Full Text
HIGH COURT OF DELHI
OMP (ENF.) (COMM.) 148/2017 & IA No.13672/2017
SHRI ANURAG RAJPAL ..... Petitioner
Through: Mr Manish Sharma, Mr Sandeep D. Das, Mr Ankit
Mangla, Mr Siddharth Sharma, Mr Ninad Dogra and Mr Ritesh
Mukherjee, Advocates.
Through: Mr Krishnendu Datta, Mr V. P.
Singh, Mr A. R. Chowdhury, Mr Aditya Jalan and Mr
Priyank Ladoia, Advocates.
VIBHU BAKHRU, J IA No. 1909/2018
JUDGMENT
1. This is an application filed by TTN Ventures Pte. Ltd. (hereafter „TTN‟), a company incorporated under the laws of Republic of Singapore, inter alia, praying for vacation of the ad interim ex parte 2018:DHC:3665 order passed by this Court on 21.11.2017. The present application has been filed through the liquidators appointed by the High Court of the Republic of Singapore for liquidation of TTN.
2. By the order dated 21.11.2017, this Court had, inter alia, directed TTN (arrayed as respondent no. 2 in the above captioned matter) to maintain status quo with regard to the debentures held in Tangerine Digital Entertainment Pvt. Ltd. (respondent no.4). By virtue of the said order, TTN stands restrained from selling, alienating, mortgaging, transferring, encumbering, disposing of, conveying or creating third party rights, in any manner whatsoever in 47,12,170 number of dentures of Tangerine Digital Entertainment Pvt. Ltd.
3. The above captioned petition has been filed by the petitioner under Section 36 of the Arbitration and Conciliation Act, 1996 for enforcement of an arbitral award dated 01.08.2017 (hereafter „the Award‟) passed by the Arbitral Tribunal constituted by Justice Vikramajit Sen (Retd.), a former Judge of the Supreme Court (hereafter „the Arbitral Tribunal‟). Although TTN was arrayed as respondent no.5 in the arbitral proceedings, it claims that the Award, which is sought to be enforced in these proceedings, does not impose any obligations on TTN to discharge the amount awarded in favour of the petitioner. It is, accordingly, submitted that the order restraining TTN from alienating any of its assets is beyond the scope of the present petition.
4. In view of the above, the limited question that falls for consideration of this Court at this stage is whether the Award imposes any liability or obligation on TTN?
5. The Award was rendered in the context of the disputes that had arisen in connection with the Employment Agreement dated 05.12.2011 entered into between the petitioner (Mr Anurag Rajpal) and respondent no.1, the American Swan Lifestyle Company Pvt. Ltd. (hereafter referred to as „A.S. Lifestyle). Admittedly, the petitioner (claimant before the Arbitral Tribunal) was appointed as the first CEO/Director of A. S. Lifestyle. A. S. Lifestyle terminated the said Employment Contract by a letter dated 05.12.2015 with immediate effect. The petitioner claimed that the said termination was wrongful and without cause; consequently, he was entitled to salary with all consequential benefits for the notice period of six months in addition to the value of the share holding held in A. S. Lifestyle. The disputes raised by the petitioner were referred to arbitration, which culminated in the Award.
6. Eight parties were arrayed as respondents before the Arbitral Tribunal. A. S. Lifestyle was arrayed as respondent no.1; three individuals, who were directors/shareholders of A.S. Lifestyle were arrayed as respondent nos.2, 3 and 4; TTN was arrayed as respondent no.5; Astro Overseas Limited was arrayed as respondent no.6; American Swan Asia Pacific Pvt. Ltd. (hereafter referred to as A. S. Asia Pacific) was arrayed as respondent no.7; and Astro Media Services Pte Ltd. was arrayed as respondent no.8.
7. It is relevant to note the connection between the above mentioned companies, which were arrayed as respondents before the Arbitral Tribunal. Astro Overseas Ltd. is the holding company of Astro Media Services (arrayed as respondent no.8 before the Arbitral Tribunal) which in turn is the holding company of TTN. TTN in turn is the holding company of A. S. Asia Pacific, which in turn holds the majority shares in A. S. Lifestyle.
8. The Arbitral Tribunal deleted A. S. Asia Pacific and Astro Media Services Pvt. Ltd. (which were arrayed as respondent nos.[7] and 8 before the Arbitral Tribunal), inter alia, for the reason that they were not parties in the petition (OMP (I) 1/2016) filed by the petitioner under Section 9 of the Act, which was disposed of by referring the disputes to the Arbitral Tribunal.
9. It is material to note that the Employment Contract was only between the petitioner and A. S. Lifestyle. No other party is a signatory to the Employment Agreement and, consequently, to the arbitration agreement embodied in the arbitration clause included therein. Notwithstanding the above, the petitioner had arrayed individual Directors/Shareholders (arrayed as respondent nos.[2] to 4) as well as other companies, which had any economic interest in A. S. Lifestyle as respondents in the arbitral proceedings. Since TTN was the holding company of A. S. Asia Pacific, which in turn held shares in A. S. Lifestyle, TTN was also arrayed as a respondent before the Arbitral Tribunal.
10. The Arbitral Tribunal deleted A. S. Asia Pacific and Astro Media Services Pvt. Ltd. (which were arrayed as respondent nos.[7] and 8 before the Arbitral Tribunal) as parties to the arbitral proceedings. But, the applications filed by other non signatories under Section 16 of the Arbitration and Conciliation Act, 1996, were rejected by the Arbitral Tribunal.
11. Respondent no.5 was initially represented before the Arbitral Tribunal by counsel. The said counsel withdrew their vakalatnama and, thereafter, TTN remained unrepresented before the Arbitral Tribunal. However, prior to the counsel withdrawing their vakalatnama, a short reply was filed on behalf of TTN wherein it was stated that TTN being a shareholder/investor in A. S. Lifestyle was not involved in the employment disputes between the petitioner and A. S. Lifestyle.
12. The petitioner did not press its claim against respondent nos. 2 to 4 (individual Directors and Shareholders of A. S. Lifestyle) and the petitioner had centred his arguments only against Astro Overseas Ltd. (which was arrayed as respondent no.6 before the Arbitral Tribunal). This is specifically noted in the Award.
13. The Arbitral Tribunal considered the claims raised by the petitioner and held that the termination of petitioner‟s employment was without cause and wrongful. The Tribunal, accordingly, held that the petitioner was entitled to his salary and consequential benefits for the period of six months commencing from 06.12.2015. The petitioner was also held entitled to the remuneration for the period October, 2015 to December, 2015. In addition, the petitioner was also held to be entitled to the value of his share holding.
14. The Arbitral Tribunal also examined the liability of Astro Overseas Ltd. (respondent no.6) and concluded that Astro Overseas Ltd. could not be held liable for the claims raised by the petitioner as it was not a signatory to the Employment Agreement. The Tribunal also noted that there was no pleading to show that Astro Overseas Ltd. was involved in the day-to-day affairs of A. S. Lifestyle. The relevant extract of the said decision is as under:- “There is no doubt about the fact that Respondent No. 6 Company being an indirect shareholder of the Company would stand to benefit as much from the actions of the Claimant as would any other shareholder of the Company i.e. even the Claimant, Respondents No.2 to 4 or even Respondent No.5. Hence, on the basis of mere indirect financial control of Respondent No.6 Company in the Respondent No.1 Company, the Claimant cannot reign in the Respondent No.6 within the realm of this Employment Agreement who is admittedly a nonsignatory to the Employment Agreement.”
15. Although, it was held that respondent no.6 was not liable for the claims raised by the petitioner; there is no discussion with regard to the liability of TTN (which was arrayed as respondent no.5 before the Arbitral Tribunal).
16. At this stage, it is relevant to refer to the operative part of the Award, which is sought to be enforced by way of the above captioned petition, and the same is reproduced below:- “In view of the pleadings, evidence led and arguments advanced, the Claimant is awarded the relief of „Declaration that the termination of the Claimant‟s services is wrongful and with prejudice‟ as well as the „Declaration that the termination of Claimant‟s services is without cause‟. The Respondent No.1 Company is directed to pay full salary, bonus, increments and other emoluments from 01-10-2015 to 08-12-2015 to the Claimant i.e. Rs.82,93,586/- (Rupees Eighty two lakh ninety three thousand five hundred eighty six only) along with 18 percent interest per annum payable till the date of realization, as he would also be entitled to damages for non-payment of his dues. The Respondent No.1 is further directed to pay Rs.70,89,802/- (Rupees Seventy lakh eighty nine thousand eight hundred two only) as salary for the six month notice period along with 12 percent interest per annum payable till date of realization. The claim for interest at the rate of 18 percent is far too excessive. As held hereinabove, Claimant is entitled to be reimbursed for the full value of his shareholding in the manner/method of valuation indicated in Clause 8.2(b) of the Employment Agreement. The Claimant shall be put to notice of any possible „Liquidity Event‟ of Respondent No. 1 Company in terms of Clause 5 of the Employment Agreement. Since it is found that the termination is found to be wrongful, a symbolic amount of Rs. 50,00,000/- (Rupees Fifty lakhs only) is hereby awarded to the Claimant for loss of reputation and the undue hardship caused to him. The Claimant will be entitled to all the fees paid or yet to be paid to the Tribunal and a consolidated sum of Rs. 20,00,000/- (Rupees twenty lakhs only) towards legal expenses. The Counter Claims raised by the Respondent No. 1 Company are rejected.”
17. It is apparent from the above that there is no specific finding that TTN is liable for any of the claims raised by the petitioner. The operative part of the impugned award also does not impute any liability on TTN.
18. Mr Sharma, learned counsel appearing for the petitioner had contended that since the Arbitral Tribunal had directed that the claimant was entitled to be reimbursed the full value of the share holding in the manner indicated in Clause 8.2(b) of the Employment Agreement, TTN would be obliged to make aforesaid payment being an indirect share holder of A. S. Lifestyle.
19. This Court does not find any merit in the aforesaid contention, particularly, for the reason that no such specific liability has been mulcted on TTN. It is also relevant to refer Clause 8.2(b) of the Employment which reads as under:- “8. Term and Termination 8.[2] The Company may terminate this Agreement forthwith with Cause or terminate, by providing a prior written notice of six (6) months („Notice Period‟) to you, without Cause. You may also terminate this Agreement by providing a prior written notice of six (6) months („Notice Period‟) to the Company. The consequences of such terminate are as under: XXXX XXXX XXXX XXXX (b) In case your engagement is terminated, without Cause by the company, the promoters shall have the right to call upon you to transfer the entire shares than held by you in the Company at a price mutually determined between the Parties. In the event that the Parties do not agree to a price then the price shall be determined by an independent Valuer. The cost incurred in the appointment of the independent valuer shall be shared by the Parties. The transfer shall be completed within 15 days of arrival of the value by the independent value.”
20. A plain reading of Clause 8.2(b) of the Employment Agreement indicates that the Promoters were provided the right to purchase the shares held by the petitioner. The term „Promoters‟ is defined under the Employment Contract as under:- “17. „Promoters‟ shall mean Four Cross Media Holdings 2 Cyprus Ltd. (a company established under the laws of the Republic of Cyprus and having its registered office at Themistokll Dervi 3, Julia House, PC 1066, Nicosia, Cyprus) and Amitabh Taneja.”
21. Thus, assuming that Clause 8.2(b) of the Employment Agreement is to be implemented, the shares held by the petitioner would be required to be sold to the Promoters as defined above. TTN is clearly not one of the Promoters and, therefore, neither had the right nor the obligations to purchase the shareholding of the petitioner.
22. It is also clear from the above that the impugned award does not impute any liability upon TTN. While, it is correct that there is no express discussion as to TTN‟s liability, the reasoning adopted by the Arbitral Tribunal for declining the petitioner‟s claim against Astro Overseas Ltd. would be equally applicable in the case of TTN as well.
23. The Award must be read in a meaningful manner and merely because TTN was arrayed as a respondent does not mean that the petitioner is entitled to recover the sums awarded in his favour from TTN.
24. For the reasons stated above, the application is allowed and the ad interim order dated 21.11.2017 is vacated. The above execution petition to the extent that it seeks to enforce the Award against TTN (respondent no.2) is also dismissed.
VIBHU BAKHRU, J MAY 31, 2018 MK