TMI Blog2023 (6) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... 11, on which the petitioner seeks to rely, was long before the Option Period. As such, the same cannot count, by any stretch imagination, as the exercise of Option under the Option Agreement. In the present case, the petitioner having admittedly not done so, the question of applicability of Clause 10(b) does not arise at all. Hence, the argument of the petitioner, that upon service of the notice on July 29, 2011 the obligations under the Agreement crystallised and were to continue in force until fulfilment even though such obligations may fall beyond the Option Period, falls flat. In the absence of any notice being served within the time as contemplated in the agreement, there did not arise any question at any point of time for the obligations under the agreement to continue. Hence, the petitioner s argument of its rights having crystallised with the notice dated July 29, 2011 is not tenable in the eye of law and in the context of the agreement. Such unilateral notice of the petitioner did not even constitute any agreement between the parties to give rise to obligations on the part of the respondent. Following the principles in Vidya Drolia [ 2020 (12) TMI 1227 - SUPREME COUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Global Mercantile Private Limited Vs. Indo Unique Flame Ltd. And others, reported at 2023 SCC OnLine SC 495. 3. Next, it is argued that the application is misconceived and bad for non-joinder of the Special Purpose Vehicle (SPV), namely Orissa Steel Expressway Private Limited, which a party to the Option Agreement containing the arbitration clause. 4. Clauses 5.2 and 7(b) imposes certain obligations and undertakings on the said SPV. Hence, it is argued that any order or award passed in an arbitration arising out of the Option Agreement would affect the SPV and its rights. The SPV may refuse to register any transfer of shares inter se the parties as under Section 58 of the Companies Act, 2013 (for the sake brevity, the 2013 Act ) and the private company may refuse the transfer of any securities in pursuance of the company s powers under its Articles or otherwise. Thus, the application is not maintainable in its present form for non-impleadment of the SPV. 5. The learned Senior Advocate for the respondent next argues that the claim sought to be referred to arbitration is ex facie barred by limitation. The right to exercise Option as per the Agreement-in-question accrued o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate and independent footing, that is, the exercise of Option Right by the petitioner under a private arbitration agreement. 9. Moreover, the order passed under Section 8 of the Cuttack Bench only refers some disputes in the Company Petition to arbitration, which do not pertain to the exercise of Option Right by the petitioner. It is further argued that the Company Petition was filed in 2020 whereas the exercise of Option Right purportedly took place only in the year 2022. Thirdly, it is argued that the NCLT order is at present under challenge in an appeal pending before the NCLAT and no finality can, thus, be attached to the same. 10. It is contended by the respondent that, on the above grounds, the application under Section 11 of the 1996 Act ought to be dismissed. 11. Learned counsel for the petitioner submits that the claim is not ex facie time-barred. It is argued that the obligations under the Option Agreement requiring the petitioner to exercise its Option stood novated by the petitioner s letter dated July 29, 2011, by which the petitioner waived all rights or claims towards Option Premium paid to the respondent as consideration for acquiring the right to purchase t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner also places reliance on Vidya Drolia (supra) to argue that the court, at the reference stage, can interfere only when it is manifest that the claims are ex facie time-barred and dead or there is no succeeding dispute. 19. In the very least, the Option Agreement, as amended, including all documents executed pursuant to the amendment dated July 29, 2011, has to be interpreted to ascertain whether there was any fixed time for performance or whether the time originally fixed ceased to exist by reason of the amendment of July 29, 2011. The effect of the letter dated July 29, 2011 on the Option Period is also to be explored by interpreting the contract documents, which is beyond the scope of an application under Section 11 of the 1996 Act. 20. The claim of the petitioner, it is argued, cannot be classified as deadwood. Hence, the reliance placed by the respondent on the judgment of this Court in B.K. Consortium Engineers Private Limited Vs. Indian Institute of Management, reported at AIR 2023 Cal 125, is misplaced. 21. Learned counsel for the petitioner reiterates reliance on the letter dated July 29, 2011 whereby the petitioner expressly undertook to exercise all i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, Section 31 does not operate as a bar against the petitioner s claim against the respondent. 28. As such, the judgments of Ghanashyam Mishra and Sons Private Limited through the authorised signatory Vs. Edelweiss Asset Reconstruction Company Limited through the Director and others, reported at 2021 SCC OnLine SC 313 and Essar Steel India (supra), it is argued, do not affect the petitioner s claim. 29. The agreement between the parties forming the subject of the present dispute is not rendered unenforceable by reason of the CIRP. Learned counsel for the petitioner also places reliance on the definitions of creditor in Section 3(10), debt in Section 3(11) and claim in Section 3(6) of the IBC. In addition, it is argued that in CP No. 09/CTB/2020, the NCLT, Cuttack Bench recorded in the order dated August 30, 2022 that the petitioner had sent a letter for effecting the Option Shares to the respondent and that the respondent had filed a Company petition in retaliation. The NCLT, despite having noticed the CIRP and approval of Resolution Plan, had expressly held that the disputes between the parties were arbitrable and fell within the scope of the arbitration agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to nominate its Arbitrator. 36. Upon hearing learned counsel for the parties, it is of utmost importance to look into the plain meaning of the relevant clauses of the Option Agreement dated October 18, 2010. 37. In Clause 1.1.26, Option Period is defined as the period starting from Option Start Date and ending immediately after the completion of the Concession Period. 38. Clause 1.1.27 provides that Option Start Date shall mean the earlier of the date (a) immediately after the completion of the lock-in period, (b) on which NHAI permits the transaction contemplated in the agreement and/or (c) of termination of the Concession Agreement. 39. Clause 1.1.32 defines settlement date as a date on which the Option Shares are transferred from the respondent and/or its affiliate/associates to the exercising party and the exercising party is registered as the owner of such Option Shares in the Registrar of the Company and shall not be later than two days from the Notice Date. 40. Clause 2.1 of the Agreement provides that the exercising party shall have the right but not the obligation to acquire all the Option Shares, during the Option Period, from the respondent and/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same business day on which the petitioner and AMRCL respectively receives payment from the Rithwik-AMR-MBL JV/OSEPL out of the first disbursement made by the Senior Lenders to OSEPL, the Rithwik-AMR-MBL JV shall not release any further funds/payments to the petitioner, AMRCL and/or on their behalf, till the payment of the aforesaid balance amount of Option Premium is paid to the respondent. Certain other related undertakings were also made by the petitioner. 50. The next relevant communication by the petitioner is Annexure E at page 132 of the application, dated July 2, 2022, whereby the petitioner sought to invoke the provision of mutual conciliation as per Clause 11(f) of the Option Agreement and indicated that in case of failure, the petitioner would seek resolution of the dispute by invoking arbitration. 51. Another communication dated October 29, 2022 has been annexed by the petitioner to its application mentioning the dismissal of the company petition filed by the respondent and referring to an application under Section 8 of the 1996 Act being allowed by the Tribunal vide order dated August 30, 2022. Accordingly, the petitioner invoked the arbitration clause. 52 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Out of the three, admittedly Clause (i), that is, the expiration of the Option Period, was the earliest. As per the above discussion, the Option Period started and ended with the termination of the Concession Agreement on January 13, 2017, on which date the petitioner did not issue any notice whatsoever. 60. Clause 10(b) clarifies that if a notice has been served on or prior to the expiry of the above period, the agreement would continue in force until the fulfilment of all the obligations, even though such obligations may fall beyond the Option Period. The expression on or prior to the expiry has to be read in conjunction with the rest of the provisions discussed above, which unerringly indicate that the Option was to be exercised during the Option Period by issuing a notice as per Clause 3.1 of the Agreement. Hence, read in such fashion, Clause 10(b) has to be read to stipulate that the notice was to be served on or prior to the expiry of the Option Period but, in terms of Clause 3.1, during the Option Period. 61. In the present case, the petitioner having admittedly not done so, the question of applicability of Clause 10(b) does not arise at all. Hence, the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date on which the notice exercising the Option could be issued was January 13, 2017, the petitioner chose not to make any claim in the CIRP which commenced subsequently on March 30, 2017 and the Resolution Plan therein was accepted on April 18, 2018. The petitioner, at least, was an operational creditor within the IBC. Hence, assessing from such perspective as well, the petitioner s claim is deadwood . 68. Insofar as the non-impleadment of the SPV, Orissa Steel Expressway Private Limited is concerned, the same could be termed as a curable defect. Although the SPV was a signatory to the Option Agreement and a proper party to the present application, the question of curing such defect became infructuous ab initio in view of the application under Section 11 not being maintainable on the grounds as indicated above. 69. Thus, the present application under Section 11 of the Arbitration and Conciliation Act, 1996 is not maintainable in law and in terms of the Option Agreement itself, as amended. 70. Hence, AP No.67 of 2023 is dismissed on contest, without any order as to costs. 71. Urgent certified copies of this order shall be supplied to the parties applying for the same, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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