Arbitration and Conciliation Act, 1996: s. 11(6) – Appointment of arbitrator – Novation of contract – Effect of – Appellant entered into a share purchase agreement (SPA) with respondent No.1 as also respondent Nos. 2 and 3 (promoters of respondent No.1) to buy the power project of respondent No.1 – Respondent Nos. 2 and
3 agreed to sell 100% ownership of respondent No. 1 and appellant agreed to purchase 100% Equity and Preference Shares of respondent no. 1 by taking over the loans of respondent No. 1 and paying the balance amount to sellers-respondent Nos. 2 and 3 – Thereafter, a tripartite agreement entered into by the appellant through its affiliate-respondent No. 4 with respondent no. 2 and 3 – Tripartite Agreement recorded execution of SPA and payment made to respondent Nos. 2 and 3 in terms of the SPA – An addendum to SPA also signed whereby respondent No. 4 agreed to remit certain amounts to respondent Nos. 1 to 3 to regularise the loan and facilitate the transfer of the project company – However, disputes arose between the parties – In terms with the arbitration clause under the SPA, application s.11(6)by the appellant for appointment of an arbitrator – High Court dismissed the application on the ground of novation of contract between the parties – On appeal, held: High Court not right in dismissing the petition u/s. 11(6) by giving a finding on novation of the Share Purchase Agreement between the parties as the said aspect would have a bearing on the merits of the controversy between the parties – Thus, it must be left to the arbitrator to decide on the said issue also – Impugned judgment and order passed by the High Court quashed and set aside – Former judge of the Supreme Court of India appointed as sole arbitrator to adjudicate the disputes between the parties.
National Insurance Co. Ltd. vs. Boghara Polyfab Pvt. Ltd. (2009) 1 SCC 267 : [2008] 13 SCR 638; SBP & Co. vs. Patel Engineering Ltd. (2005) 8 SCC 618; Vidya Drolia vs. Durga Trading Corporation (2021) 2 SCC 1 : 2021 (6 ) JT 460; Indian Oil Corporation Ltd. vs. NCC Ltd. 2022 SCC OnLine SC 896; Union of India vs. Kishorilal Gupta and Bros. (1960) 1 SCR 493, Young Achievers vs. IMS Learning Resources Pvt. Ltd. (2013)
10 SCC 535 : [2013] 2 SCR 252; M.B.S Impex Pvt. Ltd. vs. Minerals and Metals Trading Corporation (2020) 5 ALD 185; Damodar Valley Corporation vs. K.K. Kar (1974) 1 SCC 141: [1974] 2 SCR 240 referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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