Case Note & Summary
The petitioner, Banyan Tree Growth Capital L.L.C., a Mauritian investment fund, had invested approximately USD 7.5 million in Axiom Cordages Limited, an Indian company, under a Share Subscription Agreement and Put Option Deed executed in September 2008. The promoters, Responsive Industries Limited and Wellknown Business Ventures LLP, were obligated to provide exit options including a put option. A separate Escrow Agreement secured the promoters' obligations. A dispute arose when Wellknown allegedly transferred shares out of the escrow account without authority in 2014. After unsuccessful resolution attempts, Banyan Tree issued a Dispute Notice and Put Exercise Notice. Arbitration proceedings were commenced and a 'Put Award' was rendered by the Singapore International Arbitration Centre on 15 January 2019. Banyan Tree then filed Commercial Arbitration Petition No. 476 of 2019 before the Bombay High Court under Sections 47-49 of the Arbitration and Conciliation Act, 1996, seeking enforcement of the award as a decree of the court. The court heard the matter and pronounced its judgment on 30 April 2020 through video conferencing. The judgment primarily set out the factual background and the procedural history leading up to the filing of the enforcement petition.
Issue of Consideration
Whether the foreign arbitral award dated 15 January 2019 rendered by the Singapore International Arbitration Centre satisfies the conditions for enforcement under Sections 47-49 of the Arbitration and Conciliation Act, 1996, and should be enforced as a decree of the court.
Law Points
- enforcement of foreign arbitral awards under Sections 47-49 of the Arbitration and Conciliation Act
- 1996
- Part II of the Arbitration Act
Case Details
2020 LawText (BOM) (04) 5
Commercial Arbitration Petition No. 476 of 2019 with Commercial Arbitration Petition No. 475 of 2019
Aspi Chinoy, Senior Advocate with Rohan Rajadhyaksha, Anshika Misra, Sherna Doongaji instructed by AZB Partners for Petitioners; Zal Andhyarujina, Senior Advocate with Ankita Singhania, Yuvraj Chokshi, Karan Bhide, Siddhartha Srivastava, Sahil Menon instructed by Link Legal India Law Service for Respondents
Banyan Tree Growth Capital L.L.C.
1. Axiom Cordages Limited (Previously Known as Axion Impex International Ltd.), 2. Responsive Industries Limited, 3. Wellknown Business Ventures LLP (Previously known as Wellknown Business Ventures Private Limited)
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Nature of Litigation
Enforcement of foreign arbitral award under Part II of the Arbitration and Conciliation Act, 1996.
Remedy Sought
Banyan Tree (petitioner) seeks enforcement of the SIAC Put Award dated 15 January 2019 as a decree of the court and consequential reliefs.
Filing Reason
Respondents failed to comply with the award, necessitating enforcement.
Previous Decisions
Petitioner had earlier obtained interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 from the Bombay High Court, which directed status-quo on the Wellknown shares.
Issues
Whether the foreign arbitral award meets the conditions for enforcement under Sections 47-49 of the Arbitration and Conciliation Act, 1996?
Judgment Excerpts
This petition under Sections 47 to 49 of the Arbitration and Conciliation Act, 1996 (for short “the A&C Act”), prays for enforcement of an arbitral award titled as “Put Award” dated 15 January 2019 (as subsequently corrected), of the Singapore International Arbitration Centre (SIAC) Arbitration No. 37 of 2016, as a decree of this court and for prayers consequential to the enforcement of the award.
The first exit option was an initial public offering (IPO) of Axiom, allowing Banyan Tree to sell its Axiom shares on the stock exchange. The second exit option was a merger of Axiom into Responsive, whereupon Banyan Tree would receive shares in Responsive, a publicly listed company. The third exit option was that Banyan Tree would exit its investment under the Put Option Deed whereby Banyan Tree would require Responsive and Wellknown to buy its shareholding in Axiom, should the first and second exit options were not to be available to Banyan Tree.
On 30 September 2008, the parties entered into an Escrow Agreement, which provided that Wellknown agrees to keep the shares in Responsive or their cash equivalent in escrow, in a specified escrow account.
On 19 March 2014, Wellknown transferred the Escrow Shares out of the designated demat-Escrow Accounts without authority or consent of Banyan Tree and/or the Escrow Agent to a new account operated solely by Wellknown.
Banyan Tree on 21 August 2015, now issued a notice to Responsive under the terms of the Put Option Deed being a ‘Put Exercise Notice’. ... By this notice Banyan Tree exercised its option under the 'Put Option Deed' requiring the Promoters to buy its shares in Axiom.
On 18 September 2015, Banyan Tree addressed another letter to the Promoters interalia setting out its estimate of the fair market value of the Put Securities calculated to be in the sum of INR 1,017,346,252.00 (or INR 346.54 per Put Security).
Procedural History
In 2008, Banyan Tree invested in Axiom under a Share Subscription Agreement and Put Option Deed. A dispute arose in 2014 when Wellknown allegedly transferred shares out of the escrow account without authority. Banyan Tree filed a Section 9 petition before the Bombay High Court and obtained interim status-quo orders on 5 May 2015. On 18 June 2015, Banyan Tree issued a Dispute Notice; on 21 August 2015, a Put Exercise Notice. Arbitration was invoked, leading to a SIAC arbitral award dated 15 January 2019. Banyan Tree filed the present enforcement petition under Sections 47-49 of the Arbitration and Conciliation Act, 1996. The court delivered its judgment on 30 April 2020.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 47, 48, 49
- Companies Act, 1956:
