The Delhi High Court has upheld the Rs. 19,92,51,981 award passed by the Arbitral Tribunal in favour of Ager Hotels Group Limited and against the Convention Hotels India (CHI) Private Limited, both of which had a share subscription agreement.
The arbitral proceedings had arisen from a claim of Ager Hotels Group Limited for the refund of a sum of Rs. 12,69,12,090 with interest as the amount was paid towards share subscription by Ager Mauritius to CHI, but the shares were not issued by CHI.
Ager had sought a refund of the amount besides damages.
CHI, in its defence and counter-claim before the arbitrator, contended that Ager had committed a series of breaches of the SSA and therefore, was liable to pay a sum of Rs. 65,11,00,000 towards losses and damages suffered on account of the loss of business opportunity etc.
The tribunal had partly allowed Ager’s claim while denying the claim made by CHI.
Following this, CHI moved the high court challenging the award on the ground that it was against public policy and that the tribunal had erred in granting interest as per the share subscription agreement.
Before the high court, Ager Hotels Group Ltd. and Ager Hotels India Pvt. Ltd were represented by advocate Amar Dave and team led by the senior partner of M/s. Karanjawala & Co. Nandni Gore along with senior associates Sonia Nigam, Natasha Sahrawat and Khushboo Bari and associates Arjun Sharma and Neha Khandelwal.
Reading from provisions of the Foreign Exchange Management Act and the RBI circular dated November 12, 2002, on repatriation of refund of funds received for purchase of shares, Justice Yogesh Khanna said, “The crux is if any money comes to India for purchase of shares and the shares are not purchased within 180 days, the money needs to be refunded, as simple as that”.
The court found that the award was not against public policy and relied on a judgment of the Delhi High Court which said, “This Court while considering the question whether to decline enforcement of a foreign award on the ground of public policy, is also required to consider the nature of the policy that is alleged to have been contravened. The approach that this Court would bear is one that favours enforcement of a foreign award and if the public policy considerations can be addressed without declining recognition of the foreign award, the Court would lean towards such a course.”
On the issue raised by CHI that if no damages were to be granted to Ager Hotels, then interest also ought not to have been granted, Justice Khanna said, “It is a wrong argument, the respondent raised two claims i.e., of Rs.12 crores approx. and of Rs.4.44 crores etc. which were for the exchange rate fluctuation. The arbitral tribunal did not grant the exchange rate fluctuations and if such claim was not granted, then it is wrong for the petitioner to allege the interest on outstanding dues also ought not to have been granted.”