GEO GROUP COMMUNICATIONS INC Vs. IOL BROADBAND LTD

JUDGEMENT

(1.) By filing the instant application under Section 11(6) of the Arbitration and Conciliation Act, 1996, the applicant Company has prayed to appoint Mr. Justice D.R. Dhanuka (a retired Judge of Bombay High Court) as Sole Arbitrator for adjudicating the disputes that have arisen between the applicant and the respondent Company under the Share Subscription and Shareholders Agreement dated December 1, 2005.

(2.) The facts emerging from the record of the case are as under:

(3.) The application was placed for preliminary hearing and after hearing the learned Counsel for the applicant, notice was ordered to be issued to the respondent. On service of notice the respondent has filed reply controverting the averments made in the application. In the reply it is mentioned that the respondent Company has, in compliance with the Scheme of Amalgamation and the orders of High Courts of Bombay and Bangalore, allotted shares to those members of the Exatt whose names were borne in the register of members of the said Exatt and the question of allotting shares to the applicant did not arise at all as the name of the applicant was not borne in the register of members of the Exatt. What is stated in the reply is that the alleged claim of the applicant that the respondent Company did not allot 1,73,000 shares of the Company to the applicant pursuant to the Scheme of Amalgamation is a subject-matter of the said Scheme, which is governed by the provisions of Companies Act, 1956. According to the respondent, the claim advanced by the applicant does not arise out of the purported SHA dated December 1, 2005 and any issue arising out of the Scheme of Amalgamation has to be addressed to the Company Court that has sanctioned the Scheme of Amalgamation. It is mentioned in the reply that the arbitration clause relied upon by the applicant is one contained in the purported agreement between the applicant and the Exatt and brings within its ambit only those transactions which are contemplated in the purported agreement and as 6920 equity shares were allotted to the applicant by Exatt under SHA dated December 1, 2005, the said Agreement was fully performed by the parties and, therefore, there is no scope for any dispute under the purported agreement to be referred to Sole Arbitrator for adjudication. According to the respondent the purported Share Subscription and Shareholders Agreement dated December 1, 2005, relied upon by the applicant, is a document which is described at' the foot of the said document as "preliminary and tentative draft for discussion purpose only", but thereafter no further and/or other document was executed between the applicant and Exatt and, therefore, the said Agreement is not enforceable at law. It is also claimed by the respondent that the document dated December 1, 2005 is unstamped and is, therefore, devoid of legal effect. What is asserted in the reply is that to be eligible for allotment of shares of respondent Company as per the Scheme a member must be registered member of Exatt and his name should be entered in the register of members of Exatt, but the applicant was not a member of Exatt as borne out by the register of members of the said Company and, therefore, question of allotment of shares under the Scheme of Amalgamation does not arise at all. It is further mentioned in the reply that SHA document dated December 1, 2005 defines "closing" to mean consummation of the transactions contemplated in the agreement and "closing date" means the date on which the closing of transaction occurs, which shall be in no event later than 1st September, 2005, which is a date preceding the date of document, i.e., December 1, 2005 and is incapable of implementation as well as void. It is further mentioned in the reply that as per Article 2 of SHA subscription to shares by the applicant and issue thereof by the Exatt is subject to the applicant obtaining an approval from appropriate regulatory and statutory authorities including approval of FIPB for subscription of shares before the closing date and the applicant providing certified copy of such approval to Exatt as well as satisfying Exatt that the applicant is permitted to subscribe, but Article 2 of the SHA is not complied with by the applicant and, therefore, the instant application deserves to be dismissed.