TMI Blog2004 (10) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany nominated by the 3rd respondent herein. Respondents 9 and 10 are the Directors nominated by the 4th respondent herein. The financing companies, namely, IDBI, and LIC, have nominated one Director each. They are not parties to the proceedings. Since the dispute is only between the appellant-Company and respondents 1 and 2, the appellant-Company has given up respondents 3 to 11, though they have been added in the appeal as respondents. 3. The appellant-Company entered into a Power Purchase Agreement, (hereinafter called "PPA"), with the Tamil Nadu Electricity Board (hereinafter called "TNEB") on 3rd January, 1997, as the appellant-Company has to sell to the TNEB, capacity and net electrical output of the power generating facility pursuant to the terms and conditions set forth in the said agreement. 4. The PPA among other clauses provides payment security mechanism as follows : "( a )direct payments; ( b )letter of credit; ( c )An Escrow Account and hypothecation of TNEB s receivables deposited in such account; ( d )guarantee by the State of Tamil Nadu through a sovereign guarantee ("the GOTN" Guarantee) in favour of the appellant-Company guaranteeing the TNEB s p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-1-1997 for and on behalf of the Company and issue the invocation letter on or before March 26, 2004 with respect to the issuance of the Letter of Credit, the implementation of the Escrow Account and all unpaid amounts owing by TNEB under the PPA; Resvolved further that the Managing Director be and are hereby authorized and directed to forthwith initiate the proceedings as contemplated thereunder." Though the said resolutions were taken up for discussion and at the Board meeting the said nominee directors placed on record for the consideration of the Board the legal opinions obtained by them regarding limitations, the majority of the Directors of the Board refused to invoke the legal remedies available to the Company and the resolution proposed were defeated by a vote of 8:5. 7. So, again respondents 1 and 2 herein moved interim application No. 38/2004 before the CLB in C.P. No. 8/2004 seeking the following prayer: " a. Authorise Mr. Jenson and Mr. Sirse, directors of the Company sufficiently within the period of limitation expiring on 26-3-2004 as stated hereinabove to represent the Company and forthwith initiate, institute and prosecute the dispute resolution mechanis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erim injunction restraining the Respondents/Petitioners from further proceeding with ICC Case No. 13218/MS now pending on the file of the ICC International Court of Arbitration, Paris." Though the CLB granted interim order initially not to proceed with the arbitration proceedings pending Application, in the order dated 5-7-2004, dismissed the petition holding that the nature of proceedings and the relief claimed at the CLB are distinct from those made before ICC Arbitral Tribunal and the appellant-Company did not prove the prima facie case or the balance of convenience and established any irreversible prejudice that may be suffered by the appellant-Company in the event of not granting any such injunction. Aggrieved against the same, the appellant-Company has preferred the above Appeal. 9. Mr. Udaya Holla, Learned Senior Counsel appearing for the appellant submitted that the Company could not take derivative action against the TNEB to recover the amount payable by them and also to insist to provide payment security mechanism in a stringent manner as claimed by the minority shareholders taking into consideration the fact that they have to solely rely on the TNEB to sell the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CLB rejected finally the interim relief as sought for by the Applicant, the learned Senior Counsel appearing for the appellant submitted that having suffered such an order, respondents 1 and 2 should not have initiated arbitration proceedings before the International Court of Arbitral Tribunal (hereinafter called "ICC") on the same day contrary to the decision of the CLB and so such a proceeding is oppressive in nature and cannot be allowed to proceed further. Referring to the order of the CLB, on merits, learned Senior Counsel submitted that though prima facie case and balance of convenience are also established, the CLB erroneously rejected the application seeking an order of anti-suit injunction. Learned Senior Counsel also referred to clause 14.3 of the shareholders agreement dated 24-11-1995 in support of his submission that the shareholders are prohibited from taking any action in the name of or on behalf of any party to the agreement, as the parties to the agreement on independent entities engaged in the conduct of other one s business. On that basis, learned Senior Counsel submitted that respondents 1 and 2 cannot initiate arbitration proceedings in the name of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 are ignoring the earlier orders of the CLB, the appellant-Company is entitled to get an order of injunction against the respondents 1 and 2 from proceeding further with respect to the arbitration proceedings. Even if such injunction is granted, no prejudice would be caused to the respondents 1 and 2 as they have already initiated the proceedings within time to avoid expiry of period of limitation even according to their calculation. Further, due to subsequent developments, namely, a communication dated 30-8-2004, the period of limitation is extended. 12. Dr. Singhvi, learned Senior Counsel appearing for the respondents 1 and 2 submitted that the actions, namely, the earlier actions by the respondents 1 and 2 approaching the Board of Directors and the CLB are different and distinct actions and cannot be relied upon to contend that respondents 1 and 2 are estopped from invoking the arbitration clause under clause No. 16.2 of the PPA, before the ICC Arbitral Tribunal. According to him, before the Board, the respondents requested to take action against the TNEB to recover the amount and to insist the compliances of the Clauses in the agreement regarding payment security mechanism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xclusive and natural forum as held in Modi Entertainment Network v. W.S.G. Cricket (P.) Ltd. 2003 (4) SCC 341. Learned Senior Counsel further submitted that the argument made on behalf of the appellant to the effect that if the Company proceeds against the TNEB, TNEB will stop purchase of power and thereby they have to close the industry, is not based on any pleading or material. Learned Senior Counsel further submitted that even otherwise, the TNEB can stop purchase of power if they are able to get power for lesser price from others and only to avoid the same, respondents 1 and 2 have insisted the Company to change over to the method of production of power and since the same has not been considered, the respondents have filed the Company Petition under section 398 of the Companies Act. While replying to the submission of the learned Senior Counsel appearing for the appellant that other Companies supplying power to the TNEB are not insisting the dues and also to implement the payment security mechanism, learned Senior Counsel submitted that the appellant-Company has the highest outstanding with the TNEB, namely 76% of the outstanding and merely because others are not taking ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self has taken arbitration proceedings, though at the instance of minority shareholders, if injunction is granted as sought for, even the Company itself cannot invoke Clause 16.2 of the PPA. 14. With reference to the scope of appeal, learned Senior Counsel appearing for respondents 1 and 2 submitted that if the CLB has given reasonings based on materials, this Court cannot substitute another reason to reverse the orders of the CLB though such exercise is possible. Learned Senior Counsel further submitted that even under the provisions of the Arbitration and Conciliation Act, 1996, stay cannot be granted to stall the arbitration proceedings. Referring to clause 14.3 of the PPA, learned Senior Counsel submitted that the same is not applicable to the present proceedings and such a clause is available only in the different agreement entered into between the shareholders, whereas the right to take arbitration proceedings is available in the PPA. According to the learned Senior Counsel, even if such a clause is available, the respondents 1 and 2 can invoke their common law right to take arbitration proceedings. The appellate Court can interfere with the order of the CLB only if the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fy the interference with the ICC Arbitral Tribunal; ( iv )There is neither comity nor commonality of parties in the proceedings before the CLB and the ICC Arbitral Tribunal; ( v )The parties in dispute have exclusively entrusted the jurisdiction in relation to any dispute arising out of the PPA in favour of the ICC Arbitral Tribunal explicitly excluding the jurisdiction of the Indian Courts as well as the Indian Arbitration Law and any dispute in relation to the PPA has been kept outside the purview of the CLB; ( vi )While the exclusive jurisdiction of the ICC Arbitral Tribunal to adjudicate any dispute in relation to the PPA, including the issue as to whether the respondents 1 and 2 as minority shareholders, are entitled to invoke any derivative action in the name of the Company against the TNEB, is far from the doubt, the CLB can have no domain or concurrent jurisdiction over the resolution of any dispute arising out the PPA; ( vii )While considering the scope of clause 14.03 of the shareholders agreement, it is found that the prohibition sought to be enforced among the shareholders is only in relation to the conduct of their own business and it cannot override the establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by the CLB, the Appellate Court is not justified in interfering with the said order by taking a different view. 19. This view of ours is supported by the decision of the Apex Court in the decision in Laxmikant V. Patel v. Chetanbhat Shah AIR 2002 SC 275, in which it is held as follows : "17. We are conscious of the law that this Court would not ordinarily interfere with the exercise of discretion in the matter of grant of temporary injunction by the High Court and the trial Court and substitute its own discretion therefor except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the order of the Court under scrutiny ignores the settled principles of law regulating grant or refusal of interlocutory injunction. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not reassess the material and seek to reach a conclusion different from the one reached by the Court below if the one reached by that Court was reasonably possible on the material. The appellate Court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken a different view may not justify interference with the trial Court s exercise of discretion. After referring to these principles Gajendragadkar, J., in Printers (Mysore) Private Ltd. v. Pothan Joseph 1960 (3) SCR 713 : (SCR 721). ". . .These principles are well established, but as has been observed by Viscount Simon in Charles Osenton Co. v. Jhanaton 1942 AC 130, ...the law as to the reversal by a Court of appeal of an order made by a Judge below in the exercise of his discretion is well established, and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the issues on which the parties went to trial. It also found that in support of his plea of adverse possession on the disputed land, the defendant did not produce any documentary evidence while the oral evidence adduced by the defendant was conflicting in nature and hence unworthy of reliance. The first appellate Court has, in a very cryptic manner, reversed the finding on question of possession and dispossession as alleged by the plaintiff as also on the question of adverse possession as pleaded by the defendant. The appellate Court has jurisdiction to reverse or affirm the findings of the trial Court. First appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on question of fact and law. The judgment of the appellate Court must, therefore, reflect its conscious application of mind, and record findings supported by reasons, on all the issues arising along with the contentions put forth, and pressed by the parties for decision of the appellate Court. The task of an appellate Court affirming the findings of the trial Court is an easier one. The appellate Court agreeing with the view of the trial Court need not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme of the present section 100 substituted in the Code. The first appellate Court continues, as before, to be a final Court of facts; pure findings of fact remain immune from challenge before the High Court in second appeal. Now the first appellate Court is also a final court of law in the sense that its decision on a question of law even if erroneous may not be vulnerable before the High Court in second appeal because the jurisdiction of the High Court has now ceased to be available to correct the errors of law or the erroneous findings of the first appellate Court even on questions of law unless such question of law be a substantial one." 22. From the abovesaid decisions, it is clear that this Court can interfere with the order of the CLB only if discretionary/inherent powers of the CLB, is exercised arbitrarily or capriciously or perversely or ignored the settled principles of law in granting interlocutory injunction. We can also interfere with the order if we are able to conclude that the CLB has not exercised its power in granting injunction in spite of the availability of facts which are prima facie established by overwhelming evidence and material available on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st ends of justice, anti-suit injunction can be granted with respect to foreign proceedings. ( vi )There must be an equity which entitles one party as against the other, to an injunction to restrain the other from proceeding in the foreign Court. ( vii )To protect the Courts own proceedings and process, anti-suit injunction can be granted. ( viii )If the bringing of the legal proceedings involved unconscionable conduct or unconscientious exercise of legal right, such anti-suit injunction may be granted. ( ix )Though the international anti-suit injunction operates only against parties, it effectively restricts the jurisdiction of a foreign sovereign s Courts. ( x )International anti-suit injunction can be granted whenever there is a duplication of parties and issues and the Court determines with the prosecution of simultaneous proceedings would frustrate the speedy and effective determination of the case. ( xi )There is no precious Rules governing the anti-suit injunction. ( xii )Only in the most compelling circumstances, a court should exercise its discretion to issue an anti-suit injunction. ( xiii )Such injunction is required to prevent irreparable and miscarriag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he party concerned approaches the Court with due diligence and shows sufficient cause for its non-appearance on the date of hearing." 29. Even in the decision in Newabganj Sugar Mills Co. Ltd. v. Union of India AIR 1976 SC 1152, the Apex Court while dealing with the limitation on the powers of the Court in exercising inherent powers, has held as follows : "6. Rejecting, therefore, the recommendations for solution of the problem arising here, as put forward by counsel for the appellants, we have to devise other measures.We are aware of our limitations : The judge, even when he is free, is still not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unregulated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system and subordinated to the primordial necessity of order in social life . Wide enough in all conscience is the field of discretion that remains. The difficulty we face here cannot force us to abando ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct of the Company s affairs and to provide for any other matter which the Court thinks just and equitable to provide for, in the interest of the corporate body and general public. 33. Even in the decision in Grindlays Bank Ltd. v. Central Government Industrial Tribunal 1980 (Supp.) SCC 420, regarding the availability of the power of the Tribunal in the absence of any express provision, it is held as follows : "6. We are of the opinion that the Tribunal had the power to pass the impugned order if it thought fit in the interest of justice. It is true that there is no express provision in the Act or the rules framed thereunder giving the Tribunal jurisdiction to do so. But it is a well known rule of statutory construction that a Tribunal or body should be considered to be endowed with such ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties. In a case of this nature, we are of the view that the Tribunal should be considered as invested with such incidental or ancillary powers unless there is any indication in the statute to the contrary. We do not find any such statutory prohibition. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere of the widest possible amplitude and carried with them, by necessary implication all powers and duties incidental and necessary to make, the exercise of those powers fully effective. Having regard to its powers under section 254, it was held that the Tax Appellate Tribunal had impliedly been granted the power of doing all such acts and employing such means as were essential and necessary to its ends. The statutory power carried with it the duty in proper cases to make such order for staying proceedings as would prevent the appeal, if successful, from being rendered nugatory." (p. 94) From the abovesaid decisions, though it is held that even in the absence of any specific provision, the Courts are having inherent power to grant injunction and such inherent power has been conferred upon the Court by virtue of its duty to do justice. We need not go into the said aspect in this case, as Regulation No. 44 and section 402 of the Companies Act contem- plate such power on the CLB. So there cannot be any difficulty in accepting the proposition that the CLB is having such inherent power to grant injunction in a given case if it has jurisdiction to deal with the same. 36. But we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither it nor the Foreign Trade Arbitration Commission of the U.S.S.R. Chamber of Commerce which is seized of the arbitration proceedings is amenable to the jurisdiction of the Courts in India. The presence in India of the party sought to be injuncted is a condition pre-requisite for the grant of an injunction. Alternatively, the Indian Firm has been guilty of breach of the agreement to refer the matter to arbitration at Moscow and therefore, it has disentitled itself to the exercise of the Court s discretion in its favour in the matter of granting an injunction. 24. Now, it is common ground that the point about the Russian Firm having no representative in India was not agitated before the High Court. The position taken up in the plaint was that the Russian Firm was carrying on business in the U.S.S.R. and at Madras. The controversy before the High Court appears to have been confirmed only to what is stated in Para 5 of the counter-affidavit of the Russian Firm, namely, that in the presence of the Arbitration agreement in the contract entered into between the parties, the only proper remedy for the Indian Firm was to submit the disputes to the arbitration Tribunal at Moscow. 25. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrators should not proceed with the arbitration side by side in rivalry or in competition as if it were a Civil Court." (p. 574) 39. As per the above decision, there cannot be any doubt that order of injunction can be granted even with respect to arbitration proceedings. But, even from the abovesaid decision, it is clear that the petition for injunction was entertained in a suit and such an order of injunction was granted only because the action of the respondents therein was vexation or oppression and it is held that while granting such order, Courts should be very cautious and have largely refrained from granting stay of proceedings of foreign Courts. The Apex Court also found that such an order is necessary on the basis of the principle that the arbitrators should not proceed with the arbitration, side by side in rivalry or on competition as if it were a Civil Court. In the present case, such a situation is not available. The proceedings taken by the respondents 1 and 2 cannot be said as vexation or oppression. It is relevant to mention here that the amount which is due from the TNEB, is not in dispute and availability of clause 16.2 in the PPA to invoke the arbitration pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the Court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case. (4) A Court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a Court including a foreign Court, a forum of their choice in regard to the commencement or continuance of proceedings in the Court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the Court of choice because the essence of the jurisdiction of the Court does not exist or because of a vis major or force majeure and the like. (5) Where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent was restrained from proceeding further with an action instituted by it before the U.S. Court against the appellant-O.N.G.C. The appellant and the respondent entered into a drilling contract. The said contract provided for arbitration for any difference arising out of the agreement being referred to arbitrators, which is governed by the Indian Arbitration Act, 1940. In view of certain disputes, two Arbitrators and an Umpire were appointed. The Arbitrators informed the Umpire that they were unable to agree on the matters raised and consequently the Umpire entered into the arbitration and proceeded to declare his non-speaking award and passed the interim award. The respondent requested the Umpire to authorise one D.C. Singhania to file the award in the appropriate Court in India. Such authorisation was granted and the award rendered by the Umpire was lodged in the Bombay High Court. Subsequently, the Umpire rendered a supplementary award as the final award. The same also was lodged in the High Court of Bombay by the Umpire at the instance of the respondent. The respondent lodged a plaint in the US District Court seeking an order of confirmation of the awards and a judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or prosecuting any proceeding in a Court not subordinate to that from which the injunction is sought; (emphasis added) This provision, in our opinion, will be attracted only in a fact-situation where an injunction is sought to restrain a party from instituting or prosecuting any action in a Court in India which is either of co-ordinance jurisdiction or is higher to the Court from which the injunction is sought in the hierarchy of Courts in India. There is nothing in Cotton Corporation s case which supports the proposition that the High Court has no jurisdiction to grant an injunction or a restraint order in exercise of its inherent powers in a situation like the one in the present case. In fact this Court had granted such a restraint order in V/O Tractoroexport, Moscow v. M/s. Tarapore Company 1970 (3) SCR 53 : 1969 (3) SCC 562 : AIR 1971 SC 1, and had restrained a party from proceeding with an arbitration proceedings in a foreign country (in Moscow). As we have pointed out earlier, it would be unfair to refuse the restraint order in a case like the present one for the action in the foreign Court would be oppressive in the facts and circumstances of the case. And in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion has also been referred to and discussed in Modi Entertainment Network s case ( supra ). The Privy Council in the said case had also laid down the principles to be applied by the Court while granting injunction restraining foreign proceedings. In the said case, there was no jurisdiction agreement for resolution of disputes. In para 17 of the judgment in Modi Entertainment Network s case ( supra ) the Apex Court has dealt with the said judgment and so the facts of that case and the principles laid down therein supports the reasoning given by the CLB to reject the injunction as sought for by the appellant. 44. In the decision in CSR Ltd. v. Cigna Insurance Australia Ltd. 1997 (146) ALR 402, (HC) it is held that the inherent power to grant anti-suit injunction is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for protection of Courts own proceedings or processes and with respect to the same subject-matter filed in this country and apart from that, a Court may, in exercise of the power deriving from the Chancery Court, make orders in restraint of unconscionable conduct or the unconscientious exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control the conduct of persons subject to their jurisdiction to the extent of forbidding them from suing in foreign jurisdictions. However, the fundamental corollary to concurrent jurisdiction must ordinarily be respected. Parallel proceedings on the same in personam claim should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other. The mere filing of a suit in one forum does not cut off the preexisting right of an independent forum to regulate matters subject to its prescriptive jurisdiction. For this reason, injunctions restraining litigants from proceeding in Courts of independent countries are rarely issued. ****** A second reason cautioning against exercise of the power is avoiding the impedance of the foreign jurisdiction. Injunctions operate only on the parties within the personal jurisdiction of the Courts. However, they effectively restrict the foreign Courts ability to exercise its jurisdiction. If the foreign Court reacts with a similar injunction, no party may be able to obtain any remedy. Thus, only in the most compelling circumstances does a Court have discretion to issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint" and with the recognition that international comity is a fundamental principle deserving of substantial defence. ****** In order to provide guidance for the District Courts, we spell out the manner in which our preferred approach operates. The gatekeeping inquiry is, of course, whether parallel suits involve the same parties and issues. Unless that condition is met, a Court ordinarily should go no further and refuse the issuance of an international anti-suit injunction. See e.g., China Trade, 837 F.2d at 36, Laker Airways, 731 F.2d at 928; see also George A. Bermann. The Use of Anti-Suit Injunctions in International Litigation, 28 Colum, J. Transnat l L. 589, 626 (1990) (stating that Courts generally "will not consider issuing anti-suit injunctions" unless there are "parallel local and foreign actions between the same parties over the same claim"). If - and only if - this threshold condition is satisfied should the Court proceed to consider all the facts and circumstances in order to decide whether an injunction is proper. In this analysis, considerations of international comity must be given substantial weight - and those considerations ordinarily establish a rebutt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Ramaiah s case ( supra ) has agreed with the view of the learned Single Judge rendered in Suganda Bai s case ( supra ). 48. In the present case, the appellant s claim before the CLB is not on the basis of cause of action arose in the Company Petition or incidental to it. As discussed above, the prayer in the Company Petition is on the basis of mismanagement. Incidentally respondents 1 and 2 have sought for direction to the administrator to invoke the arbitration clause available in the PPA. But the appellant now seeks an order of injunction to stall the proceedings taken on different capacity which is nothing to do with the prayer sought for in the main Company Petition and so the said decisions cannot be relied on to support the appellant s case in this appeal. 49. Now we have to consider the issue raised here on the basis of the principles laid down in various decisions as to whether the CLB erred in not granting anti-suit injunction as prayed for by the appellant-Company, restraining the respondents 1 and 2 from proceeding with the arbitration proceedings initiated by them before the ICC Arbitral Tribunal. 50. Though the relief of injunction as sought for again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitration, each Party thereto or its legal counsel shall have the right to examine its witnesses and to cross-examine the witness of an opposing Party. No evidence of any witness shall be presented in written form unless the opposing Party or Parties shall have the opportunity to cross-examine such witness, except as the Parties to the dispute otherwise agree in writing or except under extraordinary circumstances where the interest of justice require a different procedure. ( e )The arbitration shall be held in London, England. Notwithstanding section 17.8 the laws of England shall govern the validity, interpretation, construction, performance and enforcement of the provisions contained in this section 16.2. The arbitration proceedings shall be conducted, and the award shall be rendered, in the English language. ( f )This Agreement and the rights and obligation of the Parties shall remain in full force and effect pending the award in any arbitration proceedings hereunder. ( g )The costs of arbitration shall be determined by the Arbitral Tribunal in accordance with the Rules. ( h )The Indian Arbitration Act [Act No. X (10) of 1940] : The Arbitration and Conciliation Act, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty before the CLB, but it is a party before the ICC Arbitral Tribunal. Moreover, TNEB cannot be a party before the CLB, as no relief can be granted by the CLB against the TNEB. Furthermore, the Courts have taken the views that the arbitration proceedings should not be stopped from proceeding further, but, on the other hand, the said proceedings should be completed at an early date. So, seeking an anti-suit injunction by the appellant-Company is contrary to the settled principles of law. In view of the reasons given, there cannot be any irreparable or miscarriage of justice if injunction is granted. As respondents 1 and 2 have proceeded with the arbitration proceedings only for the benefit of the Company and consequently of the shareholders, by taking steps to recover huge amount from the TNEB, they are not asking any personal benefit out of the same. Respondents 1 and 2 have taken steps, which would have been taken by the Company. In the present case, it cannot be said that there is a multiplicity of proceedings both before the CLB and ICC Arbitral Tribunal as the scope of the proceedings before them are different and each proceeding was taken with the respective forum which is ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding maintainability of request for arbitration at the instance of respondents 1 and 2 is pending before the ICC Arbitral Tribunal and so we are not inclined to deal with the issue on the basis of clause 14.3 of the shareholders agreement in detail in this appeal, as the CLB is not going to decide the same in the Company Petition filed by respondents 1 and 2 and they have proceeded with the arbitration proceedings not on the basis of a right arises under an agreement. 52. Learned Senior Counsel appearing for the appellant submitted that having sought for similar relief in the Company Petition and having failed in their attempt in getting interim orders to permit them to proceed with the arbitration proceedings, the Tribunal should have granted anti-suit injunction as prayed for by the appellant-Company, as the respondents 1 and 2 have taken the arbitration proceedings in spite of the orders rejecting their request for the same. On the contrary, Dr. Singhvi, learned Senior Counsel appearing for the respondents 1 and 2 submitted that the relief sought for in the Company Petition and the relief sought for by way of interim relief and also in C.A. No. 38/2004 are only to dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresent the Company to initiate, institute and prosecute the alternate dispute resolution mechanism under the PPA on behalf of the Company against the TNEB. From the abovesaid facts, it is clear that by taking the said proceedings, respondents 1 and 2 tried to get direction from the CLB to invoke alternative dispute resolution mechanism either by the administrator or by the directors of the company though such directors are nominee directors of respondents 1 and 2. The administrator, if appointed, would amount to replacing the Board and so the abovesaid prayers and orders passed by the CLB cannot be construed as if respondents 1 and 2 have come forward with the plea that they should be permitted to invoke alternative dispute resolution mechanism and so the action of respondents 1 and 2 in initiating such proceedings cannot be allowed to proceed further. The action that was sought to be taken against the TNEB is a right conferred under clause 16.2 of the PPA. Respondents 1 and 2 have approached the CLB for the above said reliefs and they have not sought for the relief to proceed with the alternate dispute resolution mechanism by themselves as minority shareholders. The proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders passed by the CLB. If such a party, in this case, respondents 1 and 2, is given right to invoke such arbitration proceedings on different capacity and exercising different right, it cannot be said that the proceedings before the CLB seeking relief differently, cannot be put against respondents 1 and 2 as if they have ignored the orders of the CLB and proceeded with the proceedings before the ICC Arbitral Tribunal invoking arbitration clause under the PPA. 56. We are not now dealing with the maintainability of the request for arbitration in the name of the Company and not in the name of minority shareholders, as the said issue is pending before the ICC Arbitral Tribunal at the instance of the TNEB. It is also relevant to mention here that the TNEB has not raised any objection for arbitration. As a matter of fact, they have appointed their arbitrator and no proceedings before the CLB or Court are taken by the TNEB, questioning the invoking of arbitration proceedings by respondents 1 and 2. 57. In view of the above, we are of the considered view that there is no bar for respondents 1 and 2 to take proceedings to invoke the arbitration clause as minority shareholders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ER 189. James L.J., in Mac Dougall v. Gardiner 1875 (1) Ch. D. 13 : 45 LJ Ch 27 considered the rule stated the exceptions in the following passages at p. 21 which has since become classic: I think it is of the utmost importance in all these companies that the rule which is well known in this Ct., as the rules in Mozley v. Alston [1847] 1 Ph 790: (61 LJ Ch 217); Lord v. Copper Miners Co., [1898] 2 Ph 740 : 2 De G S 308) Foss v. Harbottle 1843 (2) Hare 461 : 67 ER 189 should be always adhered to; that is to say, that nothing connected with internal disputes between the shareholders is to be made the subject of a bill by someone shareholder on behalf of himself others, unless there be something illegal, oppressive, or fraudulent - unless there is something ultra vires on the part of the Co., qua Co. or on the part of the majority of the Co., so that they are not fit persons to determine it; but that every litigation must be in the name of the Co., if the Co., really desire it. From this it follows that a shareholder or shareholders are entitled to bring an action; (1) in respect of matters which are ultra vires the Co., which the majority of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should exist : ( a )The matter directly and substantially in issue in the subsequent proceedings must be directly and substantially in issue in the former proceedings; ( b )The former proceeding must be between the same parties or between the parties under whom they or any of them claim; ( c )Such a party must be litigating under the same title in the former proceeding; ( d )If the Court which dealt with the earlier proceeding is not competent to decide the subsequent proceedings for want of pecuniary jurisdic- tion till it cannot be a ground for holding that the decision of the former Court is not res judicata; ( e )Such a matter in issue in the subsequent proceeding must have been heard and finally decided in the earlier proceeding. Unless the above conditions are satisfied, it cannot be said that the subsequent proceedings taken by the respondents 1 and 2 do constitute res judicata. In the present case, as rightly submitted by the learned Senior Counsel appearing for the respondents 1 and 2, there is no specific plea regarding res judicata and the CLB cannot deal with the issue raised before the ICC Arbitral Tribunal, and the TNEB is also not a party before it. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the trial Court or a higher Court having at an earlier stage decided a matter in one way will not allow the parties to re-agitate the matter again at a subsequent stage of the same proceedings. Does this however mean that because at an earlier stage of the litigation a Court has decided an interlocutory matter in one way and no appeal has been taken there from or no appeal did lie, a higher Court cannot at a later stage of the same litigation consider the matter again?" (p. 943) 64. Even in the decision in Dhanwanti Joshi v. Madhan Unde 1998 (1) SCC 112, the Apex Court had applied the principles of res judicata to the interlocutory orders and held as follows: "21. It is no doubt true that orders relating to custody of children are by their very nature not final, but are interlocutory in nature and subject to modification at any future time upon proof of change of circumstances requiring change of custody but such change in custody must be proved to be in the paramount interests of the child - Rosy Jacob v. Jacob A. Chakramakkal 1973 (1) SCC 840. However, we may state that in respect of orders as to custody already passed in favour of the appellant the doctrine of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is filed by a person seeking permission to go to Bombay and if it is refused, he cannot go to Bombay at all. But, we have to see on what capacity he sought for permission. If he sought for permission to go to Bombay in his individual capacity and even if it is refused, it cannot be said that there is a prohibition against him to go to Bombay, if he goes to Bombay on different capacity. So, the said example is not applicable to the facts of the present case. 67. In the present case, two remedies are available to the respondents: (1) Seeking a direction to take arbitration proceedings by the Company (either through administrator or directors) itself as a regular and normal action under the PPA and (2) as minority shareholders by way of derivative action invoking arbitration clause. In this case, the respondents 1 and 2 have invoked their first right before the CLB and the second right before the ICC Arbitral Tribunal. 68. Moreover, the appellant-Company did not file Application in C.A. No. 62/2004 on the ground that respondents 1 and 2 have violated the orders of the Tribunal and so the injunction should be granted. The appellant-company mentioned the said facts regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion should be granted. The above said basis on which the application is filed is only relying on the facts which has been done subsequent to the filing of the Company Petition. The cause of action to file the above C.A. No. 62/2004 arises after the filing of C.P. No. 8/2004 and orders passed in the Company Petition and Company Application. Even on this ground, the appellant-company cannot sustain their petition. 71. In C.P. No. 8/2004, by way of passing reference, the orders dated 9-3-2004 and 25-3-2004 have been mentioned and the appellant-company has not relied on the said orders heavily to insist before the CLB to grant anti- suit injunction. But the appellant-company has put forth the case mainly on the ground that the Board of Directors have decided to keep cordial relationship with the TNEB, without taking any action regarding arbitration and not to insist the payment security mechanism and so the proceedings initiated by the respondents 1 and 2 are illegal and cause serious prejudice to the interest of the Company. Mainly on that basis, the injunction was sought for. The subject-matter in the said application is nothing to do with the main Company Petition. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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