Paragraph numbers below are the court’s original numbering, recovered from the source text.
20. At this stage, in order to discover whether there is a strong prima facie case made out in favour of HSBC in the present section 9 proceedings, it is necessary to refer to the Foreign Final Award dated 27.09.2014. The Foreign Final Award in this case, after setting out the case of HSBC (the Claimant before the Arbitral Tribunal) and the case of Avitel India and the Jain family (the Respondents before the Arbitral Tribunal), set out the issues for determination thus: “ISSUES Issues for Determination 4.8 Against this background, the Tribunal considers that the issues for determination are as follows: i. have any of the Respondents made representations and/or warranties to the Claimant before the Claimant’s investment in Avitel India and if so, what were these representations and/or warranties; ii. if so, did the Respondents make the representations and/or warranties in order to induce the Claimant to invest in Avitel India; iii. if so, was the Claimant so induced and did it rely on the Respondents’ representations and/or warranties; iv. if so, were any of these representations and/or warranties untrue; v. if so, have any of the Respondents made such representations and/or warranties knowing that these were false and/or without belief in their truth, or recklessly and without caring whether these representations and/or warranties were true or false; vi. if so, are any of the Respondents liable to the Claimant in tort for deceit; vii. if so, are any of the Respondents liable to the Claimant for fraudulent misrepresentation pursuant to the relevant provisions of the Contract Act; viii. if so, is the Claimant entitled to damages for fraudulent misrepresentation pursuant to the relevant provisions of the Contract Act; ix. If so, are any of the Respondents liable to the Claimant for breach of warranty; AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] x. If so, are any of the Respondents to indemnify the Claimant in respect of any of the Claimant’s claims; xi. if the Claimant is entitled to claim damages, what is the amount of damages the Claimant is entitled to; xii. if so, is the Claimant entitled to interest and if so, at what rate; xiii. is the Claimant entitled to the reliefs sought; xiv. costs; xv. are the Claimant’s shares in Avitel India to be cancelled and if so, on what basis?” In answering these issues, the Arbitral Tribunal found: “7.14 The Tribunal additionally accepts the Claimant’s submission and finds that the Claimant was induced by and did rely on the Respondents’ further representations that, inter alia, the Avitel Group had immediate business with a value of approximately USD 1 billion with independent and legitimate customers as well as good relationships with independent and legitimate suppliers and service providers (see paragraphs 5.2(i)(l), 5.17(a.xv) and 5.17(a.xvi) above). 7.15 The Tribunal rejects the Respondents’ submission and finds that Clause 6.3 of the SSA unequivocally establishes that the Claimant did rely on the representations and warranties in making its investment in Avitel India.” It further found that the siphoning off of a large part of the amount of USD 60 million into companies owned or controlled by the Jain family was made out as follows: “8.20 The Claimant relies in support, inter alia, on the witness evidence of Mr. van Schalkwyk, HSBC Middle East Limited’s Regional Head of Fraud Risk, who conducted an investigation into the banking activities of the Jain Family in the United Arab Emirates. This investigation established the flow of funds following the Claimant’s investment [Witness Statement of Mr. van Schalkwyk, at para.9] in summary as follows: (i) on 10 May 2011,an amount of USD 60,000,000.00 was received by Avitel Dubai (Emirates NDB account number 744859021001) (“the Avitel Dubai Account”) from Avitel Mauritius. This represented the Claimant’s initial investment [ Witness Statement of Mr. van Schalkwyk, at para.17(a)]. Mr. van Schalkwyk was able to ascertain this information from a statement of the Avitel Dubai Account for the period between 1 May 2011 to 23 September 2011 which statement was provided to him by Mr. Derek Wylde of HSBC [A copy of this statement is exhibited to the Witness Statement of Mr. van Schalkwyk, at RVS-I pp. 2 to 3]; (ii) a series of payments was then made by Avitel Dubai as follows: a. on 15 May 2011 the Avitel Dubai Account was debited in the amount of USD 6 million and which amount was credited to an Emirates NBD account held in the name of Highend. This was followed by multiple small transfers out of Highend’s bank account to a number of miscellaneous accounts [Witness Statement of Mr. van Schalkwyk, at para. 17(b)(i)] ; b. on 23 May 2011, the Avitel Dubai Account was debited in the amount of USD 12.22 million and which amount was credited to the same Emirates NBD account held in the name of Highend. This amount was in turn transferred to an entity identified as Avitel Limited on 30 May 2011 whose full beneficial ownership Mr. van Schalkwyk has not been able to confirm [Witness Statement of Mr. van Schalkwyk, at para. 17(b)(ii)]; c. on 9 June 2011 the Avitel Dubai Account was debited in the amount of USD 10 million which amount was then credited to a different Emirates NBD bank account which is also held in the name of Highend. On 27 July 2011 this amount was transferred to a further Emirates NBD account in the name of Digital Fusion. This sum was thereafter transferred to Cralton Capital Commercial Broker Services LLC (“Cralton”) which appears to be a broking and investment company [Witness Statement of Mr. van Schalkwyk, at para.17(b) (iii)] in respect of which company Mr. Boban Idiculla is the sole signatory to its bank account with Emirates NDB [Witness Statement of Mr. van Schalkwyk, at fn. 9]; d. on 13 June 2011 and 14 June 2011, the Avitel Dubai Account was debited in the amounts of USD 10 million and USD 5 million respectively which amounts were credited to an Emirates AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] NBD account held in the name of Digital Fusion. On 19 July 2011 and 26 July 2011, Digital Fusion’s account was debited in the amounts USD 5 million and USD 10 million respectively which amounts were credited to an Emirates NBD account held in the name of Cralton. The account records of Cralton held with Emirates NBD show that the transfers in July 2011 totalling USD 25 million were used to make various transfers, fixed term deposits and investments between Cralton, Highend, Digital Fusion and SPAC [Witness Statement of Mr. van Schalkwyk, at para.17(b)(iv)]; e. on 23 February 2012, the Avitel Dubai Account was debited in the amount of USD 8 million which amount was credited to the Emirates NBD account held in the name of Highend. On 28 February 2012, this account was debited in the amount of USD 7.48 million which was credited to a different Emirates NBD account held in the name of SPAC. A further debit in the amount of USD 500,000 occurred on 28 February 2012 which sum was routed through two different Emirates NBD accounts, one held in the name of DejaVu FZ-LLC and one in the name of Al Jalore Trading FZE, before this sum was finally credited to a Dubai Multi Commodities Centre entity, namely Emerald DMCC [Witness Statement of Mr. van Schalkwyk, at para.17(b)(v)]; f. Mr. van Schalkwyk understands that between 18 April 2012 and 29 April 2012, there was a further transfer from the Avitel Dubai Account of USD 8.5 million. However, he has been unable to ascertain to which account(s) these funds have been transferred to [Witness Statement of Mr. van Schalkwyk, at para.18].” It then found that the following admitted facts would show that most of the representations made by the Avitel Group and the Jain family to HSBC were false in that: “8.70 The Tribunal notes that the Respondents have not denied the accuracy of thefollowing: a. the Avitel Group did not have a direct relationship with the BBC and was not close to signing the BBC Contract; b. Avitel Dubai’s offices had been closed for a period of time; c. Mr. Siddhartha Jain was a forty nine percent shareholder in Highend as well as in Digital Fusion at the material time; d. Mr. Siddhartha Jain is the sole signatory of and therefore controls Highend’s and Digital Fusion’s bank accounts with Emirates NBD; e. Mr. Siddhartha Jain was co-signatory (together with one Mr. Ankit Garg) of SPAC’s bank accounts with Emirates NDB; f. Kinden was not in existence between 12 October 2010 and 26 October 2011; g. Mr. Boban Idiculla who is the sole shareholder and director of Kinden, is also the sole signatory of and therefore controls Cralton’s bank accounts with Emirates NDB; h. Purple Passion, which was wholly owned by Mr. Siddhartha Jain, was dissolved on 23 November 2010; i. In total, USD 59.72 million of the Claimant’s USD 60 million investment have been transferred out of Avitel Dubai’s bank accounts and into bank accounts the majority of which are controlled by the Jain Family; j. the domain names for Kinden, SPAC, Highend and Digital Fusion had been registered by Mr. Hrishi Jain; k. on 28 January 2012, the websites for Kinden, SPAC, Highend and Digital Fusion had been transferred from the hosting site “rediffinalpro.com ” to “rirev.com”, the same hosting site which had been utilized by Avitel Dubai since 28 June 2011. Each website was thereafter re-registered employing a proxy service called “Domains By Proxy, LLC”, which provides anonymity to the owners of websites on the internet.” As a result thereof, issue (iv) was answered stating: “8.72 In these circumstances and also for the reasons set out below, the Tribunal accepts the Claimant’s submissions and finds that the following representations and/or warranties made by the Respondents were false and/or misleading: AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] a. the Avitel Group had been in advanced negotiations with the BBC and a BBC Contract had been close to execution. This is because the Respondents do not deny that the Avitel Group never had a direct relationship with the BBC and was not about to sign the BBC Contract; b. at the Completion Date, the Avitel Group had the benefit of the Material Contracts with Kinden, SPAC and Purple Passion in total valued at approximately USD 658 million. This is because in effect, Kinden and Purple Passion had not been in existence at the time of the Claimant’s investment; c. at the Completion Date, the Avitel Group’s key customers Kinden, SPAC and Purple Passion as well as Avitel Dubai’s key supplier, Highend, and key service provider, Digital Fusion, were all independent and legitimate companies. This is because in effect, Kinden and Purple Passion had not been in existence at the time of the Claimant’s investment and Mr. Siddhartha Jain was the shareholder and/or sole signatory to Highend’s and Digital Fusion’s bank accounts with Emirates NDB and was also co-signatory to SPAC’s bank accounts with Emirates NDB. Further, in light of the complex web of transactions to, from and between Highend’s, Digital Fusion’s, SPAC’s and Cralton’s various bank accounts with Emirates NDB (see paragraph 8.20 above), the Tribunal accepts the Claimant’s submission that none of these entities were independent and legitimate companies. As for Mr. van Schalkwyk’s evidence, as there is no evidence adduced which would challenge the veracity and reliability of Mr. van Schalkwyk’s evidence, the Tribunal sees no reason to disregard his evidence. In the Tribunal’s view he is a credible witness; d. the Claimant’s investment was required and was to be utilized for purchasing equipment in order to enable Avitel Dubai to service the BBC Contract. In light of the circumstances referred to in paragraph 8.68 above, the Tribunal accepts the Claimant’s submission that its investment has been siphoned off by the Respondents; e. the representations and/or warranties contained in Clause 6.2.1 of the SSA because the information provided to the Claimant prior to and during the negotiations and the preparations of the SSA had not been provided by the Respondents and its/or their representatives and advisors in good faith and had been untrue, inaccurate and misleading for the reasons set out in paragraphs 8.72 (a) to (d) above; f. the representations and/or warranties contained in Clause 6.2.2 of the SSA because the representations and warranties made by the Respondents in the SSA read in conjunction with Clause 7 of Schedule 3 as well as Annexure C to the Disclosure Letter did contain untrue statements of material facts as the Avitel Group did not have immediate business worth close to USD 1 billion with independent and legitimate customers including the purported relationship with the BBC; g. the representations and/or warranties contained in Clause 6.2.3 of the SSA because there had been facts or circumstances relating to the affairs of Avitel India or any Subsidiary which had not been disclosed to the Claimant and which could have had an impact on the decision of the Claimant to invest in Avitel India. In the Tribunal’s view, the fact that Kinden and Purple Passion did not exist at the material time and that Highend’s, Digital Fusion’s and SPAC’s bank accounts with Emirates NDB are controlled by Mr. Siddhartha Jain, would have had an impact on the Claimant’s decision to invest in Avitel India; h. the representations and/or warranties contained in Clauses 7.1 and 7.3 of Schedule 3 of the SSA read in conjunction with the Disclosure Letter as Kinden and Purple Passion did not exist at the Completion Date such that the Material Contracts with these entities could not have existed either; i. the representations and/or warranties contained in Clause 7.5 of Schedule 3 of the SSA because Mr. Siddhartha Jain was at the Completion Date a forty nine percent shareholder of Highend and Digital Fusion so any transactions with these entities were Related Party Transactions which were not permitted pursuant to Clause 7.5 of Schedule 3 of the SSA and which, in any event, had not been concluded on an arm’s length basis; j. the representations and/or warranties contained in Clause 10 of Schedule 3 of the SSA because Avitel India’s and the AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] Subsidiaries’ accounts could not have given a true and fair view of the assets, liabilities and state of affairs of Avitel India and the Subsidiaries at the Accounts Date and of the profits or losses for the period concerned. For example, the Material Contracts with Kinden and Purple Passion did not exist at the Completion Date; k. the representations and warranties contained in Clause 8 of Schedule 3 of the SSA because if the accounts did not give a true and fair view of the assets, liabilities and state of affairs of Avitel India and the Subsidiaries, all Tax Returns relating to Avitel India and the Subsidiaries or the Business or the assets of Avitel India and each of the Subsidiaries could not have been correct in all material respects; l. the representations and warranties contained in Clause 11 of Schedule 3 of the SSA because the Respondents falsely represented and warranted that Avitel India and each of the Subsidiaries were in material compliance with all applicable laws which in light of the Tribunal’s findings in paragraphs 8.72(a) to (j) above, could not have been the case; m. the representations and warranties contained in Clause 6.1 of the SSA because in light of the Tribunal’s findings in paragraphs 8.72 (a) to (k) above, not every representation and warranty made in the SSA and in Schedule 3 of the SSA was true, complete, accurate and not misleading at the Completion Date.” As a result, in paragraph 20, a summary of findings was given as follows: “20. SUMMARY 20.1 The Respondents chose not to attend the November 2013 Oral Hearing and the Tribunal is not satisfied that they were unable to attend or prevented from doing so. The dates for the November 2013 Oral Hearing had been fixed some nine months before the hearing itself. It was only on 19 April 2013 that the First Respondent vide Mr. Yogesh Garodia’s Request applied for these dates to be rescheduled to dates later than 9 November 2013 but without any indication as to the exact dates it sought. The Second, Third and Fourth Respondent did not seek a re-scheduling of the November 2013 Oral Hearing until 29 July 2013 giving also no indication of alternative hearing dates asserting that the Respondents following the issue of the EOW Final Report, required additional time to file their witness statements and to prepare for the oral hearing. The Tribunal did not find this to be persuasive as there was still time. In subsequent correspondence on 15 October 2013, the Respondents further asserted that the November 2013 Oral Hearing fell over a holiday period in India, namely the Diwali Festival. While the Tribunal accepts this, this hearing which was scheduled for and to be held in Singapore together with the substantial delay in seeking a postponement of the November 2013 Oral Hearing was not satisfactorily explained. The Respondents also sought an adjournment on the grounds, inter alia, of their inability to engage counsel. However, it appears to the Tribunal that during this period (i.e. from the time when they sought an adjournment up to the date of the November 2013 Oral Hearing), they were able to. The Tribunal also points out that although the Respondents at various stages ceased to be represented by lawyers, the letters written and signed by Mr. Yogesh Garodia either on behalf of the First Respondent or on behalf of all Respondents or the letters signed by the First Respondent (through Mr. Yogesh Garodia) Second, Third and Fourth Respondents, during this period were written in legal terminology including the employment of legal Latin maxims. The Respondents’ applications for re-scheduling the hearing dates in the Tribunal’s view must be viewed against the background of the failure of the Respondents to comply with the orders of the Emergency Arbitrator in proceedings in Singapore in which the Respondents had been represented by both Indian and Singapore counsel and provided evidence. All of the above are suggestive to the Tribunal of an attempt to delay these proceedings. 20.2 The Respondents provided no witness statements and did not adduce any oral evidence before this Tribunal although the Tribunal accepts that they did so in the proceedings before the Emergency Arbitrator, namely in Mr. Yogesh Garodia’s Witness Statement. In reaching its findings and its decisions, this Tribunal has considered fully the Respondents’ numerous submissions and Mr. Yogesh Garodia’s Witness Statement as well as the documentary evidence. The Claimant provided evidence from a AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] number of witnesses and also documentary evidence. As the Respondents did not attend the November 2013 Oral Hearing, the Tribunal tested the evidence of the Claimant’s witnesses by asking a number of questions. The Tribunal finds each of the Claimant’s witnesses to be credible and it accepts their evidence part of which is corroborated by the documentary evidence submitted by the Claimant Including an email from Ms. Sarah Jones, General Counsel at the BBC, dated 4 May 2012 confirming, inter alia, that the BBC had not entered into a contract with Avitel India, that Mr. John Linwood had not attended a meeting on 19 April 2011 with Mr. Anthony Bernbaum but at the same time was in an internal meeting with BBC staff. 20.3 In summary, the Tribunal finds that the Jain Family (namely the Second, Third and Fourth Respondents) engaged in a deliberate and dishonest scheme to induce the Claimant (part of HSBC) to invest in Avitel India (namely the First Respondent). The Claimant placed the investment because it had been advised by the Jain Family (making the representations also on behalf of Avitel India), verbally, in writing and in the SSA itself, that Avitel India was about to and from 2 August 2011 had signed a contract with the BBC, for the BBC to use the services of Avitel India. This was false. Not only had a contract not been negotiated, let alone signed with the BBC, but the BBC had no knowledge of it. 20.4 The misrepresentations and deception of the Respondents included the arrangement of a meeting between a representative of HSBC and a person who was falsely held out by the Respondents and purported to be the Chief Technical Officer of the BBC and who falsely purported to corroborate the Respondents’ misrepresentations. The representations were made prior to the conclusion of the SSA and in the SSA itself. They were made knowingly to be untrue and were fraudulent.” As a result thereof, it was found that HSBC, in respect of its claim for fraudulent misrepresentation, and its claim in tort for deceit, is entitled to damages in the total amount of USD 60 million plus interest and costs as awarded. The final declaration made in the Award then reads: “21.21 [The tribunal] Declares and Orders that upon the Respondents paying in full and unconditionally the sums awarded to the Claimant in paragraphs 21.15, 21.16, 21.18, 21.19 hereinabove and all costs arising out of and incidental to the cancellation of the Claimant’s Preference Subscription Shares and Equity Subscription Shares (as defined in the SSA) in Avitel India, that the said shares be cancelled and that in this regard, the Parties take the requisite steps to effect the said cancellation within 30 days of receipt of such payment.”
21. There can be no doubt whatsoever after reading the issues and some of the material findings in the Foreign Final Award that the issues raised and answered are the subject matter of civil as opposed to criminal proceedings. The fact that a separate criminal proceeding was sought to be started and may have failed is of no consequence whatsoever. We, therefore, hold on a conspectus of these facts, and following our judgments, that the issues raised and answered in the Foreign Final Award would indicate: (i) That there is no such fraud as would vitiate the arbitration clause in the SSA entered into between the parties as it is clear that this clause has to be read as an independent clause. Further, any finding that the contract itself is either null and void or voidable as a result of fraud or misrepresentation does not entail the invalidity of the arbitration clause which is extremely wide, reading as follows: “Any dispute, controversy or claim arising out of or in connection with this Agreement, including any question regarding its existence, validity, interpretation, breach or termination ……” (emphasis supplied) (ii) That the impersonation, false representations made, and diversion of funds are all inter parties, having no “public flavour”as explained in paragraph 14 so as to attract the “fraud exception”.
22. Thus, a reading of the Foreign Final Award in this case would show that a strong prima facie case has indeed been made out as the Award holds the BBC transaction as a basis on which the contract was entered into and the USD 60 million paid by HSBC, which would clearly fall within fraudulent inducement to enter into a contract under section 17 of the Contract Act. Such a contract would be voidable at the instance of HSBC. Also, the findings on the siphoning off of monies that were meant to be allocated for the performance of the BBC contract would attract the tort of deceit. The measure of damages for such fraudulent misrepresentation is not the difference between the value of the shares AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] on the date of making the contract and the value HSBC would have received, if it had resold those shares in the market, after the purchase. As has been held in the judgments stated hereinabove, the measure of such damages would be to put HSBC in the same position as if the contract had never been entered into, which is, the entitlement to recover the price paid for the shares and all consequential losses. This being the case, it is difficult to accede to the Division Bench’s finding as to the measure of damages in such cases.
23. So far as the other points raised by M/s. Mukul Rohatgi and Saurabh Kirpal are concerned, we wish to say nothing, as any finding on these points even prima facie would prejudice the section 48 proceedings pending in the Bombay High Court. So far as the appeal of HSBC is concerned, we are of the view that it has substance in that the USD 60 million that was to be kept aside vide the Single Judge’s order, was fair and just in the facts of the case in that it is only the principal amount without any interest or costs that is ordered to be kept aside. Further, the reduction of USD 60 million to USD 30 million by the Division Bench is not justified given our finding on the measure of damages in the facts of this case.
24. It is clarified that any finding made on facts in this judgment is only prima facie for the purpose of deciding the section 9 petition. We have held that HSBC has made out a strong prima facie case necessitating that USD 60 million, being the principal amount awarded to them, is kept apart in the manner indicated by the learned Single Judge of the Bombay High Court. The balance of convenience is also in its favour.It is clear that in case HSBC was to enforcethe Foreign Final Award in India in accordance with section 48 of the 1996 Act, irreparable loss would be caused to it unless at least the principal sum were kept aside for purposes of enforcement of the award in India. Accordingly, we dismiss Civil Appeal No.5145 of 2016filed by Avitel India and the Jain family, and allow Civil Appeal No.5158 of 2016 filed by HSBC. Civil Appeal No. 9820 of 2016
25. In this case, the Appellant is an angel investor in the shares of Avitel India. By a letter dated 04.07.2016, the Appellant herein expressed his concern on the observations and the freezing of the company’s bank account by the Bombay High Court vide orders dated 22.01.2014 and 31.07.2014. The Appellant attended a meeting of the Board of Directors of Avitel India on 11.07.2016, in which the Chairman of the company, i.e., Mr. Pradeep Jain, explained to the Appellant in some detail as to the proceedings filed by HSBC against the company and the orders passed by the Arbitrators and Courts therein. The Chairman expressed a view that, ultimately, they were likely to succeed in this litigation. The Appellant stated that he was not satisfied with this point of view and asked for the return of the money invested along with interest at the rate of 12% per annum. The Chairman stated that the amounts invested by the Appellant were in equity shares, which were the fixed capital of the company, and any return of such investment is not permissible in law. The Appellant then stated the following, which is recorded in the Minutes of the Board Meeting dated 11.07.2016: “Mr. Savla stated that he would like to peruse the documents in detail and would not rest content till full justification is made available, if need so arises for redressal of issues involved. He requested that the disputes be decided by an Arbitrator. The Board unanimously consented that any disputes raised by Mr. Ravindra Savla, so long as they are arbitrable under law, shall be referred to arbitration in accordance with Indian law. Mr. Ravindra Savla stated that he would examine the papers provided to him and determine his further course of action. Mr. Ravindra Savla further requested that a copy of the Minutes of this Meeting of the Board of Directors be made available to him. The Chairman accepted the said request.”
26. Almost immediately, the Appellant filed a section 9 petition under the 1996 Act before the learned ADJ, Mohali, which was decided by a judgment dated 03.08.2016, in which the learned ADJ held that the Board Resolution dated 11.07.2016 only showed that any disputes raised by the Appellant shall be referred to arbitration in accordance with Indian law, provided they are arbitrable disputes. It was then held that as serious allegations of fraud were raised by HSBC in the dispute between HSBC and the Avitel Group/Jain family, such dispute would not be arbitrable as per Indian law. Even otherwise, according to the learned ADJ, this dispute (i.e., the dispute between HSBC and the Avitel Group/Jain family) is pending adjudication before the Supreme Court of India, and any decision made by that Court shall have a direct bearing on the dispute between the parties in this case also. It was, therefore, held: “11. In view of the detailed discussion made above, this court can safely conclude that the petitioner is a shareholder and has no specific separate arbitration agreement, so no arbitrable dispute arises, as per Indian law, which may be referred to arbitration or AVITEL POST STUDIOZ LIMITED & ORS. v. HSBC PI HOLDINGS (MAURITIUS) LIMITED [R. F. NARIMAN, J.] for which, provisions of section 9 of Arbitration and Conciliation Act can be involved for protection of his interest qua the shares purchased by him. Therefore, I do not find that any prima-facie case is made out in favour of applicant. Even balance of convenience is not in favour ofthe applicant and no irreparable loss will be caused to the applicant, if this application is not allowed. Thus no ground is made out for grant of relief under section 9 of the Act and section 151 of CPC and the application stands dismissed accordingly. File be consigned to the record room.”
27. An appeal was filed against this judgment to the Punjab and Haryana High Court. A learned Single Judge of the High Court, by the impugned judgment dated 02.09.2016, held that the final relief sought for is the return of an invested amount with interest together with cancellation of the shares. Such disputes would be governed by the Companies Act, 2013. Therefore, following some of the judgments of the Supreme Court, the remedy for arbitration sought by the Appellant would be barred by implication in view of the provisions of the Companies Act, 2013. After discussing the “fraud exception” in some detail and stating that serious allegations of fraud and impersonation are not arbitrable, the High Court concluded: “For the foregoing reasons, I am of the view that primarily, the appellant is trying to make out a case of parity with the case of HSBC, which is already a matter sub-judice before the Competent Court, but as per the facts narrated above, I am of the view that the prima facie allegation of fraud, as already noticed above, would not fall in the realm of arbitrable dispute and therefore, rightly so, the court below has declined to grant the interim relief as sought. I do not intend to differ with the order under challenge. No ground for interference is made out. The appeal is dismissed.”
28. In view of the judgment in Civil Appeal No.5145 of 2016 and Civil Appeal No.5158 of 2016, we set aside the judgments of the learned ADJ and the learned Single Judge that are impugned in this appeal, and remand the matter for adjudication afresh by the ADJ, Mohali. This civil appeal is, accordingly, allowed, the judgments dated 03.08.2016 and 02.09.2016 are set aside, and the matter is remanded to the ADJ, Mohali for fresh disposal in accordance with law. Ankit Gyan Appeal disposed of.