Holding

The Court held that a dispute has arisen and must be decided by an arbitrator, and therefore appointed Hon'ble Mr. Justice S.N. Variava as the arbitrator.

Summary

The petitioner, a US citizen of Indian origin, invested $640,000 in a water‑park venture with the respondents based on agreements dated 7 June 2000, 29 January 2005 and a supplementary agreement of 2 February 2005, which contained an arbitration clause. A dispute arose over the transfer of 25 acres of land, share allocation, alleged illegal winding‑up of the company and claims for compensation. The petitioner issued a notice on 14 March 2006 appointing an arbitrator, but the respondents did not. The petitioner then filed an arbitration petition under Section 11(5) read with Sections 11(9) and 11(12) of the Arbitration and Conciliation Act, 1996. The respondents argued that the agreement was an international commercial arbitration agreement, that the petition was not maintainable, and that the petitioner was engaged in forum‑shopping. The Court held that a genuine dispute existed, that the arbitration clause was enforceable, and that the petition was maintainable under the cited provisions. Accordingly, the Court appointed former Judge S.N. Variava as arbitrator and directed the parties to appear before him, allowing the petition and ordering each party to bear its own costs.

Issues considered

Whether the dispute arising from the 2005 and 2005 supplementary agreements is arbitrable under the Arbitration and Conciliation Act, 1996.
Whether the arbitration clause in the agreements is enforceable despite the respondents' claim that it is an international commercial arbitration agreement.
Whether the petition filed under Section 11(5) read with Sections 11(9) and 11(12) of the Act is maintainable.
Whether the petitioner’s earlier invocation of arbitration and alleged forum‑shopping bar the present petition.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(12), s. 11(5), s. 11(9)

Subjects

ArbitrationSection 11International commercial arbitrationJurisdictionForum shoppingAppointment of arbitratorLand transfer disputeShareholding disputeCompensation

Judgment

[2009) 11 S.C.R. 280

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A VANNA CLAIRE KAURA THROUGH CONSTITUTED
ATTORNEY MRS. INDEERA BAWA
v.
GAURI ANIL INDULKAR & ORS.
(Arbitration Petition No. 14 of 2008)
B JULY 22, 2009
[DALVEER BHANDARI, J.]
).

Arbitration and Conciliation Act, 1996 "."' ss. 11 (5) rlw 11
c (9) and 11 (12) - International commercial arbitration
agreement - Dispute between the parties - Petition for
appointment of arbitrator for adjudicating and deciding the
disputes - Held: Dispute has arisen between the parties and
it needs to be adjudicated and decided by an arbitrator -
D Arbitrator appointed - Parties directed to appear before the
arbitrator.
1<
CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.
14 of 2008.
E Under Section 11 (5) with Section 11 (9) and Section
11 ( 12) of the Arbitration and Conciliation Act, 1996.

Dr. A.M. Singhvi, Dinkar Singh, lrshad Ahmad for the
Petitioners. ,.,.
)r

F P.H. Parekh, Sumit Goel, ,,Shubhranshu Padhi, Vishal
Prasad (for Parekh & Co.) for the Respondents.

The Judgment of the Court was delivered by

G DALVEER BHANDARI, J. 1. This application has been
filed by the applicant under section 11 (5) read wit~ section
11 (9) and section 11 (12) of the Arbitration and Conciliation Act, )or-

1996 for appointment of an arbitrator for adjudicating and
deciding the disputes which have ai-isen between the applicant
H 280
VANNA CLAIRE KAURA THR. CONSTITUTED ATTORNEY 281
v. GAURI ANIL INDULKAR [DALVEER BHANDARI, J.]
~
•
~
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and the respondents in respect of the implementation and A

...f working of agreements entered into between the applicant and
the respondent no.3 on the one hand and respondent nos.1 and
2 on the other hand on 29.1.2005 and the supplementary
agreement between the same parties on 2.2.2005.
B
2. The applicant is a citizen of the United States of
America and is a person of Indian origin .
..-. 3. Respondent no.3, Dr. Vined Kaura is the husband of the
applicant, Vanna Claire Kaura.
c
4. Respondent no.2, Anil lndulkar was doing business in
Pharmaceuticals in USA and respondent no.1, Gauri Anil
lndulkar is his wife. Respondent no.2 came in contact with the
applicant and he represented to the applicant and respondent
no.3 that there was a good prospect of business for water and D
' - ~
amusement park in India and that if the applicant and
respondent no.3 invested in India, the applicant and respondent
no.3 would get good returns on their investments. Consequently,
the applicant and respondent no.3 remitted $6,40,000 (US
Dollars) to respondent nos.1 and 2. A memorandum of E
understanding dated 7.6.2000 was entered into between the
rtrf
applicant and respondent no.3 on the one hand and respondent
nos.1 and 2 on the other. On the basis of the capital so provided
....... by the applicant and respondent no.3, respondent nos.1 and 2
"" formed a company called, M/s Splash Mountain Water Park Pvt.
F
ltd. with its registered office at Pune, Maharashtra. According
to the applicant, it was agreed that 1,67,000 equity shares of
Rs.100/- each in the said company shall be allotted as fully paid-
up shares to the applicant and respondent no.3 by way of 40%
equity shares to be allotted to the applicant as per the earlier
-< understanding. It was also agreed that respondent nos.2 and G
> _.,. 3 ·shall hold the remaining 2,50,400 equity shares of Rs.100/-
each representing their 60% shares holdings in the company.

5. According to the applicant, it was agreed by an
agreement dated 29.1.2005 that respondent no.1 who owned H

I
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282 SUPREME COURT REPORTS (2009] 11 S.C.R.
'
',.._
,.
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A 25 acres of land in Pune should transfer 10 acres out of the
said land along the eastern boarder thereof to the applicant in
~
lieu of the 40% contribution made by the applicant towards the
initial capital. There is a clause of arbitration in the said
agreement. In the supplementary agreement entered on
B 2.2.2005 a small modification was made that inasmuch as
respondent no.1 undertook to transfer and convey the entire 25
acres of land owned by her to the applicant instead of the earlier
agreed extent of 10 acres of land. Accordingly, respondent no.1 A
did not transfer the land, as agreed. It is alleged that respondent
c nos.1 and 2 called a Board meeting of the company hurriedly
to ensure that the applicant and respondent no.3 could not know
about the meeting and there was no possibility of their
participation in the said meeting. In the said meeting,
respondent nos.1 and 2 maneuvered to get a resolution passed
to wind up the Water Park business of the company and
D
transferred the said business to another company owned by the ·--,..:
close relatives of respondent nos.1 and 2. The land on which
the business of the company was being run was also handed
over to the said company owned by the close relatives of
respondent nos.1 and 2.
E
6. In these circumstances, the applicant had sent a legal ~
I

notice on 14.3.2006 to respondent nos.1 and 2 appointing one
Vilol Khaladkar as an arbitrator and also called upon .,.
respondent nos.1 and 2 to appoint their arbitrator. Since y

F responderltl)os.1 and 2 did not take any steps to appoint their
arbitrator, the applicant ti.led an arbitration petition in the High
Court of Bombay under section 11 of the Act. The respondents
submitted that the said arbitration petition filed by the applicant
in the High Court of Bombay was not maintainable for the
G reason that the agreement dated 29.1.2005 and the
supplementary agreement dated 2.2.2005 are in the nature of
)..
international corritnercial arbitration agreement as defined
'\Jnder the Act and, therefore, an application for appointment of
·. an arbitrator under section 11 (5) read with section 11 (9) and
H section 11 (12) of the Act would only lie before the Chief Justice
VANNA CLAIRE KAURA THR. CONSTITUTED ATTORNEY 283
;. v. GAURI ANIL INDULKAR [DALVEER BHANDARI, J.]
-r of India. A

7. Accordingly, the applicant withdrew the application filed
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at the Bombay High Court. The applicant submits that the
following disputes have arisen between applicant and
respondent nos.1 and 2 and the same are required to be
B
referred to an Arbitrator and the Arbitrator is to be appointed
for the purpose of adjudicating and deciding the following
I - disputes:-
-""
...... "(a) Transfer & conveyance of 25 acres of land, as
mentioned in agreement dated 29.1.2005 and c
dated 2.2.2005, standing in the name\of Guari
lndulkar to the claimant Ms. Vanna Claire Kaura and
~ her husband Dr. Vined Kaura.

(b) Being shareholders of 1,67,000 number of equity
,_ shares of Rs.100/- each of Splash Water Mountain
D
~ Park Pvt.Ltd. in the name of Vanna Clair Kaura and
~ same number of equity shares of Rs.100/- each in
the name of Dr. Vined Kaura in terms of agreement,
dated 29.1.2005, action of Gauri lndulkar and Anil
E
lndulkar to hand over the leased land to Lessor was
illegal and consequently due to illegal closure of
business of Splash Water Park Mountain Pvt. Ltd.
~ they are liable to compensate Vanna Clair Kaura
.,., for loss of business and loss of profits
approximately to the tune of Rs.20,00,000/- (Rupees F
twenty lacs/ per month from September 2005, the
---+
date of Resolution passed in the absence of Vanna
Clair Kaura and Dr. Vinod Kaura and without giving
them sufficient time to respond and thereby illegally
closing the business of Splash Water Park G
Mountain Pvt.Ltd.·
--1., .----- (c) A sum of Rs.7,00,000/- per month to be paid ta
Vanna Clair Kaura by Gauri lndulkar and Anil
lndulkar in terms of compensation as stipulated in H
284 SUPREME COURT REPORTS [2009] 11 S.C.R.
.:.
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A clause 5 of supplementary agreement dated '

2.2.2005 from the date of repayment of loans and
payment of lease rent; ....
(d) A sum of Rs.10,00,000/- towards reimbursement of
expenditure incurred on travel and board, lodging
B
etc., by the Vanna Clair Kaura;

(e) Vanna Clair Kaura to be compensated by way of
payment of damages by Gauri lndulkar and Anil ~

lndulkar due to non-performance of their respective ·~
c parts as stipulated in the agreements dated
29.1.2005 and 2.2.2005;

(f) Present, pendent lite and future interest@ 24% on
the amounts found due and payable to Vanna Clair
Kaura."
D
8. The applicant prays that an independent arbitrator be j:..
appointed for adjudicating and deciding the disputes having
arisen between the parties out of the agreement dated
29.1.2005 and the supplementary agreement dated 2.2.2005
E entered into for and between the parties.

9. In pursuance to the notice issued by this court, reply on
affidavit has been filed on behalf of respondent nos.1 and 2. In
the reply affidavit, a number of preliminary objections have been )#-
....
F taken. Respondent no.1 submitted that the application filed by
the applicant is not maintainable and is liable to be dismissed
because there is no live dispute pending between the parties.
It is also submitted by respondent no.1 that the applicant has
suppressed facts from this court and has been indulging in
G forum shopping and the present application is liable to be
dismissed on this ground alone.
r-.
10. It is further mentioned in the reply that the applicant has
abandoned the arbitration clause. It is further mentioned that
the MOU dated 7.6.2000 and subsequent agreement dated
H 29.1.2005 and the supplementary agreement dated 2.2.2005
VANNA CLAIRE KAURA THR. CONSTITUTED ATIORNEY 285
v. GAURI ANIL INDULKAR [DALVEER BHANDARI, J.]

were entered into by respondent nos.1 and 2 due to coercion, A
threat and harassment on the part of the applicant and
.. respondent no.3 .

11. The company by the name, Splash Mountain Water
Park Pvt. Ltd. came into existence on or about 3.7.1997. By
B
Board Resolution dated 24.6.2005, wherein the applicant
herself was present, the applicant proposed the closure of the
_.. Water Park business of the company since the same was
suffering losses. She further stated that she and respondent
no.3 would not invest any further funds to keep the business
going. As such, by way of board resolution dated 24.6.2005, c
the proposal of the applicant was discussed and thereafter i,t
was unanimously resolved that the activity of the Water Park
should be closed as of 30th Junef 2Q05.

12. In the reply, respondent no.1 has mentioned that the D
applicant is indulging in forum shopping and has filed multi..
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pronged litigation before various forums including the Bombay
High Court, Civil Judge, Pune, Principal Bench of Company
Law Board and this court as well as the_ criminal proceedings
before the Judicial Magistrate, First Class. E
13. It is also mentioned that the applicant has invoked
arbitration by notice dated 14.3.2006 and the present
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application is not _based on the said invocation and the'
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applicant subsequently entered into arbitration on second time
on the same cause of action and as such the present F
application is barred. It is also submitted that the applicant
having invoked arbitration by notice dated 14.3.2006 and
thereafter !3bandoning the same cannot seek arbitration for the
second time for the same cause of action. Respondent no.1
also submitted that the present application is a clear abuse of G
the process of law and is liable to be dismissed.
,-+ ... .....,

14. I have heard the learned counsel for the parties and
carefully perused the MOU dated 7.6.2000 and agreement
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H
286 SUPREME COURT REPORTS (2009] 11 S.C.R.

A dated 29.1.2005 and the supplementary agreement dated
2.2.2005.

15. In my c9nsidered view, the dispute has arisen between
the parties and it needs to be adjudicated and decided by an
Arbitrator. Consequently, I request Hon'ble Mr. Justice S.N.
8
Variava, a former Judge of this court to accept this Arbitration
and, adjudicate and decide the dispute which has arisen
betWeen the parties. The learned Arbitrator would be free to
decide about his fee.

C 16. This arbitration petition is accordingly disposed of with
the direction to the parties to appear before Hon'ble Mr. Justice
S.N. Variava, a former Judge of this court at 11 a.m. on 27th
July, 2009 at Mumbai.'

17. The Registry is directed to immediately communicate
D this order to the I.earned arbitrator to enable him to decide the
;ii. \
arbitration matter as expeditiously as practicable.

18. Consequently, this. arbitration petition is allowed and
disposed of. In the peculia~ facts and circumstances of this
E case, I direct the parties to bear
I
their own costs.

K.K.T. _ Arbitration Petition disposed of: