Agreement and the Articles, such shareholder shall cause the third party acquiring or receiving an interest in such shares, as a conditions of such acquisition, to furnish a written undertaking to the other shareholders and to Skycell in form and substance acceptable to such other shareholder and skycell, agreeing to observe and be bound by all the provisions of this Agreement as if it had sold the shares. In addition, as set forth in Article 3.6 no person or entity shall be invited to participate in Skycell without the prior written consent of all the shareholders.

(iii) That Article 15.1 provides for resolution of a deadlock by the Arbitrator. In the case of deadlock any shareholder by written notice to each other shareholder can convene a meeting of at least one representative of each shareholder and if the deadlock is not resolved by such meeting the same is to be referred to arbitration in accordance with Article 21 and in the instant case the deadlock exists as to whether the plaintiff has purchased the shares of CGL in conformity with the provisions of JVA and has a legal right or rightful claim to nominate five Directors or not.

(iv) That Article 22 even binds the devisee i.e. a new shareholder to the terms of the JVA and since the plaintiff claims himself to be a new shareholder he is bound by the terms of the JVA and, therefore, has no other remedy except by way of arbitration.

(v) Tat the tenor of the plaint shows the admission on the part of the plaintiff that there exists arbitration clause to settle any or all disputes and the nature of dispute raised by the plaintiff not only comes within the ambit of the JVA but also arises out of the JVA.

(vi) That this is a case where obligations under the alleged MoU can only have effect if the requisite conditions prescribed in the JVA for transfer of shares stand fulfillled. In the instant case Bharti has purchased shares from CGL which according to it were purchased strictly in terms of JVA but according to the defendants the shares were purchased without compliance of the requirements of the JVA. Assuming that shares of CGL stand transferred to or purchased by the Bharti strictly in terms of JVA still the plaintiff does not step into the shoes of CGL as it is not the case of assignment as referred in Articles 22 of the JVA which is as under:-

"Article -22 - Assignment -

This Agreement and every covenant, term and condition hereof shall be binding upon and inure to the benefit of the parties and their respective heirs, devisees and successors. No party may assign this Agreement or its rights or obligations hereunder without the prior written consent of each other party except to an Affiliate of such party. If such Affiliate ceases without three (3) years after such assignment to be an Affiliate of the assignor Shareholder, then unless otherwise agreed by all Shareholders such Affiliate shall, prior to such cessation, retransfer the shares of Skycell held by it to the transferor Shareholder or to another Affiliate of such transferor. In any event the original party shall guarantee the obligations of its assignee under this Agreement.

(vii) That the plaintiff has nowhere pleaded that the provisions of Section 44 & 45 of the Act do not apply nor is there any such plea that the agreement i.e. JVA is null and void, in-operative or incapable of being performed, the defendants are under the provisions of Section 45 of the Act entitled to apply to the Court for referring the parties to arbitration.

(viii) That the arbitration clause is of extremely widest amplitude as it refers to 'any' or 'all' disputes arising out of or in connection with interpretation, performance or non-performance of the JVA and since the nature of disputes raised by the plaintiff comes within the ambit of interpretation, performance or non-performance of the agreement these have to be referred to arbitration.

(ix) That the question whether there has been a compliance of the terms of the JVA in the transfer of shares by the CGL to Bharti or not is again a question that arises out of the JVA and, therefore, falls within the jurisdiction of the Arbitrator. Arbitrator has even the powers to decide its jurisdiction to adjudicate upon any or all disputes arising from the JVA.

(x) That plaint is liable to be rejected under the provisions of Order 7 Rule 11 of the Code of Civil Procedure that provide that the plaint shall be rejected were the suit appears from the statement in the plaint to be barred by any law.

24. Since in the instant case the plaintiff has pleaded that it has purchased the shares of CGL in strict terms of the JVA and had furnished the undertaking to observe and be bound by the provisions of the JVA and according to the JVA only or all disputes arising between the parties have to be referred to arbitration, the suit itself is barred by the provisions of Section 45 of the Act as this Section mandates the judicial authority when seized of an action in a matter in respect of which an arbitration agreement subsists to refer the parties to arbitration.

25. Pitted against the volley of the above contentions, learned senior Advocate and counsel for the plaintiff Mr. Kapil Sibal has advanced suffusive arguments. To be succinct, these are:

(i) That the defendants/applicants are estopped and debarred from taking the plea of arbitration as they themselves waived and abandoned this plea by filing an application under Section 9 of the Act before the Madras High Court and a Civil suit for injunction before the court at Delhi.

(ii) Since there are no corresponding provisions in the form of Sections 5 and 16 in Chapter I which prohibit the intervention of any judicial authority and empower the Arbitral Tribunal to rule even on its jurisdiction including ruling on any objections with respect to the questions mentioned in arbitration agreement, Court has the powers to rule upon the jurisdiction of the Arbitrator. Had there been any intention on the part of the legislature to exclude or limit the jurisdiction of the Court from deciding the jurisdiction of the Arbitrator or the nature of instant dispute to be arbitered upon, similar provisions would have been included in part II. If part II is interpreted to exclude the jurisdiction of the Indian Courts, inequality and unfairness would net loose.

(iii) That Section 45 of the Act does not apply as it assumes existence of agreement of arbitration that too in writing between the parties. The defendants/applicants dispute the status of the plaintiff as a member of the JVA i.e. a partly to be agreement. Since the parties are not in agreement as to whether or not the plaintiff is a party to the JVA, Section 45 of the Act cannot be invoked. The very holding of the parallel AGM or Board Meetings suggest and show that the defendants/ applicants have not accepted the plaintiff as their partner. So much so in reply to the application under Order 39 Rules 1 & 2, DSS has in categorical and unequivocal terms stated that the plaintiff is not a party to the JVA and there is no agreement between the plaintiff and defendants 1, 2, 3 & 5.

(iv) That the definition and meaning of the term 'arbitration agreement' provided in Section 7 of the Act which though relates to the domestic arbitration is applicable in respect of any agreement that contains arbitration clause irrespective of the fact whether that Section preovigore does not relate to Part II Chapter I.

26. The definition of arbitration agreement as provided in Section 7 is as under:-

"7. Arbitration agreement - (1) In this part, "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing.

(4) An arbitration agreement is in writing if it is contained in -

(a) a document signed by the parties;

(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or

(c) an exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."

(v) That clauses 1 & 2 of the Article 2 of the First Schedule of Section 44 pertaining to Convention on the recognition and enforcement of arbitral awards provide that only an agreement in writing shall be recognised and the term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement signed by the parties or contained in exchange of letters or telegrams. Section 44 recognises the foreign awards only if it is made in pursuance of an agreement in writing for arbitration. Thus unless and until there is undisputed agreement in writing between the parties the provisions of Section 45 cannot be invoked.

(vi) That any unilateral statement made by the plaintiff that it has stepped into the shoes of CGL or has acquired a status of a new shareholder or devisee or unilateral undertaking given by the plaintiff that it would abide by the terms and conditions of the JVA cannot form the basis of the agreement on the basis of which the defendants can maintain an action for arbitration.

(vii) That the basis claim of the plaintiff is based upon the agreement dated 3rd May, 2000 and subsequent acts culminating in the purchase of equity of CGL by Bharti and the policy of Government of India while granting the license that the management shall always be in the hands of the Indians and assurances given by the defendants/applicants from time to time that Bharti not only will have controlling interest in the company but also run and manage its affairs.

27. Let me deal with the doctrine of waiver raised by Mr. Sibal first. It is contended that once BellSouth h ad moved an application under Section 9 of the Act before the Madras High Court and DSS had filed a suit for injunction before the Delhi Court restraining CGL from selling or transferring its shares it is no more open to them to invoke clause or arbitration as by these acts they waived and abandoned it. I am afraid this contention holds water lime a sieve.

28. Mere seeking a relief under Section 9 of the Act though this provision was not applicable because the JVA fell under Part II Chapter I being foreign arbitration and was governed by New York Convention cannot constitute waiver as this provision is in the form of seeking an interim relief before or during the arbitral proceedings. This provision provides an interim protection to the aggrieved party either before or during arbitral proceedings. To say that by moving an application under Section 9 of the Act a party abandons the arbitration agreement is not correct as relief sought by the party under these provisions is in the form of interim injunction or such interim measure of protection as may appear to the Court to be just and convenient.

29. Though the provisions of Section 9 cannot be resorted to for interim measure or injunction where the parties have chosen a foreign forum for arbitration still the fact remains that such a step cannot constitute a waiver or abandonment of arbitration clause.

30. If the argument of Mr. Sibal is accepted then this tantamount to waiver of arbitration clause by a person who seeks an interim protection before or during the arbitral proceedings. The Sundram Finance Limited Vs. NEPC India Limited it has been held that when a party applies under Section 9 of the 1996 Act it is implicit that it accepts that there is a final and binding arbitration agreement in existence. It is also implicit that a dispute must have arisen which is referable to the Arbitral Tribunal and further contemplates arbitration proceedings shall take place between the parties. When such an application is filed before the commencement of arbitral proceedings there has to be manifest intention on the part of the applicant to take recourse to the arbitral proceedings. Thus the mere filing of an application under Section 9 of the Act by any of the parties does not operate waiver or estoppel from invoking the arbitral proceedings.

31. Merely because one of the partners has resorted to an action which was firstly not permissible under the law and secondly because of misconceived notion that it can remedy its grievance by way of interim relief does not mean that the other partners have also consented for such an action. The very fact that the remaining partners have filed the applications under Section 45 of the Act shows that they have not agreed to the waiver, if any.

32. Similarly suit filed by DSS does not operate waiver as it was a suit for injunction restraining CGL

from selling or transferring its shares in Skycell and was not covered by the provisions of Section 62 of the Indian Contract Act nor was it a suit with regard to the provisions of JVA. It related to Articles of Association of a Company. Section 62 of the Indian Contract Act provides that if the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

Thus neither does action under Section 9 nor an independent suit as filed by DSS amount to waiver or abandonment of the arbitration clause.

As regards the contention of Mr. Sibal that the absence of provisions of Sections 5, 9 & 16 in Part II of the Act shows that there is no bar to the jurisdiction of the judicial authority to entertain any proceedings arising from the arbitration agreement and even to decide the jurisdiction of the Arbitrator it is again difficult to accept as Section 45 of the Act is a self-contained provision so far as the jurisdiction of the Court is concerned.

Though Section 5 contemplates number of eventualities that confer jurisdiction upon the judicial authority to entertain an action in respect of which there is an agreement of arbitration yet it limits the jurisdiction of the judicial authority to great extent. Section 9 provides jurisdiction to the Court for granting interim injunction or interim protection before or during the arbitral proceedings. Section 16 confers powers upon the Arbitrator to even decide the question of its own jurisdiction to arbitrate upon the disputes. But Section 45 of the Act ousts the jurisdiction of a judicial authority to entertain any action in a matter in respect of which the parties have made an agreement referred to in Section 44 and makes it mandatory to refer on the request of any of the parties to arbitration. It can refuse such a request in three eventualities. These are :

(i) if the agreement is null and void;

(ii) if the agreement is non-operative ;

(iii) if the agreement is incapable of being performed.

Thus absence of the corresponding provisions of Sections 5, 9 & 16 in part II Chapter I of the Act does not show that the legislature had intended to provide jurisdiction to the Court for deciding on the jurisdiction of the Arbitrator or grant interim injunction or protection either before or during the arbitral proceedings.

The intention of the legislature was clear and unambiguous. It was to oust the jurisdiction of any judicial authority to intervene either before or during the arbitral proceedings and make it mandatory to refer the parties to arbitration as and when it is seized of an action arising from the agreement on the request of one of the parties or any person claiming through or under him. Judicial authority was conferred powers to refuse to refer the parties to arbitration only if it found that the agreement was null and void, inoperative or incapable of being performed. And rightly so. Once the parties have chosen a foreign forum to decide their disputes by way of arbitration, it is no more open to them to stultify or subvert the arbitration agreement and render it nugatory or tautologous.

Exclusion of the provisions of Sections 5, 9 & 16 in part II Chapter I was with the object to attract foreign investors to infuse life into otherwise dying or sinking industry. If the foreign investors know that on the drop of a hat their India partners can drag them in Indian Courts where they have no roots at all they would not even faintly or remotely venture to pump in their investments. It is they whom we seek to make investments and not vice versa. Thus in order to avoid an element of inequality or unfairness and to give incentives for investments that Section 45 of the Act was brought on the statute book.

Article 2(iii) of the Convention corresponds to Section 45. This Articles imposes a mandatory duty on the courts of a Contracting State to recognized and enforce an agreement to arbitrate. In Ledcee Vs. Ceramicne Rango 684 F2nd D184 and Riley Vs. Kingsley Underwriting Agencies Limited 969 F.2d 953, 959 it was observed that when asked to enforce an agreement under the Convention, the court performs a very limited inquiry to decide the following four questions :

(i) Is there an agreement in writing to arbitrate the subject of the dispute ?

(ii) Doest the agreement provide for arbitration in the territory of a signatory of the Convention?

(iii) Does the agreement arise out of a legal relationship, whether contractual or not, which is considered as commercial?

(iv) Does the commercial relationship have some reasonable relation with one or more foreign states?

If the answer are in the affirmative, a court is required to order arbitration unless the court finds the agreement to be null and void, inoperative or incapable of being performed.

However, there is no doubt that the court acquires its jurisdiction to refer the matter to arbitration only at the request of one of the parties or any person claiming through or under that party to the arbitration agreement and the onus to show that the agreement is null and void or inoperative or incapable of being performed is upon the party opposing reference to arbitration. In nutshell Section 45 gas an overriding effect and prevails over anything contrary thereto contained in Part I of 1996 Act or the Code of Civil Procedure, 1908.

Let us examine as to what do Sections 44 & 45 of the Act contemplate so far as the import and meaning of the words 'a party', 'parties' and 'agreement' are concerned. Meaning of the word 'a party', as per the Webster's Dictionary, in context of legal affairs is one of the litigants in a legal proceedings, the plaintiff or defendant or a signatory to a legal instrument and the Chambers Dictionary defines 'a party' as each of the individuals or groups concerned in a contract, agreement, law suit etc. As per Oxford Dictionary the word 'parties' refers to a person or persons forming one side in an agreement or dispute. Whartan's Law Lexican 14th Edition defines the word 'parties' as persons jointly concerned in any deed or act; litigants. Whartan's Law Lexican 14th Edition defines the word 'parties' as persons jointly concerned in any deed or act; litigants. Thus the word 'a party' or 'parties' signify and encompass those who are signatories to the agreement.

As per Oxford Dictionary the word 'agreement' means an arrangement between the parties as to a course of action. As per the Whartan's Law Lexican 'agreement' means a consensus of two or more minds in anything done or to be done. Chambers Dictionary describes the word 'agreement' as a contract or term; a joint decision made after discussion. Thus in common as well as legal parlance the term 'a party to agreement' or 'parties to agreement' refer to undisputed joint decision or contract of two or more persons.

Now comes the crucial question. Whether the plaintiff comes within the definition of 'a party' to the "agreement" i.e. JVA or not, though the defendants have ventured to project that as per its own claim, the plaintiff has purchased the shares of CGL in strict conformity of the requirements of the JVA and has become its successor-in-interest and is, as per its own claim, a party to the JVA.

The First Schedule under Section 44 of the Act Act pertains to Convention of the Recongnition and Enforcement of Foreign Arbitral Awards. Clause (1) of Article II provides that "Each Contracting State shall recognize an 'agreement in writing' under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of defined legal relationship, whether, contractual or not, concerning a subject-matter capable or settlement by arbitration". Clause (2) provides that the term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.

Though Section 7 of Chapter II of the Act relates to domestic arbitration but eh concept of agreement is couched and clothed in the same language. Sub-Section (3) of Section 7 provides that an arbitration agreement shall be in writing. Similarly Sub-section (4) provides that an arbitration agreement is in writing if it is contained in exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement or contained in exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other.

The only difference in Sub-Section (4) of Section 7 and Clause 2 of Article 2 is that in Clause 2 the phrase"other means of telecommunication which provide a record of the agreement or contained in exchange of statements of claim and defense in which the existence of the agreement is alleged by one party and not denied by the other" does not figure.

As is apparent, the term "agreement in writing" is of inclusive nature and the first and foremost condition to invoke the provisions of Sections 44 and 45 of the Act or for that purpose Section 7 is the existence of an "agreement in writing" which should be beyond the pale of dispute.

The claims and counter claims of the parties show that the main controversy or dispute is as to the validity of the purchase of share-holding of CGL by Bharti. According to the plaintiff the shares were purchased in strict terms of the JVA but the defendants/applicants contest this claim as according to them the sale of equity by CGL to Bharti was in contravention of the requirements of JVA. But at the same time the defendants/applicants have also ventured to aver that as per its own claim the plaintiff is successor-in-interest of CGL and is, therefore, bound by the terms of the JVA.

Arbitration clause can be invoked only if the parties agree in writing to such an arrangement cannot be gainsaid. Unilateral claim of the plaintiff of having become the successor-in-interest of CGL or for that purpose of a new shareholder or devisee strictly in terms of the JVA and unilateral undertaking arising out of this claim that it will observe and be bound by terms of the JVA, by no stretch of imagination, can bring the plaintiff within the net of 'a party to the agreement'.

Bemusingly DSS in reply to the application under Order 39 Rule 1 CPC has adopted a defiant posture by declaring that the plaintiff is not a party to the JVA and there exists no agreement between the parties. DSS said it openly whereas the remaining defendants laboured under the misconception that by moving the applications under Section 45 of the Act, they would succeed in keeping the cards under the wrap. I feel tempted to quote Shakespeare "virtue is bold and never fearful". Defendants/applicants forgot that words always express the purpose and bare the truth.

The defense that though the shares were neither transferred by CGL nor purchased by Bharti as per provisions of the JVA and still the dispute has to be determined on the basis of the claims of the plaintiff that being the successor of CGL it is bound by the terms of the JVA as it purchase the shares after obtaining the approval of all the co-promoters is brewed with confusion and contradiction. I don't even see a little puff in this argument that may blow their case onward.

On the one hand they do not accept Bharti as one of their co-partners and have denied it the seat once occupied by their erstwhile partner CGL while on the other hand they are forcing the plaintiff to knock the door of the arbitrators to not only get its status and slot in the Company decided that is whether the shares purchased by it from the CGL were in accordance with he terms of the JVA or not. Unless they accept Bharti as member of their conglomerate they cannot ram the arbitration clause down the throat of the plaintiff. It seems the posture assumed and adopted by the defendants/applicants vis-a-vis the plaintiff has landed them in a catch 22 problem.

Most intriguing and perfidious aspect is that Satwant Singh, a representative of DSS which has only 10% equity and as per JVA has a right to nominate only one Director has been made Chairman and Managing Director of the Company. This is not only to deceive themselves but the Govt. of India as not even a knaive would believe that by making him the Chairman of the Company, the condition of the license that the Management shall be in the Indian hands stands fulfillled

Even if for a moment it is ignored that DSS is a front or puppet of Millicom or BellSouth still appointment of a representative of a partner having 10 per cent equity as Chairman whereas it has the right to nominate only one Director does not amount to vesting the Management in Indian hands. It is ridiculous and nothing short of logic chopping. Management and control of a partner in a company flows from the number of Directors it has and its right to appoint a chairman and managing director of the company and not by making a partner who has the right to appoint only one Director as Chairman or Managing Director. Mere fact that 51% equity was reserved for Indian partners or promoters shows that the management of the company has to be necessarily in the hands of Indians which means majority of Directors have to be necessarily Indians.

But the defendants want the plaintiff to first identify its birth mark and that two before the Arbitrators as according to the defendants, Bharti is a stranger to the Skycell Company which itself is a party to the JVA and as such cannot be allowed to enter into their realm. This pre-supposes that the plaintiff is a non-entity so far as the JVA is concerned.

There is no dispute that the clause of arbitration is of widest possible amplitude as all and every kind of disputes arising out of the agreement including even disputes as to its jurisdiction fall within the purview of the Arbitrator. I deem it needless to refer to the catena of authorities in this regard as there is unvarying unanimous current of judicial opinion supporting the view that clause of arbitration as the one contained in the JVA embraces and envelopes any and every kind of dispute which includes dispute as to the jurisdiction of the Arbitrator also. But the condition precedent is that there should be an undisputed arbitration agreement between the concerned parties and that too in writing. Here the concerned parties are the plaintiff and defendants 1 to 3 but defendants 1 to 3 do not accept the plaintiff as one of their partners or co-promoters of Skycell as CGL once used to be and as such the plaintiff cannot be termed as 'a party tot he agreement'.

Lastly, the contention that the suit is barred by the provisions of Order 7 Rule 11 CPC as it provides that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law and in this case the provisions of Section 45 of the Act bar the jurisdiction of any judicial authority to entertain any action in a matter in respect of which an arbitration agreement subsists is wholly devoid of merit.

Since in the instant case the defendants/applicants are not ready to accept the plaintiff as a party to the Agreement and as such any unilateral statement of facts made by the plaintiff in support of its claim in the plaint cannot come within the ambit and purview of law of arbitration, the instant suit cannot be held as barred by this law. This argument is not only argumenti causa but also argumentum per impossible as it arises from contradictory supposition.

Conspectus of above facts and circumstances point out ineluctably that the provisions of Section 45 of the Arbitration and Conciliation Act 1996 are not invokable as the reliefs sought by the plaintiff in the instant suit are such that can be entertained even de hors the JVA as these emanate chiefly from the agreement dated 3.5.2001 concomitant with series of communications inter se the parties and the DOT and other authorities leading to the transfer of shares of CGL in order to keep the management of the Company in the Indian hands.

Out of all this, the following conclusions emerge :-

(i) The first and foremost condition to invoke Section 45 of the Act is the existence of written agreement which should neither be denied nor be disputed by any of the parties as according to Clause 2 of Article II of the First Schedule the definition of the 'agreement in writing' is of inclusive nature and is in substance at par with that of Section 7 of the Act.

(ii) Unless the contending parties accept each other as parties to the agreement, none of the parties or any person claiming through or under that party can request for referring the dispute to arbitration under Section 45 of the Act.

(iii) The exclusion of provisions of Sections 5, 9 & 16 in the Act in Part II of Chapter I does not mean that Part II of Chapter I confers power upon the judicial authority to adjudicate upon the jurisdiction of the Arbitrator. Section 45 of the Act has an overriding effect and prevails over anything contrary thereto either contained in Part-I of 1996 Act or in Code of Civil Procedure, 1908.

(iv) Section 45 is a complete code in itself so far as the power of the judicial authority to entertain an action in a matter in respect of which the parties made an agreement referred to in Section 44 of the Act is concerned. Section 45 makes it mandatory for the judicial authority when seized of an action in a matter in respect of which an arbitration agreement exists to refer parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. It imposes a mandatory duty on the Courts of Contracting State to recognize and enforce agreement to arbitrate.

(v) The question whether arbitration clause is null and void or inoperative or incapable of being performed as envisaged in Section 45 of the Act would arise only if both the parties have such an agreement in writing. The onus to prove these elements lies upon the party opposing the reference.

(vi) Once the parties have chosen a foreign arbitration forum to decide their disputes, it is no more open to them to subvert or stultify the arbitration agreement by approaching the judicial authority for any interim protection before or during the arbitral proceedings as it would render the agreement nugatory and tautologous.

(vii) The main basis for determining whether the remedy sought for by the plaintiff can be considered by way of the suit or not is the series of events as set out in the plaint that culminated in sale of the sharers by the CGL to Bharti as the defendants have refused to accept the plaintiff as one of their partners by way of questioning the validity of the sale of sharers of CGL.

(viii) The claims and counter-claims of the parties can be adjudicated only by way of an independent suit as for the defendants the plaintiff is a stranger and is forcing its entry into their domain as a trespasser whereas the plaintiff claims that it is his legal right to have the same place as was once occupied by CGL.

(ix) The application under Section 9 of the Act though filed on erroneous presumption that the parties were governed by domestic arbitration and the suit for injunction filed by DSS do not operate waiver nor do they amount to abandonment of the arbitration clause in the agreement.

In the result, the applications prove damp squib and are hereby dismissed being mis-conceived.