SASKEN COMMUNICATION TECHNOLOGIES LIMITED Vs. PRIME TELESYSTEMS LIMITED

JUDGEMENT

(1.) This petition under Section 11 (4) of the Arbitration and Conciliation Act, 1996 (hereinafter referred, to as "the Act" only) has been filed with a prayer to appoint an Arbitrator on behalf of respondent No.1 to enter reference and adjudicate upon the matter. No dispute is stated to be existing with respondents No.3 and 4 and as such no relief is claimed against them but a right is reserved to institute arbitration proceedings against them also upon their failure to honour their obligations under the Subscription cum Share holders Agreement dated 28.2.2001.

(2.) According to the petitioner the applicant Company alongwith M/s Citicorp Finance (India) and Intel Capital Corporation (hereinafter referred to as Investors No.1 and 2 respectively) had entered into a Subscription cum-Shareholders Agreement dated 28.2.2001 with respondent No.1 and its promoters respondents 2,3 and 4. In terms of this agreement the applicant and investors consented to invest in the equity share capital of respondent No.1 by subscribing to preferential issue on the basis of certain representations, warranties, undertakings, statements and covenants made by respondent No.2,3 and 4 on behalf of respondent No.1. After the applicant and Investors No.1 and 2 had subscribed to the equity shares of respondent No.1 and allotment of shares had been made the petitioner-applicant discovered that the representations, warranties, undertaking, statements and covenants made in the agreement by respondents 2,3 and 4, on behalf of respondent No.1, were incorrect and untrue. It was stated that these misleading and wrong representations constituted breach of Agreement. In terms of the Agreement the petitioner invoked 'put option' clause as contained in Article 32.2 of the Agreement and required the respondents to purchase the shares owned by the applicant but the respondents No.1 and 2 failed to fulfil their obligations and as such disputes. Efforts were made to settle disputes and differences amicably but without any result and therefore, in terms of the Arbitration Agreement contained in Article 36.1 of the Agreement the applicant issued notice dated 15.1.2002 nominating Mr. Justice M.L. Pendse (Retd.) as its Arbitrator and called upon respondent No.1 to nominate and appoint, within 15 days of the receipt of the notice, its nominee arbitrator to adjudicate the disputes between them. Inspite of this notice the respondents No.1 and.2 did not nominate their Arbitrator and hence the petition for appointment of Arbitrator for respondent No.1 for adjudication of disputes between the parties.

(3.) Reply was filed on behalf of respondent No.1 only. It was signed by respondent No.2,. Respondents No.3 and 4 did not file any reply but adopted the reply filed by respondent No.1 and opposed the prayer made by the petitioner-applicant.