Court finds absence of a valid arbitration agreement in Articles of Association, dismisses Section 9 petition for interim relief.
In a significant ruling, the Delhi High Court, presided over by Justice Purushaindra Kumar Kaurav, dismissed a petition filed by Natasha Oberoi seeking interim measures under Section 9 of the Arbitration and Conciliation Act, 1996. The petition aimed to challenge a resolution passed by the board of directors of Oberoi Hotels Pvt. Ltd. concerning the legal authority granted to Mr. Tejaswi Dixit over matters related to the estate of the late Mr. P.R.S. Oberoi.
The court was tasked with determining whether an arbitration agreement existed under the Articles of Association (AoA) of the company, which would validate the petitioner's claims under the Arbitration Act. The judgment scrutinized the provisions of Section 7 of the Arbitration Act, emphasizing the requirements for a valid arbitration agreement, including the necessity for the document to be signed by all parties involved, and for the petitioner to be a party to such an agreement.
The court concluded that the AoA did not constitute an arbitration agreement as it lacked the requisite signatures and the petitioner was not a party to the AoA since she was not a member of the company. Justice Kaurav noted, “The document which contains the purported written arbitration clause, on the strength of which interim reliefs are prayed for by the petitioner, therefore, falls foul of Section 7(4) of the Arbitration Act.”
Moreover, the court examined Clause 30A of the AoA, which the petitioner argued was an arbitration clause. However, Justice Kaurav found that the clause did not demonstrate a clear intent to arbitrate, instead indicating an internal dispute resolution mechanism. The ruling noted, “The intent must be clearly made out, either from explicit terms, or from an unavoidable, inescapable and principled inference from the terms of the contract.”
The court's decision underscores the stringent requirements for establishing an arbitration agreement under Indian law, particularly the need for explicit consent and signing by all parties involved. The dismissal of the petition highlights the judiciary's cautious approach in interpreting arbitration clauses, ensuring that parties are not inadvertently bound to arbitration without clear and mutual consent.
Bottom Line:
Arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996 - Articles of Association (AoA) of a company containing an arbitration clause - Requirement of signing, being a party to the arbitration agreement, and intent to arbitrate under the Arbitration Act.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 7, 9
Natasha Oberoi v. Rajaraman Shankar, (Delhi) : Law Finder Doc Id # 2839595
