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shares to the right-holder. Often majority stake holders or promoters prefer to retain a call option
so that in a downside, they can retain control of the JV Co by buying out other JV partners.
Pet: iled an application under Section 45 of the Arbitration and Conciliation Act, 1996 being CA
No. 94/2013 before the Board praying that the proceedings of the company petition be stopped
and the parties be referred to have the disputes adjudicated through arbitration as there was a
clause in the JVA to have the disputes/differences between the parties i.e. the plaintiff No. 1 and
the defendant No. 1 resolved through the London Court of International Arbitration (LCIA)
Vikram Bakshi vs. MC Donald's India Pvt. Ltd. (22.12.2014 - DELHC) : MANU/DE/3483/2014
Mr. Salve contended that the present suit is not maintainable as the suit challenging the validity
of an arbitration agreement is barred under Section 5 of the Arbitration and Conciliation Act,
1996. It was contended that one of the main objectives of the Act is to minimize the supervisory
roles of courts in the arbitral proceedings and since Section 5 of the Arbitration and Conciliation
Act, 1996 is applicable to Part II of the Act also, therefore, the civil court's jurisdiction is barred.
Reliance in this regard was placed on Chatterjee Petrochem (Mauritius) Co. and Anr. vs. Haldia
Petrochemicals Ltd. MANU/SC/1258/2013 : 2013(4) Arb. L.R. 456 (SC). So far as the
judgments relied upon by the learned counsel for the plaintiffs are concerned, they were sought
to be distinguished.
Vikram Bakshi vs. MC Donald's India Pvt. Ltd. (22.12.2014 - DELHC) : MANU/DE/3483/2014
http://www.mca.gov.in/Ministry/reportonexpertcommitte/chapter4.html
While corporate governance may comprise of both legal and behavioral norms, no written set of rules or laws can
contemplate every situation that a director or the board collectively may find itself in. Besides, existence of written
norms in itself cannot prevent a director from abusing his position while going through the motions of proper
deliberation prescribed by written norms. Therefore behavioural norms that include informed and deliberative decision
making, division of authority, monitoring of management and even handed performance of duties owed to the
Companies need to adopt remuneration policies that attract and maintain talented and motivated directors and
employees so as to encourage enhanced performance of the company. Decision on how to remunerate directors
should be left to the Company. However this should be transparent and based on principles that ensure fairness,
reasonableness and accountability. 13.2 It is important that there should be a clear relationship between
responsibility and performance vis-à-vis remuneration, and that the policy underlying Directors’ remuneration be
he appointment and removal of the key managerial personnel should be by the Board of Directors
203(2) Every whole-time key managerial personnel of a company shall be appointed by means of
a resolution of the Board containing the terms and conditions of the appointment including the
remuneration.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
Mr. Madon is correct, generally speaking, in saying that a draughts person's acuity cannot
permit a party to slither out of a binding arbitration agreement. But just as a petition
cannot be 'dressed up' to evade an arbitration agreement, a bona fide petition, not one that
is vexatious, oppressive or mala fide, and genuinely seeks broader reliefs to prevent acts of
oppression and mismanagement cannot be, as it were, defrocked, its thesis unseated and its
dispute only because there happens to be an arbitration agreement. The mistake, I believe,
is in seeing every arbitration agreement as some catch all, encyclopaedic repository for the
entirety of the universe of disputes between parties. It is not necessarily so. Conceptually,
too, a petition under Sections 397 and 398 of the Companies Act is not necessarily or
affairs or in the oppression of the minority shareholders, or both. In such a petition, even if
there is an arbitration agreement, it does not necessarily follow that every single act
complained of must, ipso facto, relate to that arbitration agreement. Merely because an
arbitration agreement exists does not always or necessarily imply that all disputes relate
only to it, or that all parties' rights and remedies are circumscribed by that agreement.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
Similarly, no arbitration agreement can vest an arbitral tribunal with the powers to grant
the kind of reliefs against oppression and mismanagement that the CLB might. Mr.
Madon's submission that it matters not what the arbitral panel does with the dispute so
long as the dispute is referred seems to me to strain at the boundaries of the intent of
arbitration law. The idea cannot possibly be to shunt parties off the main tracks of a
properly brought litigation to some siding with no destination and no way forward. It must
be to provide them with an effective, quick and reasonable dispute resolution alternative.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
In assessing an allegation of 'dressing up', the Section 397/398 petition must be read as a
whole, including Its grounds and the reliefs sought. It cannot be carved up and
deconstructed so as to bring some matters within the arbitration clause and leave other
matters out Where there are reliefs that are not arbitrable because they fall within Section
402 of the Companies Act, 1956, there is no question of a dismissal of the petition on the
ground that there exists an arbitration clause. In Sukanya Holdings (P) Ltd. v. Jayesh H.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
The true consequence of my finding on Mr. Chinoy's submission regarding the non- arbitrability
of disputes validity brought under sections 397-398 read with Section 402 of the Companies Act,
1956 is that it is not enough for an applicant seeking a reference to arbitration merely to show
that there exists an arbitration agreement. He must, in addition, establish before the CLB that the
petition is mala fide, vexatious and 'dressed up' and that the reliefs sought are such as can be
resolved by a private arbitral tribunal. To hold otherwise would be to say that even a dressed up
petition cannot be referred to arbitration. I see no reason why the CLB should be denuded of its
powers in that situation, it is, after all a "Judicial Authority" within the meaning of the
mischievous and 'dressed up' petition. That would be wholly contrary to Swiss Timing, Pinkcity,
Fuerst Day Lawson and others. The injustice in such a case is manifest. It must follow, therefore,
that the CLB always retains the power to refer the disputes in a petition that is mischievous,
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
As per the decision in the case of V.V. Ranga Raj Vs v. B. Gopalkrishnan [1991] 6 CLA 211 SC,
the Articles are binding inter se Company and its shareholders members.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
According to the Ld. Counsel, in view of various judgments passed by the Hon'ble Supreme
Court, the well recognized examples of non-arbitrable disputes are: (i) disputes relating to rights
and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes
relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii)
guardianship matters; (iv) insolvency and winding up matters; (v) testamentary matters (grant of
probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters
governed by special statutes where the tenant enjoys statutory protection against eviction and
only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
It is further submitted that as the parties have already agreed to the dispute resolution in
mechanism, the present proceedings are not maintainable and, therefore, Board may graciously
be pleased to refer the parties before the Arbitral Tribunal as agreed by the parties.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
In addition to the above, Mr. Mehta relying upon the decision in the case of M/s. Emgee Housing
Pvt. Ltd. & Ors. MANU/CL/0065/2012, to contend that the right of the shareholders under
Section 397 or 398 is a statutory right which by Section 8 of the Arbitration and Conciliation
Act, 1996 cannot be ousted by a provision in the Articles of Association of the Company and or
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
he foregoing facts clearly demonstrate that the affairs of the Company are being conducted in a
harsh, oppressive and burdensome manner, and also prejudicially to the Petitioner being, a
shareholder of the Company and to the interests of the Company; there is complete lack of
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
In my view, an arbitrator is not capable to grant reliefs sought by the petitioner in the petition
and the CLB is the only competent forum to grant such reliefs in exercise of Its rights and
powers conferred upon it by virtue of the provisions contained in Section 402 of the Act.
Dunar Foods Limited and Ors. vs. IL and FS Trust Co. Ltd. and Ors. (13.05.2015 - CLB) :
MANU/CL/0015/2015
The court dismissed the action on the ground that, as the acts of the directors were capable of
confirmation by the majority of members, the court should not interfere. it was thus left to the
majority to decide what was for the benefit of the company. This rule has been applied in several
Rajeev Saumitra vs. Neetu Singh and Ors. (27.01.2016 - DELHC) : MANU/DE/0201/2016
conduct of parties is relevant. It shows how they understood it. As the Supreme Court said in The
Godhra Electricity Co Ltd. & Anr. v The State of Gujarat & Anr. MANU/SC/0282/1974 : (1975)
1 SCC 199
"11. In the process of interpretation of the terms of a contract, the court can frequently get great
assistance from the interpreting statements made by the parties themselves or from their conduct
in rendering or in receiving performance under it. Parties can, by mutual agreement, make their
own contracts; they can also, by mutual agreement, remake them. The process of practical
interpretation and application, however, is not regarded by the parties as a remaking of the
contract; nor do the courts so regard it. Instead, it is merely a further expression by the parties of
the meaning that they give and have given to the terms of their contract previously made. There
is no good reason why the courts should not give great weight to these further expressions by the
parties, in view of the fact that they still have the same freedom of contract that they had
own favour. It is the concurrence therein that such a party can use against the other party. This
concurrence may be evidenced by the other party's express assent thereto, by his acting in
accordance with it, by his receipt without objection of performances that indicate it, or by saying
nothing when he knows that the first party is acting on reliance upon the interpretation (see
Madhu Ashok Kapur and Ors. vs. Rana Kapoor and Ors. (04.06.2015 - BOMHC) :
MANU/MH/1038/2015
Custom and practice is one of various ways that terms may become
implied into an employment contract. In order for a term to become
implied by custom and practice it must be,
"reasonable, notorious and certain".
In other words the term must be:
fair and not capricious,
well established over a period of time,
known to employees,
clear and unambiguous.
The fact that a benefit has been granted by an employer for a number of
years will not necessarily mean it has become a binding entitlement.
Firstly, this is because the term must be known to the workforce so that
employees have a reasonable expectation of receiving the benefit. For
example, if details of the benefit are published in an easily accessible
document such as a staff handbook this might point towards an implied
term. However, if information about the benefit is set out in a restricted
policy document available only to a small group of management or HR,
this would point away from the benefit having become an implied term.
Secondly, the employer must have behaved in such a way which
suggests it felt a sense of legal obligation to provide the benefit.
Ultimately, the question a tribunal or Court will ask is whether the
circumstances demonstrate that the parties intended the term to form
part of their contract? In other words, can they be taken to have
accepted that the practice has attained contractual status?
In the recent case of Park Cakes v Shumba & Ors, which concerned a
disputed entitlement to an enhanced redundancy payment, the Court of
Appeal stressed that the crucial task for a tribunal was to assess
objectively whether the employer's conduct evidenced an intention to be
bound by the term:
". the essential question.. Must be whether, by his conduct in making available a particular
benefit to employees over a period, in the context of all the surrounding circumstances, the
employer has evidenced to the relevant employees an intention that they should enjoy that
benefit as of right?"