Vikram Bakshi And Anr. ? S -and Vikram Bakshi And Anr. ? S v. Connaught Plaza Restaurants Pvt. Ltd. & Ors. ? S

1.This is second application preferred by Respondent No. 2 u/s 45 of the Arbitration and Conciliation Act, 1996 (for brevity, Arbitration Act) again with a prayer that the Tribunal may refer the parties and/or persons claiming through or under them to arbitration pursuant to arbitration agreement contained in para 40(b) of the erstwhile Joint Venture Agreement dated 31-3-1995, as amended. A further prayer has also been made to vacate the interim order passed on 16-9-2013 which is continued later. The earlier application being CA 94/2013 was dismissed as withdrawn on 30.1.2014 without any permission to file fresh one on the same cause of action.

2.Brief facts necessary for disposal of this application are that non applicant-petitioner filed CP No. 110(ND)/2013 in September 2013 by invoking the provisions of Sections 397/398 of the Companies Act, 1956, with the grievance of oppression and mismanagement against the applicant-respondents. There has been plethora of applications filed by the parties. On the decisions rendered by the CLB on those applications, the orders were challenged before the superior Courts and the hearing before CLB was stayed. A perusal of the order sheet shows that at one stage, the matter was transferred to Chennai Bench which was brought back to Delhi Bench of the CLB after the orders were passed by Delhi High Court to that effect. A reference was made to Delhi High Court for issuance of criminal contempt on account of conduct of a counsel.

3.Thereafter, the arguments commenced and after the non applicant-petitioner had concluded his arguments, the erstwhile CLB granted time vide order dated 10-9-2015 to the non applicant-petitioners to file written submissions. Accordingly, written submissions were filed. It is in the background of this chequred history that this second application has again been filed u/s 45 of the Arbitration Act, curiously on the ground that in the written arguments, the non applicant-petitioners have changed their stand.

4.In para 2 of the application, the following averments have been made:

Respondent No. 2 respectfully submits that it shall press the present application, if this Honble Tribunal forms a view that the new claimpurported to be made by the Petitioners in their written submissions dated October 5, 2015 (which claim is not pleaded in, or relatable to, the Company Petition) (the Written Submissions) can be considered by this Honble Tribunal.

5.We have heard the learned counsel for the parties at a considerable length.

6.Mr. Sudipto Sarkar has submitted that on account of changed circumstances, the application u/s 45 of the Arbitration Act is necessitated. A reference has been made to the written arguments filed by the non application-petitioner requesting for valuation of the assets of the company. According to Mr. Sarkar, the question of valuation is pending before the London Court of International Arbitration. It has been maintained that the request of the non applicant-petitioner for stay of Arbitration proceedings pending at the London Court of International Arbitration was rejected by the Company Law Board.

7.Mr. Sarkar maintained that the non applicant-petitioner then filed Civil Suit registered as CS(OS) 962/2014 on the original side of Delhi High Court. Learned Single Judge of Delhi High Court, in IA 6207/2014 under Order XXXIX Rules 1 & 2 of the Code of Civil Procedure, 1908, granted ad interim injunction against the Arbitral proceedings before the London Court of International Arbitration at London. However, the aforesaid order was set aside by the Appellate Court in FAO(OS) 9/2015 and CM No. 326/2015 decided on 21-7-2016. In that regard, reliance has been placed on paragraphs 54, 56, 58 & 59 of the Appeal Court order to argue that the non applicant-petitioners did not succeed in their efforts to stop the arbitral proceedings. Therefore Mr. Sarkar argued that on account of the changed circumstances, the filing of another application u/s 45 of the Arbitration Act has been necessitated.

8.On behalf of the non applicant-petitioner, Mr. Tejas Karia has submitted that the instant application is not maintainable because the applicant-Respondent No. 2 had earlier filed an application u/s 45 of the Arbitration Act, which was registered as CA No. 94/2013 and the same was dismissed as withdrawn without any prayer to file a fresh one on the same cause of action. It has been highlighted that subsequent proceedings, either before the erstwhile Company Law Board or before Honble Delhi High Court have no bearing for deciding the fate of the application filed u/s 45 of the Arbitration Act.

9.Having heard the learned counsels for the parties, we are of the considered view that the instant application is wholly misconceived. It is a conceded fact that the applicant-Respondent No. 2 had earlier filed CA No. 94/2013 and the same was dismissed as withdrawn vide order dated 30-01-2014, without obtaining any permission to file a fresh one on the same cause of action. Order dated 30-01-2014 reads as under:

The counsel on behalf of R-2 states thatR-2 does not press CA 94/2013, In view of the subsequent events, including the initiation by R-2 of the proceedings before the London Court of International Arbitration and the termination of JVA which in R-2s submissions, has rendered CP 110/2013 infructuous.

Responding to the same, the counsel for the petitioner side has disputed the statement given by R-2 stating withdrawal of CA 94/2013 will not make CP-110/2013 infructuous.

On hearing the submissions of either side, there being no objection for withdrawal of CA 94/2013, the same is hereby dismissed as withdrawn without prejudice to the rights and contention of the either side in making their submissions in CP 110/2013.

The petitioner counsel has come up with a suggestion that company may be valued without taking the brand name of McDonald Into consideration; thereafter provide an opportunity to buy out the company. To which, the respondent side counsel has sought time to get instructions from the respondents.

Hence the matter is posted to 19.3.2014, 20.3.2014 at 10:30 a.m. for reporting, if nothing is materialized by next date of hearing, the proceedings will continue.

Accordingly, CA 94/2013 is hereby disposed of.

10.It is a well settled principle of law deducible from the provisions of Order XXIII Rule 1(4) that where an application for withdrawal of the Suit has been allowed without any permission to refile the Suit on the same cause of action, then no further Suit would be permissible. The embargo on filing of another suit for the same cause of action has been imposed by Clause 4(b) of Rule 1, Order XXIII of the Code of Civil Procedure. The rationale for the aforesaid principle is that a litigant cannot be permitted to file suites one after the other on the same cause of action which may result in harassment to the other side. There is no change of circumstances warranting the view that a new cause of action has come into being. Moreover, it would be unnecessary impact on the public exchequer and unnecessary load on the Court time. Once no permission was obtained from the Court while withdrawing CA 94/2013, the second application u/s 45 of the Arbitration Act would not be maintainable.

11.The argument of Mr. Sarkar is wholly untenable. Change in circumstances stated to be brought about by written arguments submitted by the petitioner, wherein prayer for valuation of the assets of the company has been made and the subsequent litigation, do not advance the case of the applicant-Respondent No. 2. The written arguments cannot constitute a basis for filing another application u/s 45 of the Arbitration Act as claimed in para 2 of the application. The written submissions cannot give birth to fresh pleadings. It is elementary principle of law that ordinarily the pleadings lead to arguments and arguments would not lead to filing of fresh pleadings. If such a course is permitted, no proceedings in a suit could ever attain finality as it would be an unending process. The inverted argument raised for filing this application u/s 45 of the Arbitration Act is wholly unsustainable. Moreover, no change has been brought about by filing of the suit before the Delhi High Court and declining of stay of proceedings by the CLB before the London Court of International Arbitration. In any case, we do not find that these proceedings have anything to do with CP 110(ND)/2013.

12.It is further patent that the petitioner-non applicant has not made any prayer in the pleadings namely Company Petition for valuation of the assets of the company and the prayers made by the petitioner-non applicant proceed entirely on different basis and the same are as under:

(i) Injunction restraining the respondent Nos. 2 to 9 from interfering with the management and affairs of the company.

(ii) Injunction restraining the Respondent Nos. 2 to 9 from preventing the Petitioner No. 1 from acting as or holding out or representing himself to be the Managing Director of the Company.

(iii) Injunction restraining the Respondent Nos. 2 to 9 and each one of them from giving any effect or further effect to the resolution purportedly passed at the meeting of the Board of Directors held on 6 August, 2013 in so far as it relates to re-appointment/re-election of the Petitioner No. 1 as Managing Director of the Company.

(iv) Injunction maintaining the Respondent nos. 2 to 9 and each one of them from giving any effect or further effect to Form 32 filed with regard to the cession of the Managing Diectorship of the Petitioner No. 1.

(v) direction that a scheme be framed for the management and affairs of the Company.

(vi) direction that the Articles of Association of the Company be suitably amended to provide for the exclusive management and control of the Company by the Petitioners and/or their nominees on such terms and conditions as this Honble Board may deem fit and proper;

(vii) Injunction restraining the Respondent No. 3 & 4 from acting as or holding themselves out as directors of the Company;

(viii) Injunction restraining the Respondent Nos. 2 to 9 and each one of them from giving any effect or further effect to the letter dated 16 August, 2013 and the reply dated 29 August, 2013 in any manner whatsoever.

(ix) direction that a resolution passed at the meeting of the Company held on 6 August, 2013 in so far as it relates to the appointment/re-election of the Petitioner No. 1 as Managing Director of the Company and the Form 32 filed with regard to cessation of Petitioner No. 1 as Managing Director of the Company be cancelled and adjudged void.

(x) Injunction restraining the Respondent Nos. 2 to 9 from altering the shareholding composition of the Company in any manner whatsoever.

(xi) Injunction restraining the Respondent No. 2 to 9 from dealing with, disposing of, encumbering the assets and properties of the Company in any manner whatsoever.

(xii) Injunction restraining the Respondent Nos. 2 to 9 from altering the composition of the Board of Diectors or management of the Company in any manner whatsoever.

(xiii) Injunction restraining the Respondent Nos. 2 to 9 from issuing any circulars/communications which are similar or identical to the circulars or communications referred to herein above.

(xiv) Appropriate directions be issued to the respondent Nos. 2 to 5 to reimburse the company for all losses caused to the company upon such enquiry being made as this Honble Board deem fit and proper.

(xv) Injunction restraining Respondent Nos 2 & 5 from preventing the company from using the mark/brand McDonalds in any manner whatsoever.

(xvi) Directions given for the management and administration of the Company as subsisting on 16 July, 2013 and/or 6 August, 2013 to be continued on such terms as this Honble Board may deem fit and proper.

(xvii) Pass such order or further order(s) as this Honble Board may deem fit and proper in the facts and circumstances.

13.A perusal of the aforesaid prayers would show that there is no relief claimed in the form of valuation of the assets of the company. Therefore, it is open to the parties to address arguments which are cognate to or associated with the prayers made in theCompany Petition(Supra) or other pleadings.

14.Therefore, the instant application u/s 45 of the Arbitration Act is devoid of merit and the same is dismissed with cost of Rs. 20,000/-.