Arbitration.
HARIDAS.P.R
(Querist) 18 June 2014
This query is : Resolved
my company entered in to a promotion agreement in 1995 with an industrial development corporation.They subscribed our shares for Rs.1.10 crores with condition to buyback within three years or 5 years after commencement of production.Company had been incorporated before the agreement.Agreement provided an arbitration clause in the case of future disputes.Clause attached no conditions as to time or type of disputes.in 2002 industrial corporation demanded buyback with interest at the rate of 10%.But we insisted them to hold the shares till such time as the company made profits and also demanded additional funds as provided in the agreement.They being a government entity initiated revenue recovery proceedings for realizing their investment as provided in the agreement.Then we sent notice invoking arbitration clause.they did not respond to the notice.e filed Arbitration request in 2005 before the high court.But there we took a stand that they can not initiate recovery without selling the shares first.we also disputed rate of interest.But in the meantime they sold shares for fraction of their subscription value.Then the court dismissed the arbitration request noting selling of shares by the promoter corporation. After that they again sent recovery notice in 2008.we again invoked arbitration clause and called for their consent to appoint a sole arbitrator.They consented for such appointment but after one week sent a letter cancelling consent.Mean while we filed a review for the dismissal order of Arbitration request with considerable delay.High court dismissed the review petition noting that there is no provision for review for dismissal of an order in a request field under section 11 of A&CACT 1996.We again sent a notice in 2012.They consented to appoint the same sole arbitrator they consented in 2008.Now arbitration proceedings are at an advanced stage.We have incorporated certian fresh disputed from that of our Arbitration Request.1.company can not buy back shares in view of section 77 of companies act and rules of SEBI.2.If promoter is to buyback shares his percentage of holding will go up than what is prescribed under statute.3.Government entity is only a share holder in paripasu with other shareholders and not entitled for any special treatment.Now they have challenged jurisdiction based on resjudicata and limitation.My question is whether limitation act is applicable to arbitration proceedings going on with mutual consent or applicable only to court appointed arbitration proceedings under section 11.whether contentions in earlier arbitration request(which resulted in a non speaking order)will operate as resjudicata? is int limitation arbitration proceedings governed solely by section 43 and section 21 of arbitration and conciliation act,1996.whether limitation act is applicable only to court proceedings and not before arbitrator appointed with mutual consent of parties.which is the starting period of limitation in mutually appointed arbitration proceedings?please quote judgements
Devajyoti Barman
(Expert) 18 June 2014
No decision is supplied here.
Pure academic question.
HARIDAS.P.R
(Querist) 19 June 2014
in the earlier Arbitration Request filed in 2005,our stand or dispute was that no recovery could be effected with out selling shares first.we also disputed rate of interest calaculated for buy back.(their quanti fication was 2.67 crores on 1.10 crores as share participation done in 1995.)it was not term loan but share participation or investment.My qoestion is whether in the present arbitration with mutual consent.our contention in the former arbitration request will operate as resjudicata and whether limitation act,accroding to which they have worked out a date of 2002 as the cause of action will be attracted to the present ongoing proceedings? in fact they have challenged jurisdiction of arbitrator and put up limitation as defense.Now we say property of managing director who signed the agreement dated 1995 is not liable to be attached and he signed it only as representative of the company and the agreement was meant between company and state industrial corporation.question is whether we can bring up such dispute we did not bring in the 2005 Arbitration request and whether there is limitation as to the cause of action.They sent another attachment notice in 2012 and effected attachment of the property of managing director and whether that will serve as fresh cause of action ans so the limitation is got over in the present proceedings.No need of any citation,please.
T. Kalaiselvan, Advocate
(Expert) 22 June 2014
Seems to be a professional/academic query. If it is a real problem, contact a local advocate for his opinion.
