REGIONAL AIRPORT HOLDINGS INTERNATIONAL LIMITED Vs. IL AND FS ENGINEERING AND CONSTRUCTIONS COMPANY LIMITED AND OTHERS

JUDGEMENT

(1.) PETITIONER -Regional Airport Holdings International Limited contends that they entered into a share purchase agreement as per Annexure A and share holders agreement as per Annexure B both dated 09.07.2010 with the respondents. Subsequently the petitioners and respondents have also entered into a supplementary agreement as per Annexure C. In terms of Annexures A, B and C the petitioners established management control over respondent No. 6 and took the responsibility of setting up the Greenfield Airport at Shimoga. According to the petitioners, respondent No. 1 committed several breach of terms of Annexure A, B and C. Thus there are disputes between the petitioners and respondents. As per Clause 5.2 of the share purchase agreement and Clause 13 of the share holders agreement arbitration clause is provided and the same reads as under: 5.2 Arbitration (share Purchase Agreement) 5.2.1 Any dispute, controversy or claim arising out of or in relation to this Agreement or the interpretation of any of their provisions or upon the occurrence of any event of breach of any of the terms of this Agreement shall be resolved by Arbitration. For the purpose of such arbitration, the party referring the dispute to arbitration shall appoint the first arbitrator and the other shall appoint the second arbitrator and the third or presiding arbitrator shall be appointed by the two arbitrators chosen by the Parties. 5.2.2 The Arbitration shall be carried out in accordance with the provisions of the Arbitration and Conciliation Act, 1996. 5.2.3 The arbitral proceedings shall take place in Bengaluru and shall be conducted in the English language. 5.2.4 The award of the Arbitral Tribunal shall be final and binding on the parties. 13. Dispute Resolution (Shareholders Agreement) 13.1 Any dispute, controversy or claim arising out of or in relation to this Agreement or the interpretation of any of their provisions or upon the occurrence of any event of breach of any of the terms of this Agreement shall be resolved by Arbitration. For the purpose of such arbitration, the party referring the dispute to arbitration shall appoint the first arbitrator and the other shall appoint the second arbitrator and the third or presiding arbitrator shall be appointed by the two arbitrators chosen by the parties. 13.2 The Arbitration shall be carried out in accordance with the provisions of the Arbitration and Conciliation Act, 1996. 13.3 The arbitral proceedings shall take place in Bengaluru and shall be conducted in the English language. 13.4 The award of the Arbitral Tribunal shall be final and binding on the Parties. In order to resolve the disputes between the parties arising out of the agreements Annexure A and B petitioners invoked the arbitration clause and issued a notice on 02.07.2012 nominating Sri. H.B. Jairaj as arbitrator on their side and called upon respondent No. 1 to appoint their nominee within specified period. The petitioners' notice is marked as Annexure H. The respondents, instead of complying the demand made in the petitioners' notice, got issued a reply as per Annexure J dated 17.05.2012 inter alia contending that there are no disputes to be resolved and the petitioners have invoked the arbitration clause only with an intention to delay to perform their part of obligations under the agreements Annexure A and B. Therefore the petitioners are before this Court

(2.) HEARD arguments on both the side and perused the entire petition papers.

(3.) THE Supreme Court in the case of ., AIR 2011 SC 987 held that the Courts will not enter into the merits of the dispute while -considering the petition under Section 11 of the Arbitration and Conciliation Act. Therefore I decline to go into the question, whether the respondents committed breach of terms of agreement or petitioners committed breach of terms of agreement. In view of the rival stand taken by the parties, I am of the considered opinion, that there is a dispute. In terms of the arbitration clause in the agreements at Annexure A and B, the dispute between the parties is to be revolved by the arbitrators. Therefore the petitioners are entitled to succeed.