Raj Dutta & Ors v. Lambda Content India Private Limited & Ors

NAVIN CHAWLA, J FEBRUARY 01, 2019 RN

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ARB.P. 883/2018 Reserved on: 23.01.2019 Date of decision : 01.02.2019 RAJ DUTTA & ORS. ..... Petitioners Through: Mr.P. Chidambaram, Sr. Adv. with Mr.Satish Kishanchandari, Mr.Parag Khandhar & Mr.Sohil Shah & Mr.Tejas Patel, Advs. versus LAMBDA CONTENT INDIA PRIVATE LIMITED & ORS. ..... Respondents Through: Mr.Abhinav Vasisht, Sr. Adv. with Ms.Aayushi Sharma, Mr.Nandish Vyas, Mr.Joran Dewan & Ms.Priya Singh, Advs. for R-1 & R-2. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') has been filed by the petitioners seeking appointment of the Nominee Arbitrator on behalf of respondent nos.1 and 2 for adjudicating the disputes that have arisen between the parties in relation to the Share Purchase Agreement dated 09.04.2018 executed between the petitioners as the 'Sellers' and Page 2 respondent nos.1 and 2 as the 'Purchasers' of the shares in respondent no.3 company (hereinafter referred to as 'Domestic SPA'). 2. It is the case of the petitioners that the petitioners were holding 26.36% of the total paid up share capital of the respondent no.3 company, which the respondent nos.1 and 2 acquired pursuant to the Domestic SPA. It is further asserted by the petitioners that as per the terms of the Domestic SPA, a part of the sale consideration was payable upfront by the respondent nos.1 and 2 to the petitioners and the balance consideration of US$ 26,68,117.00 (equivalent to Rs.18,15,12,009/-) out of aggregate consideration (referred in the Domestic SPA as Additional Consideration) was deferred and under Clause 5.7.1 of the Domestic SPA, the same was deposited by respondent nos.1 and 2 in an Onshore Escrow Account as per terms of Onshore Escrow Agreement executed between the parties. 3. It is further submitted that this Additional Consideration was to be released to the petitioners in accordance with Clause 5.7.3 of the Domestic SPA on fulfilment of the conditions mentioned therein. 4. The Domestic SPA was amended on 02.06.2018, however, the terms thereof are stated to be not relevant for the present adjudication. 5. The petitioners further claim that they complied with Clauses 5.7.2 and 5.7.3 of the Domestic SPA and as the respondent no.1 and 2 did not notify any dispute thereto, the amount in the Escrow Account was to be released in favour of the petitioners. The petitioners, therefore, vide their letter dated 05.09.2018 sought release of the Additional Consideration Page 3 from the Escrow Account. However, the respondent nos. 1 and 2 disputed the same vide its letter dated 07.09.2018 and further by its letter dated 11.09.2018 sought recession of the Domestic SPA. 6. The petitioners, vide letter dated 22.09.2018, in compliance with Clause 15 of the Domestic SPA, which provides the Dispute Resolution Mechanism, called upon the respondent nos.1 and 2, to attempt to amicably resolve the disputes. Thereafter, a series of correspondence was exchanged between the parties, however, as the dispute could not be amicably resolved, the petitioners invoked the Arbitration Agreement contained in Clause 15 of the Domestic SPA and nominated a Sole Arbitrator. 7. The respondent nos.1 and 2, however, vide their letter dated 20.11.2018 refused to concur to the appointment of the Sole Arbitrator and instead contended that the disputes have to be resolved through a separate Share Purchase Agreement dated 09.04.2018 executed between SPI Global Content Mauritius Holding as 'Purchaser' and Olympus Capital Asia Investments Ltd.; Walden Investments VI; D.E. Shaw Composite Investments (Mauritius) Ltd. as 'Investor Sellers' and Edward Quinterro, Karen Kase as 'Minority Investor Sellers' (hereinafter referred to as 'Foreign SPA''). 8. The petitioners assert that as respondent nos.1 and 2 did not agree to the appointment of the Arbitrator in accordance with Clause 15 of the Domestic SPA, the Arbitrator propo