The Supreme Court today allowed The Chatterjee Group (TCG) to go ahead in the International Court of Arbitration in France to settle its dispute over sale of 155 million shares of Haldia Petrochemicals Ltd (HPL).
TCG, a key promoter of HPL, had challenged the Calcutta High Court order barring it from going for arbitration in International Chamber of Commerce (ICC), Paris and negating the decision of the Company Law Board (CLB) to allot 155 million shares to the Indian arm of TCG.
Allowing the appeal, a bench comprising justices G S Singhvi and V Gopala Gowda, directed the parties to resolve their disputes through arbitration as mentioned in clause 15 of the letter of Agreement dated January 12, 2002 in accordance with the Rules of ICC and subsequent Agreements dated March 8, 2002 and July 30, 2004.
"The parties shall continue with the arbitration proceeding since the suit filed for permanent injunction against the arbitration proceeding is dismissed by setting aside the impugned judgment and final order passed by the high court," the bench said.
The high court had set aside the order of the CLB on the ground that Chatterjee Petrochem (India) Ltd (CPIL) was not a member of HPL and the CLB could not have enforced its right under private contract entered into between CPIL and WBIDC for transfer of shares as the same could not be the subject matter of a petition under Section 397 of the Companies Act.
HPL had filed a suit before the high court for declaring the arbitration clause in the agreement as void.
"We are inclined to reject the submission made on behalf of the respondents (HPL, West Bengal government and WBIDC) that the transfer of shares to CPIL instead of Chatterjee Petrochem (Mauritius) Company (CPMC) substantially changes the legal rights and responsibilities of the parties as per agreement resulting in novation of contract," the bench said.
It said the clause goes to show that CPIL is an affiliate of CPMC.
"This is to say, that by means of the letter dated March 8, 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 January 12, 2002," it said.
