Advocate Sushila
SUPREME COURT REITERATES GROUNDS FOR SETTING ASIDE INTERNATIONAL AWARD IN CASE OF ECONOMIC OFFENCES
Advocate Sushila Ram 13 Nov 2021

SUPREME COURT REITERATES GROUNDS FOR SETTING ASIDE INTERNATIONAL AWARD IN CASE OF ECONOMIC OFFENCES

The Supreme Court has in a case of Ratnam Sudesh Iyer vs Jackie Kakubhai Shroff passed a Judgment dated 10-11-2021 and reiterated the grounds for setting aside international arbitral award in cases of economic offences.


In this case, one, Mr. Ratnam Iyer, the Appellant herein and Mr. Jackie Shroff, the Respondent herein, were shareholders in an investment holding company, namely, Atlas Equifin Private Limited, India (Atlas) which held 11,05,829 Equity Shares of Rs.10 each in Multi Screen Media Pvt. Ltd. (Company). The Appellant was interested in selling the Shares and hence, both Parties allegedly signed a Placement Instruction dated 15-11-2005 (Placement Instruction) and authorised Standard Chartered Bank (Bank) as their Agent to look for a buyer for the Appellant’s Shares in Atlas. The dispute arose when the Respondent alleged that his signatures on the Placement Instruction were forged. Thus, the Respondent lodged a complaint with the Economic Offences Wing (EOW), Mumbai Police on 19-04-2010 (Complaint) against the Appellant and the Bank. Thereafter, the Parties entered into a Settlement Deed dated 03-01-2011 (Settlement Deed) which stated that (a) the Respondent would withdraw all complaints and proceedings filed against the Appellant; (b) the Respondent would not inform any Authority about the subject matter of the Settlement Deed; (c) USD 1.5 Million to be held in an Escrow Account and later to be released to the Respondent upon confirmation by EOW that the Complaint has been withdrawn; (d) USD 2 Million payable to the Respondent from proceeds of sale of Shares; (e) in case of disputes, Parties shall resort to arbitration.

Thereafter, various incidents of breach of Settlement Deed by the Appellant were communicated to the Appellant by Emails dated 09-06-2011, 15-06-2011, 30-06-2011, etc by the Respondent’s Wife. Thus, owing to disputes arising out of the Settlement Deed, arbitration proceedings were initiated.

During the arbitration, it was noted that a Share Purchase Agreement was executed for the Shares in the Company in July 2012 and Shares were sold in March 2013. Meanwhile, the Arbitrator directed the Bank to refrain from releasing the amounts held in the Escrow Account, till further directions of the Arbitrator. The Arbitrator then passed a Final Award dated 10-11-2014 (Award) awarding Liquidated Damages of USD 1.5 Million in favor of the Appellant and that the Respondent will not be entitled to his share in the sale proceeds of Shares, on account of his breach of Settlement Deed.

Aggrieved, the Respondent filed a Petition under Section 34 of the 1996 Act before the Bombay High Court on 24-01-2015, thereby challenging the Award. On the other hand, the Appellant filed for execution of the Award. The Respondent further filed for stay of enforcement of Award, which was granted on 06-04-2018. The High Court passed a Judgment dated 19-05-2020 and set aside the Award and also granted interim protection against withdrawal of money from the Escrow Account. An Appeal filed against the High Court Judgment dated 19-05-2020, was dismissed by the Division Bench of the High Court.


To read more, please visit the link below:


https://theindianlawyer.in/supreme-court-reiterates-grounds-for-setting-aside-international-award-in-case-of-economic-offences/


#supremecourt #international #award #arbitration #economicoffence

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