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2014 (1) TMI 735 - SC - Companies LawArbitration agreement - Transfer of shares - CLB held to transfer of Respondent's rights to Appellant - High Court held that no transfer of right to be taken place - Can the Arbitration clause under clause 15 of the letter of Agreement dated 12th January, 2002 be invoked by the appellants and whether Clause 7.5 of the subsequent Agreement dated 8th March, 2002 invoking the exclusive jurisdiction of the courts of Calcutta nullify the scope of arbitration as mentioned in the previous agreement dated 12th January, 2002 - Held that:- It is nowhere mentioned in the letter dated 8th March, 2002 that transfer of shares to CPIL instead of CPMC extinguishes the old agreement dated 12th January, 2002 to nullity. In fact, in the letter dated 8th March, 2002, CPMC has been constantly mentioned as a guarantor. It is only to this extent the nature of agreement has changed. CPIL is an affiliate of CPMC. This is to say, that by means of the letter dated 8th March,2002 CPMC becomes a guarantor whereas CPIL becomes the borrower. Therefore, the same does not change the rights and responsibilities of the parties under the agreement dated 12th January, 2002 - agreement dated 12th January, 2002 remains the principal agreement while agreement dated 8th March 2002 remains a supplementary agreement which was meant for restructuring of HPL on urgency - clauses of the subsequent Agreements dated 8th March, 2002 and 30th July, 2004 go to show that there has been no alteration in the nature of rights and responsibilities of the parties involved in the contract. Consequently, there has been no novation of the contract - The phrase ‘this agreement’ means the Agreement dated 8th March, 2002 which is essentially a supplementary Agreement and does not, by any mean, make the Principal Agreement dated 12th January, 2002 subject to the jurisdiction of the Court. Agreements dated 8th March 2002 and 30th July, 2004, read with section 5 of the A&C Act, we are inclined to observe that the Arbitration clause in the Principal Agreement continued to be valid in view of clause no. 6 of the Agreement dated 30th July, 2004 and also by virtue of its mention in different parts of both the supplementary agreements dated 8th March, 2002 and 30th July, 2004. Therefore, the arbitration clause mentioned in Clause 15 of the Arbitration agreement dated January 12, 2002 is valid and the appellant is entitled to invoke the arbitration clause for settling their disputes. Principal Agreement dated 12th January, 2002 continues to be in force with its arbitration clause in place. We have also mentioned, while answering point no. 1, that section 5 of the A&C act will be applicable to Part II of the Act as well. The Agreement dated 12th January, 2002 remains valid and the arbitration clause, with all fours, will be applicable to the parties concerned to get their disputes arbitrated and resolved in the Arbitration as per the Rules of ICC - The respondent no.1 has filed a suit seeking two remedies against the appellants: firstly, that the Arbitration Agreement contained in Clause 15 of the Agreement dated January 12, 2002 is void and/or unenforceable and/or has become inoperative and/or incapable of being performed, and secondly, the respondent no.1 sought permanent injunction restraining the appellant herein from initiating and/ or continuing with the impugned Arbitration proceedings bearing case no. 18582/ARP pursuant to the Impugned Arbitration Agreement contained in clause 15 of the Agreement dated January 12, 2002 and the Request for Arbitration dated March 21, 2012 and the communication dated April 02, 2012 issued by defendant no. 8 in the Arbitration proceedings connected therewith and incidental thereto. Since, we have already held that the arbitration clause is valid, suit filed by the respondent no.1 for declaration and permanent injunction is unsustainable in law and the suit is liable to be dismissed - Decided partly in favour of appellant.
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