Karnataka High Court
Sri L Vivekananda vs M/S Handy 101 Solutions And Service Pvt … on 7 April, 2026
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COMAP No. 95 of 2023
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF APRIL, 2026
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
R
AND
THE HON'BLE MS. JUSTICE TARA VITASTA GANJU
COMMERCIAL APPEAL NO.95 OF 2023
BETWEEN:
SRI. L.VIVEKANANDA
AGED ABOUT 51 YEARS,
S/O LATE RAMAKRISHNAPPA,
R/AT NO.8, 13TH 'A' MAIN ROAD,
NEW THIPPASANDRA,
BENGALURU-560038.
...APPELLANT
(BY SRI. SAMPATH A.,ADVOCATE)
AND:
Digitally signed by 1. M/S. HANDY 101 SOLUTIONS
SUMATHY KANNAN
Location: HIGH
AND SERVICE PVT. LTD.,
COURT OF NO 10, SHANTHI NILAYAM,
KARNTAKA WIND TUNEEL ROAD,
MURUGESHPALYAM, HAL POST,
BENGLAURU-560017.
2. MR. PETER PUSHPARAJ
AGED ABOUT 62 YEARS,
S/O LATE MR. JOSHPH PUSHPARAJ,
R/AT NO - G-2, MEMPHIS, NO.7,
LONGFORD ROAD, BENGALURU-560025.
...RESPONDENTS
(BY SRI. VASANTH.V.FERNANDES, ADVOCATE)
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THIS COMAP/COMMERCIAL APPEAL FILED UNDER
SECTION 37 OF ARBITRATION AND CONCILIATION ACT R/W
SECTION 13 (1-A) OF THE COMMERCIAL COURTS ACT, 2015,
PRAYING TO SET ASIDE THE JUDGMENT AND ORDER DATED
28.09.2022 IN COM.A.P.NO.41/2022 PASSED BY THE LEARNED
LXXXV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE (CCH-
86) AND CONSEQUENTLY SET ASIDE THE AWARD DATED
31.01.2022 PASSED BY THE LEARNED SOLE ARBITRATOR IN
A.C.NO.5/2020 AT ARBITRATION AND CONCILIATION CENTRE,
BENGALURU (DOMESTIC AND INTERNATIONAL), SO AS TO
MEET THE ENDS OF JUSTICE AND EQUITY. IA NO. 1/2023 FOR
CD IN FILING IA NO.1/2023 IS FILED UNDER SECTION 5 OF
THE LIMITATION ACT, PRAYING THAT THIS HONBLE COURT
MAY BE PLEASED TO CONDONE THE DELAY OF 85 DAYS IN
FILING THE ABOVE APPEAL, SO AS TO MEET THE ENDS OF
JUSTICE AND EQUITY.
THIS APPEAL HAVING BEEN RESERVED FOR JUDGMENT
ON 25.03.2026, THIS DAY, COMING ON FOR
PRONOUNCEMENT OF JUDGMENT WAS DELIVERED THEREIN AS
UNDER:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
&
HON'BLE MS. JUSTICE TARA VITASTA GANJU
CAV JUDGMENT
(PER: HON’BLE MS. JUSTICE TARA VITASTA GANJU)
1. The present Appeal under Section 37 of the
Arbitration and Conciliation Act, 1996 [hereinafter referred
to as the ‘Act’] impugns the Judgment and Order dated
28.09.2022, passed in Com.A.P.No.41/2022 by the
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learned LXXXV Additional City Civil And Sessions Judge, at
Bengaluru (CCH-86), whereby the Commercial Court has
dismissed a Petition filed under Section 34 of the Act
(hereinafter referred to as the ‘Impugned Judgment’)
thereby upholding an Award dated 31.01.2022 passed in
A.C.No.5/2020, by a Sole Arbitrator appointed by this
Court (hereinafter referred to as the ‘Arbitral Award’).
2. I.A. No.1/2023 has been filed seeking condonation of
delay of 85 days to file the present appeal. The learned
counsel for the appellant/claimant has contended that the
appeal could not be filed within time, however, in terms of
the judgment of the Supreme Court in the case of
Government of Odisha, Department of Water
Resources vs. Gayatri Projects Limited1, even a delay
of 75 days has been condoned by the Supreme Court.
3. Although the respondents stand served, there is no
presence on their behalf. However, in view of the
pendency of this appeal for almost three years, and the
1
2025 SCC OnLine 2736
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fact that this matter is listed for admission today, this
Court deems it apposite to hear the appeal.
4. As stated above, I.A.No.1/2023 has been filed by the
appellant/claimant, which sets out that the reason for the
delay was because the appellant/claimant had a busy
schedule and was travelling out of station and could not
instruct his counsel. The relevant paragraphs of the
Affidavit are set out below:
“2. I humbly submit that pursuant to the
aforesaid order, I was not keeping well for some
time and also due to busy schedule of the business
work I was travelling out of station hence I could
not instruct my counsel to prefer the above
statutory appeal in time. Therefore, there is a delay.
3. I submit that there is no malafide intention in
filing the appeal belatedly due to the aforesaid
Bonafide reasons. If this application is not allowed, I
would be put to great hardship and prejudice and on the
other hand, no hardship of prejudice would be caused to
the Respondent if this application is allowed.”
[Emphasis Supplied]
5. The Supreme Court in the case of State of
Maharashtra Vs. Borse Bros. Engineers &
Contractors (P) Ltd.2 has explained that in the case of
commercial disputes, delay should be condoned merely by
2
(2021) 6 SCC 460
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way of an exception and not by way of a Rule. It has been
explained that the expression ‘sufficient cause’ is not
elastic enough to cover long delays, which are beyond the
period provided for in the appeal. It has further been held
that merely because the Government is involved, a
different yardstick for condonation of delay cannot be
made. The relevant extract is below:
“58. Given the object sought to be achieved under
both the Arbitration Act and the Commercial Courts
Act, that is, the speedy resolution of disputes, the
expression “sufficient cause” is not elastic enough
to cover long delays beyond the period provided by
the appeal provision itself. Besides, the expression
“sufficient cause” is not itself a loose panacea for the ill
of pressing negligent and stale claims. This Court,
in Basawaraj v. LAO [Basawaraj v. LAO, (2013) 14 SCC
81] , has held : (SCC pp. 85-88, paras 9-15)“9. Sufficient cause is the cause for which the
defendant could not be blamed for his
absence. The meaning of the word “sufficient”
is “adequate” or “enough”, inasmuch as may
be necessary to answer the purpose intended.
Therefore, the word “sufficient” embraces no
more than that which provides a platitude,
which when the act done suffices to
accomplish the purpose intended in the facts
and circumstances existing in a case, duly
examined from the view point of a reasonable
standard of a cautious man. In this context,
“sufficient cause” means that the party should
not have acted in a negligent manner or there
was a want of bona fide on its part in view of
the facts and circumstances of a case or it
cannot be alleged that the party has “not
acted diligently” or “remained inactive”.
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However, the facts and circumstances of each case
must afford sufficient ground to enable the court
concerned to exercise discretion for the reason that
whenever the court exercises discretion, it has to
be exercised judiciously. The applicant must
satisfy the court that he was prevented by any
“sufficient cause” from prosecuting his case,
and unless a satisfactory explanation is
furnished, the court should not allow the
application for condonation of delay. The court
has to examine whether the mistake is
bona fide or was merely a device to cover an
ulterior purpose. (See Manindra Land & Building
Corpn. v. Bhutnath Banerjee [Manindra Land &
Building Corpn. v. Bhutnath Banerjee, AIR 1964 SC
1336], Mata Din v. A. Narayanan [Mata Din v.
A.Narayanan, (1969) 2 SCC 770] Parimal v. Veena
[Parimal v. Veena, (2011) 3 SCC 545 : (2011) 2
SCC (Civ) 1] and Maniben Devraj Shah v. Municipal
Corpn. of Brihan Mumbai [Maniben Devraj Shah v.
Municipal Corpn. of Brihan Mumbai, (2012) 5 SCC
157 : (2012) 3 SCC (Civ) 24])…
59. Likewise, merely because the Government is
involved, a different yardstick for condonation of
delay cannot be laid down. This was felicitously stated
in Postmaster General v. Living Media (India) Ltd.
[Postmaster General v. Living Media (India) Ltd., (2012)
3 SCC 563: (2012) 2 SCC (Civ) 327 : (2012) 2 SCC (Cri)
580:(2012) 1 SCC (L&S) 649] [“Postmaster General”], as
follows: (SCC pp. 573-74, paras 27-29)
“27. It is not in dispute that the person(s)
concerned were well aware or conversant with the
issues involved including the prescribed period of
limitation for taking up the matter by way of filing a
special leave petition in this Court. They cannot
claim that they have a separate period of limitation
when the Department was possessed with
competent persons familiar with court proceedings.
In the absence of plausible and acceptable
explanation, we are posing a question why the
delay is to be condoned mechanically merely
because the Government or a wing of the
Government is a party before us.
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28. Though we are conscious of the fact that in a
matter of condonation of delay when there was no
gross negligence or deliberate inaction or lack of
bona fides, a liberal concession has to be adopted
to advance substantial justice, we are of the view
that in the facts and circumstances, the Department
cannot take advantage of various earlier decisions.
The claim on account of impersonal machinery and
inherited bureaucratic methodology of making
several notes cannot be accepted in view of the
modern technologies being used and available. The
law of limitation undoubtedly binds everybody,
including the Government.
29. In our view, it is the right time to inform
all the government bodies, their agencies and
instrumentalities that unless they have
reasonable and acceptable explanation for the
delay and there was bona fide effort, there is
no need to accept the usual explanation that
the file was kept pending for several
months/years due to considerable degree of
procedural red tape in the process. The
government departments are under a special
obligation to ensure that they perform their duties
with diligence and commitment. Condonation of
delay is an exception and should not be used as an
anticipated benefit for the government
departments. The law shelters everyone under the
same light and should not be swirled for the benefit
of a few.”
[Emphasis is supplied]
5.1 The Supreme Court has in Borse Brothers case
further held that given the object of speedy disposal
sought to be achieved by the Commercial Courts Act,
2015, for appeals filed under Section 37 of the Arbitration
and Conciliation, 1996, that are governed by Articles 116
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and 117 of the Limitation Act, 1963, the delay is to be
condoned by way of an exception and not a Rule. The
relevant extract is below:
“63.Given the aforesaid and the object of speedy
disposal sought to be achieved both under the
Arbitration Act and the Commercial Courts Act, for
appeals filed under Section 37 of the Arbitration
Act that are governed by Articles 116 and 117 of
the Limitation Act or Section 13(1-A) of the
Commercial Courts Act, a delay beyond 90 days, 30
days or 60 days, respectively, is to be condoned by
way of exception and not by way of rule. In a fit
case in which a party has otherwise acted bona
fide and not in a negligent manner, a short delay
beyond such period can, in the discretion of the
court, be condoned, always bearing in mind that the
other side of the picture is that the opposite party may
have acquired both in equity and justice, what may now
be lost by the first party’s inaction, negligence or laches.”
[Emphasis Supplied]
6. A reading of the Affidavit annexed to I.A.No.1/2023
shows that the appellant has failed to furnish any cause
whatsoever for condonation of delay, other than stating
that the appellant was travelling out of station and was
busy. It further states that the application must be allowed
to meet the ends of justice.
6.1 As stated above, the Supreme Court in the Borse
Brothers case has held that in a case where a party has
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acted in a bonafide manner, a short delay may be
condoned in exceptional circumstances. The contentions
which are reproduced in paragraph No.4 do not make out
any cause for condonation of delay much less sufficient
cause. The party cannot be said to have acted in a
bonafide manner.
7. The judgement in the Government of Odisha’s
case does not help the appellant either, inasmuch as the
delay of 75 days therein was condoned only on the
Supreme Court being satisfied that sufficient cause had
been shown, in line with the principles laid down in Borse
Brothers case.
8. In view of the settled law, this Court is not inclined to
condone the delay in the present case. Accordingly, I.A.
No.1/2023 is dismissed. However, this Court has briefly
examined the contentions of the learned counsel for the
appellant/claimant as well and found the same to be sans
merit. The only contention that has been raised by the
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learned counsel for the appellant/claimant before this
Court on the merits of this case, is that the learned
Arbitral Tribunal wrongly interpreted the clauses of the
Share Purchase Agreement [hereinafter referred as the
‘SPA’].
9. The appellant/claimant and respondent entered into
a SPA dated 30.03.2020, whereby the appellant/claimant
has agreed to purchase 20% of the shares of the
respondent No.1/company for a sum of Rs.10,00,000/-
(Rupees Ten Lakhs). It is the case of the appellant/
claimant that there was a breach of clauses (c) and (d) of
the SPA and based on the breach, he exercised his right to
transfer the shares back to the Promoters by sending a
Notice dated 01.08.2018. Since the Notice was not acted
upon, a Claim Petition was filed seeking recovery of the
sum of Rs.35,00,000/- (Rupees Thirty Five Lakhs) from
the respondents.
10. The respondents contended that the exercise of
power to transfer their shares back was not a valid
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exercise and that a combined reading of clauses (l) and
(m) of the SPA ousts the claim of the appellant/claimant.
Thus, it was prayed that the claim petition be dismissed
with costs.
11. The learned Arbitral Tribunal formulated three issues,
below:
“i. Whether the claimant proves that the respondents
to pay a sum of Rs.35,00,000/- in terms clause (l)
of the share purchase agreement dated
30.03.2010?
ii. Whether the claimant proves that the respondents
are liable to pay a sum of Rs.8,92,500/- towards
interest for the period from 01.08.2019 to
31.12.2019?
iii. Whether the respondents prove that the
Arbitration proceedings is not maintainable /
barred in view of the pendency of
O.S.No.7201/2012 on the file of the Additional City
Civil Judge Bengaluru (CCH-45)?”
12. The learned Arbitral Tribunal after examining the SPA
found that the ‘option to exit’ of the appellant/claimant is a
qualified option and not an absolute option. It further
found that in terms of the oral evidence of the
appellant/claimant (PW1), as set out in his examination-
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in-chief, there was an admission by the appellant/claimant
that the option was only exercised on 01.08.2018 and not
previously. The relevant extract is below:
“I state that, exercising my rights under clause (1) of the
Share Purchase Agreement dated 30.03.2010, vide
notice dated 01.08.2018, I intended to exit from the
company and claimed a sum of Rs.35,00,000/- (Rupees
Thirty-Five Lakhs Only) within fifteen days from the
receipt of the said notice.”
[Emphasis Supplied]
12.1. The learned Arbitral Tribunal further held that the
option to exit was to be exercised after the expiry of the
period prescribed under clause (l) of the SPA and it was
required to be exercised after 30.03.2015 but was only
exercised on 01.08.2018. The learned Arbitral Tribunal
relied upon Clauses (l) and (m) of the SPA to hold that the
appellant/claimant was required to exercise the exit option
strictly at the end of the stipulated period of five years
from the date of the agreement, i.e., on or before
30.03.2015. The learned Arbitral Tribunal interpreted the
expression “at the end of the period of 5 years” as not
permitting exercise of the option after the expiry of the
said period. It was further held that the Notice dated
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01.08.2018, being beyond the prescribed period, was not
in compliance with Clause (l) of the SPA. The learned
Arbitral Tribunal also relied upon Clause (m) to conclude
that the agreement itself was valid only for a period of five
years and, admittedly not having been renewed, the right
to exercise the exit option did not subsist thereafter.
Accordingly, the learned Arbitral Tribunal held that the
appellant/claimant, having failed to act strictly in terms of
the said clauses, was not entitled to seek payment of
Rs.35,00,000/- or any other relief.
12.2 The learned Arbitral Tribunal also relied on the
evidence of the appellant/claimant who deposed as PW1,
who in his cross-examination stated that the SPA (Ex.P1)
was not renewed at any point of time and neither was
there an ‘Addendum’ or a ‘Corrigendum’ to the SPA to
accept the contentions of the appellant/claimant. Thus,
interpreting the SPA, the learned Arbitral Tribunal held
that the claimant is not entitled for the relief sought in the
claim petition and the claim was dismissed.
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13. Aggrieved by the dismissal of its claim, the
appellant/claimant filed a petition under Section 34 of the
Act and contended that the learned Arbitral Tribunal lost
sight of the contention of the parties and it wrongly
interpreted the meaning of clause (l) of the SPA. It was
further contended that the interpretation by the Arbitral
Tribunal that the option must be exercised immediately
after the expiry of 5 years was incorrect.
13.1 The respondents on the other hand contended that
since there was only one interpretation possible to the
clause of the SPA and since the learned Arbitral Tribunal
interpreted the same, relying on the settled law in this
behalf, under Section 34, the Court cannot interfere even
if the Court has a different view.
14. The learned Commercial Court, relied on the
judgments in the cases of SAIL vs. Gupta Brother Steel
Tubes Limited3 and Sumitomo Heavy Industries
3
2009 (10) SCC 63
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Limited vs. ONGC Limited4 to hold that since the Court
cannot sit in an appeal over the Award of the learned
Arbitral Tribunal nor can it go into the reasonableness of
the contents of the award, the Court cannot substitute its
view with that of the Arbitrator or Arbitral Tribunal. Thus,
the challenge to the Award came to be dismissed by the
Commercial Court.
15. It is settled law that an Arbitrator examines the
quality of evidence placed before him when he delivers his
Award and a view which is possible on the facts as set
forth by the Arbitrator must be relied upon. This Court
while sitting in a Coordinate Bench in the Delhi High Court,
relying on the judgments of the Supreme Court in the case
of Delhi Airport Metro Express (P) Ltd. v. DMRC5 and
Indian Oil Corporation Ltd. v. Shree Ganesh
Petroleum6, has in the case of Deputy Commissioner
4
2010 (11) SCC 296
5
(2022) 1 SCC 131
6
(2022) 4 SCC 463
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of Police versus Score Information Technologies7
held as follows:
“20. The Arbitrator examines the quality and
quantity of evidence placed before him when he
delivers his Arbitral Award and a view, which is
possible on the facts as set forth by the Arbitrator
must be relied upon. In Delhi Airport Metro Express
(P) Ltd. v. DMRC, the Supreme Court has held that the
very object of the Act is that there should be minimal
judicial interference with an Award. It is further
held that the Arbitral Tribunal holds the final
authority in both facts and law and contravention
of law not linked to public policy is beyond the
scope of judicial interference under “patent
illegality”:
“28. This Court has in several other judgments
interpreted Section 34 of the 1996 Act to stress on
the restraint to be shown by Courts while examining
the validity of the arbitral awards. The limited
grounds available to Courts for annulment of arbitral
awards are well known to legally trained minds.
However, the difficulty arises in applying the well-
established principles for interference to the facts of
each case that come up before the Courts. There is
a disturbing tendency of Courts setting aside
arbitral awards, after dissecting and
reassessing factual aspects of the cases to
come to a conclusion that the award needs
intervention and thereafter, dubbing the award
to be vitiated by either perversity or patent
illegality, apart from the other grounds
available for annulment of the award. This
approach would lead to corrosion of the object
of the 1996 Act and the endeavours made to
preserve this object, which is minimal judicial
interference with arbitral awards. That apart,
several judicial pronouncements of this Court would
become a dead letter if arbitral awards are set aside
by categorising them as perverse or patently illegal7
2024 SCC OnLine Del 455516
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without appreciating the contours of the said
expressions.
29. Patent illegality should be illegality which
goes to the root of the matter. In other words,
every error of law committed by the Arbitral
Tribunal would not fall within the expression
“patent illegality”. Likewise, erroneous
application of law cannot be categorised as
patent illegality. In addition, contravention of
law not linked to public policy or public interest
is beyond the scope of the expression “patent
illegality”. What is prohibited is for Courts to
reappreciate evidence to conclude that the
award suffers from patent illegality appearing
on the face of the award, as Courts do not sit in
appeal against the arbitral award. The
permissible grounds for interference with a
domestic award under Section 34(2-A) on the
ground of patent illegality is when the
arbitrator takes a view which is not even a
possible one, or interprets a clause in the
contract in such a manner which no fair-minded
or reasonable person would, or if the arbitrator
commits an error of jurisdiction by wandering
outside the contract and dealing with matters
not allotted to them. An arbitral award stating no
reasons for its findings would make itself susceptible
to challenge on this account. The conclusions of the
arbitrator which are based on no evidence or have
been arrived at by ignoring vital evidence are
perverse and can be set aside on the ground of
patent illegality. Also, consideration of documents
which are not supplied to the other party is a facet of
perversity falling within the expression “patent
illegality”.
[Emphasis is ours]
21. Interpretation of a contract is a matter for an
Arbitrator to determine. Even if such interpretation
gives rise to an erroneous application of law, the
Courts will generally not interfere, unless the error
is palpably perverse or illegal and goes to the root
of the matter. It is therefore to be seen whether the
interpretation given by the Arbitral Tribunal is such that a
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fair minded or reasonable person could conclude as well,
or if the interpretation by the Arbitral Tribunal is patently
illegal.
xxx xxx xxx
23. The Arbitral Tribunal examined and interpreted the
provisions of the Contract and found the termination of
the Contract to be illegal and awarded damages to the
respondent. The learned Single Judge upheld all the
findings of the Arbitral Tribunal after examining
the same. The findings of the Arbitral Tribunal are
not patently illegal or against public policy.
xxx xxx xxx
25. The Supreme Court in Indian Oil Corporation
Ltd. v. Shree Ganesh Petroleum, had held that
where the terms of a contract are capable of more
than one interpretation, the Court cannot interfere
with the Award only if the Court is of the opinion
that another interpretation would have been a
better one. Reliance is placed on the following extract of
the Indian Oil case:
“45. The Court does not sit in appeal over the award
made by an Arbitral Tribunal. The Court does not
ordinarily interfere with interpretation made by the
Arbitral Tribunal of a contractual provision, unless
such interpretation is patently unreasonable or
perverse. Where a contractual provision is
ambiguous or is capable of being interpreted in
more ways than one, the Court cannot interfere
with the arbitral award, only because the Court
is of the opinion that another possible
interpretation would have been a better one.”
[Emphasis is ours]
16. An examination of the SPA reflects that it is in the
nature of an agreement for investment with the
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appellant/claimant investing into the respondent No.1/
Company, who stands represented by respondent No.2.
17. At this stage, it is apposite to extract the relevant
clauses of the SPA, which are set out below:
“Clause (b): The parties hereby agree that Handy 101,
the Company has been valued at Rs.50,00,000/-
(Rupees fifty lakh only) based on the present assets such
as furniture, computers, software and resources cost
which are brought in to the Company by Mr.Peter
Pushparaj from his old establishment.
Clause (c): It is hereby agreed that liability if any beyond
Rs.5 lakhs towards the company from the date of
incorporation till march 31st 2010 will be paid by the
Mr.Peter Pushparaj and not by the company.
xxx xxx xxx
Clause (h) The parties hereto agree to increase the
authorized capital of the Company (Handy 101) to
Rs.50,00,000/- consisting of 5000 equity shares of Rs.
100/- each to be subscribed by the promoters group and
investor in the following ratios:-
Promoter Group 80%
Mr.L.Vivekananda/Nominee 20%
Further capital if any required by Handy 101 in
addition to the said issued equity share capital
shall be decided from time to time by mutual
consent between the parties hereto in writing.
Further issue of Equity Shares, if any, shall be in
the same proportion as stated hereinabove unless
otherwise mutually agreed between the parties
hereto in writing and in case any of these parties
not taking their share of additional capital, option19
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to take the same is available to Mr.Peter Pushparaj
/ Handy 101 Employees.
Clause (i) The third party (Investor) hereby agrees to
bring in his portion of equity in consideration of
his appointment as a Director in Handy 101 and he will
remain as a Director of the Company as long as his
investment by way of shareholdings of 20% remain. Any
change in constitution of the Board will be done in
consultation with the Third party.
xxx xxx xxx
Clause (k) Neither party (promoter and Third part)
sell, transfer or otherwise encumber equity share
held by them for a minimum period of 3 years from
the date of allotment. Each shareholder shall
undertake not to sell, assign or transfer any shares of
the Company without first obtaining the prior return
consent of the other shareholder.
Clause (l): At the end of the period of 5 years from
the date of this agreement, the Third party shall
have an option to exit by transferring his shares
to Promoters group represented by Mr.Peter
Pushparaj at an agreed value of Rs. 35 Lacs for
equity investment of Rs. 10 Lacs (three and half
times the value of investment).
Clause (m): this SPA is valid for a period of five
years from the date hereof unless renewed for
further period/s as may be mutually agreed to in
writing between the parties hereto”
[Emphasis Supplied]
17.1 These clauses reflect that the appellant/claimant is
investing into the respondent No.1/Company and in return
for 20% of shareholding in the Company. The investment
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has a lock-in period of three (3) years. It reflects that the
SPA is valid for 5 years and at the end of 5 years, the
appellant/claimant would have the option to transfer his
shareholding at three and half times the value of his
investment of Rs.10,00,000/-, for a value of
Rs.35,00,000/.
18. Undisputably, the SPA was neither extended nor
renewed. It thus came to an end of 5 years, i.e., on
30.03.2015. At that time, the appellant/claimant did not
exercise his option to exit. He waited for another three
years and then exercised his option belatedly and after the
SPA had expired.
19. An examination of the Arbitral Award shows that the
learned Arbitral Tribunal has examined the clauses of the
SPA, as well as the evidence produced by the parties and
has given a finding based thereon including, with reference
to the admissions made by the appellant/claimant (PW1)
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during his examination/cross-examination. The relevant
extract is set out below:
“14. A careful reading of the clause (1) above
makes it clear that the claimant has an option to
exit from the company, but such an option is not
an absolute one. On the other hand, the same is a
qualified one. The qualifications are:
i. that the option shall be exercised at the end
of the period of 5 years from the date of the
agreement i.e., at the end of 5 years from
30.03.2010.
ii. the option can be exercised only by way of
transferring his shares to promoters group.
iii. such a promoter group shall be represented
by Mr.Peter Pushparaj, i.e., the respondent
No.2 herein.
15. If the option to exit is exercised by fulfilling
all the above qualification, then the claimant is
entitled for 35 Lakhs being the agreed value of
equity investment of Rs.10 Lakhs. It is the specific
case of the claimant that he has exercised the option
to exit by way of the letter/notice dated 01.08.2018
vide Ex-P4.
Therefore, it is necessary to refer to the contents of
Ex-P4 and the oral evidence of the claimant who
was examined as PW-1 to ascertain the fact as
to whether the option was exercised by him
strictly in terms of the said clause (1).
xxx xxx xxx
…Admittedly, the date of exercising the option as
per the admission of claimant himself is
01.02.2018. The period of 5 years from
30.03.2010 ends on 30.03.2015 whereas, the
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letter/notice by which the option is said to have
been exercised is dated 01.08.2018. Therefore,
there can be no doubt that the option was exercised
after the expiry of the period prescribed under clause
(1) of the share purchase agreement vide Ex-P1.
xxx xxx xxx
18. … The claimant having not exercised the
option to exist from the company in terms of the
time limit prescribed under the said clause (1)
remains to be an ordinary shareholder of the
company and as such his entitlement is only on the
share held by him in the company and is not entitled
for the agreed value of Rs.35 Lakhs.
xxx xxx xxx
20. Though there exists no pleading to the effect that
the claimant has transferred the shares to the said
promotors group in terms of clause (1) of the Ex.P4,
with a view to find out as to whether he has spoken
anything in his evidence about the transfer of his
shares to the said promotors group, I have carefully
perused the deposition of PW1. In the process I
find that the affidavit of PW1 in lieu of
examination-in-chief is nothing but the
repetition of the Claim petition. On the other
hand, in his cross-examination he categorically
admits as “It is true to state that, I have not
issued any notice prior to the date mentioned at
Ex.P4”. Therefore, I find considerable force in the
argument of Sri. Vasanth V Fernandes that apart from
expressing his intention to exit from the company by
issuing the said letter/notice dated 01.08.2018 vide
Ex.P4 nothing has been done in furtherance of the
same for fixing the liability on the respondents to pay
a sum of Rs.35 Lakhs to the claimant. The claimant
having failed to act strictly in terms of clause (1)
of the said share purchase agreement, which is
the foundation of the claim, in my opinion he is
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not entitled to seek a direction to the
respondents to pay a sum of Rs.35 Lakhs at the
hands of this Tribunal on the strength of the said
clause (1) at Ex.P1 and the notice/letter dated
01.08.2018 at Ex.P4.
21. Sri. Vasanth V Fernandes further by referring to
clause (m) of Ex.Pl argued that in view of the
period prescribed therein and that the same was
not renewed for further period by mutual
concert in writing, the right to exercise the
option to exit from the company conferred on
the claimant ceases to be in force. As such, I have
perused the said clause (m) of Ex.P1. It reads as
under:
“(m) This SPA is valid for a period of five years
from the date hereof unless renewed for further
period/s as may be mutually agreed to in
writing between the parties hereto”.
22. The above clause makes it clear that the
original period of 5 years prescribed for the
validity of the agreement can be renewed for
further periods by mutual consent, but such
renewal shall be necessarily by writing between the
parties. In order to find out as to whether there is a
renewal of the said SPA, I have carefully perused the
evidence of the claimant i.e., PW1, who in his cross-
examination categorically admits as “The share
purchase agreement at Ex.P1 was not renewed
at any point of time. There is no addendum to
Ex.P1. Similarly, there is no corrigendum to
Ex.P1”. Therefore, the argument of Sri. Vasanth V
Fernandes that the claimant cannot enforce his right
under clause (1) of the SPA at Ex.P1 on account to the
fact that the validity of the agreement is only for a
period of 5 years from 30.03.2010 which come to an
end on 30.03.2015 and that the same was not
renewed at any point of time as admitted by the
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claimant himself requires to be sustained and
resultantly on this ground also the claim against the
respondents is liable to be rejected. Accordingly, Issue
No.1 is answered in the negative.”
[Emphasis Supplied]
19.1 In addition, the learned Arbitral Tribunal has
examined the evidence and found an admission by the
appellant/claimant (PW1) during his examination/cross-
examination in the following terms:
“The share purchase agreement at Ex.P1 was
not renewed at any point of time. There is no
addendum to Ex.P1. Similarly, there is no
corrigendum to Ex.P1”
[Emphasis Supplied]
20. The learned Counsel for the appellant/claimant has
been unable to show to the Court as to how the
interpretation given by the learned Arbitral Tribunal suffers
from any illegality.
21. The interpretation given by the learned Arbitral
Tribunal in its interpretation of the SPA is neither patently
illegal nor ignores the evidence produced by the parties
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before the Arbitral Tribunal. In view of the settled law as
discussed above, merely because another interpretation is
possible, it is not a ground to set aside the award.
22. In any event and as stated above, this appeal is
barred by limitation. Thus, the appeal is dismissed both
on the ground of being barred by limitation, as well as on
merits. All pending applications stand closed.
Sd/-
(ANU SIVARAMAN)
JUDGE
Sd/-
(TARA VITASTA GANJU)
JUDGE
JJ/YN
List 4 Sl.No.1
26
