Madras High Court
M/S.Vonamor Entertainment ... vs Nagarjuna Yanamala on 26 October, 2022
Arb.O.P.(Comm.Div.) No.50 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 26.10.2022
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
Arb.O.P.(Comm.Div.) No.50 of 2021
1.M/s.Vonamor Entertainment Private Ltd.,
rep. by its Director,
Mr.S.Venkatesh
having its Office at L-116,
Ground Floor, 11th Street,
West Kamaraj Nagar,
Thiruvanmiyur,
Chennai - 600 041.
2.M/s.Vonamor Entertainment Private Ltd.,
rep. by its Director,
Mr.C.K.Mohammed,
having its Office at L-116,
Ground Floor, 11th Street,
West Kamaraj Nagar,
Thiruvanmiyur,
Chennai - 600 041. ... Petitioners
vs.
1.Nagarjuna Yanamala
2.Praveen Kumar Bandaru
1/11
https://www.mhc.tn.gov.in/judis
Arb.O.P.(Comm.Div.) No.50 of 2021
3.Yanamala Sundersana Babu ...
Respondents
PRAYER: Arbitration Original Petition filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996, pleased to appoint an arbitrator to
adjudicate the disputes between the petitioners and the respondents in terms
of the arbitration agreement dated 13.02.2020.
For Petitioners : Mrs.Vedavallikumar
For Respondent 1 : Ms.J.Amritha Sarayoo
for M/s.TVJ Associates
For Respondent 2 : Mr.J.Vasu
For Respondent 3 : Mr.S.Prabhakaran
for M/s.Udayveer Singh
**********
ORDER
The petitioner seeks the constitution of an arbitral tribunal to resolve
the dispute purportedly arising out of an agreement dated 13.02.2020, which
is tiled as A.R.Rahman Concert, Pune and Hyderabad Investors Agreement
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Arb.O.P.(Comm.Div.) No.50 of 2021
(the Agreement).
2. Learned counsel for the petitioner pointed out that clause 10 of the
Agreement provides for the resolution of disputes through arbitration and
further pointed out that a notice under Section 21 of the Arbitration and
Conciliation Act, 1996 (the Arbitration Act) was issued to all the respondents
herein on 17.12.2020. Although all the respondents received such notice, it
was submitted that only the third respondent replied thereto.
3. Learned counsel contended that the present petition is liable to be
allowed for the following reasons:
(i) Although the second and third respondents did not sign the
Agreement, they admittedly financed the organization and conduct of
concerts pursuant to such Agreement.
(ii) The e-mails addressed by or to the respondents, including by
copying the respondents, draw reference to the concerts and the disputes
relating thereto. The profit and loss account, including the investors account,
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Arb.O.P.(Comm.Div.) No.50 of 2021
was sent to the respondents as attachments to an email.
(iii) The Section 21 notice was dispatched to and received by all the
respondents.
4. In order to substantiate these contentions, learned counsel relied
upon the following judgments:
(i) Baluram -vs- P.Chellathangam and others, (2015)13 SCC 579,
particularly paragraph 15 thereof, with regard to the necessary parties to a
dispute.
(ii) Chloro Controls India Private Limited -vs- Severn Trent Water
Purification Inc. and Others, (2013)1 SCC 641, particularly paragraph 157
thereof, with regard to the circumstances in which a reference to arbitration is
justified even in respect of non-signatories to an arbitration agreement.
5. These contentions were refuted by learned counsel for the first
respondent on the following grounds:
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Arb.O.P.(Comm.Div.) No.50 of 2021
(i) The Agreement was admittedly not signed by the second and
third respondents herein.
(ii) The Agreement was not signed in view of the inequitable
sharing of profit and loss, as provided therein.
(iii) The requirements of Section 7 of the Indian Contract Act,
1872 (the Contract Act) are not satisfied.
(iv) The requirement of Section 2(a) read with Section 7 of the
Arbitration Act are not fulfilled in as much as there is neither an
arbitration clause - as part of the Agreement, which has been
signed by all the parties hereto - nor a separate arbitration
agreement between the parties.
6. In support of these contentions, learned counsel relied on the
following judgments:
(i) U.P.Rajkiya Nirman Nigam Ltd. -vs- Indure Pvt. Ltd., (1996)2 SCC
667, particularly paragraphs 8 and 19 thereof, for the proposition that the
existence of a written agreement to submit existing or future disputes to
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Arb.O.P.(Comm.Div.) No.50 of 2021
arbitration is a pre-condition for reference of the dispute to arbitration.
(ii) PSA Mumbai Investments Pte. Limited -vs- Board of Trustees of
the Jawaharlal Nehru Port Trust and another, (2018)10 SCC 525,
particularly paragraphs 12 and 14 thereof, with regard to the requirements of
absolute and unqualified acceptance as per Section 7 of the Contract Act.
(iii) Chloro Controls India Private Limited -vs- Severn Trent Water
Purification Inc. and Others (Chloro Controls), particularly paragraph 133
thereof, wherein the Court refused to interfere with the ratio in Sukanya
Holdings Pvt. Ltd. -vs- Jayesh H.Pandya and another, (2003)5 SCC 531.
7. Learned counsel for the second respondent submitted as under:
(i) The second respondent financed the concerts to the extent of
Rs.1.16 Crore.
(ii) The second respondent was lured into investing on the basis of the
petitioner's representation that they had a strong equation with
Mr.A.R.Rahman. However, no accounts were provided thereafter.
(iii) The Agreement was not signed by the second respondent.
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Arb.O.P.(Comm.Div.) No.50 of 2021
(iv) A FIR was registered and it is likely that a charge sheet would be
filed soon.
8. Learned counsel for the third respondent submitted that the third
respondent did not sign the Agreement and that correspondence was merely
copied to the said respondent.
9. The sustainability of the petition should be determined in the context
of the above contentions. At the outset, it should be noticed that there are
two petitioners, both suing on behalf of a limited liability company, Vonamor
Entertainment Private Limited. It is not possible to discern the reason for the
same legal entity being arrayed as the first and second petitioners herein.
10. Turning to the Agreement, the Agreement contains the name of the
petitioner, which is described as National Promoter. It also contains the
names of each of the respondents herein, who are described as party one,
party two and party three and collectively as investors. The admitted position
is that only the petitioner and the first respondent signed the Agreement. The
Agreement contains a provision for dispute resolution through arbitration
(clause 10). Therefore, it should be examined whether the requirements of
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Arb.O.P.(Comm.Div.) No.50 of 2021
Section 2(a) read with Section 7 of the Arbitration Act are otherwise
satisfied. In order to satisfy the requirements of Section 7, there should be a
written arbitration agreement. Such written arbitration agreement could be
contained in an arbitration clause in a contract or in other documents, such as
correspondence between the parties or even by reference in the contract to a
document containing the arbitration clause provided such reference is
sufficient to incorporate the arbitration clause by reference into the relevant
contract. Apart from the impugned Agreement, learned counsel for the
petitioner invited my attention to e-mails addressed by or to the respondents.
None of the e-mails draw reference to the Agreement dated 13.02.2020.
More importantly, the petitioner has failed to place on record any e-mails or
communications from the respondents evidencing the intention to be bound
by the arbitration clause contained in the Agreement. Although learned
counsel for the petitioner relied upon an e-mail from the first respondent to
the petitioner and the other respondents, such e-mail also does not draw
reference to the Agreement although it draws reference to obligations, which
may also be dealt with in the Agreement. For all these reasons, I conclude
that the requirements of the Section 7 of the Arbitration Act are not satisfied.
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Arb.O.P.(Comm.Div.) No.50 of 2021
11. The question whether a reference to arbitration is nonetheless
warranted by recourse to the Group of Companies doctrine or the like
remains to be considered. Both the petitioner and the first respondent relied
upon Chloro Controls. In the said judgment, the Hon'ble Supreme Court
noticed that there was a primary or mother contract and several contracts
ancillary thereto, which formed a composite whole. The Court also noticed
that all the parties were a part of a common Group of Companies. In those
circumstances, the Court concluded that reference to arbitration under Section
45 of the Arbitration Act is justified. This principle was extended to
references under Part I of the Arbitration Act by Cheran Properties -vs-
Kasturi and Sons Limited, (2018) 16 SCC 413. Although the law laid down
in Chloro Controls has been referred to a larger bench, it holds the field as
on date. Applying the said principles to the facts of this case, each of the
respondents is an individual. There is nothing on record to indicate that they
have constituted a partnership or any other association. Learned counsel for
the first respondent pointed out that the second and third respondents refused
to sign the Agreement in view of clauses, such as clause 2.4, which provide
for sharing of losses only by the investors. In these circumstances, reference
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Arb.O.P.(Comm.Div.) No.50 of 2021
to arbitration is not warranted even in terms of the ratio laid down in Chloro
Controls.
12. For reasons set out above, this petition is liable to be rejected.
Accordingly, Arb.O.P.(Comm.Div.) No.50 of 2021 is dismissed without any
order as to costs by leaving it open to the petitioner to institute appropriate
civil proceedings in relation to the dispute between the petitioner and the
respondents.
26.10.2022
rna
Index : Yes / No
Internet : Yes / No
https://www.mhc.tn.gov.in/judis
Arb.O.P.(Comm.Div.) No.50 of 2021
SENTHILKUMAR RAMAMOORTHY,J
rna
Arb.O.P.(Comm.Div.) No.50 of 2021
26.10.2022
https://www.mhc.tn.gov.in/judis
