1. Over a year has gone past since this Petition was fledd In that time these two Respondents, undoubtedly indebted to the Petitioner, have done three thingsd One, they have repeatedly promised to payd Two, they have then attempted to deny liability, only to admit it laterd Three, they have made payment of an amount of only Rsd 50 lakhs just a few days agod Including contractually stipulated interest, the Petitioner’s claim is a little more than Rsd 23 croresd The principal component itself (without reckoning the Rsd 50 lakh payment) is Rsd 14d88 crores.

2. I have noted these broad factors at the very beginning just to give a conspectus of where the matter stands.

3. The factual background is thisd The Petitioner (“Kotak Mahindra”), is a banking companyd The 1st Respondent, Williamson Magor, carries on a variety of businessesd The 1st Respondent itself is a corporate promoter of other companies including one McNally Bharat Engineering Co Ltd (“McNally Bharat”)d The 2nd Respondent (“Khaitan”) is the chairman and one of the promoters of Williamson Magord The Respondents have various other associated corporate entities including Eveready Industries India Ltd, McLeod Russel India Limited and so ond All these are part of the Khaitan Group.

4. In early 2018, Williamson Magor, Khaitan and McNally Bharat asked Kotak Mahindra to take up equity in McNally Bharatd After negotiations, the parties agreed that Kotak Mahindra bank would purchase 24 lakh shares of McNally Bharat at a price of Rsd 62/- per share, said to be the then prevailing share priced For reasons that do not matter, but do suggest themselves, and to ensure that a major fnancial institution such as Kotak Mahindra remained invested as a shareholder, the parties agreed: (1) Kotak Mahindra would remain invested for a period of 15 to 30 months from April 2018; (2) at any time after that period, Kotak Mahindra could call on Williamson Magor to buy, either itself or through a third party, the entirety of Kotak Mahindra’s shareholding in McNally Bharat (a ‘put option’); (3) the put option, if exercised, required Williamson Magor to take up Kotak Mahindra’s equity in Bharat McNally at the initial acquisition price of Rsd 62/- per share plus an assured 16% Internal Rate of Return or IRR; and (4) if Williamson Magor could not or did not comply with this demand, Khaitan would discharge these obligations, that is to say, Khaitan would either buy Kotak Mahindra’s shareholding himself at this price (Rs 62/- per share with an IRR of 16%) or would cause a third party to do sod These, Kotak Mahindra says, were the representations made to it and on the basis of which it made an investment of Rsd 14d88 crores in McNally Bharat Engineeringd It was allotted 24 lakh shares of the face value of Rsd 10/- per share at Rs 62 per share, ided with a premium of Rsd 52/- per shared This is documented.

5. To give efect to this agreement and the put option, Williamson Magor and Kotak Mahindra entered into an agreement dated 12th April 2018d It provided that within 15 to 30 months after the date of initial investment, Kotak Mahindra could call upon Williamson Magor to take up its equity either itself or through a third party at Rsd 62/- per share plus a 16% IRRd A copy of this agreement is at Exhibit “B” to the Petition from page 22d The put option is described in clause (2) at pages 24 to 25d About this there is no dispute at all.

6. This agreement also contains a provision for arbitration in clause 11d1d The reference is to be a three-Member Tribunal and the arbitration is to be in Mumbaid The clause is broadly worded.1

7. As I noted above, according to Kotak Mahindra there was an understanding that Williamson Magor’s obligation under the put option would also be assured or guaranteed by Khaitan himselfd This meant that if Williamson Magor did not fulfl its contractual obligations upon Kotak Mahindra exercising the put option, Khaitan had agreed to fulfl those put option obligations himselfd As we shall see, this is important for an assessment of the tenability of one of the defences taken by Mr Kamat for the Respondentsd It is not in dispute that Khaitan then entered into and executed a Deed of Guarantee also of 12th April 2018d A copy is annexed at Exhibit “C” from page 32 onwards.

8. Ordinarily, I would not have had need to consider this document in any great detaild This only becomes necessary in view of the arguments taken before me and in the Afdavit in Replyd The recitals to the Guarantee document make it clear that Khaitan has executed the document as a promoter of Williamson Magord The frst recital says sod Recitals B, C and D are importantd Recital B acknowledges the share subscription by Kotak Mahindra in McNally Bharatd Recital C acknowledges the put option that allows Kotak Mahindra to require Williamson Magor either by itself or through a third party to purchase Kotak Mahindra’s investment in McNally Bharatd Then Recital D tells us that Khaitan as a promoter of Williamson Magor has agreed to secure “the said obligations of” Williamson Magor by providing “an unconditional and irrevocable personal guarantee in favour of” Kotak Mahindra Bankd The rest of the guarantee follows the usual pattern, but clause (3) speaks of the liability of Khaitan being unafected by a variety of factors that are listed in that claused Sub-clause (j) tells us that Khaitan’s liability is unafected by any dispute or disagreement in relation to any agreement between Williamson Magor and Kotak Mahindra Bank or any other person.

9. Then Clause 13 tells us that the guarantee is covered by Indian law and then says it is subject to the exclusive jurisdiction of competent Courts in Mumbai aloned Mr Kamat would have it — and this is what his Afdavit in Reply says — that this clearly means that Khaitan has signed no arbitration agreement and no arbitration is possible against Khaitand The submission is that the guarantee is personald Khaitan may have been the chairperson of Williamson Magord But that is irrelevantd He himself has not signed the principal or master agreementd His guarantee is a separate contract and must be separately construed.

10. When confronted with the decision of the Supreme Court in Chloro Controls India Pvt Ltd v Severn Trent Water Purifcation Inc & Ors, 2 and particularly paragraph 103 of that decision, Mr Kamat submits that Chloro Controls has been explained in later decisions to say that the intention to refer to arbitration must be shownd This is the reason I have been at some pains to deal with the Deed of Guarantee and the terms of this agreement.

11. The Afdavit in Reply (on behalf of both Respondents) contains a denial in paragraph 4(c) that Khaitan expressly or impliedly or otherwise “intended to be bound by the agreement dated 12th April 2018”d That statement is clearly untrued The guarantee in terms says that Khaitan is bound by the agreementd But that is not even the questiond The question is whether Khaitan intended to be bound by the arbitration agreement, for it is wellsettled that an arbitration agreement is ‘an agreement within an agreement’d There is a denial in this very paragraph that Khaitan had ever agreed or intended to be bound by the arbitration agreementd This lack of intention will thus have to be gathered from other surrounding circumstancesd But what the argument frst overlooks is the stipulation in the guarantee itself which we fnd in clause 15d2d Undoubtedly Khaitan has signed this guaranteed Undoubtedly it contains clause 15d2d Undoubtedly this clause says that the guarantee “together with the defiitiie agreemeit” constitutes and contains an entire agreement and understanding amongst the parties with respect to the subject matter and supersedes all previous communications etcd This is not a question of ‘incorporation by reference’d This is a matter that fall squarely within the Chloro Controls framework, of one document being part and parcel of what the Chloro Controls decision refers to as the umbrella or the master agreementd

12. Chloro Controls has never been over-ruledd It has never been held not to be good lawd It was applied in Chatterjee Petrochem Co v Haldia Petrochemicals Ltdd 3 In Purple Medical Solutions (P) Ltd v MIV Therapeutics Inc, 4 the Supreme Court observed that the involvement of the 2nd respondent in that case brought it squarely within the frame of Chloro Controls.

13. Mr Kamat’s submission presumably invokes the Supreme Court decision in Duro Felguera SA v Gangavaram Port Ltd. (2017) 9 SCC 729 [LQ/SC/2017/1495] : 2017 SCC OnLine SC 1233. There, it was found — as a matter of fact — that each of the multiple packages and guarantees in question had a distinct arbitration clause; Paragraph 42. hence, the Chloro Controls principle would not operated More apposite to the present case is the Supreme Court decision in Cheran Properties Ltd v Kasturi & Sons Ltd & Orsd (2018) 16 SCC 413 [LQ/SC/2018/569] : 2018 SCC OnLine SC 431 This considered both Chloro Controls and Duro Felguerad Cheran Properties indeed distinguished the decision in Duro Felguera and applied Chloro Controlsd Paragraphs 23 and 34 of Cheran Properties summarises the fnding thus: Also see paragraph 20.

23. As the law has evolved, it has recognised that modern business transactions are often efectuated through multiple layers and agreements. There may be transactions within a group of companiesd The circumstances in which they have entered into them may refect an intention to bind both signatory and non-signatory entities within the same group. In holding a non-signatory bound by an arbitration agreement, the court approaches the matter by attributing to the transactions a meaning consistent with the business sense which was intended to be ascribed to them. Therefore, factors such as the relationship of a non-signatory to a party which is a signatory to the agreement, the commonality of subjectmatter and the composite nature of the transaction weigh in the balanced The group of companies doctrine is essentially intended to facilitate the fulflment of a mutually held intent between the parties, where the circumstances indicate that the intent was to bind both signatories and non-signatoriesd The efort is to fnd the true essence of the business arrangement and to unravel from a layered structure of commercial arrangements, an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory.

34. The appellant questions the application of the Chloro Controls [Chloro Controls India (P) Ltd. v. Severn Trent Water Purifcation Inc., (2013) 1 SCC 641 [LQ/SC/2012/874] : (2013) 1 SCC (Civ) 689] doctrined Dr Singhvi urged that in Chloro Controls, there was a joint venture agreement; the mother or parent agreement contained an arbitration clause and though the ancillary agreements did not contain an arbitration agreement, they could not have been performed in the absence of the mother agreementd The submission proceeds on a constricted interpretation of the Chloro Coitrols dictumd The principle which underlies Chloro Controls is that an arbitration agreement which is entered into by a company within a group of companies may bind nonsignatory afliates, if the circumstances are such as to demonstrate the mutual intention of the parties to bind both signatories and non-signatoriesd In applying the doctrine, the law seeks to eiforce the commoi iiteitioi of the parties, where circumstances indicate that both signatories and nonsignatories were intended to be boundd In Duro [Duro Felguera v. Gangavaram Port Ltdd, (2017) 9 SCC 729 [LQ/SC/2017/1495] : (2017) 4 SCC (Civ) 764], the case was held to stand on a diferent footing since all the fve diferent packages as well as the corporate guarantee did not depend on the terms and conditions of the original package nor on the memorandum of understanding executed between the parties. The judgment in Duro does not detract from the principle which was enunciated in Chloro Coitrols.

(Emphasis added)

14. Applying this ratio, we must ascertain the understanding between the partiesd Kotak Mahindra was asked to invest in Bharat McNallyd It did sod It was asked to remain invested and not exit before 15 to 30 monthsd To ensure that it stayed, as it were, “locked in” for that period, Williamson Magor said that it would buy out Kotak Mahindra’s investment in Bharat McNally at the purchase price plus 16% IRR if asked to do so after that periodd This was further backed by Khaitan’s guarantee to do exactly the same thingd Now it seems to me entirely inconceivable to even argue that Williamson Magor, of which Khaitan is the chairperson, would be bound by an arbitration agreement, but that Khaitan himself, qua guarantor for exactly the same promise, and also as the chairperson of Williamson Magor, would not be bound by the arbitration agreement; but would, instead, require that a civil suit be fled against him for precisely the same transaction and in respect of the same fnancial obligationsd The argument is, frankly, entirely untenable and unstatabled I would go a step furtherd Where there is a controlling agreement and also a separate guarantee of the performance of agreed obligations, it is simply not enough to say (1) that there is no arbitration agreement; or (2) that it is for the person invoking the guarantee to demonstrate the intention to be boundd If the Chloro Controls principle is applied, as explained in Cheran Properties, the task is a two-step processd First, one must assess whether the guarantee is enfolded within the umbrella, master or controlling agreementd If it is, and the guarantor seeks to escape the arbitration agreement within the master agreement, the second step is for the guarantor to show that he is not bound and did not intend to be boundd As in Duro Felguera, he may do this by saying the guarantee was part of a distinct packaged Or he may show aliunde that the intention was explicitly or by necessary implication to show that guarantor was not bound by the arbitration agreementd Chloro Controls is not to receive a restricted interpretation or understanding: Cheran Properties, suprad Where there is a commonality of subject matter and the understanding is shown to be a composite one, it will not do to merely say ‘there was no intention’d The true essence of the business or commercial agreement must be ascertained to bind a non-signatory, including, as Cheran Properties says:

"an intent to bind someone who is not formally a signatory but has assumed the obligation to be bound by the actions of a signatory."

15. Can I meaningfully make the kind of distinction Mr Kamat invites me to do What is the basis of this distinction, other than saying that Mr Jagtiani must show the intention There is nothing at alld As opposed to this, there is precisely the commonality of subject-matter that Cheran Properties and Chloro Controls contemplate, between Williamson Magor’s obligation and the and the exactly corresponding assumption by Khaitan of the very obligationd Khaitan’s obligation is simply a fail-safe or a fall-back position, to do exactly what Williamson Magor had agreed to do; not a jot more, and not a whit lessd The submission by Mr Kamat must be repelledd Khaitan is bound by the arbitration agreement.

16. To return to the factual narrative, the option period admittedly began on 4th September 2019d On 9th September 2019, Kotak Mahindra exercised its put option and issued a notice to Williamson Magor; which did not fulfl its obligationsd The correspondence from December 2019 has been put in a compilation by Mr Jagtianid I am taking that compilation on record and marking it ‘J1’ for identifcation with today’s dated The compilation also includes copies of earlier ordersd The frst of these was of 22nd January 2020d On 31st December 2019, (compilation page 5) Williamson Magor wrote to Kotak Mahindra and said that it was in the fnal stages of tying up with foreign investorsd Funds were soon expectedd Williamson Magor requested time until 31st March 2020.

17. Nothing happened.

18. On 27th July 2020, Kotak Mahindra’s Senior Executive Vice President wrote to Khaitan and asked for an update because nothing had been received by 31st March 2020d Khaitan replied on 3rd August 2020, saying there was a delayd Now came the usual inevitable Covid-19, pandemic and lockdown excused Khaitan said he was discussing with some lenders and would need more timed Factually, this puts paid to any argument that Mr Kamat raises of Khaitan distancing himself from Williamson Magor’s obligations.

19. This went on till as late as December 2020d There was no payment, no purchase and no fulflment of the put option obligations by either Williamson Magor or Khaitan

20. Notably — that is from the date of the put option exercise notice of 9th September 2019 until December 2020 — Khaitan never denied his co-terminus liability under the put option, or claimed that any dispute with him was not arbitrable.

21. This is important because on 17th November 2020, Kotak Mahindra in fact invoked arbitration.

22. On 18th December 2020, almost a full year after my frst order of 22nd January 2020, I noted a statement made on behalf of the Respondents that they would pay an amount of Rsd 50 lakhs by 31st March 2021d Again, there was no denial of liabilityd Again, there was no claim that Khaitan was not bound by the arbitration agreement.

23. A legal notice followed from Kotak Mahindra’s attorneys on 13th January 2021 (compilation pages 9 to 11).

24. There is an astonishing reply from Williamson Magor’s Advocates on 21st January 2021 at pages 12 and 13, in paragraph 4 of which, for the frst time, there is a denial of the put option obligationd But this is at odds with what is stated in paragraph 3, because this refers to my order of 18th December 2020 (compilations pages 3 to 4), when I noted the Respondents’ promise to make partial payment.

25. The most recent communication from the Respondents is of 3rd March 2021 confrming payment of the amount of Rsd 50 lakhs and then saying only that the Respondents have discussed the matter with Kotak’s representative in late-February 2021d There is no longer even a promise for an ofer to pay any further amount

26. Thus, the half-hearted denial of all liability on 21st January 2021 is uselessd The argument that Khaitan was not bound by the arbitration agreement is very much a latter-day epiphany, but contradicted by conduct and correspondence.

27. Mr Kamat’s instructions are cleard There is nothing further that either of the Respondents can pay, at least not within a reasonable timed The only submission is that the Respondents should be aformed some indefnitely prolonged periodd Why this should be is a puzzled How this is a legal or contractual entitlement is riddled How this is not in breach of contractual obligations is an enigma.

28. But all of it is unacceptabled These are commercial transactions before commercial Courtsd We cannot be told that contractual obligations count for nothing, or that we must condone and give judicial protection to defaultsd The Respondents have failed to fully honour their contractual obligationsd They received benefts under the Agreement in questiond They promised, assured and guaranteed a repayment — and that was after a fairly extended period of 15 to 30 months, during all of which Kotak Mahindra’s money lay locked up with McNally Bharatd Regrettably, I fnd that in matter after matter, respondent after respondent and borrower after borrower tries to get me to re-write the terms of the commercial contractd Mr Kamat does so even now when he says that there is this exorbitant and extortionate IRR of 16%d That is of complete and utter irrelevanced For it is a rate of return that both Williamson Magor and Khaitan signed of ond Nobody coerced them into itd They must be held to the terms of the bargain they struck

29. Mr Kamat is also in error when he says that at least Rs 50 lakhs was paid, thereby suggesting that this paltry payment should count for somethingd It counts for very littled It was simply an adherence to an undertaking to the Courtd It was very far short of the contractual obligationd And no borrower is doing anyone a favour by repaying only a small part of the debt, and only after great delay

30. I do not see any reason now why an order should not be made against the Respondents securing at least the principal that is due to Kotak Mahindra Bankd Mr Kamat argues that the amount of Rsd 50 lakhs should be reckonedd But if it is to be reckoned then the deposit will be of the entire amount due of Rsd 23 crores and oddd Otherwise, Rsd 50 lakhs will be taken into reckoning while considering the claim of Kotak Mahindra for the additional amount under the IRR in arbitration.

31. Lest it be argued either here or in any other forum that no case has been made out under Order 38 Rule 5 of the Code of Civil Procedure, 1908 (“CPC”), which seems to me more or less the habitual and automatic chanting of every respondent in a Section 9 Petition, this needs to be stated: that is not the lawd The recent decision of the Division Bench of this Court (RD Dhanuka and VG Bhisht JJ) in Essar House Private Limited v Arcellor Mittal Nippon Steel India Ltd 2021 SCC OnLine Bom 149. makes it clear that there is no requirement that for such relief an iron-clad case under Order 38 Rule 5 of the Code of Civil Procedure, 1908 (“CPC”) must be made out (or, if not argued, that the Court must hunt for it)d The Division Bench reafrmed the principle that has long been settled, and restated repeatedly, but which seem to be reagitated in the wrong way again and againd The Division Bench said in the clearest terms that the principles of the CPC, including especially Order 38 Rule 5, are guides to a Section 9 Court and the order it makes under that Sectiond They are not fetters upon the Section 9 Court’s discretiond On my reading of the Division Bench order, the position in law is that in such a case an order of deposit not only can be made, but ought to be maded In Valentine Maritime Ltd v Kreuz Subsea Pte Ltd & Anr , 2021 SCC OnLine Bom 75, (paragraphs 88, 95 to 97 and 101). the Division Bench of this Court reiterated this position regarding Order 38 Rule 5 and also held that in appropriate case, where the defence is prima facie untenable, the Petitioner has a chance of success, and the defence is moonshine, an order of deposit to secure the claim can and indeed should be made under Section 9. This was also the view of another Division Bench of this Court in Jagdish Ahuja & Anr v Cupino Ltd. 2020 SCC OnLine Bom 849 (paragraphs 6 and 7. All three decisions referenced and explained the previous Division Bench decision in Nimbus Communications Ltd v Board of Control for Cricket in India, (2013) 1 Mah LJ 39. and the Supreme Court decision in Adhunik Steels Ltd v Orissa Manganese & Minerals (P) Ltd. (2007) 7 SCC 125 [LQ/SC/2007/877] . I followed the Division Bench decisions (referencing this law) in Parle Agro Pvt Ltd v Shree Aqua Purifer Pvt Ltd Arbitration Petition (L) No 1821 of 2021, order dated 12th February 2021d and IIFL Finance Ltd v Shrenik Dhirajmal Siroya. Commercial Arbitration Petition (L) No 8385 of 2020, order dated 18th February 2021.

32. Williamson Magor has no defence at alld Khaitan’s defence is untenable and, in view of the settled law on the subject, is unstatable and probably the most complete moonshined There is a contract with a clear and unequivocal obligation cast on the Respondentsd The Petitioner has an excellent chance of successd Accordingly, the Respondents are required to deposit with the Prothonotary and Senior Master an amount of Rsd 14d88 crores by 31st March 2021d I have rounded of the amount of deposit.

33. Upon deposit being made, that amount is to be invested according to the usual practices of that ofce until further orders of the Court or the Arbitral Tribunal as the case may bed Liberty to Kotak Mahindra to apply to the Arbitral Tribunal for a withdrawal of that amountd Any such application will be decided on its own meritsd All contentions in that regard are kept open

34. It is open to the Respondents in the alternative to furnish a bank guarantee for the entire amount of, also optionally, a bank guarantee for a part of the amount and a cash deposit for the restd If exercised, that bank guarantee is to be kept alive pending the fnal Award in the arbitration and until the expiry of the statutory period under Section 34 thereafterd It is also open to Kotak Mahindra to apply to the Arbitral Tribunal for encashment of the bank guarantee and disbursal of the amountd Any such application will be decided on its own merits.

35. I am not inclined to grant the much wider reliefs that are sought in terms of prayer clauses (b)(ii) and (c)(ii) but will leave it open to Kotak Mahindra to make that application before the Arbitral Tribunal

36. There will, however, be an injunction restraining the 1st and 2nd Respondents from transferring any of their immovable properties or assets otherwise than in the ordinary and usual course of businessd There will also be an order of disclosure against both Respondents in terms of prayer clause (d)d The Afdavit of Disclosure is to be fled and served on or before 31st March 2021 in this Court as also before the Arbitral Tribunal

37. Liberty to Kotak Mahindra to seek the actual costs of this Petition in arbitrationd Since Kotak Mahindra has already invoked arbitration, liberty to it fle the a Section 11 application, if necessary

38. Of course, these are all prima facie views for the purposes of this order under Section 9d It is open to the Arbitral Tribunal which may be appointed hereafter to decide whether or not it wishes to consider any of these observations as part of its own considerationd I do not suggest that the Arbitral Tribunal is bound by these observationsd I also do not suggest that it cannot rely upon themd The Arbitral Tribunal will have the entirety of its decision-making latitude

39. This order will be digitally signed by the Private Secretary of this Courtd All concerned will act on production of a digitally signed copy of this order.