Avantha Holdings Limited V. Vistra ITCL India Limited, 2020
Case Number: O.M.P. (I) (COMM.) 177/2020
Court: Delhi High Court
Bench: Hon’ble Mr. Justice C. Hari Shankar
Date of Judgement: 14th August 2020
Petitioner: Avantha Holdings Limited
Respondent: Vistra ITCL India Limited
Facts of the Case:
- A consortium of lenders comprising of K. K. R., L. & T., and B. O. I. lent a hefty sum of Rs. 1265 to the petitioner, that is, Avantha Holdings Limited. Nonconvertible debentures were issued by the petitioner against the aforementioned borrowing. The respondent, Vistra ITCL India Limited was the Debenture Trustee. Avantha Holdings Limited pledged the equity shares it had held in other companies, that is, C. G. P. and B. I. L. T. to secure these debentures.
- A part of shares of BILT was sold in the open market on 15th July 2019 with others pending to be sold when the case at hand was going on. The shares of C. G. P. were sold between the months of July to November of 2019. K. K. R. and L. & T. purchased the aforementioned shares.
- An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed seeking for the grant of interim measures prior to the commencement of arbitration proceedings.
- The reliefs were based on grounds including the fact that according to an oral agreement between the consortium of lenders and Avantha Holdings Limited, the latter was negotiating for an extension of time for repaying the debentures. Moreover, it was alleged that there was a conspiracy between K.K.R., Vistra ITCL India Limited, and others. The conspiracy was aimed at artificially depressing the share prices before purchasing the shares.
Issues of the Case:
- What are the pre-requisites for passing an order under Section 9 of the Arbitration and Conciliation Act, 1996?
- Can the jurisdiction of an Arbitral Tribunal be based on any assumptions by the Court under section 9 of the Arbitration and Conciliation Act, 1996?
The judgment of the Case:
The Hon'ble High Court observed that three conditions must be fulfilled for passing an order under Section 9 of the Arbitration and Conciliation Act, 1996. The conditions that must be fulfilled are as follows:
(i) The applicant must display her/his intention to initiate arbitral proceedings.
(ii) The criteria which apply to Order 39 of the Civil Procedure Code for grant of interim proceedings must stand satisfied.
(iii) The circumstances must be such that it renders the grant of interim measures an emergent necessity.
Moreover, the Court held that jurisdiction of an Arbitral Tribunal can't be usurped while exercising jurisdiction under Section 9 even at the pre-arbitration stage.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.