MAHENDRA R SARAF Vs. GOLDSTONE TECHNOLOGIES LIMITED

JUDGEMENT

(1.) The petitioners filed the above application under Section 11 (6) of the Arbitration and Conciliation Act, 1996 read with Rule 3 (l)(d) of the Scheme for Appointment of Arbitrators, 1996. The petitioners were holding 100% of the equity shares of M/s. Natural Technologies Private Limited and were also promoters/ shareholders/directors of the said Company. The petitioners negotiated with the respondents and arrived at an understanding wherein the respondents agreed inter aim to (i) buy 100% equity shares of the petitioners held in Natural Technologies Private Limited along with product rights, patent and trade marks; (ii) meet fhe running expenses of the banking division (NTPL) and (iii) share the profit with the petitioners in an agreed manner for a period of three years, apart from some other terms and conditions.

(2.) An agreement was entered intobetween the petitioners and the respondents on 22-2-2000 under which the petitioners have sold 100% of the equity shares of NTPL with product rights, patent and trade mark to the respondents. The agreed operational terms and conditions were incorporated in the agreement dated 22-2-2000 which were required to be performed and discharged by both the parties of the agreement. The petitioners as required by the respondent- company opened a Bank account with the State Bank of Bikaner and Jaipur and it was resolved that it would be operated on behalf of the respondent-company by petitioner No.2 as an authorized signatory of the Company, the office of the respondent company started functioning at Jaipur with the employees of NTPL who were given appointment letters by the respondent company and some more employees were employed for running the business. The amount of cash of Rs.100 lakhs and its mode of payment were also incorporated in the agreement. According to the petitioners, right from the beginning, the respondents have been committing breach of the contract to discharge their obligations under the contract in many ways and more prominently in respect of not properly setting up the office of the banking division (NTPL), not developing the manpower infrastructure for various jobs of development, customization, implementation and marking, non- clarification of the marketing Strategy, non- setting up of the testing lab, etc.

(3.) In view of the same, differences arosebetween the parties on various aspects, such as, lack of perception of division of the functional responsibilities, lack of commitment about the product, lack of understanding of the processes of the development, testing in the lab/site, customization, implementation, after sales service of an application software particularly in banking non-implementation of action points commonly arrived at in various meetings.