Ajay Mehra vs Ebercon Gmbh And 3 Ors

Jdk/pdp 1 jt-comap-315, 314 & 316 -19.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION IN ITS COMMERCIAL DIVISION

COMMERCIAL APPEAL NO. 314 OF 2019 IN COMMERCIAL ARBITRATION PETITION NO. 205 OF 2016 Ajay Mehra ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North ) South Road No. 8, JVPD Scheme, ) Vile Parle (W), Mumbai 400 048. ) .. Appellant

Vs.

1. Enercon GmbH ) a Company incorporated and ) existing under the laws of Germany ) and having its Registered Office at ) Dreekamp 5, D26605, Aurich, ) Germany. ) 2. Wobben Properties Gmbh, ) a company incorporated and ) existing under the laws of Germany ) having its Registered office at ) Dreekamp 5, D26605, Germany )

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3. Wind World India Limited ) a Company incorporated under the ) Companies Act, 1956 and having its) registered office at Plot No.33, ) Daman - Patalia, Bhimpore, ) Daman - 396210 ) 4. Mr. Yogesh Mehra, ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North South ) Road No.8, JVPD Scheme, ) Vile Parle (W), Mumbai-400 048 ) ..Respondents

WITH COMMERCIAL APPEAL NO. 315 OF 2019 IN COMMERCIAL ARBITRATION PETITION NO. 196 OF 2016

Yogesh Mehra ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North South ) Road No.8, JVPD Scheme, ) Vile Parle (W), Mumbai-400 048 ) .. Appellant

Vs.

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1. Enercon GmbH ) a Company incorporated and ) existing under the laws of Germany ) and having its Registered Office at ) Dreekamp 5, D26605, Aurich, ) Germany. ) 2. Wobben Properties Gmbh, ) a company incorporated and ) existing under the laws of Germany ) having its Registered office at ) Dreekamp 5, D26605, Aurich, ) Germany ) 3. Wind World India Limited ) a Company incorporated under the ) Companies Act, 1956 and having its) registered office at Plot No.33, ) Daman - Patalia, Bhimpore, ) Daman - 396210 ) 4. Ajay Mehra ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North ) South Road No. 8, JVPD Scheme, ) Vile Parle (W), Mumbai 400 048. ) .. Respondents

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WITH COMMERCIAL APPEAL NO. 316 OF 2019 IN COMMERCIAL ARBITRATION PETITION NO. 16 OF 2017

Wind World India Limited ) a Company incorporated under the ) Companies Act, 1956 and having its ) registered office at Plot No.33, ) Daman - Patalia, Bhimpore, ) Daman - 396210 ) .. Appellant

Vs.

1. Enercon GmbH ) a Company incorporated under the ) provisions of the Companies Act, ) 1956 and having its Registered ) office at Adani House, Near ) Mithakali Circle, Navrangpura ) Ahmedabad- 380 009 ) 2. Wobben Properties Gmbh, ) a company incorporated and ) existing under the laws of Germany ) having its Registered office at ) Dreekamp 5, D26605, Germany )

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3. Mr. Yogesh Mehra, ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North South ) Road No.8, JVPD Scheme, ) Vile Parle (W), Mumbai-400 048 ) 4. Ajay Mehra ) being an Indian Inhabitant ) residing at 101, Hare Krishna ) Presidency Society, North ) South Road No. 8, JVPD Scheme, ) Vile Parle (W), Mumbai 400 048. ) ..Respondents

Mr. Shyam Mehta, Senior Advocate i/b Bimal Rajasekhar for the Appellant in COMAP No. 314 of 2019

Dr. Birendra Saraf a/w Mr. Ranjeev Carvalho, Mr. Sachin Chandrana,Ms. Sanaya Dadachanji, Mr. Rohit Lalwani and Mr. S. J. Kakadia i/by Manilal Kher Ambalal and Co. for the Appellant in COMAP No.315 of 2019.

Mr. Zal Andhyarujina a/w Mr. Karan Bhide, Mr. Kartikeya Desai, Mr. Asadali Mazgaonwala and Ms. Devashree Maniar i/by Kartikeya & Associates for Appellant in COMAP No. 316 of 2019, and for respondent No.3 in COMAP Nos.314 and 315 of 2019.

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Mr. S. U. Kamdar, Senior Advocate a/w Mr. Sarosh Bharucha, Mr. Jehangir Jeejeebhoy, Mr. Vivek Vashi, Mrs. Kanika Sharma Goenka, Ms. Shaheda Madraswala, Ms. Swati Khinvasara and Mr.Cyrus Jal i/by Vashi and Vashi for respondent Nos.1 and 2 in COMAP No. 314 of 2019.

Mr. Aspi Chinoy, Senior Advocate a/w Mr. Karl Tamboly, Mr. Jehangir Jeejeebhoy, Mr. Vivek Vashi, Mrs. Kanika Sharma Goenka, Ms. Shaheda Madrawala, Ms. Swati Khinvasara and Mr. Cyrus Jal i/by Vashi and Vashi for respondent Nos.1 and 2 in COMAP No. 315 of 2019.

Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Jehangir Jeejeebhoy, Mr. Vivek Vashi, Mrs. Kanika Sharma Goenka, Ms. Shaheda Madrawala, Ms. Swati Khinvasara and Mr. Cyrus Jal i/by Vashi and Vashi for Respondent Nos.1 and 2 in COMAP No.316 of 2019.

CORAM : PRADEEP NANDRAJOG, CJ. & N. M. JAMDAR, J.

RESERVED ON : 12 JUNE, 2019 PRONOUNCED ON : 24 JUNE, 2019

JUDGMENT [PER PRADEEP NANDRAJOG, CJ.]

1. Vide this common judgment we propose to decide a

batch of Commercial Arbitration Appeals preferred under Section

37(1)(c) of the Arbitration and Conciliation Act, 1996

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(Commercial Appeal No.314 of 2019 arising out of Commercial

Arbitration Petition No. 205 of 2016, Commercial Appeal No.

315 of 2019 arising out of Commercial Arbitration Petition No.

196 of 2016 and Commercial Appeal No. 316 of 2019 arising out

of Commercial Arbitration Petition No. 16 of 2017) that are

directed against the common Judgment dated 14.12.2018 passed

by a learned Single Judge of the Commercial Division of this

Court upholding the majority Award passed by the Arbitral

Tribunal. We may note that vide Orders dated 21.01.2019 and

29.01.2019 certain corrections have been incorporated to the

Judgment by the learned Single Judge upon a request in this regard

having been made by the Petitioners/Appellants-herein.

2. The Appellant before us in Commercial Appeal No.

316 of 2019 is Wind World (India) Pvt. Ltd. (WWIL). It is an

unlisted public limited company incorporated under Indian

Companies Act, 1956 as a joint venture between Enercon GmbH

and members of the Mehra family (the Mehra's). Enercon is the

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registered holder of 56% of the issued share capital, and the

Mehra's are the registered holders of the residual 44%.

3. The Appellant in Commercial Appeal No. 315 of

2019 is Mr. Yogesh Mehra; who is described as the Managing

Director of WWIL and its shareholder.

4. The Appellant in Commercial Appeal No. 314 of

2019 is Mr. Ajay Mehra; who is the Director of WWIL and its

shareholder.

The Appellants- Mr. Yogesh Mehra and Mr. Ajay

Mehra are brothers; who may conveniently be referred by us as the

'Mehra brothers'.

5. The contesting Respondents before us are body

corporates incorporated under the laws of Germany. Enercon

GmbH (Enercon) is a company incorporated in the year 1984

and carrying on the business of engineering manufacturing and

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marketing Wind Turbine Generators (WTGs) and components.

Wobben Properties GmbH (WPG) is a company incorporated

in the year 2004 to hold the intellectual property acquired by Dr.

Alloys Wobben, the founder of Enercon.

EVOLUTION OF BUSINESS RELATIONSHIP BETWEEN THE PARTIES AND GENESIS OF THE DISPUTE

6. Before proceeding to analyse the Award passed by the

Arbitral Tribunal and examining the impugned Judgment

affirming the majority Award, we embark upon the exercise of

tracing the evolution of the relationship between the parties and

the genesis of the dispute.

7. On 10.05.1993, the Mehra's incorporated Wind

World Power Ltd. as they were desirous of entering the business

of wind energy in India. In September 1993, meetings took place

between Mr. Yogesh Mehra and Dr. Wobben and other

representatives of Enercon. Since the meetings were fruitful and a

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prospective commercial relationship was under contemplation,

requisite permission was sought from the Reserve Bank of India

(RBI).

8. Vide communications/letters dated 14.10.1993 and

20.11.1993, the RBI accorded its "in principle" approval for

financial collaborations. On 23.11.1993 Wind World Power Ltd.

was renamed as Enercon (India) Ltd.

9. On 12.01.1994, Enercon GmbH and Mr. Yogesh

Mehra, acting for himself and on behalf of his family members

(Mehra Group), entered into a Shareholding Agreement (SHA).

At the relevant time, Enercon GmbH was holding 51% of issued

share capital and Mehra's held the residual 49%. A Technical

Know-How Agreement (TKHA) of the even date was also

entered between Enercon GmbH and Enercon (India) Ltd. which

granted Enercon (India) Ltd. the right and licence to use certain

defined technical know-how for manufacturing a specified class of

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WTGs (E-26) and agreed to supply it with certain of essential

components for manufacturing them. The Technical Know-How

Agreement was expressed to continue in force for 10 years. On

19.06.1998, a Supplementary Share Holding Agreement

(SSHA) was entered between the parties. Further on 19.05.2000,

a Second Supplementary Share Holding Agreement (SSSHA)

was entered between the parties, which resulted in an increase of

Enercon GmbH's shareholding to the tune of 56%. On the same

date, a Supplementary Technical Know-How Agreement

(STKHA) was executed by which the grant of Technology was

enlarged to include additional classes of WTGs (E-30, E-40 and at

least two other ranges/models). Enercon GmbH claims that the

obligation to supply the Technical Know-How of two other

ranges/models stood satisfied upon supply of know-how of E-

40/644/E2, E-40/644/E3B and E-40/644/E2B to Enercon (India)

Ltd. However, Enercon (India) Ltd. disputes such assertion.

10. Upon the expiry of the ten-year term on 12.01.2004,

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the parties initiated negotiations to enter into a new TKHA.

Exchange of correspondence reveals that during negotiations Mr.

Yogesh Mehra pitched a proposal that Enercon (India) Ltd. may

not be required to pay royalties accruing from the sale of Wind

Turbine Generators manufactured from the new technology to be

received from Enercon GmbH. However, Enercon GmbH did not

relent, and the Mehra's had to ultimately accept the condition of

payment of royalties. It would be pertinent to highlight that

Enercon GmbH claims that Enercon (India) Ltd. was supplied

confidential technology for manufacturing further models of

WTGs (E-33, E-48 and E-53) in anticipation of a new agreement

which would be shortly formalised and executed between the

parties.

11. On 23.05.2006, the parties signed non-binding

Heads of Agreement on a Proposed Intellectual Property

License Agreement (HoA) at Aurich, Germany. The said

document was expressed to represent the final views of the parties

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on the terms of a new agreement. A draft of the Intellectual

Property License Agreement (IPLA) was attached to the same.

12. During the months to follow, there was an exchange of

drafts of the proposed Intellectual Property License Agreement

(IPLA). One of the primary bone of contentions during these

protracted negotiations was the basis/formula for calculation of

royalty. As a matter of fact, the HoA recorded that the services of

Mr. N. P. Sarda, Partner of Deloitte Haskins and Sells (DHS) be

commissioned to seek their views on a formula for calculating

royalties that would be in consonance with the requirements of

Indian law.

13. A meeting was scheduled in Germany for 17-20th

September, 2006 for finalising the IPLA. On 15.09.2006, a final

version of IPLA was sent by electronic mail by Ms. Fritsch

Nehring to Mr. Yogesh Mehra for his perusal. Since the finalised

draft of the IPLA was only sent at the last moment, Mr. Yogesh

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Mehra postponed his trip to Germany to read the draft.

14. Ultimately, Mr. Yogesh Mehra arrived in Bremen

(Germany) on the morning of 29.09.2006. Discussions on the

proposed IPLA ensued. However, it is common ground that no

document was signed on this date.

15. The controversy stems from the events that transpired

on 30.09.2006. There is marked divergence of claims of rival

litigants in this regard. It is the case of Enercon GmbH that after

intensive discussions, Mr. Yogesh Mehra and Dr. Alloys Wobben

finally executed the IPLA in the presence of Mr. Kettwig, though

he did not append his signatures thereon as a witness. Another

document titled "Agreed Principles" was also executed which

comprised the agreed principles that were binding and would form

the basis of four agreements that would be executed between the

parties, namely (1) IPLA "Draft enclosed" (2) Successive

Technology Transfer Agreement (3) Name Use License

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Agreement (4) Amendment to the existing Shareholder

Agreement. A note received from DHS comprising of the

proposed formula for the computation of royalties was also

initialled by the parties. Per contra, the Mehra's contend that only

the Agreed Principles were executed between the parties and the

IPLA in question was a mere draft attached to the Agreed

Principles. The same was initialled on each page by the parties

merely for identification.

16. The relations between the parties seem to have

embittered in view of the fact that Dr. Wobben was not in favour

of permitting an Initial Public Offering (IPO) for Enercon (India)

Ltd. as intently canvased by Mr. Yogesh Mehra; who wanted to

raise additional money for his family. Floating of an IPO was

subject matter of discussion between parties for some time,

however, the said proposal of Mr. Mehra was perhaps conclusively

rejected by Dr. Wobben in the meetings dated 29-30 September

2006 in Germany. Subsequent thereto, the negotiations between

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Dr. Wobben and Mr. Yogesh Mehra with regard to purchase of

additional shareholding by Enercon GmbH in Enercon (India)

Ltd. also failed. Mr. Yogesh Mehra intended to monetise his

shareholding.

17. Significantly, Mr. Yogesh Mehra through an electronic

mail dated 03.11.2006 addressed to Ms. Fritsch-Nehring expressed

his understanding that the draft of IPLA contained certain

inconsistencies, thereby implying that it was still a draft. Further

correspondence was exchanged between the parties in this regard,

which we shall advert to in greater detail a little later. Suffice would

it be to state that Enercon GmbH ultimately refuted the claim of

Mr. Mehra that IPLA had not been executed as a concluded

contract.

18. Enercon GmbH claimed that it was illegally ousted by

the Mehra's from the management of affairs of Enercon (India)

Ltd. and no information was shared with regard to the activities of

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the company. The issue precipitated, and Appellants claim that

supplies of equipment were abruptly stopped by Enercon GmbH

in the month of February, 2007. The said events resulted in a spate

of unsavoury litigations between parties before various forums

including the Company Law Board, Civil Court at Daman,

Bombay High Court, the Hon'ble Supreme Court and certain

Foreign Courts.

19. The Mehra's instituted a derivative suit in this Court

bearing Suit No. 2667 of 2007, inter alia, seeking directions to

ensure continuous and uninterrupted supply of parts and specific

performance of certain contracts. Certain interim arrangements

were made under the Orders of the Court to ensure supplies.

20. Enercon GmbH, on the other hand, invoked the

jurisdiction of the Company Law Board (CLB) in terms of Section

397/398 of the Companies Act, 1956 and preferred Company

Petition No. 121 of 2007 alleging oppression and

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mismanagement. The Mehra's filed an application under Section 8

of the Arbitration and Conciliation Act, 1996 seeking reference to

arbitration, however, the same was dismissed by the CLB vide

Order dated 29.10.2007. Shortly thereafter, the Mehra's followed

the suit and filed Company Petition No. 74 of 2008 also casting

allegations of oppression and mismanagement against Enercon

GmbH. We may note that both the petitions were disposed by the

CLB in terms of its common Judgment dated 14.12.2012. The

CLB dismissed the petition filed by Enercon GmbH opining the

same to be not maintainable and allowed the petition preferred by

the Mehra's holding that they had succeeded in making out a case

of oppression at the hands of Enercon GmbH. The said decision of

the CLB was assailed before this Court in Company Appeal No.s

42-43 of 2013 and vide Judgment dated 20.08.2015 the Company

Petitions were remanded to CLB for fresh consideration. We are

informed that the said proceedings are pending before the CLB.

21. It would be pertinent to highlight that Enercon

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GmbH demanded royalties payable in its favour as mandated

under the IPLA. On 22.08.2007, Enercon (India) Ltd. belatedly

transmitted royalties to the tune of 986,399.88 pounds for the

period 01.10.2006 to 31.12.2006. Similarly, further royalties to the

tune of 1.64 million pounds were transmitted to Enercon GmbH

on 16.10.2008 in respect of the period 01.01.2007 to 31.03.2007,

and 570,000 pounds were remitted in respect of the period from

01.04.2007 to 31.12.2007. On 14.11.2009, Enercon (India) Ltd.

made a last payment of royalties in the sum of 2,114,852 pounds.

It is the claim of the Appellants that the said royalties were not

payable and were transmitted under bonafide mistaken belief.

They attempt to explain that the said payments were not made

pursuant to the IPLA, which was never executed to bind the

parties. The Appellants contend that the monies were transmitted

pursuant to the obligations perceived by Enercon (India) Ltd.

under the Agreed Principles.

22. On 13.03.2008, Enercon GmbH addressed a

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communication to the Mehra brothers invoking the arbitral

agreement as comprised in Clause 18.1 of the IPLA. Mr. V.V

Veeder, QC was nominated as an Arbitrator on their behalf.

23. Consequent thereto, on 27.03.2008 'Arbitration

Claim Form' was issued by Enercon GmbH seeking several

declaratory reliefs in relation to the IPLA from the High Court of

Justice, Queens Bench Division, Commercial Court- United

Kingdom.

24. The claim form was enclosed along with a

communication dated 02.04.2008 and was sent to the Appellants-

herein. The form was served upon Enercon (India) Ltd. on

04.04.2008 at Daman.

25. On 08.04.2008, the Appellants-herein instituted

Regular Suit No. 9 of 2008 before the Court of the Civil Judge,

Senior Division-Daman seeking, inter alia, a declaration to the

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effect that the draft IPLA was not a concluded contract capable of

binding parties and consequently, there was no arbitration

agreement. The learned Trial Court at Daman directed the

Respondents to maintain status quo with regard to the proceedings

initiated by them before the English High Court.

26. In the interregnum, Enercon (India) Ltd., without

prejudice to its rights, nominated Mr. Justice B.P Jeevan Reddy,

Former Judge-Supreme Court of India, as Arbitrator.

27. That on 05.08.2008 both the nominated Arbitrators

addressed a joint-letter to the effect that there were inherent

defects in the arbitration clause and they were unable to proceed

further to appoint the third/Presiding Arbitrator.

28. During the course of proceedings in the Civil Suit

instituted at Daman, an application in terms of Section 45 of the

Arbitration & Conciliation Act, 1996 was filed by Enercon

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GmbH seeking to invoke the arbitration clause as comprised

under the IPLA. The Mehra's resisted to submitting themselves to

arbitration by inter alia, contending that the IPLA executed

between the parties was a mere draft and not a concluded contract.

Vide Order dated 05.01.2009 the Daman Court dismissed this

application and subsequently vide Order dated 09.01.2009 it

proceeded to allow the application preferred by the Appellants

seeking interim reliefs in the form of anti-arbitration injunction.

29. The Orders passed by the Trial Court at Daman were

assailed before the Daman Appellate Court. Vide Order dated

27.08.2009 the Court allowed the appeals. The anti-arbitration

injunction was vacated, and the application under Section 45 of

the Arbitration and Conciliation Act, 1996 was allowed.

30. The aforesaid Order of the Appellate Court was

challenged by the Appellants before this Court by preferring Writ

Petition No. 7636 of 2009 and Writ Petition No. 7804 of 2009.

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Ultimately the said petitions came up to be dismissed by the

Bombay High Court vide Order dated 05.10.2012.

We do not propose to delineate in detail the

chequered history of litigation that ensued between the parties

before the English Courts as the same remains a mere historical

event and has no bearing upon the issues involved for our

consideration.

31. The decision of this Court was carried by the

Appellants to the Supreme Court by preferring Special Leave

Petitions. The Supreme Court in its decision dated 14.02.2014

while referring the parties to arbitration authoritatively held that

the seat of arbitration would be India, however the venue of

arbitration would be London as stipulated by the parties in the

agreement. As stated in the agreement, the applicable law

governing the dispute would be the Indian Law. In paragraph 153

of the report of the Judgment the Court directed -

"...All the disputes arising between the parties in

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relation to the following agreements viz. SHA, TKHA, SSHA, STKHA, Agreed Principles and IPLA including the controversy as to whether IPLA is a concluded contract are referred to the Arbitral Tribunal."

32. Further, the Court was pleased to appoint Lord

Hoffmann as the third Arbitrator, and it was held that he would

act as the Chairman of the Arbitral Tribunal. The conclusion

arrived by the Bombay High Court that English Courts would

enjoy concurrent jurisdiction was set aside. Consequently, the

Respondents were restrained from further prosecuting the

proceedings instituted by them before the English Courts. The

proceedings pending before the Trial Court at Daman and the

Civil Suit No. 2667 of 2007 before the Bombay High Court along

with the Contempt Petition filed in relation thereof were directed

to be stayed during the pendency of arbitration.

33. It is pertinent to note for the purpose of lending

clarity to our factual narrative that the name of Enercon (India)

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Ltd. was changed to Wind World (India) Ltd. (WWIL) with

effect from 01.01.2013.

34. The Arbitration proceedings were finally set into

motion in terms of directions passed by the Supreme Court. Since

many years had lapsed since the invocation of arbitral clause and

the same had come to a grinding halt, Mr. Justice B.P Jeevan

Reddy expressed his inability to undertake the assignment any

further. Consequently, the Appellants nominated Mr. Justice R.V

Raveendran, Former Judge- Supreme Court of India as an

Arbitrator.

35. With a view to avoid prolixity, we eschew unnecessary

reference to the itinerary of the proceedings, save and except to

deal with the submissions of the parties at the relevant stage. The

chronology of proceedings has been exhaustively catalogued in

paragraphs 25 to 83 of the Final Award as passed by the majority -

Lord Hoffmann (Presiding Arbitrator) and Mr. VV Veeder, QC.

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36. The Final Award passed by the Tribunal was a split

verdict. The majority comprising of Lord Hoffmann (Presiding

Arbitrator) and Mr. VV Veeder, QC substantially upheld the

claims of the Claimants (Respondents-herein) and rejected the

counterclaims set up by the Respondents (Appellants-herein). The

dissenting opinion dated 26.08.2016 was authored by Mr. Justice

R.V Raveendran.

37. We now proceed to microscopically analyse the Award

delivered by the Arbitral Tribunal.

ANALYSIS OF THE MAJORITY AWARD

38. The Tribunal concatenated the issues arising for their

consideration in paragraphs 84 to 89 of the Final Award authored

by the majority Arbitrators (Lord Hoffmann and Mr. VV Veeder,

QC).

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39. The central issue upon which the rights of parties

would have to be adjudicated was naturally whether the

Intellectual Property License Agreement (IPLA) could stated to

have been a concluded contract that would bind the signatories. It

was also required to be considered if the said Agreement even if

executed with the intent to create binding legal relations was liable

to be declared void on the ground of uncertainty. The Tribunal

also posed and proceeded to answer an alternative issue as to the

rights of parties under the Technical Know-How Agreement

(TKHA), if the IPLA was held not to be a binding contract.

The next set of issues pertain to the alleged breach of

provisions of IPLA by Wind World (India) Ltd. (WWIL) and

whether Enercon GmbH was entitled to terminate the agreement

for repudiatory breach. The said issue was required to be answered

only if it was held by the Tribunal that the IPLA was a binding

agreement.

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The Tribunal also considered the counter-claim set up

by WWIL against Enercon Gmbh for damages for breach of

contracts to deliver components and other materials in the year

2007-08.

The last group of issues proposed to be dealt by the

Tribunal pertain to the alleged breaches of fiduciary and

contractual duties owed personally by the Mehra directors to

EnerconGmbH under the Share Holder Agreement (SHA).

WHETHER THE IPLA IS A CONCLUDED CONTRACT

40. The Tribunal elaborately considered the events as they

unravelled after the expiry of the TKHA on 12.01.2004. The

correspondence between the parties for executing a new agreement

was noticed wherein an initial stance was adopted by Mr. Yogesh

Mehra that royalty may not be charged for new models proposed to

be launched in the Indian market. However, Enercon GmbH were

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categoric that Dr. Wobben was considering the levy of royalty to

the tune of 4% or 5%. On 02.11.2004, Drafts of royalty agreements

were provided to Mr. Mehra during his visit to Enercon in

Germany. Thereafter, it seems that Mr. Mehra had reconciled to

the fact the royalties would be payable for the new models of Wind

Turbine Generators (WTGs) and the discussions centered upon

the issue of computation of royalty. As highlighted earlier, on

23.05.2006 the parties signed non-binding Heads of Agreement

on a Proposed Intellectual Property License Agreement (HoA)at

Aurich, Germany. The said document was expressed to represent

the final views of the parties on the terms of a new agreement. A

draft of the IPLA was attached to the same. Clause 5.1 of the draft

IPLA contemplated royalty of 5% on the net sales value of

products sold by WWIL. The net sales value was elaborately

defined to mean -

"the net ex-factory sales price of the Products, exclusive of excise duties, minus the cost of the standard bought out Wind Energy Technology

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components and the landed costs of imported Wind Energy Technology components, irrespective of the source of procurement, including ocean freight, insurance, custom duties and the like."

As a matter of fact, the HoA recorded that the services

of Mr. N. P. Sarda, Partner of Deloitte Haskins and Sells (DHS) be

commissioned to seek their views on a formula for calculating

royalties that would be in consonance with the requirements of

Indian law.

41. In furtherance thereof, Mr. Yogesh Mehra

corresponded with Mr. Sarda and elicited his opinion on a formula

provided by him in his letter dated 23.06.2006. The formula sent

by Mr. Mehra upon which opinion of Mr. Sarda was sought is

extracted hereunder :

"Net Ex-Factory Sales Price of the Wind Energy Converters, excluding Excise duty, Taxes, Levies ,

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Cess etc. LESS:

Landed cost of all imports, other than capital equipment and the cost of standard bought out components and raw material procured locally"

42. The Tribunal noticed that this was not the formula as

comprised in the draft IPLA on which it had been agreed that

opinion of Mr. Sarda be sought. Rather it was a formula of Mr.

Mehra's own devising. It included deductions which did not form

part of the RBI formula. On 16.06.2006, Mr. Sarda is stated to

have replied by reciting the RBI formula and certifying that the

formula proposed by Mr. Mehra fell within it. The Tribunal

observed that Enercon GmbH did not notice this discrepancy at

this stage and the same caused difficulties later.

43. During the months to follow, there was exchange of

drafts of the proposed IPLA. A meeting was also held in Aurich on

07-08 August 2006 where the parties signed Heads of Agreement

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with regard to a Share Holder Agreement. A meeting was

scheduled in Germany for 17-20th September 2006 for finalising

the IPLA. On 15.09.2006, a final version of IPLA was sent by

electronic mail by Ms. Fritsch-Nehring to Mr. Yogesh Mehra for

his perusal. It was also stated therein that Dr. Wobben had desired

that he would like to first discuss the final version of the IPLA

before any discussion takes place on other issues. Since the

finalised draft of the IPLA was only sent at the last moment, Mr.

Yogesh Mehra postponed his trip to Germany with a view to

consider the said draft.

44. Ultimately, Mr. Yogesh Mehra arrived in Bremen

(Germany) on the morning of 29.09.2006. Dr. Wobben received

him at the Airport and accompanied him to the Hilton Hotel.

Discussions on the proposed IPLA ensued. They were joined at

lunch by Mr. Hans Dieter Kettwig. The Tribunal noticed the

evidence of Mr. Kettwig where he testified that he sensed the

discussions had not gone smoothly and he could feel some

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tension. Dr. Wobben had informed Mr. Kettwig in the presence of

Mr. Mehra that Mr. Mehra also wanted a further document to set

out certain principles that would be reflected when it came to

subsequently finalising other contracts. However, this was on a

clear understanding that the IPLA was to be entered into without

change and the agreed principles related to other agreements

which would be shortly entered into. Before leaving, Dr. Wobben

had frustratingly exclaimed that the IPLA should be accepted in its

current form. Dr. Wobben had left Mr. Kettwig to discuss the new

document headed "Agreed Principles". However, it is common

ground that no document was signed on this date.

45. The Tribunal was of the considered view that the

evidence furnished by Mr. Kettwig appeared to be reliable vis a vis

the version of events disclosed by Mr. Yogesh Mehra. The

Tribunal observed that the objections/reservations expressed by

Mr. Mehra to the drafts of IPLA shared with him earlier by

Enercon GmbH had been firmly dealt by Dr. Wobben in August

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2006. It was improbable that Dr. Wobben would now have made a

'U-turn' on the issues canvassed by Mr. Mehra during negotiations

which took place 29.09.2006.

46. Mr. Kettwig stated in evidence that to the best of his

recollection, Mr. Mehra had brought with him a draft of Agreed

Principles in hard copy. The Agreed Principles were

predominantly drafted by Mr. Mehra in advance of the meeting

rather than being drafted together in the meeting. Mr. Kettwig

further deposed that Mr. Mehra accepted at the meeting that he

would enter into the IPLA the next day, and this was unaffected by

the Agreed Principles. Per contra, Mr. Mehra claimed in his

evidence that the draft of Agreed Principle had not been brought

by him. He stated that this document had been typed on the

computer in the Bremen Hotel. In this regard, the Tribunal

observed that Mr. Kettwig was neither a lawyer nor fluent in

English, unlike Mr. Mehra. The language of the Agreed Principles

suggested that its substance was derived from Mr. Mehra and his

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legal advisors in India. It was further held that Mr. Mehra

understood that the Agreed Principles would have no effect upon

the IPLA and that the IPLA was expected to be executed by the

parties during his stay in Aurich, Germany.

47. The Tribunal observed that Mr. Kettwig was not an

astute lawyer. He could thus could not visualise the effect of the

words- "Draft enclosed" comprised in the document-Agreed

Principles and that these words could later be construed to be

inconsistent with Enercon's intention of executing the IPLA

without any amendment. It was held that evidence of relevant

surrounding circumstances emerging from the contemporaneous

correspondence between parties and the evidence of Mr. Kettwig

established that both sides clearly understood that before any

discussion of other agreements took place, IPLA had to be

executed.

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48. It was also observed that it was highly implausible that

the parties would sign the IPLA (twice in the case of Dr. Wobben

as he appended his signatures on behalf of Enercon GmbH aswell

as WPG) and initial every page merely to identify it as the latest

draft under discussion. The Tribunal noticed that such an

approach had not been adopted by the parties before with respect

to other documents that were available for similar treatment.

49. The Tribunal also held that the assertion of Mr.

Kettwig that after the execution of IPLA; which had been pending

since a long time, Mr. Mehra appeared rather emotional, was

supported by the contents and tenor of a letter authored by Mr.

Mehra on that very day viz. 30.09.2006. The letter was addressed

to Dr. Wobben and was penned by Mr. Mehra at his hotel before

leaving for India.

50. The contents of the said letter read :

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"Dear Dr. Wobben, Today when I reached back to Bremen, and before I leave back to India Mr. Wobben, in the last 13 years since I first met you, I have never felt so de-motivated lost, confused and empty! Mr. Wobben, my this trip to Germany was besides of course to clarify al the points of the agreements, was to also find some solutions to my problems which you had also promised to do. But I am sorry to state that I go back without any solutions! Mr. Wobben, you asked me to trust you, which I have always done-

(1) I signed the agreement, without even reading it, only because I trust you. (2) I did not even speak when Mr. Kettwig decided to write the royalty figure at 5%, because I trusted you, to be fair, because you always told me, that you wanted to make Enercon India Ltd.

financially strong. Now with this, it reduces the profitability of Enercon India Ltd by 40% straight away. [I have never

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said no to paym (sic.) of royalty, only I thought you will be fair and just].

This royalty, is when the agreements do not ev (sic.) provide for any other technologies. In fact it does not even provide for the E-82! (3) I trusted you, when you told me, that I should not pursue the 'UBS' proposal, because you did not feel comfortable, I dropped the idea totally, because you promised me that we would find a solution to my 'family' issues. But I go back again without any solution! Respected Mr. Wobben, it hurt me, when Mr. Kettwig mentioned today, that the value of Enercon's operations in India should be of a value of 250 Million Euro. If you believe that this is correct, than [sic] I personally take responsibility of the fact that, I failed, and for which I am willing to resign.

Mr. Wobben, you asked me to be truthful and open to you, which I always will be, and I thought I must write to you on exactly how I

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feel, because one thing for sure, is if I am not motivated, how can I motivate my team in India? If I cannot do that, all I can say is it is not fair for Enercon India! Dear Mr. Wobben, you have always been my source for inspiration and you have always motivated me, to be able to do my best! Mr. Wobben, I go back to India a disappointed man, as I have no face to show to my family, whom I promised, and who have always supported me for the last 13 years! Mr. Wobben, the decision is in your hands and please do not ask me to talk to anyone else about the issue, because I will not! At the end all I want to say is I trust you. Do not let me down! Regards! Yogesh Mehra."

\

51. The Tribunal observed that this reproachful letter was

inconsistent with Mr. Mehra's claim that only a draft had been

signed. None of this recrimination would have made sense if

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everything was still open to negotiation. The Tribunal did not

accept the explanation tendered by Mr. Mehra in evidence that

that the agreement which referred in his letter to have signed was

the Agreed Principles and not the IPLA and that he was not to be

taken literally.

52. Perusal of the majority Award reveals that the Tribunal

also formed an adverse opinion on the credibility of Mr. Mehra,

especially in view of his vacillating stand before different forums.

The Tribunal noticed that in July 2008, Mr. Mehra had stated on

solemn affirmation in the criminal proceedings initiated in India

before the Court of Magistrate that he had been coerced into

signing the Agreed Principles. It was observed that there were no

allegations of coercion made before the Tribunal and rather it was

claimed that almost immediately upon his arrival in Germany Dr.

Wobben accepted his objections to the IPLA and agreed that it

should be renegotiated at some indeterminate future date.

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53. The Tribunal was of the considered view that it

appeared that Mr. Mehra was unwilling to execute the IPLA,

however after extensive rounds of deliberations and sustained

obstinacy of Dr. Wobben, he succumbed to sign the IPLA. He

later regretted the execution of the IPLA as Dr. Wobben did not

favourably acede to his proposal of floating an IPO to raise

additional money and neither did Dr. Wobben purchase additional

shareholding from the Mehra's on the tentative terms indicated

earlier during the course of negotiations. In the considered view of

the Tribunal, Mr. Mehra sought to retrace his acts by belatedly

propounding the version that he had merely signed a draft when

he sent an electronic-mail dated 03.11.2006 expressing his

disappointment at the withdrawal of the offer to purchase

additional shareholding.

54. The Tribunal also attached significance to the

circumstance that the parties appended their signatures at the spot

where they are expected to be placed when a contract is to be

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signed with an intent to create legal obligations and not for the

purpose of mere identification for future reference. It held that

though the surrounding circumstances that the IPLA is referred as

a draft in the Agreed Principles and that the IPLA as executed

omitted certain annexes which had been referred to in the body of

the document, were relevant, yet other circumstances as alluded to

by the Tribunal tilted the scales in favour of the conclusion that

the IPLA had been executed as a concluded contract.

55. While rendering its findings, the Majority in its

wisdom did not choose to comment upon the dissenting views

expressed by Justice Raveendaran on this issue. Further, it was

deemed unnecessary to undertake the exercise of analysing the

Agreed Principles to decide whether or not the IPLA was

inconsistent with them.

IPLA VOID FOR UNCERTAINTY

56. An alternate contention that was canvassed on behalf

of the Appellants-herein before the Arbitral Tribunal was that

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even if it were held that the IPLA was executed with the intent of

creating binding legal obligations, yet the same was not liable to be

enforced as the same was void for uncertainty. Reliance was placed

upon Section 29 of the Indian Contract Act, 1872.

57. It was submitted that the IPLA was inchoate. The

annexes with regard to trademarks and patents were not present,

and thus the identity of the licensed patents/trademarks was not

discernible.

58. In the absence of identification of patents, it was

submitted that the date of expiry of the agreement could also not

be determined as Clause 12.1 of the agreement provides that the

agreement would expire upon the expiry of the last to expire

patents.

59. Further, there existed discrepancies, which resulted in

the date of commencement of the agreement being uncertain.

Clause 1.1 mandates the 'effective date' as the date on which the

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agreement is executed by the parties. It was highlighted that the

cover sheet bears the date 29 September 2006 whereas the

agreement commences with the recital that this agreement is

entered into at Aurich on 17 September 2006.

60. The Tribunal noticed decisions of various High

Courts wherein it had been held that the Courts ought not to

readily declare the solemn contracts entered into between parties

void for apparent vagueness or uncertainty which may otherwise

be capable of being removed by a process of proper interpretation.

61. Apropos, the contention with regard to date of

commencement of the agreement it was observed that there was

no doubt that the same was executed on 30.09.2006 and therefore

the same was liable come in effect from the same date as mandated

by Clause 1.1 of the agreement itself. The fact that the cover sheet

and the introductory recital contains other dates was explainable as

Mr. Mehra was initially expected to visit Germany on 17.09.2006

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for signing this agreement and in view of the same the opening

recitals contained reference to execution of the agreement on

17.09.2006. The said inaccuracies and clerical discrepancies would

not in the opinion of the Tribunal make the date of

commencement of IPLA uncertain.

62. With regard to the argument of absence of discernible

identity of patents and trademarks licensed, it was observed by a

matter of construction that license must have extended to include

all Indian patents and trademarks to Enercon's name. Such patents

and trademarks were clearly identifiable as being available on the

face of public record. It was observed that there was no evidence to

suggest the reason why parties would have wished to exclude

certain patents/trademarks from the license. In wake of the finding

that the Tribunal was of the view that the patents which formed

the subject matter of the agreement were capable of being

identified, it could be no longer be contended that the date of

expiry of the agreement could not be ascertained.

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NATURE OF RIGHTS STEMMING FROM THE TKHA

63. The Tribunal noted that in view of the fact that it had

held that the IPLA was a concluded contract capable of binding

the signatories thereto, it was not necessary to opine upon the

rights of the parties flowing from the TKHA as the same had

expired and at any rate stood superseded by the IPLA. However, in

view of the fact that a substantial amount of time had been

dedicated to this issue during the proceedings and expert evidence

had been led by the parties, the Tribunal chose to render its

findings on this aspect of the matter.

64. That it had been contended before the Tribunal on

behalf of the Appellants-herein that the TKHA resulted in

outright transfer of rights in perpetuity of the technology

comprised therein. Emphasis was laid upon the meaning of the

term 'transfer' and the regulatory backdrop of RBI in which it was

required to be interpreted. It was submitted that the approvals

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accorded by the RBI were predicated on the premise that the

transfer of technology was in perpetuity and the same would stand

absorbed/indigenized. Expert evidence was led in the form of

testimony of Mr. Khizer Ahmed to suggest that mere license of

technology for a specified duration would fall foul of the

regulatory framework of the RBI. Thus, the Appellants-herein

were entitled to manufacture WTG's comprised under the

TKHA/STKHA and no longer be required to pay royalty to the

Claimants (Respondents-herein) upon the expiry of the agreement

or in the case of reaching the ceiling cap of two million five

hundred thousand Deutsche Mark; which limit had reached in the

year 2002 itself. It was further submitted that the transfer of

technology of the various models of WTG's in favour of the

Appellants-herein was pursuant to the stipulated contractual

obligations upon the Claimants (Respondents-herein) under the

TKHA and STKHA.

65. The Tribunal held that the issue was required to be

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answered essentially upon the construction of the terms of the

TKHA and STKHA itself. However, it would also be permissible

to look into the terms of the SHA in order to ascertain if they

throw light upon the nature of rights under the TKHA. It was

observed that the SHA was simultaneously executed by the parties

on 12-01-1994 along with the TKHA as part of the same

transaction. Reference to the term-'license' found at various

junctures in the agreements was noticed. The Tribunal refused to

look into the contents of documents which comprised the views of

the parties at the stage of negotiations preceding the execution of

the TKHA. The Tribunal observed that negotiation of a contract

is an iterative process in which only the final contract represents

the concluded intention of the parties. With regard to the expert

evidence on the regulatory background led by the parties, the

Tribunal was pleased to observe that it derived no assistance

therefrom. It appeared that there seemed no published guideline

to unequivocally indicate that outright transfer of technology was

a sine qua non for approval to be accorded by the RBI. The

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Tribunal noted that reported decisions of various Courts had been

referred before it which would indicate that the Court had no

hesitation in arriving at the conclusion that an agreement by which

a foreign company licensed an Indian company to use know-how

for a limited period was not an outright sale of property and that

the payments received by the foreign company were in the nature

of royalty rather than a capital receipt for the transfer of an

intangible asset. There was no suggestion of any regulatory

obstacle to this conclusion.

66. Upon adverting its consideration primarily to the

provisions comprised in the agreements themselves, the Tribunal

concluded that the TKHA contemplated a license to use the

technical know-how of the technology comprised therein,

however, the same was not limited for a period of 10 years as

suggested by the Claimants (Respondents-herein). It was held that

that the right to utilise the technical know-how transcended

beyond the period of expiry of the TKHA. The Tribunal fortified

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its conclusion in this regard by citing Article 5.5 of the TKHA,

inter-alia, which obliged the Claimant (Respondents-herein) to

ensure supplies of Electronic Control Components to WWIL. The

Tribunal observed that the fact that WWIL was given a right to

buy the components would necessarily entail that it must have the

right to manufacture the WTG's in which they would be used.

67. The Tribunal, however, repelled the contention of the

Appellants-herein that the TKHA and the STKHA enwombed

within its fold the right to manufacture E-48 and E-53 models of

the WTG's. It had been contended on behalf of the Appellants-

herein that the STKHA had contemplated supply of atleast two

other ranges/models in addition to E-26, E-30 and E-40. It was on

strength of this recital comprised in STKHA that the Appellants

staked the claim to manufacture E-48 and E-53 as a matter of

right. It was observed by the Tribunal that the transfer of

technology for E-33, E-48 and E-53 models of WTG's was

initiated by Enercon GmbH only after the expiry of the TKHA

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and STKHA in January 2004. The said transfer was made in

anticipation of a fresh agreement that would be formalised

between the parties after negotiations. The Tribunal held that the

right to receive technical know-how and manufacture atleast two

other ranges/models stood satisfied upon the receipt of technical

know-how of E-40/644/E2, E-40/644/E3B and E-40/644/E2B,

as explained by Mr. Kettwig in his evidence. Further, the Tribunal

placed reliance upon Mr. Yogesh Mehra's letter dated 17-10-2008

wherein he listed each of the E-40's separately as a model for

which technology had been supplied to WWIL. The position was

similarly stated by him in the draft of the new TKHA prepared by

him and shared with Enercon GmbH on 14-10-2004.

CLAIMS UNDER THE IPLA

68. The Tribunal observed that WWIL did not comply

the terms of IPLA. However, on 22.08.2007 royalties to the tune

of 986,399.88 pounds were remitted for the period 01.10.2006 to

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31.12.2006. Similarly, further royalties to the tune of 1.64 million

pounds were transmitted to Enercon GmbH on 16.10.2008 in

respect of the period 01.01.2007 to 31.03.2007, and 570,000

pounds were remitted in respect of the period from 01.04.2007 to

31.12.2007. On 14.11.2009, WWIL made a last payment of

royalties in the sum of 2,114,852 pounds. It was however

submitted by the Claimants (Respondents-herein) that the

payments were not accompanied by Statement of Accounts/books

and thus there were no means to verify if the royalties had been

paid appropriately. It was the claim of the Appellants-herein that

the said royalties were not payable and were transmitted under

bonafide mistaken belief. It is in this view of the matter that they

counterclaimed for repayment. They attempt to explain that the

said payments were not made pursuant to the IPLA, which was

never executed to bind the parties. It was contended that the

monies were transmitted pursuant to the obligations perceived by

WWIL under the Agreed Principles.

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69. The Tribunal observed that after termination of IPLA,

the Claimant (Respondents-herein) were entitled to damages for

wrongful use of its Intellectual Property and Technology. The

royalty which WWIL had agreed to pay was the best measure for

the loss occasioned to the Claimants (Respondents-herein).

70. The Tribunal observed that Appellants own expert-

Mark Taylor assessed the total of royalties which fell due from the

inception of IPLA until 08.09.2015 using the IPLA method of

calculation (but without interest) to be 62.5 million pounds. The

Tribunal noticed that in fact, the said figure was more than the

amount assessed by the expert witness produced by the Claimants

(Respondents-herein). The expert witness produced by the

Claimant, Nicolas Good, assessed the amount due to be 63.1

million pounds together with interest. The Tribunal noted that the

Claimants (Respondents-herein) were content to accept the

amount assessed by their own expert witness even though it was

substantially less than the amount computed by the expert witness

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produced by the Appellants-herein.

71. The Tribunal also observed that at the relevant time,

WWIL was only manufacturing E-53 WTG. There was no dispute

that the said product was being manufactured by the Technical

Know-How provided by Enercon GmbH. The Tribunal was

pleased to grant injunctive relief against WWIL for manufacturing

the said WTG. The Tribunal was pleased to direct WWIL to

return the documents and other materials containing the

confidential technology as defined in the IPLA.

CLAIM FOR GOODS SOLD AND DELIVERED

72. Before the termination of IPLA, Enercon GmbH

supplied WWIL with components and raw materials upon its

standard Terms and Conditions. The Tribunal observed that it had

not been disputed that in May 2008 WWIL owed Enercon

GmbH 19,025,296.38 pounds for these supplies.

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COUNTERCLAIM

73. The Appellants-herein set up a counterclaim before

the Arbitral Tribunal alleging breach of contract by the Claimants

(Respondents-herein) in failing to supply parts and raw materials

ordered by WWIL. The breaches are alleged to have occurred (a)

between 16.02.2007 and third week of March 2007 (b) between

13.07.2007 and December 2007. It was further contended that

even when supplies were resumed pursuant to directions passed by

the Bombay High Court by an interim Order dated 31.10.2007,

the said supplies were deliberately mismatched. It was submitted

that as a result of suspension of supplies and mismatching of parts,

WWIL was able to make and sell fewer WTGs than it would have

done if Enercon had complied with its contractual obligations. It

was claimed that the contribution which the additional sales would

have made to the revenue during the first spell of disruption of

supplies was estimated to be Rs. 43 crores and Rs. 429 crores for

the second.

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SUSPENSION OF DELIVERIES

74. The Tribunal observed that the TKHA was no longer

in force and had been replaced by the IPLA. There was no specific

reference to a failure to deliver Electronic Control Components,

for which Enercon GmbH was saddled with a positive contractual

obligation to ensure supplies. It was held that with respect to other

parts and raw materials there was no pre-existing contractual

obligation to ensure supply. The Tribunal analysed the mechanism

of processing orders that was in place at Enercon GmbH. It was

observed that no contract was created until the purchase order had

been accepted. In the case at hand, the grievance of the

Appellants-herein was that the purchase orders had not been

accepted by the Claimants (Respondents-herein) rather than the

Claimants having failed to honour them. The Tribunal further

observed that a prior discussion of production plans between

parties assumed a mere moral commitment to use their best

endeavours to enable them to be carried into effect. However, the

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same did not fasten any contractual liability on either side. The

production plan was a plan to which the parties hoped to adhere

but not a contract for the sale of goods. In view of the said reasons,

the Tribunal opined that the two spells of suspension of deliveries

in the year 2007 were not breaches of contract.

MISMATCHED DELIVERIES

75. Apropos, the allegation of deviousness on part of the

Claimant (Respondents-herein) to deliberately mismatch the

deliveries, it was observed by the Tribunal that perusal of

correspondence revealed that the Appellants-herein were

themselves reluctant to assist the Claimants (Respondents-herein)

when a query had been posed to remedy the situation. Therefore,

the claim in this regard was rejected.

TORT CLAIMS

76. In the defence and counterclaim, the Appellants-

herein had alleged that by suspending deliveries and certain other

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actions, Claimants (Respondents-herein) had intentionally caused

WWIL loss by unlawful means and intimidation. The Tribunal

observed that no evidence had been led in this regard, and the

claims were not mentioned by the Appellants-herein at the hearing

or in closing submissions. The Tribunal assumed that the same

had been abandoned.

SAP SYSTEM

77. Enercon had a computerised data-processing system

(SAP system) on a server in Aurich which was used by all its

subsidiaries to maintain their records, each having access to its own

information. The Appellants-herein had alleged that there was a

three day interruption in August 2007. Upon termination of

IPLA, WWIL was disconnected from the server. It was contended

that this was a malicious act to cause harm to WWIL. The

Claimants (Respondents-herein), on the other hand, submitted

that the Mehra Directors were abusing the system by attempting

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to obtain information about Enercon's worldwide activities. The

Tribunal observed that there was no evidence of any particular loss

occasioned by such disconnection. Further, the merits of the

dispute were not explored by the parties. Under such

circumstances, the Tribunal chose not to render any findings on

this issue.

REPAYMENT OF ROYALTIES

78. The Tribunal held that it had already adjudged that

royalties were payable by the Appellants-herein. Therefore,

counterclaim for return of royalties was rejected.

CLAIMS AGAINST MEHRA DIRECTORS

79. The Claimant (Respondents-herein) contended that it

was illegally ousted from the management of WWIL in as much as

it was being denied its rights in the governance of WWIL,

contrary to the terms of the SHA. No prior notice of meetings

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was dispatched as required by the agreement. Further, its consent

was not sought with respect to 'reserved matters'. It was further

contended that it was not allowed to appoint an Auditor as

contemplated under the Agreement, and no information with

regard to the affairs of WWIL was shared. Other instances of

usurpation of power by Mehra Directors were also illustrated. It

was also claimed that the Mehra Directors breached the fiduciary

duties under the SHA and company law by effecting transfers of

value and confidential technology from WWIL to companies

owned/controlled by the Mehra directors. A list of 37 such

companies and partnerships owned/controlled by the Mehra

Directors were annexed to the Statement of Claim.

80. In this regard, the Appellants-herein pressed

jurisdictional objections with regard to the arbitrability of these

claims as the same were overlapping and also pending adjudication

before the Company Law Board.

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81. The Tribunal observed that the judgment of the

Supreme Court of India dated 14.02.2014 unequivocally

mandated that all disputes arising from the SHA, inter alia, were

referred for arbitration. The Tribunal accepted the contention of

the Appellants-herein that the issues raised by the Claimants

(Respondents-herein) may indeed overlap with the issues pending

adjudication before the Company Law Board. However, it was

observed that it was a matter of procedural discretion, whether to

await the decision of the Company Law Board. The Tribunal

noticed the delay which had already been occasioned in

adjudicating these disputes. It was held that it would be unjust to

the parties not to proceed with the mandate given by the Supreme

Court by awaiting the outcome of proceedings before the

Company Law Board.

82. With respect to the allegations of having being ousted

from the management of the affairs of WWIL, it was contended

on behalf of the Appellants-herein that the Claimants

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(Respondents-herein) had rather abdicated their responsibilities by

not attending meetings. Thus, the right of notice to such meetings

stood waived. It was observed that it had not been demonstrated

that Enercon GmbH was served with prior notice of meetings and

yet its representatives consciously chose not to attend the

meetings. The Tribunal did not accept the extreme proposition

propounded by the Appellants-herein that the express obligations

under the SHA could be circumvented by inferring a waiver from

the conduct of the other party to whom such obligation was owed.

83. The Tribunal observed that the Articles of

Associations (AoA) were mysteriously amended to remove Art.

170 (a) and substitute the same. The said provision dealt with

'reserved matters', which conferred a valuable right in favour of

Enercon GmbH in governance of WWIL. No valid special

resolution to amend the AoA was passed. The Tribunal found that

it was highly improbable that Enercon GmbH would have

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consented to a resolution cutting down its rights in respect of the

'reserved matters'.

84. The Tribunal also held that the Board resolution dated

26.04.2007 conferring wide powers on Mr. Yogesh Mehra,

including the power to commence legal proceedings that fell with

the ambit of 'reserved matters', was illegal. No notice of the

meeting had been given to Enercon. It was observed that the

Mehra Directors were not entitled to ignore the solemn

undertakings made to Enercon GmbH in the SHA. The plea

raised on behalf of the Appellants-herein that the powers were

exercised only in the interest of WWIL was negatived by the

Tribunal, and it was held that the parties may have different

perception of what is in the interest of the Company.

85. The Tribunal also observed that the since the

breakdown of relations between the parties, Enercon GmbH was

not consulted in the matter of appointment of Auditor and

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therefore they were unable to exercise its rights under Art. 8.2 of

SHA. It was held that Enercon had a right of access and

participation in an audit conducted by the Auditor which had in

effect been appointed by the Mehra's.

86. The Tribunal also accepted the contention of the

Claimants (Respondents-herein) that information with regard to

the functioning of WWIL was wrongly withheld by the

Appellants-herein and the said right stemmed from the SHA as

well as Company law.

87. Thereafter, the Tribunal proceeded to adjudicate upon

the last limb of issues which pertained to transfer of technology

and/or value to Vish Wind Companies/ Partnership.

88. The Tribunal noticed that in paragraphs 84 and 92.2

of the Statement of Claim, the Claimants (Respondents-herein) at

the very outset had pleaded their apprehensions in this regard.

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However, in absence of information with regard to the affairs of

WWIL from which they have been ousted, the Claimants

(Respondents-herein) were then not in a position to substantiate

their claims.

89. The Tribunal traced the events as they dramatically

unravelled during the course of Arbitral proceedings. It emerged

that the Appellants-herein had not faithfully complied with the

directions of the Tribunal with regard to disclosure of documents

pertaining to transactions between WWIL and the Vayuu

Companies. On day 7 of the evidential hearing, the relevant

documents were ultimately produced.

90. It appeared from these documents that substantial

sums in the form of interest-free loans were doled out to these

Companies and LLPs from WWIL. Further, development rights

were purchased by WWIL from these companies and, in such

transactions, huge profits were earned by the Vish Wind

Companies/Partnerships that were owned/controlled by the

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Mehra's.

91. In view of this fresh material that had come on record

during the course of evidential hearings, parties were permitted to

lead further evidence on this issue.

92. The Tribunal observed that the Vish Wind

transactions were a breach of express terms of Art. 4 of the SHA.

The transactions required the consent of Enercon representative.

Instead, Enercon was not even given notice of the transactions.

The Tribunal held that such conduct also amounted to breach of

fiduciary duty to act in good faith. The evidence led by the

Appellants-herein to justify the valuations of these transactions

was not accepted. The Tribunal did not accept the explanation

offered by Mr. Mehra that WWIL did not embark upon the task to

itself develop rights and rather chose to purchase them as it would

have caused distractions from the core activity of WWIL. The

Tribunal further observed that the acts of Mehra directors fell foul

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of the mandate of Section 88 of Indian Trusts Act, 1882. The

Mehra directors had a conflict of interest and duty in as much as

they made profit by sale of development rights to WWIL in which

Enercon had a majority interest, whereas, their family exclusively

owned/controlled the companies/partnerships with whom such

transactions for purchase of development rights were made. The

Tribunal noticed that according to accounts Vish Wind had no

employees, business and virtually no money. It financed the

purchases of land with loans from WWIL.

93. The Tribunal rejected the objection raised by the

Appellants-herein that the claim in respect of Vayuu Companies

was not sufficiently pleaded. The Tribunal observed that concrete

evidence emerged towards the end of the hearing in view of the

fact that the Appellants-herein had themselves breached the earlier

Order of the Tribunal directing supply of relevant documents.

Hearing was kept open to enable the Appellants-herein to counter

the allegations of the Claimants (Respondents-herein). Sufficient

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opportunity was given to lead evidence, and the Appellants availed

of such opportunity by tendering evidence of two experts, namely,

Mr. Kaushik Khona and Mr. D. Vaidyanathan.

94. The Tribunal noticed that the Claimants

(Respondents-herein) sought damages from Mehra directors and

claimed that the same be paid directly to Enercon GmbH. The

Tribunal, however, observed that it was WWIL which was most

immediately affected by the breaches committed by the Mehra

directors. Therefore, the Tribunal held the Mehra directors

accountable to WWIL for the 97 million pounds profit, which

Vish Wind made on the development rights transactions.

95. The Tribunal did not proceed to make any award with

respect to Vayuu Renewable Energy (Purna) Pvt. Ltd. in view of

the fact that there was no evidence to demonstrate that Purna and

its subsidiaries had yet succeeded in attracting any business.

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96. The Tribunal refused to grant costs in favour of the

Claimants (Respondents-herein) for expenses incurred on

litigation before the commencement of arbitration. The Tribunal

also negatived the contention of the Claimants that the Mehra

Directors ought to be held personally liable for the debts of

WWIL stemming from failure to pay royalties and price for the

goods supplied.

97. The Tribunal was pleased to direct that Enercon

GmbH was entitled to the unredacted documents supplied by the

Appellants-herein under Procedural Order No. 1 and therefore

LCIA was directed to release them in favour of the Claimants

(Respondents-herein). The said documents contain information

with regard to WWIL's suppliers and components manufactures.

98. In paragraph 316, the Majority concatenated its

conclusions on various issues which had arisen for its

consideration. The same are summarised for the sake of

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convenience. The Tribunal held that the Claimants (Respondents-

herein) were entitled to the declaration that the IPLA was valid

and binding but lawfully terminated on 08.12.2008 upon which

WWIL ceased to be entitled to use the technology of the

Claimant. The Claimants were entitled to payment of arrears of

Royalty and outstanding monies due for the parts/materials

supplied to WWIL. Mehra Directors were required to account for

97 million pounds to WWIL for the profits on sale of

development rights wrongly diverted to Vish Wind. The

Claimants were entitled to injunctive relief to restrain the Mehra

Directors from preventing them to exercise their rights under the

SHA to participate in the management of the Company, have

access to information, and appoint the Auditors. It was held that

the Claimants were entitled to injunctive relief to restrain the

Mehra Directors from causing WWIL to take actions within the

reserved matters of Art. 4 of SHA.

99. With regard to the issue of payment of costs of

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arbitration, the Tribunal held that the Claimant (Respondents-

herein) had substantially prevailed on merit and were entitle to

cost. It was however clarified that this was not a case in which the

Tribunal would award the Claimants (Respondents-herein) costs

on full indemnity basis. In paragraph 330 of its Award, the

Tribunal fixed the reasonable cost of arbitration to be 3,794,970

pounds which was payable in favour of Claimants (Respondents-

herein) within 28 days.

100. In paragraph 331 of the Award, the Tribunal

crystallised its final directions and the sums of monies which the

Appellants-herein were liable to be pay in terms of the findings.

We reproduce the same for the sake of clarity.

"(1) The Tribunal declares:

(a) The IPLA executed by the parties thereto on

30 September 2006 was intended to create legal relations and was a valid and binding contract;

(b) The Mehra directors caused WWIL to repudiate liability under the IPLA and to commit

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breaches of the IPLA amounting to a repudiation thereof.

(c) The Claimants accepted the repudiation and terminated the IPLA on 8 December 2008;

(d) WWIL was indebted to Enercon in respect of

(a) royalties due under the IPLA until its date of termination and (b) damages for wrongful use of its intellectual property and technology after termination until 8 September 2015 in the sum of €55.2 million and interest;

(e) Pursuant to clause 13(1)(b) of the IPLA, WWIL is not entitled to use or exploit the confidential Technology disclosed by the Claimants to WWIL during or before the subsistence of the IPLA and is obliged to return to Enercon documents or materials which contain such Technology

(f) WIL is indebted to Enercon for components and materials sold and delivered before May 2008 in the sum of €19,025,296.38 and interest;

(2) The Tribunal orders WWIL -

(a) To pay to Enercon

(i) €55,200,000 in respect of royalties due under the IPLA together with interest thereon

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in the sum of €7.9 million until 8 September 2015 and thereafter at the rate of 3% over European Central Bank rate until the date of this Award;

(ii) €19,025,296.38 in respect of components and materials sold and delivered together with interest in the sum of €5.9 million until 31 March 2016 and thereafter at the rate of 3% over European Central Bank rate until the date of this Award;

(b) To return to Enercon the documents and other materials containing the

confidential Technology (as defined in the IPLA) disclosed to WWIL pursuant to the TKHA and IPLA;

(c) To allow Enercon, pursuant to clause 6.1(b) of the IPLA, to inspect its books and records and take relevant copies.

(3) The Tribunal orders the Second and Third Defendants: (a) Not to prevent or obstruct Enercon or

its nominated directors from exercising their rights under the SHA or as directors to -

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(i) Receive notice of board and company meetings; (ii) Obtain information about the affairs of the company; (iii) Secure the appointment of auditors by the company in general meeting; (b) Jointly and severally - (i) to pay to WWIL the sum of INR 6,772,456,570, being the profit made by Vish Wind on the sale of allotment rights to WWIL in the years ending 31 March 2011 and 2012 together with interest thereon at the rate of 3% over European Central Bank rate from those dates until the date of this Award. (ii) To pay to the Claimants their legal and other costs in the sum of €3,794,970 4. All other claims and counterclaims are dismissed. 5. From the date of the award, all sums

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payable will carry interest in accordance with section 31(7)(b) of the Indian Arbitration and Conciliation Act 1996."

ANALYSIS OF MINORITY AWARD

101. Justice R.V Raveendran expressed his inability to agree

with the views of the majority with regard to four issues namely,

(i) That IPLA is a completed contract and not a

draft;

(ii) That WWIL is liable to pay a sum of Euro 55.2

million towards Royalty and Euro 7.9 million towards

interest thereon; and

(iii) That Yogesh Mehra and Ajay Mehra were

accountable to WWIL for Euro 97 million, towards

the profit on development right transactions made by

M/s. Vish Wind Infrastructure LLP.

(iv) That Yogesh Mehra and Ajay Mehra were

liable to expend the costs of the proceedings rather

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than WWIL.

WHETHER IPLA IS A CONCLUDED CONTRACT OR A DRAFT

102. The learned Arbitrator took notice of the fact that the

Claimants (Respondents-herein) had deliberately filed the

document titled "Agreed Principles" separate from the IPLA

despite the fact that the document titled "Agreed Principles"

referred to the draft IPLA as an enclosure. It was observed that the

Appellants-herein had in fact filed the "Agreed Principles" along

with the entire bundle of enclosures which included the note(s) of

Deloitte Haskins and Sells (DHS) and the IPLA. The conduct of

the Claimant (Respondents-herein) was chastised by observing

that the apparent reason for suppressing the two attachments to

the Agreed Principles was that if they were produced they would

support the case of the Appellants-herein that the IPLA was a

mere draft which was enclosed along with the document titled

'Agreed Principles' and would militate against the stand of the

Claimant (Respondents-herein).

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103. The learned Arbitrator noticed that the

correspondence exchanged between the parties since 15.09.2006

clearly indicated that there was no consensus between the parties

in regard to the terms of the IPLA. It is in this view of the matter

that Dr. Wobben and Mr. Mehra met on 29-30 September 2006

in Germany to find a solution to the impending issue of

computation of royalty and certain other aspect relating to IPLA

amongst other issues relating to sale of shares. The discussions for

three long hours on 29.09.2006 did not bear any fruit as Mr.

Mehra did not agree to the terms of draft IPLA. Thus, Dr.

Wobben asked Mr. Kettwig to join Mr. Mehra and prepare the

Agreed Principles in regard to the various pending issues so that it

could be executed on 30.09.2006. It was observed that if the issue

regarding IPLA had been creased out during the discussions on

29.09.2006, there would be no need for the Agreed Principles to

have been drawn and executed by the parties. Significance was

attached by the learned Arbitrator to the fact that the document

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titled Agreed Principles referred to the IPLA as a draft.

104. It was further noticed that the disputed document in

question contained several indications which probablised that it

was only a draft. There was a blank space in the title portion at

page 1 where the parties were described. Similarly, blank spaces

were also observed in clause 15/Page 23 relating to delivery of

notice. Further certain particulars were left blank with regard to

name and address of the person to whom notices addressed to the

licensor should be endorsed. Blank spaces could also be observed

in the particulars of Respondent licensee. The learned Arbitrator

was pleased to observe that it would militate against the natural

course of probabilities that a final document which was ready to be

executed would contain numerous blank spaces considering big

companies like Claimants (Respondents-herein) are involved and

are ably assisted by their legal teams.

105 It was also highlighted that the IPLA refers to certain

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annexures with regard to trademark and patent portfolio amongst

others. However, such annexures were not produced.

106. The learned Arbitrator also noticed that the opening

recital indicates that the agreement was entered into at Aurich on

17.09.2006 whereas it is the case of the Claimant (Respondents-

herein) that it was executed on 30.09.2006. It was observed that if

this document was intended to be the final IPLA, it was expected

that the date of the document would have been corrected as

30.09.2006.

107. It was held that the question was not whether the

blank spaces in the agreement and absence of annexures were with

reference to material terms or not. In the view of the learned

Arbitrator, such facets probabalised the conclusion that the

document was a mere draft, especially in light of the fact that the

agreed principles described it as a draft IPLA.

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108. With regard to the circumstance that the parties had

appended their full signatures on the last page of the disputed

document along with their initials, it was observed that the

explanation tendered by Mr. Mehra in his evidence that he merely

followed the suit and appended his signatures following Dr.

Wobben, merited acceptance.

109. The correspondence and conduct of the parties

subsequent to the execution of the Agreed Principles on

30.09.2006 were also taken into consideration to fortify the

conclusion that the disputed document was a mere draft. The

learned Arbitrator referred to an email dated 18.10.2006 sent by

Ms. Fritsch Nehring to Mr. Mehra wherein she stated that that the

IPLA was in consonance with the Agreed Principles and any

amendment of IPLA was not required. It was observed that if the

IPLA had been already executed as a concluded contract, there was

no requirement for Ms. Fritsch Nehring to persuade Mr. Mehra

that the amendments to IPLA in terms of Agreed Principle was

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not required.

110. It was also noticed that Mr. Mehra in his electronic

mail dated 03.11.2006 expressly pronounced that the IPLA was a

draft which contains certain inconsistencies. However, the

Claimants (Respondents-herein) did not denounce this assertion

in their response dated 24.11.2006. Rather the tenor of the reply

probablised the case of the Appellants-herein. The learned

Arbitrator extracted the relevant portion of the said response,

which we reproduce hereunder:

"Thema: Final IPLA, shareholding and other successive agreements Dear Yogesh, First I have to apologise for the delay in sending you the outstanding drafts of the agreements mentioned above. At present, there are still some discrepancies in the contract compared to the agreed principles which we have to discuss internally..."

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111. Thereafter the Learned Arbitrator proceeded to

analyse the ocular evidence led by the parties in support of their

claims with regard to what transpired on 29-30 September 2006.

At the outset, it was noticed that Ms. Nicole Fritsch Nehring was

not present during the meetings whereas Mr. Kettwig was only

present during part of the discussions. The evidence tendered by

Mr. Kettwig was found to be vague, uncertain and inconsistent. It

was noticed that he could not remember many details. The

evidence tendered by this witness was found contrary to

documentary evidence i.e. Agreed Principles. It was observed that

Mr. Kettwig had no explanation why Dr. Wobben signed the

Agreed Principles on 30.09.2006 agreeing to change the draft

IPLA to the satisfaction of the parties if the IPLA had been finally

concluded. It was not the case of the Claimant that on 30.09.2006

the Agreed Principles was signed and thereafter the draft IPLA was

corrected to the satisfaction of Mr. Mehra, and then the final

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version of IPLA was signed on 30.09.2006 itself. On the other

hand, the learned Arbitrator found evidence of Mr. Mehra as to

what transpired on 29-30 September 2006 to be more probable,

logical and in consonance with the documentary evidence.

112. The learned Arbitrator negatived the contention of

the Claimants (Respondents-herein) that in his emotional letter

dated 30.09.2006, Mr. Mehra admitted to have signed the

agreement and therefore the hypothesis of IPLA having been

merely initialled as a draft was debunked. It was observed that Mr.

Mehra was a layman and loosely referred to the Agreed Principles

as the Agreement.

113. An adverse inference was also drawn against the

Claimants (Respondents-herein) considering their conduct in

arbitrarily novating the initial offer to purchase additional

shareholding of WWIL to the tune of 6% Equity Shares for a sum

of Euros 40 million.

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COMPUTATION OF ROYALTY/DAMAGES

114. It was observed that since it had been held that the

IPLA was not executed as a concluded contract capable of binding

parties, therefore it necessarily follows that the terms of the draft

IPLA would not govern the royalty.

115. The learned Arbitrator held that Enercon (India)

Ltd./WWIL continued to use the technology provided by the

Claimants (Respondents-herein) and was therefore liable to pay

royalty in terms of DHS formula agreed under the Agreed

Principles, from the period commencing 30.09.2006.

116. The evidence tendered by expert witnesses produced

by both the sides with respect to computation of royalty was

analysed by the learned Arbitrator and it was opined that the

report of Mr. Nicholas Good; the expert witness produced by the

Claimant (Respondents-herein), was liable to be accepted in so far

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as the calculation of quantum is concerned.

117. It was concluded that upon adjustments of the

payments already made, the Appellants-herein were liable to pay

Euro 39.8 million as total amount due towards royalty along with

interest upto 30.09.2015.

DIRECTIONS TO MEHRAS' TO PAY WWIL EURO 97 MILLION IN REGARD TO SALE OF DEVELOPMENT RIGHTS BY VISH WIND

118. At the outset, the learned Arbitrator noted that the

reliefs sought by the Claimants (Respondents-herein) in the

Statement of Claim did not include a prayer for payment of any

sum by the Mehra brothers in favour of WWIL. All reliefs sought

in the statement of claim were proposed to be in favour of the

Claimants themselves. Further, there was no indication that the

present claim is a derivative action by Enercon GmbH as a

shareholder for grant of relief in favour of WWIL from Mehras.

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119. It was also observed that in absence of pleadings, no

amount of evidence could be looked into to grant reliefs that were

not expressly sought. It was held that the Mehra brothers did not

have the opportunity to submit their defence in regard to the

proposed relief. It was highlighted that there was no averment for

sale of development rights in the Statement of Claim.

120. The learned Arbitrator held that if the claimants

(Respondents-herein) became aware of the development right

transactions belatedly, they ought to have sought amendment of its

Statement of Claim. No amount of proof could substitute the

pleadings, which are the foundation of a claim by a litigating party.

Reliance was placed upon the decision of the Supreme Court

reported as (1995) 5 SCC 612 'Abubakar Abdul Inamdar v.

Harun Abdul Inamdar'. It was observed that the statement of

claim merely comprised the averment of an apprehension that

confidential technology was being unauthorisedly passed on to the

Vayuu Companies.

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121. The learned Arbitrator did accept that some material

disclosed during evidence gave rise to an inference of impropriety

on the part of Mehra's, however, in absence of pleadings, due

opportunity for letting in evidence and arguments on the specific

issue, liability for a huge sum of Euro 97 million could not be

fastened.

122. In paragraph 58 of the Award, the learned Arbitrator

expressed his respectful agreement with the views of the majority

on all other issues. However, with the regard to the directions of

payment of costs, the learned Arbitrator was of the opinion that

WWIL ought to be liable to pay such costs and not the Mehra

brothers.

123. The Conclusions and consequent directions recorded

in the dissent were crystallized in paragraph 59 of the Award.

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"59. In view of the above, I record my dissent to the Award by the majority and make the following Award:

(a) I declare that the 'IPLA' relied upon by claimants is not a finally executed IPLA, but a draft enclosed to Agreed Principles which was intended to be finalised and signed after certain pending issues were sorted out;

(b) I declare that as first respondent continued to use technology, it is liable to pay royalty in terms of the DHS formula agreed under the 'Agreed Principles' from 30.9.2006; and

(c) WWIL shall pay to Enercon, Euro 35.2 million towards royalty and Euro 4.6 million as interest upto 30.9.2015, and thereafter, simple interest at the rate of 3% over European Central Bank rate until date of Award.

(d) Agreeing with the majority, I direct that WWIL shall pay to Enercon, Euro 19,025,296 in respect of components and materials sold and delivered, with interest of Euro 5.9 million till

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31.3.2016 and thereafter, simple interest at the rate of 3% over Europoean Central Bank rate until the date of the Award;

(e) Agreeing with the majority, I direct that WWIL shall return to Enercon the documents and other material containing the confidential technology disclosed to WWIL by Enercon;

(f) Agreeing with the majority, I order that respondents 2 & 3 not to prevent or obstruct Enercon or its nominated Directors from exercising their rights under the SHA or as Directors to (i) receive notice of Board and company meetings; (ii) obtain information about the affairs of the company; and (iii) secure the appointment of auditors by the company in General Meeting.

(g) The amounts awarded shall carry simple interest from the date of Award till date of realisation at the rate of 3% over European Central Bank Rate.

(h) I direct WWIL to pay to the claimants, their legal and other costs in the sum of Euro 3,794,970

(i) Agreeing with the majority, all other claims and counter-claims are dismissed. "

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ANALYSIS OF THE IMPUGNED JUDGEMENT

124. The Arbitral Award was assailed before this Court by

preferring three petitions under Section 34 of the Arbitration and

Conciliation Act, 1996. The said petitions were dismissed by a

common judgment dated 14.12.2018 passed by the learned Single

Judge of this Court.

125. Perusal of the judgment reveals that it was strongly

urged by the Petitioners (Appellants-herein) that the award was

liable to be set aside in view of the fact that opportunity was not

granted to the parties to make oral submissions upon conclusion of

evidence. It was submitted that the approach adopted by the

learned Tribunal was violative of the principles of natural justice

and was in breach of Section 24(1) of the Arbitration and

Conciliation Act, 1996. Thus, the award was said to have been

passed in a manner which is opposed to the fundamental policy of

India and warranted interference.

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126. Apropos, the relief granted in respect of purchase of

development rights from Vish Wind, it was contended that the

Arbitral Tribunal adopted an approach which was patently

perverse and opposed to the quintessential norms of fair play. The

issue was not sufficiently pleaded yet the Tribunal proceeded to

grant relief on the strength of the fact that some material had

emerged in evidence. It was highlighted that the relief granted was

not even expressly sought and the Tribunal exceeded its

jurisdiction to mould relief.

127. The Petitioners also reiterated their submissions as

made before the Tribunal that the IPLA was not a concluded

contract capable of binding the signatories but was a mere draft

that had been initialled and signed merely for the purpose of

identification.

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128. Before adverting its consideration to the above-noted

submissions, the Court elaborately set out the factual backdrop of

the dispute and the spate of litigation initiated between the parties

before different forums.

129. While dealing with the contention of failure to grant

an oral hearing, the Court took note of the calendar of proceedings

before the Tribunal and proceeded to analyse the Procedural

Orders passed at each stage. The Court observed that it had been

made amply clear at the stage of passing Procedural Order No. 5

that closing oral submissions would be granted only if determined

necessary and could not be claimed as a matter of right. In this

regard, the dates 27-28 April 2016 were reserved for the purpose

of oral evidence with respect to the issue of Vish Wind

Infrastructure LLP and closing oral submissions, if any. The Court

extracted the transcripts of proceedings on Day 10 of the

evidential hearings, wherein, the learned Senior Counsel

appearing on behalf of the Petitioners was categorically intimated

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the course proposed by the Tribunal, and he approved of the same.

130. During the course of evidential hearings, the team of

lawyers representing the Petitioners sought discharge and

expressed their inability to continue to represent them. The

Tribunal modified its calendar on numerous occasions to

accommodate the newly engaged legal team.

131. Vide an e-mail dated 13.04.2016, the Tribunal

reminded the advocates for parties that closing submissions were

due to be filed on 22.04.2016 and the Tribunal would notify the

parties as soon as possible after receiving closing submissions

whether the Tribunal wishes to hear any oral submissions. If not,

the provisional arrangements for the oral hearings on 27-28 April

2016 would be cancelled. In response to this e-mail, the counsels

for the Petitioners herein sought further time to file closing written

submissions and reserved their right to apply to the Tribunal for

permission to make closing oral arguments after 30.06.2016.

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However, since the closing written submissions were not

submitted promptly in accordance with the proposed schedule and

could be submitted after submitted only on 25.05.2016 after

seeking further extension of time, no opportunity was provided for

further oral hearing. The Court observed that it could not be

demonstrated that absence of an opportunity to advance closing

oral submissions occasioned any prejudice. It was held that the

approach of the Tribunal had by far been transparent.

132. The Court repelled the contention that the Tribunal

fell in error by proceeding to grant relief in absence of specific

pleadings. The Court observed that the Statement of Claim sets

out the loss caused to Enercon by the Mehra's by breach of their

duties under the SHA. Further, material evidence with regard to

Vish Wind transactions had only emerged belatedly during the

cross-examination of Mr. Mehra as the same had been suppressed

by the Petitioners. In view of such disclosure, the Tribunal while

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formulating Procedural Order No. 5 categorically alerted the

Petitioners that Vish Wind transactions would be an integral issue

to be adjudicated during the course of the proceedings and

evidence in this regard could be adduced. The Court observed that

the decision of the Supreme Court reported as 1966 2 SCR 286

'Bhagwati Prasadv.Chandramaul' was squarely applicable to the

case at hand. It was held by the Supreme Court that if a plea was

not specifically made and yet it was covered by an issue by

implication and the parties knew that the plea was involved in the

trial then the mere fact that the plea was not expressly taken in the

pleading would not disentitle a party from relying upon it if it is

satisfactorily proved by evidence. The test is whether the parties

knew that the matter in question was involved in the trial and

whether they did lead evidence about it. The Learned Single Judge

further observed that in the context of arbitration proceedings,

strict rules of pleadings as comprised in the Civil Procedure Code

would not apply with the same rigor as the Arbitral Tribunal is not

bound by the Code of Civil Procedure, 1908 in view of Section

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19(1) of Arbitration and Conciliation Act, 1996.

133. The Court held that the findings of the Tribunal that

the IPLA was a concluded contract could not be faulted. It was

observed that royalties were paid by the Petitioners, and if the

IPLA was not treated to have been binding, there would have been

no obligation to make such payments. The Court expressed a note

of caution that proceedings under Section 34 of the Arbitration

and Conciliation Act, 1996 were not akin to an appeal and do not

entail a review on merits of the dispute.

134. Further, the submission that the approach of the

Tribunal reeked with bias was merely noted to be rejected as the

Court found no justification for such an allegation.

135. We have carefully perused the Award passed by the

Arbitral Tribunal, including the dissent authored by Mr. Justice

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Raveendaran and also the impugned Judgment upholding the

majority Award. The raison d'etre forming the basis for the

conclusions has sought to be comprehensively culled out in the

preceding paragraphs. In light of the same, we now proceed to

note the submissions made before us.

SUBMISSIONS OF MR. SHYAM MEHTA, SENIOR ADVOCATE APPEARING ON BEHALF OF THE APPELLANT- AJAY MEHRA IN COMMERCIAL APPEAL NO. 314 OF 2019

136. Mr. Shyam Mehta, learned Senior Counsel ventured to

make submissions on two counts.

First, that the Arbitral Tribunal fell in grave error by

denying oral hearing upon the culmination of proceedings despite

a request having been made.

Second, that the relief granted by the majority

Arbitrators with respect to Vish Wind transactions was beyond the

scope of pleadings and the reliefs sought therein.

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137. Apropos, the first proposition with respect to absence

of oral hearing it was submitted that the proviso to Section 24 (1)

of the Arbitration and Conciliation Act, 1996 mandates that the

arbitral tribunal shall hold oral hearings, at an appropriate stage of

the proceedings, on a request by a party. It was pointed out that

the only exception to this proviso is a specific agreement between

the parties not to hold oral hearings. It was thus submitted that in

the present case, there was no agreement by the Appellant's-herein

to exclude oral hearings.

138. Mr. Mehta drew attention of the Court to Procedural

Order No. 4, wherein the Arbitral Tribunal gave liberty to the

parties to apply for further hearings on oral closing submissions at

the discretion of the Tribunal. However, the said Procedural Order

recorded the disagreement on part of the Appellant's with the

aforesaid direction. It was submitted that the Appellant's had

unequivocally indicated their intention to request for further oral

hearings even after the filing of written submissions, as it was their

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understanding that it was open for them to do so.

139. With respect to the contents of the Procedural Order

No. 5 wherein the Arbitral Tribunal, inter alia, reserved 27-

28.04.2016 as dates for oral evidence and oral submissions, if any

were requested and if determined necessary by the Arbitral

Tribunal, it was submitted that the said Order was in the nature of

directions and could not be construed to contemplate any

agreement between the parties to not hold oral hearings. At best, it

was an agreement on the timetable to be followed.

140. Taking the argument forward, Mr. Mehta submitted

that Procedural Order No. 5, which was issued on 11.12.2015, is

required to be read with Procedural Order No. 4 issued on 26.11.

2015, wherein in Paragraph 8, a similar direction is comprised as

contained in Sr. No. 9 of Procedural Order No. 5. As highlighted

earlier, the note forming part of Procedural Order No. 4 clearly

records that the Appellants-herein desired an oral hearing to make

submissions although Enercon desired to leave this to the Arbitral

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Tribunal's discretion. Procedural Order No. 4 and Procedural

Order No. 5 were passed in close succession i.e. within a span of

merely fifteen days, and it could not be construed that the

Appellants had changed their stand during that period.

141. It was contended that at any rate, the Arbitral

Tribunal in its Order dated 26.05.2016 had not provided any

reason for refusing to hold an oral hearing. The Arbitral Tribunal

merely observes that the Act does not provide that the Arbitral

Tribunal shall hold as many hearings as a party may request and at

such times as a party may propose. The Arbitral Tribunal referred

to hearings held in December 2014 and November and December

2015. It was submitted that it was apparent that the Arbitral

Tribunal failed to appreciate the distinction between a hearing to

record evidence and a hearing to hear submissions / arguments of

the parties.

142. Mr. Mehta submitted that the Appellant's-herein

repeatedly pleaded and sought an oral hearing, however, they were

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denied the same. The requirement of oral hearing assumed all the

more significant considering the abstruse issues involved in the

case at hand, and the voluminous evidence led during the course

of proceedings. Furthermore, the Arbitral Tribunal proceeded to

adjudicate upon the issues which were not even pleaded and

therefore atleast a fair opportunity of closing oral submissions

ought to have been granted to also effectively raise an objection in

this regard.

143. It was highlighted that the Arbitral Tribunal vide e-

mails dated 14.02.2016 and 13.04.2016 had informed the parties

that it would decide whether or not to hold oral hearings only after

receiving their written submissions. By an email dated 18.02.2016,

the Advocates representing the Appellant's-herein informed the

Arbitrators that the new legal team would not be able to peruse the

voluminous record within the close deadline of 22.04.2016. It was

suggested that an oral hearing was necessary and if necessary, the

same could be held in Hong Kong. Curiously, on 20.04.2016 the

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Arbitral Tribunal hastily cancelled the dates tentatively reserved

for oral hearings (27-28.04.2016) without considering the written

submissions, even before the scheduled date for filing written

submissions. Mr. Mehta urged that even assuming without

conceding that the parties had agreed that oral arguments would

be permitted only at the discretion of the Arbitral Tribunal, such

an agreement was necessarily premised on the Arbitral Tribunal

deciding on this aspect after a fair consideration of all relevant

factors including change in advocates and the Tribunal's own

declarations that it would determine the request for oral hearings

only after considering the parties written submissions. It was thus

submitted that the decision to refuse oral hearings was not arrived

at upon a determination having been made upon perusal of

written submissions. It appeared that the Arbitral Tribunal

cancelled the oral hearings solely on account of its own scheduling

constraints and its difficulty in finding appropriate dates.

144. It was highlighted that the learned Single Judge placed

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reliance on the transcripts of Day 9 and Day 10 of the evidential

hearings to hold that the learned Counsel for the Appellant's-

herein was made aware that the Arbitral Tribunal was not

committed to oral hearings. In this context, it was submitted that

the awareness exhibited by the learned Counsel to the course

proposed to be adopted by the Tribunal would not be sufficient to

clothe the same as a waiver to oral hearings which assumed the

character of a statutory right. The statement made by the learned

Counsel in a polite verbal interchange with the Arbitrator's ought

not to be construed as an agreement of waiver to exclude oral

hearing as contemplated in the exception to proviso to Section

24(1) of the Act.

145. While summing up his submissions on this aspect, Mr.

Mehta clarified that the fact that the Appellant's-herein repeatedly

applied/requested for oral hearing during the course of arbitral

proceedings did not imply that they accepted the course proposed

under the Procedural Order No. 5 and pursued the same by

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abdicating their statutory right of oral hearing by relegating the

decision to the discretion of the Tribunal. It was submitted that

such requests were made to the Tribunal in terms of the mandate

of Section 24 of the Act itself which requires such a formal request

to be made.

146. The next plank of submissions sought to be urged by

Mr. Mehta pertained to insufficiency of pleading with respect to

Vish Wind transactions of sale of development rights to WWIL on

which the Tribunal has proceeded to make an award. Linked with

this issue is also the grievance that the novel relief of directing the

Mehra brothers to recompense WWIL; a co-respondent at the

Arbitration was not even sought. The majority Award, inter alia,

directs the Mehra brothers to pay a sum of Rs. 677,24,56,570/- to

WWIL, towards profits allegedly made by Vish Wind

Infrastructure LLP on the sale of allotment (development) rights

to WWIL.

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147. Attention of the Court was drawn by the learned

Senior Counsel to the Statement of Claim submitted by the

Claimants (Respondents-herein). It was submitted that perusal of

the Statement of Claim establishes that the damages sought against

the Mehra's were with regard to (i) the alleged wrongful

dissemination of the technical know-how (in relation to wind

turbine generators) of Enercon GmbH by WWIL and the

Mehra's; and (ii) the alleged breaches committed by the Mehra's

under the SHA, namely relating to no proper notice to Enercon

regarding board meetings, passing of board resolutions in respect

of reserved matters without Enercon's affirmative vote, etc. The

only mention of Vaayu Companies (including Vish Wind) in the

Statement of Claim is in relation to the alleged receipt or

exploitation by the Vaayu Companies, of Enercon's technical

know-how and the resultant transfer of value from WWIL to the

Vaayu Companies. There is no mention in the Statement of Claim

with regard to any purported wrongful profiteering by Vish Wind

by transfer of allotment / development rights to WWIL.

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148. It was further highlighted that in prayer I (c) of the

Statement of Claim, Enercon GmbH sought damages and/or on

account of profits from the Mehra's for their alleged breaches of

the SHA and /or duties arising as a matter of Indian Law. It was

submitted that this was a vague prayer and is not supported by any

particulars, much less material particulars, in the Statement of

Claim. Prayer I(d) seeks an award against the Mehra's for payment

of all sums and damages and/or an account of profits that may be

ordered to be paid by WWIL. Thus, the relief claimed is of

payment by Mehra's to Enercon GmbH and not of any payment

to be made by Mehras to WWIL as finally granted.

149. Elaborating on his submissions, Mr. Mehta submitted

that the alleged damages claimed by Enercon are not quantified

either in the Statement of Claim or in any witness statement.

Accordingly, apart from not pleading any case for damages on

account of profits allegedly made by Vish Wind or the

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quantification thereof, Enercon even failed to prove the same by

way of evidence. If loss was caused to WWIL, the effect of the

same on Enercon GmbH would at the highest be by way of a loss

in the value of the shareholding. There was neither any pleading

nor proof in this regard. The action initiated by Enercon GmbH

was not in the nature of a derivative action on behalf of WWIL

but was a proceeding in their personal capacity seeking damages

caused to them. In the absence of the requisite pleadings with

proper particularization, such proceedings could not have been

converted into a derivative proceeding leading to an award in

favour of WWIL against the Mehra's.

150. It was contended that though by Procedural Order

No.5, the Arbitral Tribunal granted an opportunity to the parties

to lead evidence responsive to the documents pertaining to Vish

Wind produced by the Mehras, however, since these facts were

neither pleaded nor proved, there was no fair opportunity to the

Mehra's to meet any allegations. There was neither any affidavit of

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evidence supporting any claim awarded nor was any such claim

proved. It was pointed out that Enercon did not even amend their

Statement of Claim to incorporate any such claim for damages nor

led any effective evidence in support thereof. In this regard

reliance was placed on the decision of the Supreme Court reported

as (2008) 17 SCC 491 Bachhraj Nahar v. Nilima Mandal & Anr

and AIR 2008 SC 2594 State Bank of India v. S.N Goyal.

151. It was submitted that the Appellants-herein filed two

affidavits pursuant to Procedural Order No.5 - one of Mr. D.

Vaidyanathan and the other of Mr. Kaushik Khona. It was sought

to be clarified by Mr. Mehta that these Affidavits were filed only to

allay a prejudicial impression which was perceived to be held by

the majority arbitrators as regards the conduct of Mehra's pursuant

to the production of documents by them and also the recusal of

their advocates. Neither of these Affidavits dealt with the merits of

the claim that allegedly arose out of the documents produced by

the Appellants. The Affidavit of Mr. Vaidyanathan was restricted

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to explaining the procedure for obtaining rights to establish wind

farms (namely allotment/ development rights). The Affidavit of

Mr. Khona was restricted to placing on record instances of the

benefits received by WWIL from the sale of development rights

acquired from Vish Wind. It was urged that the Appellants did not

venture to lead evidence as regards the merits of the allegations or

the alleged claim since these were not even a subject matter of the

pleadings.

152. It was highlighted that the Appellants in their Written

Submissions, at the outset itself, stoutly raised a contention that

the claim for alleged profits wrongfully earned by Vish Wind was

not pleaded in the Statement of Claim and hence the same could

not be considered by the Arbitral Tribunal. Without prejudice to

this contention, they sought to deal with this claim on merits, even

though no evidence was led by either party in respect thereof. The

same was dealt with only by way of abundant caution.

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153. It was submitted that the findings comprised in the

impugned majority award were based only on the written

submissions filed by the parties and not on the basis of any

pleadings and/or evidence. Further, even while dealing with the

submissions of the Appellant's-herein with respect to these

transactions, the Arbitral Tribunal glossed over material

contentions raised therein. Various contentions of the Mehras in

the Written Submissions while justifying that no improper profit

was made by Vish Wind were completely overlooked. It had been

pointed out in the Written Submissions that in fact, WWIL had

made profits by selling development rights which it acquired from

Vish Wind to third parties. It was also highlighted that Enercon

had not led any evidence that the acquisition by Vish Wind was at

an over valuation. The Appellant's had produced valuation

reports, which went unchallenged. Even the evidence of Mr.

Vaidyanathan and Mr. Kona, which explained that the transaction

between WWIL and Vish Wind were at arms length, were

completely ignored and not dealt with. The said witnesses had

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already pointed out that time and effort expended in developing

the rights and obtaining various permissions which added value.

154. Learned Senior Counsel further submitted that the

majority Award accepts the position that the required pleadings

and particulars were absent in the Statement of Claim but holds

that the same were present in the application filed by Enercon

under Section 17 of the Arbitration and Conciliation Act, 1996

which was sufficient. The majority Award grants this relief under

the head of "further and other reliefs". In this context, it was

contended that pleadings set up in interim proceedings can never

be the substitute for the main pleadings and evidence in support

thereof.

155. It was emphasized that the pleadings are a

concomitant of natural justice and any relief granted sans

pleadings is clearly in teeth with the principles of natural justice.

Even if the strict rules of CPC and Evidence do not apply to

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arbitrations, the same surely are applicable to the extent necessary

for compliance of the avowed principles of fairness and natural

justice.

156. The learned Senior Counsel drew support from the

reasons advanced in the minority opinion on the aspect of lack of

pleadings. It was submitted that a minority view ought not to be

lightly brushed aside. The Supreme Court, in various cases, has

taken note of a minority opinion and has, in fact, affirmed the

minority opinion in preference to the majority view. Reliance in

this regard was placed on the judgment reported as (2007) 8 SCC

466 Numaligarh Refinery Ltd. v. Daelim Industrial Company Ltd.

SUBMISSIONS OF DR. BIRENDRA SARAF, ADVOCATE APPEARING ON BEHALF OF THE APPELLANT-

YOGESH MEHRA IN COMMERCIAL APPEAL NO. 315 OF 2019

157. Dr. Saraf addressed submissions on broadly three

issues, namely-

(i) That the majority Award dealt with and decided

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disputes emanating from the SHA which were foreign to the IPLA and rather fell within the domain of the CLB proceedings. Such disputes were therefore not arbitrable under the IPLA, and it was the arbitral clause comprised in the IPLA alone that had been invoked by the Claimants. It was thus submitted that such disputes relatable to the SHA could not fall within the scope of reference to arbitration as set out by the Supreme Court in paragraph 153 of its judgment dated 14.02.2014, if the same was construed meaningfully in light of the factual setting under which the arbitral machinery was set into motion.

(ii) Likelihood of Prejudice/Bias in the mind of the Tribunal as inferred from the disparaging and vitriolic remarks against Mr. Yogesh Mehra contained in the majority Award.

(iii) Perverse approach adopted by the majority Arbitrators whilst levying costs upon the Mehra brothers rather than WWIL.

158. Commencing his submissions on the issue of

arbitrability of the disputes relatable to the SHA in the present

arbitration, it was submitted that the disputes which were referred

to arbitration were in relation to the IPLA. The disputes in relation

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to SHA were never intended to and were in fact not referred to

arbitration.

159. In the alternative and without prejudice, it was

contended that even if it were held that the disputes in relation to

SHA were also referred to arbitration, the disputes which formed

the subject matter of proceedings before the CLB were certainly

not within the scope of reference to arbitration.

160. Dr. Saraf drew our attention to the SHA executed

between the parties on 12.01.1994. Clause 16 thereof incorporated

an arbitration agreement which reads as under:

"16.1 If any dispute, difference, claim or question shall arise between the parties hereto concerning the contents of this Agreement, or in any way relating to the contents of this agreement, or arising from the contents of this Agreement or the operation thereof, or the rights, duties, or liabilities of either party thereof in connection with this Agreement, the parties

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hereto shall do their best to settle the said disputes or differences amicably between themselves.

16.2 All disputes, differences, claims, questions, and controversies arising in connection with this Agreement and the operation of this Agreement which the parties are unable to settle between themselves are to be brought in writing to the attention of the Indo-German Chamber of Commerce in Bombay. The Indo-German Chamber of Commerce will finally settle the said disputes by arbitration. Both parties expressly agree to be bound by the results of said arbitration." (emphasis supplied).

161. This was in clear contrast to the arbitration clause

comprised under the IPLA which reads as under:

"17. GOVERNING LAW

17.1 This Agreement and any disputes of claims arising out of or in connection with its subject matter are governed by and construed in accordance with the

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Law of India.

18. DISPUTE AND ABRITRATION

18.1 All disputes, controversies or differences which may arise between the Parties in respect of this Agreement including without limitation to the validity, interpretation, construction, performance and enforcement or alleged breach of this Agreement, the Parties shall, in the first instance, attempt to resolve such dispute, controversy or difference through mutual consultation. If the dispute, cotroversy or difference is not resolved through mutual consultation within 30 days after commencement of discussions or such longer period as the Parties may agree in writing, any Party may dispute(s), controversy(ies) or difference(s) for resolution to an arbitral tribunal to consist of three (3) arbitrators, of whom one will be appointed by each of the Licensor and the Licensee and the arbitrator appointed by Licensor shall also act as the presiding arbitrator.

18.2 The arbitrators shall have powers to award and/or enforce specific performance. The award of the arbitrators shall be final and binding on the Parties.

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IN order to preserve its rights and remedies, either Party may seek preliminary injunctive relief or other temporary relief from any court of competent jurisdiction or from the arbitration tribunal pending the final decision or award of the arbitrator(s). Any such application to a court of competent jurisdiction for the purposes of seeking injunctive relief, shall not be deemed incompatible with this agreement to arbitrate or as a waiver of this Agreement to arbitrate.

18.3 All proceedings in such arbitration shall be conducted in English. The venue of the arbitration proceedings shall be London. The arbitrators may (but shall not be obliged to) award costs and reasonable expenses (including reasonable fees of counsel) to the Party (ies) that substantially prevail on merit. The provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply. ..."

162. It was submitted that disputes arose between the

parties as to whether the IPLA was a binding and concluded

agreement or was it only a draft which was finalized. There were

disputes as regards the rate of royalty and also the basis of

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computation of royalty. It was the case of Appellants that the IPLA

was not a concluded contract and that the draft was at variance

with the Agreed Principles and yet to be finalised. It was signed

only for the purpose of identification.

163. Dr. Saraf painstakingly traced the sequence of events

that transpired thereafter. It was pointed out that the first

proceeding between the parties was a petition being Company

Petition No. 121 of 2007 filed by Enercon GmbH before the

Company Law Board, Bombay under Section 397 and 398 of the

Companies Act, 1956. Various allegations were made in the said

petition as regards the functioning of the Joint Venture Company,

Enercon (India) Limited / Wind World India Limited

(WWIL),about alleged wrongdoings of the Mehra Group, alleged

breach of the SHA and also alleged siphoning off funds by the

Mehras to various other companies, which companies were

impleaded as party respondents to the petition. Vish Wind

Infrastructure Limited (Vish Wind) was arrayed as Respondent

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No.33. It was contended that a bare perusal of the petition would

clearly evince that all issues regarding their functioning of WWIL

and the alleged siphoning away of funds were raised in the said

petition and reliefs were sought in that regard. Some of the

relevant averments comprised in the petition are extracted as

under:

"21. ... Despite the Technical Know-How Agreement between the Petitioner and the Company having expired and despite demanding new and newer technology (which were invariably made available by the Petitioner) Respondent No.2 resisted efforts to formalize a new technology arrangement. When at last the Intellectual Property Licence Agreement was entered into between the Petitioner and the Company (through Respondent No.2) pursuant to the Agreed Principles, copies of which are annexed hereto and marked Annexure P-7, Respondent No.2 would neither reveal the "net sales" figures of the Company, nor carry out the required self assessment of royalties. Most

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importantly the financials of the Company were hidden by Respondent No.2.

...In other words, the Company is being run by manipulation of its accounts to portray a rosy picture so as to dip into public funds by indulging in excessive and unjustified borrowings from banks, including PSU Banks, which would never agree to become lenders to the Company if the true and fair accounts were known.

...Instead of concentrating the core area of specialization of the Enercon Group, that is manufacture of wind turbines, Respondent No.2 has diverted the focus of the Company to indiscriminately acquiring land and capacity for power generation, vesting these in many separate companies. Thus Respondent Nos. 2 and 3 authored a slew of companies (the subsidiary and associate companies - Respondents 9 to 35 herein), many of which became Independent Power Producers (IPPs) under the Electricity laws of the country. All the associate companies are owned by Mehra Group.

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...Being the Managing Director of the Company and in actual day-to-day control of its affairs; Respondent No.2 is in a position to cause the books of account of the Company to reflect only what suits him. Restricting access to accounts and doctoring accounts for unfairly depriving the other shareholder from exercising its rights to purchase offered shares, a right provided by Article 58 of the Articles, makes it clear case of oppression and mismanagement and it is imperative, in the most respectful submission of the Petitioner that an independent audit be immediately conducted. ...

24. ... So long as the Petitioner shall own not less than 51% of the total issued equity shares of the Company, the Petitioner shall have the right to appoint two directors, one of whom to be a non retiring director and so long as the Mehra Group shall own not less than 49% of the total issued equity shares of the Company, the Mehra Group shall have the right to appoint two directors, one of whom to be a non retiring director. This was given effect to (including the

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change in shareholding to 56% of Petitioner and 44% Mehra Group) in Article 128 of the Articles of Association of the Company and the said Article, as it reads today, states that so long as the Petitioner is holding 56% of the total Equity share capital of the Company and the Mehra Group is holding 44% of the total Equity share capital of the Company, ....

74. Another aspect of the way the business of the Company was being conducted by Respondent No.2 was his focus on acquiring land and capacity for power generation, vesting these in a separate company. The deal with the future customer would include complete management of the power utility by Respondent No.2. Thus Respondent No.2 authored a slew of companies (the subsidiary and associate companies - Respondents 9 to 35 herein), many of which became Independent Power Producers (IPPs) under the Electricity laws of the country. Furthermore, Respondent Nos. 2 and 3 have set up some of the associate companies themselves wherein utilizing the monies of the Company

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assets such as land have been acquired in the name of such associate companies. This also constitutes a wrongful diversion of funds and amounts to grave mismanagement of the affairs of the Company.

...

76. When the Petitioner, having left the day- to-day management to the Mehra Group, started to have serious reasons to doubt the rosy picture portrayed by the Mehras, the Petitioner commissioned financial audit and legal due diligence so as to determine the actual state of affairs of the Company and its subsidiary and associate companies. The facts of mismanagement of the affairs of the company that emerged included: ...

81. Restricting access to accounts and doctoring accounts for unfairly depriving the other shareholder from exercising its rights to purchase offered shares, a right provided by Article 58 of the Articles, makes it imperative that an independent audit be immediately conducted.

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PRAYERS

88. It is therefore respectfully prayed as under:

Main Prayers

a) pass appropriate orders and directions removing the Respondent Nos. 2 and 3 from the positions of Managing Director and Whole Time Director respectively of Enercon (India) Limited.

b) Pass appropriate orders and directions removing the Respondent Nos. 2 and 3 from the positions of Managing Director and/or Whole Time Director and respectively of the said subsidiary and associate companies of Enercon (India) Limited.

...

e) Direct Respondent Nos. 2 to 8 to transfer their entire shareholding (44% in Enercon (India) Limited to the Petitioner at a fair value to be independently arrived at on the basis of the balance sheet of the Company giving the true view of the Company.

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f) Direct Respondent Nos. 2 to 8 to transfer their entire shareholding in the subsidiary and associate companies of Enercon (India) Limited including but not limited to Respondent Nos. 9 to 35 herein to the Petitioner at a fair value to be independently arrived on the basis of the balance sheet of each of the said companies giving the true view of each company.

g) Direct an investigation to ascertain the conduct of the Respondent Nos. 2 to 8 in dealing with assets, properties, monies and management of the Respondent No.1 Company.

h) Direct Respondent No.1 to take all necesary and consequential action to the report of the investigation, including but not limited to tracing out the monies, property and assets of the Company in the hands of the Respondent Nos. 2 to 8 or any of them and direct restoration of such monies, properties and assets to Respondent No.1.

Interim prayers

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...

iv. Restrain Respondent Nos. 9 to 35 being the subsidiary and associate companies of Enercon India Limited, their employees, officers, servants and agents, from dealing with, transferring or creating any third party interests in their respective assets except in the ordinary course of business.

viii. Injunct Mehra Group (Respondent Nos. 2 to

8) or any of them from transferring, selling, mortgaging, creating third party rights of all or any part of their shareholding in the Company to any other person, except the Petitioner;

ix. Direct the Respondent Nos. 2 to 8 to furnish an affidavit before this Hon'ble Board the details of contracts between the Mehra Group or any of the Respondent Nos. 2 to 8 and the Company.

x. Restrain Respondent Nos. 1 to 35 from divulging or diverting to third parties the Technical know-how and proprietary informations of the Petitioner;"

164. It was highlighted that in the said petition, the

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Appellant's-herein filed Company Application No. 484 of 2007

under Section 8 of the Arbitration and Conciliation Act, 1996

seeking reference to arbitration. The same was opposed by

Enercon GmbH (Respondent-herein) and vide Order dated

29.10.2007 the said application was dismissed.

165. The relevant portions of the said Order as referred to

by Dr. Saraf during the course of his submissions are reproduced as

under:

"5. Shri Sarkar, Senior Advocate for the petitioner submitted: In terms of Section 8, to refer the parties to arbitration, this Board should be satisfied that the subject matter of the petition is the subject matter of the arbitration agreement and that there is a commonality of parties. In the present case, the SHA is between the petitioner and the Mehra group and the company is not a party. Similarly, TKA is an agreement between the petitioner and the company and Mehra group is not a party. This

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TKA has already expired by efflux of time and is no longer effective. That is why IPLA was entered into. As a matter of fact, when the petitioner stopped supply of equipments etc., the Mehra group filed a suit seeking for a direction to the petitioner to supply equipment in terms of SHA/TKA. Instead of submitting the same to arbitration, thus, very clearly indicating that Mehra group has given a go bye to arbitration. This would indicate that they do not rely on the arbitration clauses. Further, respondents 9 to 35, against which reliefs have been sought, are not parties to either of the two agreements. Further in the petition, the petitioner alleged mismanagement and there is no provision regarding the same in either of the two agreements. Even in respect of removal of

nd rd the 2 and 3 respondents and also relating to transfer of shares, the petitioner has relied on the Articles and not on the terms of the SHA. Therefore, in view of the fact that there is no commonality of parties, and that many of the

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allegations particularly in relation to financial mismanagement are not matters arising out of the arbitration agreements and that bifurcation between the Board and the Arbitration Tribunal is not permissible, the application should be dismissed.

...

8. It is evident from the provisions of Section 8 that if the subject matter brought before this Board is the subject matter of arbitration agreement, the Board is bound to refer the parties to arbitration. Therefore commonality of the subject matter is a prerequisite to invoke/apply Section 8. Likewise, a reading of Section 7(1) read with Section 2(1)(h) would indicate that the parties before the judicial proceedings should be parties to the arbitration agreement to refer the disputes between them arising out of the defined relationship. This would indicate that there should be a commonality of parties also. Section 7(3) mandates that an arbitration agreement has to be in writing or in terms of Section 7(4), it should satisfy one of the requirements as specified in sub-Sections (a) to (c).

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Thus, before referring parties to arbitration, this Board has to satisfy itself, that there is commonality of parties, subject matter and the requirements of Section 7(3) or 7(4) are met with.

9. Having dealt with the legal position, I shall deal with the factual aspects of this case. There are two agreements viz. SHA and TKA in which the parties thereto have agreed to refer the disputes to arbitration. The admitted fact is that the company is not a party to SHA and Mehra group is not a party to TKA. As a matter of fact, ShriSarkar pointed out that the currency of TKA has expired by a flux of time and that is why IPLA relating to supply of technical know how was entered into in September 2006, the existence of which has also been challenged by Mehra group. On the basis of the reliefs sought, Mehra group is contending that the reliefs sought arise out of the SHA. It is on record that the terms relating to shareholding and directorship as in the SHA have been incorporated in the Articles in toto. In such a situation, in Goyal M Gases case relying on the decision of this Board in EIH Limited vs. Mashobra Resort Ltd. (119 CC 993), this Board has held that

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once terms of SHA containing arbitration clause have been incorporated in the Articles of the company, then the terms of the Articles will prevail over the SHA. It also further held that once the terms of the shareholders' agreement have been incorporated in the Article with the omission of arbitration clause, that clause has no validity. In the present case, the petitioner has relied on the Article 58(a) of the Articles of Association of the company in regard to the allegation of depriving the petitioner of its pre- emption rights and likewise the petitioner has sought for amendment to the Articles regarding directorship. Both these matters can be decided independent of the terms of SHA. ... Even otherwise, in view of the judgment of the Apex Court in Sukanya Holdings, there is no possibility of bifurcation of the subject matter between the CLB and the Arbitrator. Whether, there is a breach of right of pre-emption, whether the Mehra group is guilty of financial mismanagement meriting their removal as MD and WTD and whether Articles relating to directorship is to be amended etc. would all depend on the merits of the case and need not be gone into while dealing with the instant

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petition under Section 8 of the Act.

10. Considering the fact that the company is not a party to SHA and that some of the allegations cannot be traced to the terms of the SHA, even assuming that pre-emption rights and directorship are covered under the terms of SHA, the application is not maintainable and is accordingly dismissed."

166. Emphasis was laid on the circumstance that the

Appellants request for referring the disputes which were subject

matter of the CLB proceedings was opposed by Enercon GmbH

(Respondent-herein) and such request was rejected by the CLB,

making it clear that Enercon GmbH never intended to be refer

such disputes to arbitration. In this context, it was submitted that

the Respondents-herein cannot be permitted to belatedly set up an

inconsistent plea of 'intent to arbitrate' even for the disputes

relatable to the SHA, as sought to have been done in the case at

hand.

167. Taking the argument forward, Dr. Saraf highlighted

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that on 13.03.2008, a notice invoking arbitration was issued by

Enercon GmbH invoking Clause No. 18 of the IPLA and seeking

to refer the disputes in respect of IPLA to arbitration. The relevant

portion of the notice are as under:

"There have arisen in respect of the IPLA a series of substantive disputes, controversies and differences between Enercon GmbH, WPG on the one hand and EIL on the other hand which EIL is obliged to refer to arbitration in London. Further, to the extent that you yourselves seek to advance such claims in the name of or derivative of EIL, you are both likewise bound to refer such claims to arbitration in London.

The parties' substantive disputes in respect of the IPLA cover at least the following:

1) The extent to which the supply of Special Components, any other parts, components, etc. to EIL since September 2006 and the further supply since November 2007 is governed by and protected by the terms of IPLA and the amount

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payable towards the sale of Special and other components, parts and materials by Enercon to EIL and any questions relating to the alleged claim of EIL for damages for non-supply of Special Components.

2) The validity of the IPLA ...

3) Whether the parties have concluded a binding agreement to refer disputes in respect of the IPLA to arbitration ...

4) The amount of royalty payable by EIL to Enercon ... pursuant to the terms of clause 5 of the IPLA.

5) The access to and provision of accounts pursuant to ... IPLA ...

6) EIL's and your liability in damages.

In respect of these disputes, Enercon GmbH and WPG hereby give notice of their Joint nomination of Mr VV Veeder QC as the Licensors' arbitrator pursuant to clause 18.1 of the IPLA. ...

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...As you know we have also looked to the need for the regularisation of the affairs of EIL through the appointment of the joint managing directors to EIL as mandated by the order of the Company Law Board's decision dated 29 October 2007. Notwithstanding, however the appointment of a joint managing director on 28 November 2007, effectively, EIL has continued to be run as it was before the joint managing director's appointment. Further, in light of the discoveries of systematic financial and managerial abuse of EIL's affairs that we discovered in the short review that we had in January 2008, we have had no option but to apply to the CLB for further orders protecting Enercon's position in EIL as a shareholder. In so doing Enercon GmbH has not submitted any of the above substantive disputes arising out of the IPLA to the CLB. "

168. From the notice of invocation, it was apparent that

what was invoked was the arbitration clause in the IPLA

incorporated in Clause 18 therein. No disputes in relation to the

SHA were referred to arbitration. In fact, it was expressly made

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clear that disputes which were pending before the CLB would not

be a subject matter of the arbitration and would be prosecuted

independently. It is on the basis of the arbitration clause in the

IPLA that it was stated that the venue should be London and the

reference would be to three arbitrators. Under the SHA, the

arbitration was contemplated under the aegis of the Indo German

Chambers of Commerce.

169. Consequent thereto, on 27.03.2008 Enercon GmbH

filed an Arbitration Claim Form being Claim No.2008 F 040296

in the Queen's Bench of the Commercial Court in England based

on Clause 18 of the IPLA seeking a declaration that there was a

valid and binding arbitration agreement, and also seeking a

restraint on the proceedings initiated by the Mehra's in the

Bombay High Court. Under the head of 'Relief Claimed' at page 2

of the said proceeding, it was apparent that the entire reference was

to the IPLA and Clause 18 thereof being the arbitration agreement

on the basis of which the proceedings were initiated.

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170. Proceeding further in his endeavour to highlight that

the intention expressed by Enercon GmbH to arbitrate was

confined to disputes under the IPLA in view of which only the

arbitral clause comprised therein was invoked, Dr. Saraf referred to

the contents of the application filed by Enercon GmbH under

Section 45 of the Arbitration and Conciliation Act, 1996 in the

Daman Suit. As highlighted by us in our factual narrative, on

08.04.2008 the Mehra's had instituted Regular Civil Suit No. 9 of

2008 before the Court of Civil Judge, Senior Division, Daman.

The suit sought a declaration that the IPLA was not a concluded

contract between the parties and that there was no valid arbitration

agreement for submission of disputes between the parties. The

plaintiffs in the suit asserted that the invocation of English

Arbitration Act and the initiation of proceedings in England were

without jurisdiction and sought relief restraining the proceedings

initiated by Enercon GmbH in England in Claim No.2008 F

040296.

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171. Significantly, it was pointed out that the application

filed by Enercon GmbH under Section 45 of the Arbitration and

Conciliation Act, 1996 on 28th July 2008 also sought to invoke

arbitration agreement as enmeshed in Clause 18 of the IPLA.

Much emphasis was laid on the said circumstances as it was

contended that it was this application which ultimately formed the

subject matter of consideration before the Supreme Court; where

reference to arbitration was authoritatively made by judgment

dated 14.02.2014.

172. Dr. Saraf elaborately took us through the judgment of

the Supreme Court to buttress his submission that the operative

text contained in paragraph 153 directing all disputes to be

referred for arbitration including those emanating from the SHA

had to be read in the context of what had arisen for consideration

of the Court. Emphasis was laid on the issues formulated by the

Supreme Court that it proceeded to ultimately answer. We

reproduce the relevant portion hereunder.

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"69. ...The issues that arise for consideration of this Court are :

(i) Is the IPLA a valid and concluded contract?

(ii) Is it for the Court to decide issue No. (i) or should it be left to be considered by the Arbitral Tribunal?

(iii) Linked to (i) and (ii) is the issue whether the Appellants can refuse to join arbitration on the plea that there is no concluded IPLA?

(iv) Assuming that the IPLA is a concluded contract; is the Arbitration Clause 18.1 vague and unworkable, as observed by both the Arbitrators i.e. Mr. V.V. Veeder QC and Mr Justice B.P. Jeevan Reddy?

(v) In case the arbitration clause is held to be workable, is the seat of arbitration in London or in India?

(vi) In the event it is held that the seat is in India, would the English Courts have the concurrent jurisdiction for taking such measures

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as required in support of the arbitration as the venue for the arbitration proceedings is London?

(vii) Linked to (v) & (vi) is the issue whether the Appellants are entitled for an anti-suit injunction?

These, of course, are only broad based issues; many other supplementary questions will have to be examined in order to give a definitive determination."

173. It was urged that from the issues framed by the

Supreme Court, it was pellucid that the Court was only

considering the IPLA, whether the IPLA was a concluded

contract, the validity of the arbitration clause in Clause 18.1 of

IPLA and as to whether the same was workable. Further, the

Supreme Court was also considering whether the seat of the

arbitration was in India or in England solely with reference to

Clause 18 of IPLA and the effect of London being specified as

venue therein. The entire gamut of consideration of the Supreme

Court revolved around the IPLA and the arbitration clause

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incorporated therein.

174. Dr. Saraf submitted that the decision of the Supreme

Court bears not even a reference to the arbitration clause

comprised under the SHA. The SHA is referred to only as a

historical fact.

175. It was pointed out that the Supreme Court ultimately

allowed the application under Section 45 filed before the Daman

District Court and while various proceedings in Daman Court and

the English Courts were stayed, the Supreme Court in its

considered wisdom consciously chose not to stay the proceedings

before the CLB.

176. On the strength of this circumstance, it was therefore

submitted that the only discernible reason for choosing to exercise

such a course was that the disputes under the SHA were subject

matter of adjudication before the CLB and were never

contemplated to be referred to arbitration. It was reiterated that

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the directions of the Supreme Court cannot be read out of context

to expand a scope of reference much beyond the invocation and

also the proceedings under Section 45. In this regard reliance was

placed upon the decision of the Supreme Court reported as (2006)

7 SCC 735 Commissioner of Central Excise, Delhi v. Allied Air-

Conditioning Corporation (Regd).

177. It was highlighted that the issue of want of jurisdiction

of the Arbitral Tribunal to adjudicate upon disputes arising under

the SHA was raised before the Tribunal. The Arbitral Tribunal

dealt with the issue of jurisdiction in paragraphs 227 and 230 of

the Award. Paragraphs 227 and 230 read as under:

"A. Jurisdiction and Discretion

227. The first question is whether the Tribunal has jurisdiction to deal with these matters and if so, whether as a matter of procedural discretion it should exercise that jurisdiction. The SHA has a clause (16.2) providing for arbitration of "all disputes ... arising in connection with this

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agreement and the operation of this agreement"

by the Indo-German Chamber of Commerce in Bombay.

...

230. In the Tribunal's view, the last point is fallacious. The refusal to stay the CLB proceedings does not entail staying these arbitration proceedings. Both may continue. The Tribunal considers that the judgment of the Supreme Court makes clear this Tribunal's mandate to resolve the disputes under the SHA. It is true that the Supreme Court did not stay the CLB proceedings (correctly, if one may say so with respect), for the same reason as the CLB itself refused to stay such proceedings in 2007. The issues may overlap; but they are not the same and the statutory remedies sought are not necessarily available to the Tribunal. The Supreme Court did not stay the proceedings before the CLB but neither did it stay the arbitration. The resolution of issues of fact or law by either the CLB or the Tribunal may give rise

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to issue estoppels or other forms of res judicata in the proceedings before the other, but the question of whether the one should wait for a decision by the other is a matter of procedural discretion and case management for the CLB and the Tribunal. The Tribunal notes that it took from 2007 until 2012 for the CLB to deliver a final judgment on the Company Petitions and a further three years for that judgment to be set aside on appeal by the Bombay High Court. The Tribunal therefore considers that it would be procedurally unjust to the parties not to proceed with the mandate which it has been given by the Supreme Court."

(emphasis supplied)

178. It was thus submitted that the Arbitral Tribunal

clothed itself with the jurisdiction on the specious basis that there

would be delays in disposal of proceedings in the CLB. It was

urged that such considerations could supply no legitimate basis for

conferring jurisdiction on an Arbitral Tribunal which it inherently

lacked.

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179. While summing his submissions on this issue, which

needless to state goes to the root of the matter, Dr. Saraf submitted

that in the aforesaid circumstances, it was apparent that neither

were the disputes referred to arbitration nor were the same

adequately pleaded before the Arbitral Tribunal and as such, the

Award against the Appellants on the aspect of breach of SHA is

without jurisdiction.

180. In the context of scope of reference, reliance was

placed on a passage from Russel On Arbitration, 24 th Edtn, which

reads as under:

"5-028 Scope of the reference. Whether a particular is within the reference will be determined as a matter of construction of the notice of arbitration, giving the words used their natural meaning in the context in which they were used and applying an objective test. The scope of matters that can be referred will normally be constrained by the scope of the agreement to arbitrate, although the parties may

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agree that the reference should be broader and can agree an adhoc submission of issues enlarging the scope of the Tribunal's jurisdiction beyond their original agreement to arbitrate. The scope of reference may include both claims by a claimant and counterclaims brought by a respondent, which again must be within the agreement to arbitrate. The factual background to the giving of the notice and any previous communications between the parties concerning the issues between them will also be relevant in construing the scope of the reference to arbitration. If, by the time the notice of arbitration is given, the parties' previous communications indicate that it would be natural to expect the reference to arbitration to include all the outstanding disputes, that fact may be taken into consideration. The reference may also include claims arising subsequent to the commencement of arbitration if the notice of arbitration demonstrates the parties' intention to do so. Provided they are within the scope of reference, the Tribunal has a discretion whether

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to permit new claims to be introduced in the course of the arbitration, but if they are outside the scope of reference new claims cannot be entertained without agreement of the parties."

181. Reliance was also placed on the judgment of the

Supreme Court reported as (2011) 5 SCC 532 Booz Allen and

Hamilton Inc. v. SBI Home Finance Limited & Ors. and in

particular paragraph 34 (iii) which we reproduce as under:

"34. The term "arbitrability" has different meanings in different contexts. The three facts of arbitrability, relating to the jurisdiction of the Arbitral Tribunal, are as under:

...

(iii) Whether the parties have referred disputes to arbitration?

That is, whether the disputes fall under the scope of the submission to the Arbitral

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Tribunal, or whether they do not arise out of the statement of claim and counterclaim filed before the Arbitral Tribunal. A dispute, even if it is capable of being decided by arbitration and falling within the scope of arbitration agreement, will not be "arbitrable" if it is not enumerated in the joint list of disputes referred to arbitration, or in the absence of such joint list of disputes, does not form part of the disputes raised in the pleadings before the Arbitral Tribunal."

182. It was therefore contended that in these circumstances,

the award to the extent that it impinged upon the disputes under

the SHA was liable to be set aside by the learned Single Judge of

this Court under Sub-Section 2 (b)(iv) of Section 34, which reads

as under:

"34. Application for setting aside arbitral award. ...

(2) An arbitral award may be set aside by the Court only if--(a) the party making the application furnishes proof that--

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...

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or..."

183. Grievance was also raised that the Arbitral Tribunal

fell in error by passing the Award directing the Mehra brothers to

make payment of monies to WWIL under the residual head "relief

claimed as further and other reliefs" in the Statement of Claim. It

was urged that it is a settled law that the residual head of "any relief

of further and other relief" has to be read in the context of entirety

of the pleading and the main relief claimed in the proceedings and

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cannot be read de hors the same. It was submitted that at any rate

it must derive colour from the main relief claimed and must not be

materially different so as to radically alter the nature of

proceedings. In this regard reliance was placed on the decision of

the Privy Council reported as 1927 SCCOnline PC 98 (527)

Abdur Rahim & Ors. v. Mahomed Barkat Ali & Ors.

184. Incidentally entrenching upon the issue of absence of

requisite pleadings that was separately dealt by Mr. Mehta, learned

Senior Counsel, Dr. Saraf placed reliance upon Section 23 of the

Arbitration and Conciliation Act, 1996 which mandates that a

statement of claim needs to be filed by a claimant pleading and

stating "the fact supporting the claim, the points at issue and the

relief or remedy sought" and the respondent is entitled to state his

defence in respect of these particulars. Under Section 23 (3) a right

is conferred on any party to amend or supplement his claim. It

was, therefore, urged that in the absence of any relief claimed or

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any basis of such relief being stated in the Statement of Claim, no

award could have been passed by the Arbitrator as done in the

instant case. Without prejudice to the contention that the entire

controversy was beyond the scope of arbitration, it was submitted

that Enercon GmbH did not even amend its statement of claim to

incorporate such pleadings /relief as mandatorily required.

185. The next contention canvassed by Dr. Saraf was that

the entire majority Award was vitiated by the prejudice/bias

formed by the learned Arbitrators against the Mehras. The said

argument was essentially anchored on the observations made in

the majority Award against the Mehras, in particular, Mr. Yogesh

Mehra whilst appreciating his account tendered as a witness. It was

pointed that extremely sharp and strong observations were made

against Mr. Yogesh Mehra, which was a tell-tale sign of the fact

that the Arbitrators formed a prejudicial opinion about Mr. Yogesh

Mehra's character. The two Arbitrators holding a majority opinion

completely disregarded the evidence of Mr. Yogesh Mehra because

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they formed an adverse opinion that Mr. Yogesh Mehra was

"devious, manipulative and dishonest." Having formed this

opinion, the two Arbitrators holding the majority view completely

disregarded the only direct evidence of the meeting in the form of

testimony of Mr. Yogesh Mehra and instead placed heavy reliance

on the testimony of two witnesses on behalf of Enercon GmbH

whose evidence as regards what happened at the said meeting was

nothing beyond hearsay evidence and hence not admissible. It is

in this context that Dr. Saraf ventured to draw our attention to the

relevant portions of the majority Award which we reproduce

hereunder.

"VII. THE WITNESSES

90. The Tribunal considers that, with the exception of Mr. YogeshMehra, all the witnesses were honest and trying to assist the Tribunal. Their memories may sometimes have been inaccurate, but they were doing their best with events taking place many years ago. Mr. Mehra, as will be apparent from many places in this

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Award, was not a reliable witness. He is a highly emotional man who felt very strongly that his German counterparties had treated him unfairly. His deep sense of grievance may have enabled him to believe that what he would have liked to have happened had actually happened. But it also made him feel that he was entitled to behave in a way which, viewed objectively, was devious, manipulative and dishonest. In his testimony to explain away this behaviour, he gave evidence to the Tribunal that sometimes even he must have known to be untrue, as indeed it manifestly was.

(emphasis supplied)

...

119. On the morning of 29 September 2006 Mr. Mehra arrived in Bremen. DrWobben met him at the airport and took him to the Hilton Hotel. They had a discussion together in the morning and were joined at lunch by Mr. Kettwig. We do not of course have Dr. Wobben's evidence about what was discussed in the morning, but Mr. Kettwig said that when he arrived, it appeared that the discussions had not gone smoothly.

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He said he could "feel some tension, or an atmosphere that was not quite normal ... I tried to calm them down because there were a lot of emotions". The main issue appeared to be that "Dr. Wobben had pointed out that the IPLA should be accepted in its current form". In his witness statement, Mr. Kettwig added a detail:

"After having made this clear, I recall that Dr.Wobben put his things into his bag and shut the clasp. From my experience of Dr.Wobben, this was a typical reaction of his where he was frustrated or annoyed...

...

121 Mr. Mehra's account of the discussions with DrWobben at the Hilton Hotel is very different. He testified:

"We discussed, amongst other matters, my objections to the draft IPLA (as communicated in August 2006). After about 3 hours of discussion, it became clear that there were outstanding issues between the parties. It was felt that the draft IPLA

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required amendments ... Dr. Wobben assured me that he would decided on a fair basis for computing the royalty ... At that point Dr. Wobben called Mr. Kettwig, Managing Director of Enercon, to join us at the Hilton. Mr. Kettwig arrived at about 4 pm. The three of us then discussed the basis on which we would move forward and Dr. Wobben agreed to some of the key objections raised by me in August 2006."

122. The Tribunal does not accept Mr. Mehra's evidence and prefers the evidence of Mr. Kettwig. The IPLA had been discussed at length and in detail. DrWobben had dealt firmly with Mr. Mehra's comments in August 2006 and was expecting that Mr. Mehra had come to Aurich to sign the IPLA. That Dr. Wobben should now have made a U-turn on MrMehra's points seems to the Tribunal highly improbable and is contrary to all other credible evidence. Nor is it probable that Dr.Wobben would have been willing to re-open discussion about the 5% royalty agreed in the HoA. There is no credible evidence for this either.

(emphasis supplied)

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...

124. Mr.Mehra, on the other hand, testified that, it having been decided between himself and Dr.Wobben that "the draft IPLA required amendments", the Agreed Principles were intended to reflect the changes which would have to be made in that document as well as the other agreements yet to be finalised. He denied that he had brought a draft of the Agreed Principles: "maybe I had my points with me, but this document was very clearly typed on the computer in the Bremen Hotel."

125. Mr.Kettwig is neither a lawyer nor fluent in English (unlike Mr.Mehra). The language of the document suggests that its substance is derived from Mr.Mehra and his legal advisers in India. ...

...

146. The Tribunal regrets that it is not unanimous on this point. The contrary views of Justice Raveendran will be found in Appendix A. The majority members do not think it would be helpful for them to undertake a point by point examination

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of his reasons. They would only observe that he appears to attach little importance to what the persons involved said and did not say at the time of the meetings in Aurich at the end of September 2006. It is essentially a question of credibility. The majority regard Mr. Kettwig as an honest and credible witness and accept, as explained in paragraphs 127-128 and 131 above, that Dr. Wobben's instructions to him at Bremen, given in the presence of Mr. Mehra, were that he and Mr. Mehra were to settle the Agreed Principles but that the IPLA was to be executed unchanged and that his discussions of the Agreed Principles with Mr. Mehra it was accepted that they would not affect the IPLA. The majority do not regard Mr. Mehra as an honest or reliable witness and in any case, he has not suggested that he said anything to contradict what he must have known that Dr. Wobben and Mr. Kettwig understood the position to be."

( emphasis supplied)

186. On the strength of the aforesaid observations, it was

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submitted that it was apparent that having formed a very strong

prejudicial opinion about Mr. Mehra, the majority arbitrators

disregarded every evidence of his and accepted every testimony of

Mr. Kettwig and Ms. Fritsch Nehring as the gospel truth. As

against the aforesaid, the learned Arbitrator holding the minority

opinion, on an impartial and unbiased assessment of evidence held

that Mr. Yogesh Mehra was the only reliable witness and that Mr.

Kettwig and Ms. Fritsch Nehring were unreliable witnesses who

were trying to either skirt the issues or to give erroneous evidence.

Reference was made by the learned Counsel to the observations of

the learned Arbitrator in this regard.

187. Dr. Saraf also sought to give another dimension to his

plea of bias. It was submitted that the ' general territorial bias' of

the majority arbitrators is also apparent from their observations in

paragraph 230 of the award wherein they clothed themselves with

jurisdiction as regards disputes which were the subject matter of

CLB proceedings on the basis that such disputes in India remain

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pending for years. The attention of the Court was drawn to the

relevant observations of the majority Arbitrators on this aspect,

which we quote as under.

"...The Tribunal notes that it took from 2007 until 2012 for the CLB to deliver a final judgment on the Company Petitions and a further three years for that judgment to be set aside on appeal by the Bombay High Court. The Tribunal therefore considers that it would be procedurally unjust to the parties not to proceed with the mandate which it has been given by the Supreme Court..."

188. In support of this plea, reliance was placed on the

following pronouncements.

(i) (1998) 5 SCC 513-State of W.B. v. Shivananda Pathak ; wherein the Supreme Court extensively laid down the contours of the law with regard to bias.

(ii) (2000) Q.B. 451- Locobail (UK) Ltd. vs. Bayfield Properties Ltd.; wherein the Court held that real danger of bias may well exist if credibility of that individual could be significant

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in the decision of the case; or if in a case the credibility of any individual where an issue to be decided by the Judge, he had in a previous case rejected the evidence of that person in such outspoken terms as to throw doubt on his ability to approach such persons evidence with an open mind.

(iii) (2015) 2 Mah LJ 38- Inox Leisure Ltd. v. Goa State Infrastructure Corporation Ltd.; wherein it was observed by this Court that when bias on the part of the arbitrator became evident only upon the receipt of the Award, Section 12 and Section 13 of the Act would not apply in cases of such nature.

189. The last issue agitated by Dr. Saraf during the course

of his arguments was imposition of costs of arbitration upon the

Mehra brothers rather than WWIL. It was submitted that the

majority Award imposes costs of Euro 3,794,970 on the Mehra's

being the entire costs on actuals of the arbitration as assessed by

the Tribunal. It was pointed out that a large part of the award

relates to the claim of royalty against WWIL. The Arbitral

Tribunal in paragraph 306 and 307 of the Award clearly held that

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there is no personal liability of Mehra brothers for the liability of

WWIL under the IPLA. The issues were complex, and Mehras

were under their bonafide rights in contesting the same. In such

circumstances, the award of the entire cost against the Mehras was

perverse. The dissenting Arbitrator in paragraphs 58-59 of the

minority Opinion fairly ordered WWIL to bear the cost. It was

contended that the award of Costs as against the Mehra brothers

cannot be countenanced and is not backed by any reason.

SUBMISSIONS OF MR. ZAL ANDHYARUJINA, ADVOCATE APPEARING ON BEHALF OF THE APPELLANT- WWIL IN COMMERCIAL APPEAL NO.

316 OF 2019

190. The learned counsel at the outset before proceeding to

make his submissions informed the Court that a Corporate

Insolvency Resolution Process in respect of WWIL was initiated

on 20.02.2018 appointing an Interim Resolution Professional and

the moratorium had been imposed.

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191. Mr. Andhyarujina addressed the Court on the aspect

whether the IPLA was a concluded contract or a mere draft upon

which signatures had been appended only as a mark of

identification. The learned counsel also dealt with the issue of

payment of royalties in respect of WTG's. He clarified that the

Appellant-WWIL would not be challenging the directions issued

by the Arbitral Tribunal to pay Enercon GmbH the price of

components and materials supplied to it.

192. Apropos the issue whether the IPLA had fructified as

a contract capable of binding parties or had remained in the realm

of incohate draft, the learned counsel submitted that Agreed

Principles admittedly executed between the parties on 30.09.2006

clearly dislodged the theory of IPLA having been executed as a

concluded contract. It was highlighted before us that the Agreed

Principles referred to the IPLA as a draft and therefore it strikes a

discordant note with the assertion of the Respondents-herein that

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the IPLA had been finally executed. It was submitted that both

the documents are admittedly signed on the same date, and

significantly it is not the case of the Respondents-herein that the

IPLA was executed some time after the execution of the Agreed

Principles. Rather, it had emerged in evidence that the documents

were signed by Dr Wobben and Mr Yogesh Mehra in succession at

one sitting.

193. Mr. Andhyarujina further contended that the IPLA

executed by the parties on 30.09.2006 in its present form

unequivocally evidences that the same was a mere inchoate draft in

view of the fact that there are blank spaces comprised therein. The

cover page of the said document bears a date which is different

from the date comprised in the recitals of the agreement . The

Annexures referred in the agreement are not appended and

admittedly not drawn up. It was submitted that the said

circumstances are a tell-tail sign that the IPLA was a mere draft

enclosed to the Agreed Principles.

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194. The learned counsel also raised an alternative

submission that even if the IPLA was executed with the intention

to create legal relations, yet the same could not be enforced as it

was uncertain and hit by Section 29 of the Indian Contract Act,

1872.

195. It was urged that given the unambiguous nature of the

Agreed Principles executed between the parties, oral evidence to

dislodge the same could not have been permitted in terms of

Sections 91 and 92 of the Indian Evidence Act.

196. The learned counsel submitted that the handwritten

letter authored by Mr. Yogesh Mehra on 30.09.2006 from his

hotel referred to the execution of the Agreed Principles and not

the IPLA as has been interpreted by the Tribunal.

197. Taking the argument forward, Mr Andhyarujina

placed emphasis on the e-mail sent by Ms. Nehring on 24.11.2006

referring to the IPLA as a final draft.

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198. It was contended that it would militate against the

natural course of probabilities that Enercon GmbH handed over

the valuable technical know-how of various WTG's only in mere

anticipation of a formal agreement. In this context, it was

submitted that the plea of the Appellants that they were entitled

to further WTG's in terms of the TKHA (as amended by STKHA)

cannot be brushed aside. According to learned counsel Enercon

(India) Ltd. was entitled to E-26, E-30, E-33, E-40 and E-48

WTG's under the TKHA (as amended by STKHA).

199. The learned counsel contended that the TKHA

contemplated one time transfer of technology and the same was in

consonance with the Industrial Policy of the Government of India

of the year 1991 and the RBI Norms. It was submitted that the

Tribunal did not attach significance to the aspect of indegenisation

as contemplated under Article 5.2 of the TKHA. Further, Article

3.1 of the TKHA employs the expression ' transfer' in respect of

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the supply of technology.

200. With respect to the issue of seeking restitution of

royalties remitted by Enercon (India) Ltd., it was submitted that

the said amounts were transferred under bona fide mistake, and it

is the case of the Appellants that no further royalties were payable

upon the threshold mark of 2.5 Million Deutsche Marks having

reached in the year 2002.

SUBMISSIONS OF MR. ASPI CHINOY, SENIOR ADVOCATE APPEARING ON BEHALF OF THE CONTESTING RESPONDENTS- ENERCON GMBH AND WPG IN COMMERCIAL APPEAL NO. 314 OF 2019

201. Mr. Aspi Chinoy, learned Senior Counsel appearing

on behalf of the contesting Respondents in the above captioned

appeal addressed submissions on two issues that were raised during

the course of hearing by Mr. Shyam Mehta, learned Senior

Counsel appearing on behalf of the Appellants.

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First, namely, whether the Award passed by the

Tribunal insofar as 'Vish Wind' transactions were concerned was

liable to be set aside owing to insufficiency of pleadings in that

regard.

The other cardinal issue adverted to by Mr. Chinoy

before us was whether it could be safely concluded that the

Appellants-herein had themselves waived the right to oral hearing

during the course of proceedings before the Tribunal, and thus the

absence of the opportunity to address closing oral submissions

would not vitiate the Award from the root to the fruit.

202. Apropos the first issue with regard to insufficiency of

necessary averments in the pleadings of the Claimants and

consequent failure to raise the foundation of claim with respect to

Third Party transactions, Mr. Chinoy painstakingly alluded to the

various pleadings drawn by the parties at different stage of the

proceedings to trace the genesis and evolution of this claim which

ultimately succeeded before the Tribunal.

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203. At the outset attention of this Court was drawn to the

Statement of Claim. It was pointed out that de hors the claims

against WWIL, separate claims had been raised against the Mehra

brothers since the very inception. In this regard, he referred to Para

96.2 and Para 96.3 of Part H of the Statement of Claim, inter alia,

wherein it had been specifically claimed that Vaayu Companies

had been set up for exploiting the claimants technology and value

was transferred from WWIL to such companies. The relevant

extracts are reproduced hereunder.

Para 96.2 of Part H of the Statement of Claim

"...set up the Vaayu Companies for the purpose of receiving and exploiting the Claimants technology and/or have assisted the Vaayu Companies in receiving and/or exploiting the Claimants technology and/or have transferred value from WWIL to the Vaayu companies, such also constitutes breaches of Mr Yogesh Mehra and/or Ajay Mehra's

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obligations under the SHA and/or Indian law, including their duties of good faith, which has caused loss to the claimants and for which the claimants are entitled to damages to be assessed and/or an account of profits, plus interest...".

Para 96.3 of Part H of Statement of Claim

"...The loss caused to Enercon by Mr Yogesh Mehra and/or Mr Ajay Mehra's breach of their duties under the SHA and/or under Indian Law, including their obligations of utmost good faith, trust, confidence and commitment towards Enercon, include the damage caused to the value of Enercon's shareholding in WWIL and Enercon is entitled to Damages (to be assessed) plus interest, in regards to this loss. Further and alternatively, Enercon is entitled to an account of profits plus interest, in relation to Mr Yogesh Mehra and/or Mr Ajay Mehra's breach of their duties of utmost good faith, trust, confidence and commitment towards Enercon..."

Prayer Clause (I)(c) stated as follows:

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"(1) In respect of Mr Yogesh Mehra and Mr Ajay Mehra's breaches of the SHA :

(a) .. .. ..

(b) .. .. ..

(c) An order that Yogesh Mehra and Mr Ajay Mehra pay damages (to be assessed) and/or an account of profits for their breaches of the SHA and/or duties arising as a matter of Indian Law."

204. On the strength of the above noted material, it was

urged that the Statement of Claim contained material pleading to

the effect that the Mehra's had transferred value from WWIL to

the Vaayu Companies in breach of their obligations under the

SHA and/or Indian Law. Further, it had been categorically prayed

that the Mehra brothers be held liable to pay damages and/or

account for the profits made by such transfer. It was emphasised

that this was in clear contra-distinction from the pleadings with

respect to the loss suffered owing to exploitation of Claimants

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technology by the Mehra's.

205. Mr. Chinoy however fairly submitted that the

Statement of Claim fell short of disclosing any concrete particulars

of the manner of such unauthorized transfer of technology and/or

value was effected, The Statement of Claim merely voiced the

apprehensions under which the Claimant's were laboring as they

were in dark about the affairs of WWIL.As events would

subsequently unravel, this deficiency was overcome at a later stage

in the form of Written Submissions and other applications

preferred by the Claimants detailing the Third Party transactions

with a greater degree of specificity. It was submitted that actionable

information with regard to such transactions had started to surface

only sometime around September 2015 in view of the disclosures

made by the Appellants-herein pursuant to Procedural Order

No.2 dated 22.06.2015 passed by the Tribunal. Documents prima

facie revealed that transactions to the tune of Euro 124 million

had taken place between WWIL and Vish Wind; one of the Vaayu

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Companies for the purchase of what was later sought to be termed

as 'development rights' and interest in land. It was pointed out that

even at this stage, financial statements of the Vaayu Companies

were deliberately withheld by the Mehra's.

206. The Claimant's had pursued their apprehension of

unauthorized value transfer from WWIL in favour of Third Party

entities and subjected the documents received through the process

of disclosures to forensic scrutiny by Experts. Report prepared by

Mr. Nicholas Good lent credence to the fears of the Claimant's

and brought to notice past transactions to the tune of Euro 124

million as described above. The said Report was also submitted

before the Tribunal.

207. Armed with this material gained from disclosures

made during the course of Arbitral Proceedings, the Claimants

proceeded to positively aver material particulars in their Opening

Written Submissions submitted on 25.11.2015 with respect to the

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claim of value transfer having been made to third parties. Special

emphasis was placed by Mr. Chinoy to the following portions

comprised therein.

"114...In setting up the Vaayu Companies and procuring that WWIL transact with related companies, including but not limited to the Vaayu Companies, Mr Yogesh Mehra and/or Ajay Mehra have breached their obligations under the SHA and/or Indian Law including clauses 2.7 & 4.1 of the SHA and/or their duties of good faith towards Enercon. Accordingly Mr Yogesh Mehra and Mr Ajay Mehra should pay damages and/or account for profit in respect of transactions undertaken by WWIL with these related companies. By way of example it has now been seen that WWIL has purchased from related companies land or land rights at a cost of Euro 124 million in recent years. No valid consent from Enercon has been obtained for these transactions by which very large sums have been paid to entities which Yogesh Mehra or his family own or have a

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significant interest in. It amounts to self dealing on the part of Mr Yogesh Mehra and/or Ajay Mehra and/or consists of breaches by Mr Yogesh Mehra and Mr Ajay Mehra of clauses 2.7 and 4.1 of the SHA and/or their duties of good faith towards Enercon and they are obliged to account for all profits they have earned. The same legal principles apply with respect to benefits received from loans made by WWIL to related companies."

208. It was also highlighted that the Appellant's-herein

also took cognizance of the issue of unauthorized value transfer in

favour of Third Party entities-Vaayu Companies and at various

junctures expressly denounced the same in their Opening Written

Submissions. Attention of this Court was drawn to the relevant

portions on this aspect at Paragraphs 87, 88(iii)(iv) and Para

89(iii) of the Opening Written Submissions submitted before the

Tribunal on behalf of the Appellants. It had been contended that

there has been no transfer of value from WWIL to the Vaayu

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Companies. They also defended the sale and purchase of

Development rights by WWIL from the related companies as

being backed by independent valuation reports.

209. Mr. Chinoy submitted that further discoveries on this

issue were made during the course of cross-examination of Mr.

Yogesh Mehra in consequence of which he finally produced

financial statements of Vish Wind on 07.12.2015 pursuant to the

directions of the Tribunal. The said documents evinced the

following material facts.

-'Vish Wind' had a subscribed capital of Rs. 500,000 [Euro 7500], which had been subscribed by the Mehras.

-From 2007 'Vish Wind' had borrowed substantial sums interest free from WWIL; with Euro 650,000 being owing in 2008. These funds were used for purchasing land.

-In 2010-11 'Vish Wind' had sold development Rights to WWIL for Euro 50 million, as against the total operating expenses incurred of Euro 463,000. The Profit & Loss

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account showed a profit of over Euro 49 million.

-In 2011-12 'Vish Wind' had sold Development Rights to WWIL for Euro 49 million against total expenses incurred of Euro 1.4 million.

-The contracts for the sale of Development Rights were signed by Yogesh Mehra for 'Vish Wind' and by Mr Ajay Mehra for WWIL.

-That 'Vish Wind' had no employees, no business and virtually no money apart from the loans received from WWIL.

210. In view of the dramatic developments that had

transpired during the course of evidential hearings, Procedural

Order No. 5 came up to be passed on 11.12.2015 wherein,

significantly, the Tribunal categorically recorded the fact that it

proposed to give ample opportunity to the parties to adduce

further evidence with respect to Vish Wind Infrastructure LLP. It

was submitted that no objection/demur was raised at this stage to

resist the proposed reception of evidence with respect to Vish

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Wind on any ground including non-arbitrability of this claim or

the alleged insufficiency of pleadings. Rather, the Appellants-

herein ventured to lead evidence in terms of such liberty provided

under Procedural Order No.5 by submitting the statements of Mr.

Kaushik Khona and Mr. D Vaidyanathan to explain/justify these

Third Party transactions.

211. Further, the Closing Written Submissions submitted

by both the parties also unequivocally evidenced detailed exchange

of submissions on the aspect of the Third Party transactions.

Reference was made to the Closing Submissions dated 13.05.2016

tendered by the Claimants wherein this issue was explored at Part

VI(F) whereas the Closing Submissions of the Appellants-herein

dated 25.05.2016 also elaborately dealt with the said issue in

Paragraphs 153-220.

212. It was in this backdrop which we have noted at some

length that Mr. Chinoy submitted that the Appellants-herein were

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well aware that value transfer to Third Party entities was an

integral claim raised by the Claimants and the concise

facts/particulars upon which such claim was founded ultimately

emerged to the fore during the course of the proceedings even if

not discernible at the commencement of the proceeding; when it

remained in the realm of apprehension. It was contended that at

any rate Procedural Order No.5 passed by the Tribunal

sufficiently alerted the Appellant's that the issue of Vish Wind

transactions was well within the domain of adjudication. It was in

this view of the matter that the Appellant's even embarked to lead

evidence with respect to such transactions with a view to render

them innocuous. Thus, it was submitted that there existed no

element of surprise and the circumstance of absence of sufficient

pleadings in the Statement of Claim by itself would not result in

jettisoning such a claim from judicial calculus in view of the host

of subsequent events which unequivocally demonstrate the

conscious awareness exhibited by the Appellant's that the issue was

very much under the lens of adjudication.

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213. In support of his submissions, reliance was placed

upon the decision of the Supreme Court reported as AIR 1966 SC

735 Bhagwati Prasad v. Chandramaul , wherein it was observed

that though as a matter of principle the importance of pleadings

could not be underscored enough, however, there may be peculiar

cases where a plea though not expressly adopted at the inception

may, in fact, emerge during the course of a Trial and the parties

may be aware in substance that the plea is being tried. It was held

that under such circumstances when both the parties being aware,

there being no element of surprise and ample opportunity having

been given to lead evidence, the pedantic requirement of pleadings

may stand relaxed provided the possibility of prejudice could be

foreclosed.

214. Adverting to the issue of denial of oral hearing to

present concluding arguments, Mr. Chinoy stoutly refuted the

plea of violation of natural justice as canvassed on behalf of the

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Appellants. It was contended that there was no cavil with the

proposition that right to oral hearing was engrafted under Section

24 of the Arbitration and Conciliation Act, 1996. It was submitted

that however, it was open for the parties to waive/exclude such a

right.

215. Extensive reference was made to the proceedings

conducted before the Tribunal as evidenced from the perusal of

the Procedural Orders passed and transcripts of Proceedings. It

was submitted that opportunity for making opening oral

submissions was duly accorded by the Tribunal to both sides

before commencement of evidential hearings.

216. It was highlighted that during the course of recording

evidence, more particularly on Day 6-7, during cross-examination

Mr. Yogesh Mehra, that financial statements of Vish Wind were

required to be produced under the directions of the Tribunal. The

documents revealed high value transactions between WWIL and

Vish Wind, which also took the learned Counsels representing the

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Appellants-herein by surprise. In this regard, Mr. Chinoy drew our

attention to the relevant transcript of the Proceedings dated

10.12.2006. For the sake of appreciating the contentions, we

reproduce the relevant portions thereof herein-below.

"We on this side were, I think, by as much surprise as anyone else as to some of the evidence that was heard yesterday and AZB [the Respondents' solicitors] has not yet received instructions from the client on these related party matters, so I am instructed today not to examine Mr Good [the Claimants accounting expert] on these matters."

217. It was submitted that the Tribunal, under these

attending circumstances, proceeded to pass Procedural Order No.5

on 11.12.2015 fixing a proposed calendar enumerating the

timeline to be adhered by the parties. It was contended by Mr.

Chinoy that the said Order was formulated upon clear

consensus/agreement between the parties as expressed by their

lawyers. Significantly, Item No.9 of the Procedural Order No. 5

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recorded the fact that opportunity for Closing Oral Submissions

would be accorded only if determined to be necessary by the

Tribunal. We extrapolate the said Procedural Order in entirety.

"The following Timetable is agreed between the parties:

Sr.No. Particulars Date

1. Claimants to file an Application 13 Dec 2015 under Sec 17 of the Arbitration & Conciliation Act 1996

2. Respondents to file their Reply to 19 Dec 2015 the Claimants Application under Sec 17 of the Arbitration & Conciliation Act 1996

3. Respondents to respond to the 15 Dec 2015 Claimants request for production of documents set out at Annex A

4. Tribunal to make a ruling on the 23 Dec 2015 Claimants Application (i) under sec. 17 of the Arbitration and Conciliation Act 1996 & (ii) in relation to any disputed item in Annex A

5. Respondents to provide any 4 January 2016 documents/information in accordance with (3) and (4) Above

6. An Application to the Tribunal, if 18 January 2016

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either party seeks to adduce further evidence responsive to the Vish Wind Infrastructure LLP documents or the new documents produced at (5) above

7. An Application to cross examine 25 January 2016 or respond to the evidence adduced pursuant to (5) above

8. Exchange of Closing Written 16 March 2016 submissions

9. Any oral evidence in 27 & 28 April accordance with (7) above and 2016 in London.

Closing oral submissions if any are requested and if determined necessary by the Tribunal."

(Emphasis Supplied)

218. It was contended that the transcript of Proceedings

dated 11.12.2015 also contemporaneously recorded the views of

the Tribunal and the learned Counsels representing the parties.

Mr. Chinoy submitted that a perusal of the said transcript also

lends credence to his submission that the Appellants-herein did

not assert any legal right to make Closing Oral Submissions and

rather relegated the decision to the wisdom of the Tribunal. The

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relevant portions of the transcript of Proceedings dated 11.12.2015

is extracted hereinbelow.

"The Chairman : "I assume we are not necessarily committed to an oral hearing at all?".

Mr Khambata : [WWIL & the Mehras Counsel] "No, I understand".

The Chairman : It may be that no one wants to cross examine and then we just do it.

Mr Joseph [Claimants Counsel] : I think Lord Hoffmann, you are absolutely right. We are not committing ourselves, and I think, maybe we said closing submissions, if any are requested, or something along those lines.

The Chairman : Yes.

Mr Khambata : Yes, that would give us the opportunity to go back and make an appropriate application for oral submissions.

Mr Joseph : If any is required and that again would not commit the Tribunal to acceding to the request, if the request were made.

Mr Khambata : Of course not. Of course not."

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219. Mr. Chinoy sought to deal with the contention canvassed by

Mr. Shyam Mehta and Dr. Birendra Saraf, learned Counsels for the

Appellants that the transcript of Proceedings for Day 9 dated

10.12.2015 evidenced categoric request for oral hearing having

been made by Mr. Khambatta, the learned Senior Counsel

representing the Appellants-herein before the Tribunal and

therefore waiver of the right to oral hearing ought not to be lightly

inferred from the statements exchanged on the subsequent date i.e.

Day 10 of evidential hearings on 11.12.2015.

The said contention was countered by Mr. Chinoy by

explaining that a perusal of the transcript of Proceedings dated

10.12.2015 would reveal that the learned Senior Counsel

representing the Appellants-herein did not have proper

instructions and sought time for obtaining the same. The

transcripts further suggest that even on the said date, the learned

Senior Counsel had himself offered the alternative recourse of

submitting Written Submissions instead of oral hearing. It would

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thus emerge that he had no instructions to adopt a hardened

position committed to an Oral hearing. Further, the Procedural

Order No. 5 was made the following day i.e 11.12.2015 upon the

consent of parties, and the same is consistent with the contents of

the verbal interchange that took place between the Tribunal and

the Counsels which was also contemporaneously recorded in a

transcript. It was submitted that the prior intention to the

contrary, if any, stood superseded by the unequivocal and

unambiguous submission by the learned Senior Counsel to the

discretion of the Tribunal to determine the requirement of Closing

Oral Hearing.

220. It was further urged that even the Solicitors which

were inducted subsequently and entered appearance on behalf of

the Appellants-herein on 07.01.2016 did not assert that they had

an indefeasible right to make Closing Oral Submissions. Rather

intent was expressed at repeated intervals to apply to the Tribunal

to take leave to make such submissions. In order to buttress his

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submission, Mr. Chinoy drew attention of this Court to various

communications addressed by the Solicitors to the Tribunal,

including the communication dated 09.02.2016, 14.04.2016,

22.04.2016 and 11.05.2016. It was only on 25.05.2016 that the

Solicitors representing the Appellants-herein belatedly for the first

time asserted that they had a right to oral hearing in terms of

proviso to Section 24(1) of the Arbitration and Conciliation Act,

1996 and that the parties had not excluded such a right. The said

request was promptly rejected by the Tribunal on 26.05.2016 by

highlighting that the Procedural Order No. 5 was made by

consent of parties and it expressly recorded the fact that Closing

Oral Submissions would be granted only if requested and

determined to be necessary by the Tribunal.

222. While summing up his submissions on this aspect, Mr.

Chinoy contended that the procedure adopted by the Tribunal was

transparent and reasonable. Repeated accommodations were

granted in favour of the Appellants-herein by the extending time-

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lines. The Tribunal was considerate to accede to such requests in

view of the fact that the legal team of Counsels and Solicitors

representing the Appellants-herein withdrew from the case on 14-

15.12.2015. Procedural Order No. 5 was subsequently modified

by Procedural Order No. 7 dated 03.02.2016 at the instance of the

Appellants-herein. However, further extensions were sought. It

was owing to such repeated extensions that the dates of 27-28

April 2016 initially reserved for possible Closing Oral Submissions

had to be cancelled by the Tribunal vide communication dated

20.04.2016 as the Appellants-herein had already indicated they

were not in the position to submit their Closing Written

Submissions in the stipulated time and had sought further

extensions. The Appellants-herein ultimately submitted their

Closing Written Submissions only on 25.05.2016 again breaching

the further extended deadline fixed for 13.05.2016. The Tribunal

thus no longer had the opportunity to peruse the submissions in

advance and determine the necessity, if any, of permitting Closing

Oral Submissions.

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223. It was further submitted that no prejudice stemming

from absence of such hearing had been demonstrated. All issues,

including the issue of Third Party transactions-Vish Wind, were

comprehensively contested in the exhaustive Written Submissions

submitted on behalf of the Appellant's-herein before the Arbitral

Tribunal and thus the plea was a legal after-thought.

SUBMISSIONS OF MR. S.U KAMDAR, SENIOR ADVOCATE APPEARING ON BEHALF OF THE CONTESTING RESPONDENTS- ENERCON GMBH AND WPG IN COMMERCIAL APPEAL NO.S 314 OF 2019

224. Mr. Kamdar, learned Senior Counsel appearing on

behalf of the contesting Respondents sought to counter the

contentions canvassed by Dr. Saraf.

Mr. Kamdar dealt with three issues, namely-

(i) Whether the disputes relatable to the SHA, which included the 'Vish Wind' transactions could have been the subject matter of the present arbitration.

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(ii) The allegations of Bias/prejudice harboured by the majority Arbitrators as sought to have been inferred from the observations contained in the majority Award qua Mr. Yogesh Mehra.

(iii) Whether the Arbitral Tribunal fell in error by saddling the Mehra brothers with the Costs of arbitration rather than having imposed the same upon WWIL.

225. With regard to the issue of arbitrability of disputes in

relation to the SHA, it was submitted that the Supreme Court in

paragraph 153 of its decision made unambiguous directions to

refer all disputes arising between parties in relation to various

agreements, inter alia, the SHA. It was contended that it was

impermissible for this Court to go behind the unequivocal

directions of the Supreme Court and its wisdom could not be

called into question by the Appellants in these proceedings by

posing novel objections that ought to have been urged before the

Supreme Court to resist reference of disputes under the SHA for

arbitration.

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226. It was further submitted that it was evident that the

Supreme Court proceeded to comprehensively refer all disputes for

arbitration in view of the fact that the disputes had been

precipitating for nearly a decade before different forums and

inordinate delays had occasioned. It was also highlighted that in

the peculiar facts of the present case, with a view to mitigate

further delays, the Supreme Court in Paragraph 154 of its

judgment itself proceeded to nominate the Third Arbitrator.

227. Mr. Kamdar submitted that the Supreme Court noticed

the circumstance that each of the agreements- IPLA, HoA, SHA,

TKHA comprised arbitral clauses and thus there was a clear

'intention to arbitrate'.

228. It was further contended that the directions passed by

the Supreme Court in the case at hand was somewhat akin to its

approach in an earlier pronouncement reported as (2013) 1 SCC

641 - Chloro Controls India (P) Ltd. v. Severn Trent Water

Purification Inc, which was incidentally cited by the learned

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Counsels before the Supreme Court in another context.

229. It was also urged that Sections 8 and 45 of the

Arbitration and Conciliation Act, 1996 contemplate referring

parties to arbitration and not per se the matters/disputes.

Reliance was placed upon the decision of the Supreme Court

reported as (2012) 12 SCC 581 - State of Goa v. Praveen

Enterprises.

230. Taking the argument forward, Mr. Kamdar submitted

that significantly the Terms and Conditions of Tribunal's

Appointment also expressly contained reference to the directions

passed by the Supreme Court in its judgment dated 14.02.2014.

231. Countering the submissions of the Appellants, Mr.

Kamdar submitted that the Supreme Court in its judgment dated

14.02.2014 did not grant stay to the CLB proceedings as at the

relevant time the said proceedings had already concluded and

statutory appeals u/s 10F Companies Act, 1956 were pending

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before the Bombay High Court. Mr. Kamdar further elaborated

that the ambit of CLB proceedings was not restricted to merely

disputes under SHA but also enwombed within its fold disputes

arising from unauthorized amendment of Articles of Association

and other breaches of other statutory rights/duties under the

Companies Act, 1956 that were not the subject matter of

arbitration. Therefore, the two proceedings though having some

overlap could be permitted to operate concurrently in their own

spheres.

232. It was also urged that the plea of want of jurisdiction

was not raised by the Appellant's-herein before the Arbitral

Tribunal and the Tribunal was merely called upon to exercise its

procedural discretion not to pronounce upon the matters relatable

to SHA as the same were also pending adjudication before the

CLB. It was submitted by Mr. Kamdar that what was urged before

the Tribunal was the plea that exercise of such jurisdiction would

result in duplication of proceedings and not that the Tribunal

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inherently lacked jurisdiction as the Supreme Court did not intend

to refer disputes arising from the SHA. Reference was made to

Paragraphs 83-85, 150 of the Statement of Defence, Paragraphs

XII (A)-(D) of the Written Opening Submissions and Paragraph

139 of the Written Closing Submissions to demonstrate the nature

of objections raised before the Tribunal.

233. In this context, it was submitted that it was a trite

proposition of law that the objection of jurisdiction if not raised in

terms of Section 16(2) and (3) of the Act, 1996 is deemed to be

given up. Reliance was placed upon the decision reported as

(2014) 11 SCC 366 - Union of India v. Pam Development Pvt.

Ltd. and (2002) 3 SCC 572 - Narayan Prasad Lohia v. Nikunj

Kumar Lohia & Ors.

234. On this aspect, Mr. Kamdar while summing up his

submissions, contended that the exercise of jurisdiction by the

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Tribunal was on a plausible and sound reasoning. The same had

been affirmed by the learned Single Judge, and this Court must be

slow in interfering. Reliance was placed on the recent decision

reported as (2019) 4 SCC 163 - MMTC Ltd. v. Vedanta Ltd.

235. Adverting to the next set of issue pertaining to bias,

Mr. Kamdar submitted that bias/prejudice was sought to be

inferred merely on the basis of certain scathing observations

expressed by the learned Arbitrators while appreciating evidence

the evidence of Mr. Yogesh Mehra and contending that Mr.

Yogesh Mehra, on the other hand, had been observed to be a

truthful witness in the minority Award. It was submitted that the

very premise for inferring bias was tenuous. Further, the issue in

substance pertains to appreciation of evidence that had been

undertaken by the Arbitrators by advancing reasons in support of

their conclusions. The intensity of review under Section 34/37 of

the Act, 1996 was not of such amplitude that it would be

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permissible for this Court to re-appreciate evidence.

236. Mr. Kamdar also highlighted that in Paragraph 22 of

the Affidavit in Rejoinder (in Notice of Motion (L) No. 84 of

2019 dated 20.02.2019 filed by Ajay Mehra it had been

pertinently averred that the Appellant was already apprehensive of

the alleged prejudice and personal bias of the majority of the

Arbitral Tribunal by 11.12.2015 i.e. during the pendency of the

arbitral proceedings itself.

237. In this context, it was submitted that in terms of

Section 13(2) of the Act, 1996 such a challenge ought to have

been raised at that stage itself before the Arbitrators, failing which

such a challenge is deemed to have been waived. Reliance was

placed upon the decision of this Court reported as (2015) 7

BomCR 141 M/s Visakha Petroleum Products Pvt. Ltd. v. B.L

Bansal and Ors.

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238. On the issue of award of Costs, Mr. Kamdar submitted

that issues of such nature could hardly be urged under Section

34/37 of the Act, 1996 given the limited nature of such

jurisdiction. It was submitted that the issue of costs in the case at

hand is determined by Section 31A of the Act, 1996. It was

highlighted that Clause 18(3) of the IPLA expressly contemplated

that a party which prevails on the merits of the proceedings is

entitled to an award of costs and reasonable expenses. It was

pointed out that the Tribunal did not award the costs prayed for

but a substantially less amount bearing into consideration the

expenses incurred by the Appellant's-herein. The approach

adopted by the Tribunal was stated to be fair and reasonable.

239. It was urged that that the directions issued by the

majority Arbitrators directing the Mehra brothers to bear the costs

of proceedings was logical in as much as they were in the de-facto

control of the management of WWIL during period of actionable

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breaches. Further, a direction to WWIL to expend the costs would

in effect imply saddling Enercon GmbH (the successful Claimant)

with such liability as it owns shareholding in WWIL to the tune of

56%.

SUBMISSIONS OF MR. JANAK DWARKADAS, SENIOR ADVOCATE APPEARING ON BEHALF OF THE CONTESTING RESPONDENTS- ENERCON GMBH AND WPG IN COMMERCIAL APPEAL NO.S 316 OF 2019

240. Mr.Janak Dwarkadas, learned Senior Counsel

embarked upon the task of persuading us that the IPLA executed

between Dr. Wobben and Yogesh Mehra on 30.09.2006 at

Aurich, Germany was a concluded contract capable of binding the

signatory - parties and not a mere draft as contended by the

Appellants-herein. He also dealt with the submissions made by

Mr. Andhyarujina that the transfer of technology for various

WTG's under the TKHA/STKHA was a transfer in perpetuity

and not a mere license for a limited duration, therefore royalties

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not being payable.

241. Mr. Dwarkadas traced the fruition of the commercial

relationship between Enercon GmbH and the Mehras from the

very inception leading to surrection of Enercon (India) Ltd.

242. The learned Senior Counsel drew attention of the

Court to the contents of the TKHA executed between the parties

on 12.01.1994 wherein Enercon GmbH agreed to provide

Enercon (India) Ltd. with the 'right and license' to use the

technical know-how for the manufacture of certain WTG's (E-26

and at least two other ranges/models). It was highlighted that as

per Article 4 Enercon GmbH was entitled to receive a royalty at

the rate of 5% on the sale of WTG's and components over a

period of seven years not exceeding 2.5 Million Deutsche Mark.

As per Article 6.1, Enercon (India) Ltd. was prohibited from sub-

licensing or transferring the technical know-how to any party. The

TKHA would expire in ten years from the effecting date or seven

years from the date of commercial production.

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243. It was pointed out that Enercon GmbH agreed to

supply E-30 and E-40 WTG's and at least two other

ranges/models to Enercon (India) Ltd. by expanding the scope of

products as defined in the TKHA by entering into a STKHA on

19.05.2000. Mr. Dwarkadas submitted that the Arbitral Tribunal

rightly held that Enercon GmbH fully complied with its

stipulated obligations of supplying the know-how of WTG's in as

much as technology in respect of E-26, E-30 and four ranges of

E-40 WTG's (E-40/6.44/E1, E-40/6.44/E2, E-40/6.44/E-3B and

E-40/6.44/E2B).

244. By November 2002 the royalty amount of 2.5 Million

Deutsche Mark had been generated, and the TKHA (as amended

by the STKHA) expired on 12.01.2004.

245. In view of the expiry of these agreements the parties

commenced negotiations to enter into a further agreement to

govern the supply of technical know-how in future. However,

during the interregnum, in anticipation of a formal agreement

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which was on the horizon, Enercon GmbH also provided the

technology in respect of E-33, E-48 and E-53 models of WTG's.

246. Mr. Dwarkadas referred to the observations made by

the Tribunal in its Award with respect to the contention canvassed

by the Appellants -herein that the TKHA contemplated a transfer

of technology in perpetuity and after its expiry Enercon (India)

Ltd. would be at liberty to utilize the said technology without

further payment of royalty. The Appellants had sought to urge

before the Tribunal and also before this Court that the regulatory

framework of RBI prevailing in the country compulsorily

mandated permanent transfer of technology to foster

indeginization, failing which approvals would not be granted. The

Tribunal had repelled this contention by observing that no

authoritative rule/policy to fortify such an assertion was produced,

and therefore the contention that the TKHA was required to be

interpreted in light of the regulatory backdrop was liable to be

rejected. The Tribunal proceeded to interpret the agreement de

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hors the regulatory backdrop and arrived at the conclusion that

the TKHA (as amended by STKHA) did not amount to a transfer

but was a permanent license which applied only to E-26, E-30

and E-40 models of WTG's.

247. It was urged by Mr Dwarkadas that perusal of the

correspondence between Mr. Yogesh Mehra and the

representatives of Enercon GmbH would reveal that no claim was

ever made at the relevant time that Enercon (India) Ltd. was

entitled to further WTG's under the TKHA (as amended by

STKHA) and thus the question of paying royalties would not

arise. It was highlighted by the learned Senior Counsel that Mr.

Yogesh Mehra merely attempted to negotiate in this regard citing

considerations of commercial viability, however, no assertion of the

right to receive technology for further WTG's without payment of

royalty was ever made. In this regard, reference was made to the

communication dated 29.10.2004 authored by Mr. Yogesh Mehra

and addressed to Dr. Wobben. Our attention was also drawn to a

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communication dated 11.02.2005 wherein the representatives of

Enercon GmbH expressed gratitude to Mr Yogesh Mehra for

having accepted that the royalty fee would be adopted as it was

adopted before for the two new WTG models. It was submitted

that overwhelming evidence led before the Arbitral Tribunal

establishes that Mr. Yogesh Mehra reconciled to the fact that

royalties would be payable and the only bone of contention that

survived was its quantum and method for computation. We were

referred to the discussion of the Tribunal in this regard as

contained in paragraphs 93 & 96 of the majority Award. The

portions of the same are reproduced hereinbelow:

"93. But the draft contained no provision for a royalty on the new models. On 19 October 2004, Mr. Kettwig wrote to say that he and Dr. Wobben were considering a royalty of 4% or 5%. On 29 October 2004 Mr. Mehra sent a five-page letter to Dr Wobben arguing his case for no royalty. The letter is well argued and courteous, ("I totally leave the decision to you,

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and whatever your decision, ultimately I shall follow!"). For present purposes, its significance is that at no point did Mr. Mehra suggest, as is now the Respondents' case, that WWIL was already entitled free of charge to the technology for the new models. The letter accepts that it is a matter of negotiation and leaves the decision to Dr. Wobben.

...

96. In his oral testimony at the Hearing, Mr Mehra found it difficult to explain why he had never told Dr Wobben or anyone at Enercon that WWIl was actually entitled to the E-33 and E-48 technology for free (to say nothing of the yet undeveloped E-53) because it had already been permanently transferred under the TKHA. Nor could he explain why he had said nothing to dispute Mr Monnerjahn's letter of 11 February 2005. The best he could offer by way of explanation was:

"My discussions with Dr Wobben were as a businessman. I never took the chance to

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explain my legal right... There was a huge amount of trust and understanding on both sides."

248. Mr. Dwarkadas urged that the approach adopted by

the learned Arbitrators authoring the majority Award in arriving at

the conclusion that the IPLA executed on 30.09.2006 was a

concluded contract, could hardly be termed as perverse and the

same was based on cogent reasons. The Tribunal analysed the

vast volume of documentary and ocular evidence to support its

findings.

249. For our benefit, Mr. Dwarkadas compartmentalized

the lengthy deliberation of the learned Arbitrators on this issue

into three broad heads, evidence (oral and documentary) with

respect to events preceding 29-30.09.2006, evidence (oral and

documentary) with respect to what transpired on the fateful dates

of 29-30.09.2006 at Aurich, Germany and the evidence (oral and

documentary) of the subsequent events which would throw light

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on the intent/understanding of the parties as to what they

executed on 30.09.2006.

250. It was urged that it was not the case that the Tribunal

arrived at conclusions sans any reasoning or without reference to

material in support of the same. In this context, it was submitted

that it was settled beyond pale of controversy that the jurisdiction

of Courts under Sections 34/37 of the Act, 1996 would not

enwomb within its fold re-appreciation of evidence.

251. With a view to satisfy us that the approach adopted by

the learned Arbitrators penning the majority Award was

unexceptionable, Mr. Dwarkadas extensively took us through the

observations comprised in the Award.

252. The Tribunal comprehensively took into account the

sequence of events that transpired during the protracted period of

negotiations. As noted by us earlier, the discussions between the

parties now centred on the method of computing the royalties in

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future. It seems that some headway was made on 23.05.2006

when non-binding Heads of Agreement on a Proposed Intellectual

Property License Agreement (HoA) was executed at Aurich,

Germany. The said document was expressed to represent the final

views of the parties on the terms of a new agreement. A draft of

the IPLA was attached to the same. Clause 5.1 of the draft IPLA

contemplated royalty of 5% on the net sales value of products sold

by WWIL. The net sales value was elaborately defined to mean -

"the net ex-factory sales price of the Products, exclusive of excise duties, minus the cost of the standard bought out Wind Energy Technology components and the landed costs of imported Wind Energy Technology components, irrespective of the source of procurement, including ocean freight, insurance, custom duties and the like."

The HoA recorded that the services of Mr. N. P. Sarda,

Partner of Deloitte Haskins and Sells (DHS) be commissioned to

seek their views on a formula for calculating royalties that would

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be in consonance with the requirements of Indian law.

253. Mr. Dwarkadas highlighted that in furtherance

thereof, Mr. Yogesh Mehra corresponded with Mr. Sarda and

elicited his opinion on a formula provided by him in his letter

dated 23.06.2006. The formula sent by Mr. Mehra upon which

opinion of Mr. Sarda was sought is extracted hereunder :

"Net Ex-Factory Sales Price of the Wind Energy Converters, excluding Excise duty, Taxes, Levies , Cess etc. LESS:

Landed cost of all imports, other than capital equipment and the cost of standard bought out components and raw material procured locally"

254. It was pointed out by the learned Senior Counsel that

the Tribunal noticed that this was not the formula as comprised in

the draft IPLA on which it had been agreed that opinion of Mr.

Sarda be sought. Rather it was a formula of Mr. Mehra's own

devising. It included deductions which did not form part of the

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RBI formula. On 16.06.2006, Mr. Sarda is stated to have replied

by reciting the RBI formula and certifying that the formula

proposed by Mr. Mehra fell within it. The Tribunal in paragraph

107 observed that Enercon GmbH did not notice this discrepancy

at this stage and the same caused difficulties later.

255. Taking his argument forward, Mr Dwarkadas

delineated the succession of events to follow that would ultimately

culminate to the fateful visit of Mr Yogesh Mehra at Aurich,

Germany. It was highlighted from the Award that during the

months to follow there was exchange of drafts of the proposed

IPLA. A meeting was scheduled in Germany for 17-20th

September, 2006 for finalising the IPLA. On 15.09.2006, a final

version of IPLA was sent by electronic mail by Ms. Fritsch-

Nehring to Mr. Yogesh Mehra for his perusal. It was also stated

therein that Dr. Wobben had desired that he would like to first

discuss the final version of the IPLA before any discussion takes

place on other issues. Since the finalised draft of the IPLA was

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only sent at the last moment, Mr. Yogesh Mehra postponed his

trip to Germany with a view to consider the said draft.

256. Mr. Yogesh Mehra arrived in Bremen (Germany) on

the morning of 29.09.2006. Dr. Wobben received him at the

Airport and accompanied him to the Hilton Hotel. Discussions on

the proposed IPLA ensued. They were joined at lunch by Mr.

Kettwig. The Tribunal noticed the evidence of Mr. Kettwig where

he testified that he sensed the discussions had not gone smoothly

and he could feel some tension. Dr. Wobben had frustratingly

informed Mr. Kettwig in the presence of Mr. Mehra that Mr.

Mehra also wanted a further document to set out certain principles

that would be reflected when it came to subsequently finalising

other contracts. However, this was on a clear understanding that

the IPLA was to be entered into without change and the Agreed

Principles related to other agreements which would be shortly

entered into. However, it is common ground that no document

was signed on this date.

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257. The Tribunal was of the considered view that the

evidence furnished by Mr. Kettwig appeared to be reliable vis a vis

the version of events disclosed by Mr. Yogesh Mehra. The

Tribunal observed that the objections/reservations expressed by

Mr. Mehra to the drafts of IPLA shared with him earlier by

Enercon GmbH had been firmly dealt by Dr. Wobben in August

2006. The stand of the parties had hardened. It was improbable

that Dr. Wobben would now have made a 'U-turn' on the issues

canvassed by Mr. Mehra during negotiations which took place

29.09.2006.

258. The Tribunal noticed that Mr. Kettwig stated in

evidence that to the best of his recollection, Mr. Mehra had

brought with him a draft of Agreed Principles in hard copy. The

Agreed Principles were predominantly drafted by Mr. Mehra in

advance of the meeting rather than being drafted together in the

meeting. Mr. Kettwig further deposed that Mr. Mehra accepted at

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the meeting that he would enter into the IPLA the next day, and

this was unaffected by the Agreed Principles. Per contra, Mr.

Mehra claimed in his evidence that the draft of Agreed Principle

had not been brought by him. He stated that this document had

been typed on the computer in the Bremen Hotel. On this aspect,

the Tribunal observed that Mr. Kettwig was neither a lawyer nor

fluent in English, unlike Mr. Mehra. The language of the Agreed

Principles suggested that its substance was derived from Mr.

Mehra and his legal advisors in India. It was further held that Mr.

Mehra understood that the Agreed Principles would have no effect

upon the IPLA and that the IPLA was expected to be executed by

the parties during his stay in Aurich, Germany.

259. The Tribunal observed that Mr. Kettwig was not an

astute lawyer. He could thus could not visualise the effect of the

words- "Draft enclosed" comprised in the document-Agreed

Principles and that these words could later be construed to be

inconsistent with Enercon's intention of executing the IPLA

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without any amendment. It was held that evidence of relevant

surrounding circumstances emerging from the contemporaneous

correspondence between parties and the evidence of Mr. Kettwig

established that both sides clearly understood that before any

discussion of other agreements took place IPLA, had to be

executed.

260. In support of his contentions, Mr Dwarkadas drew

strength from the findings of the Tribunal where the learned

majority Arbitrators observed that it was highly implausible that

the parties would sign the IPLA (twice in the case of Dr. Wobben

as he appended his signatures on behalf of Enercon GmbH as well

as WPG) and initial every page merely to identify it as the latest

draft under discussion. The Tribunal noticed that such an

approach had not been adopted by the parties before with respect

to other documents that were available for similar treatment.

261. The Tribunal also held that the assertion of Mr.

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Kettwig that after the execution of IPLA; which had been pending

since a long time, Mr. Mehra appeared rather emotional, was

supported by the contents and tenor of a letter authored by Mr.

Mehra on that very day viz. 30.09.2006. The letter was addressed

to Dr. Wobben and was penned by Mr. Mehra at his hotel before

leaving for India.

262. The contents of the said letter have been extracted by

us in para 50 above, however, for the sake of appreciating the

submissions of Mr Dwarkadas, we reproduce its contents again.

"Dear Dr. Wobben, Today when I reached back to Bremen, and before I leave back to India Mr. Wobben, in the last 13 years since I first met you, I have never felt so de-motivated lost, confused and empty! Mr. Wobben, my this trip to Germany was besides of course to clarify al the points of the agreements, was to also find some solutions to my problems which you had also promised to do. But I am sorry to state that I go back without any solutions!

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Mr. Wobben, you asked me to trust you, which I have always done-

(1) I signed the agreement, without even reading it, only because I trust you.

(2) I did not even speak when Mr. Kettwig decided to write the royalty figure at 5%, because I trusted you, to be fair, because you always told me, that you wanted to make Enercon India Ltd. financially strong. Now with this, it reduces the profitability of Enercon India Ltd by 40% straight away. [I have never said no to paym (sic.) of royalty, only I thought you will be fair and just].

This royalty, is when the agreements do not ev (sic.) provide for any other technologies. In fact it does not even provide for the E-82! (3) I trusted you, when you told me, that I should not pursue the 'UBS' proposal, because you did not feel comfortable, I dropped the idea totally, because you promised me that we would find a solution to my 'family' issues. But I go back again without any solution! Respected Mr. Wobben, it hurt me, when Mr. Kettwig mentioned today, that the value of Enercon's

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operations in India should be of a value of 250 Million Euro. If you believe that this is correct, than [sic] I personally take responsibility of the fact that, I failed, and for which I am willing to resign. Mr. Wobben, you asked me to be truthful and open to you, which I always will be, and I thought I must write to you on exactly how I feel, because one thing for sure, is if I am not motivated, how can I motivate my team in India? If I cannot do that, all I can say is it is not fair for Enercon India! Dear Mr. Wobben, you have always been my source for inspiration and you have always motivated me, to be able to do my best! Mr. Wobben, I go back to India a disappointed man, as I have no face to show to my family, whom I promised, and who have always supported me for the last 13 years! Mr. Wobben, the decision is in your hands and please do not ask me to talk to anyone else about the issue, because I will not! At the end all I want to say is I trust you. Do not let me down! Regards! Yogesh Mehra."

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263. The Tribunal observed that this reproachful letter was

inconsistent with Mr. Mehra's claim that only a draft had been

signed. None of this recrimination would have made sense if

everything was still open to negotiation. The Tribunal did not

accept the explanation tendered by Mr. Mehra in evidence that

that the agreement which referred in his letter to have signed was

the Agreed Principles and not the IPLA and that he was not to be

taken literally.

264. Perusal of the majority Award reveals that the Tribunal

also formed an adverse opinion on the credibility of Mr. Mehra,

especially in view of his vacillating stand before different forums.

Learned Senior Counsel placed emphasis on the observations of

the Tribunal where the Tribunal noticed that in July 2008 Mr.

Mehra had stated on solemn affirmation in the criminal

proceedings initiated in India before the Court of Magistrate that

he had been coerced into signing the Agreed Principles. It was

observed that there were no allegations of coercion made before

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the Tribunal and rather it was claimed that almost immediately

upon his arrival in Germany Dr. Wobben accepted his objections

to the IPLA and agreed that it should be renegotiated at some

indeterminate future date.

265. The Tribunal was of the considered view that it

appeared that Mr. Mehra was unwilling to execute the IPLA,

however after extensive rounds of deliberations and sustained

obstinacy of Dr. Wobben, he succumbed to sign the IPLA. He

later regretted the execution of the IPLA as Dr. Wobben did not

favourably accede to his proposal of floating an IPO to raise

additional money and neither did Dr. Wobben purchase additional

shareholding from the Mehra's on the tentative terms indicated

earlier during the course of negotiations. In the considered view of

the Tribunal, Mr. Mehra sought to retrace his acts by belatedly

propounding the version that he had merely signed a draft when

he sent an electronic-mail dated 03-11-2006 expressing his

disappointment at the withdrawal of the offer to purchase

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additional shareholding.

266. It was pointed out by Mr Dwarkadas that the Tribunal

also attached significance to the circumstance that the parties

appended their signatures at the spot where they are expected to

be placed when a contract is to be signed with an intent to create

legal obligations and not for the purpose of mere identification for

future reference. It held that though the surrounding

circumstances that the IPLA is referred as a draft in the Agreed

Principles and that the IPLA as executed omitted certain annexes

which had been referred to in the body of the document, were

relevant, yet other circumstances as alluded to by the Tribunal

tilted the scales in favour of the conclusion that the IPLA had been

executed as a concluded contract.

267. Mr Dwarkadas drew attention of the Court to

paragraphs 122, 126, 127, 131, 133 to 139 of the majority Award.

Though we have already ventured to pithily summarise the

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reasons upon which the conclusions of the learned Arbitrators

were premised, however, for the sake of completeness, we

reproduce the said paragraphs herein under:

"122. The Tribunal does not accept Mr Mehra's evidence and prefers the evidence of Mr Kettwig. The IPLA had been discussed at length and in detail. Dr Wobben had dealt firmly with Mr Mehra's comments in August 2006 and was expecting that Mr Mehra had come to Aurich to sign the IPLA. That Dr Wobben should now have made a Uturn on Mr Mehra's points seems to the Tribunal highly improbable and is contrary to all other credible evidence. Nor is it probable that Dr Wobben would have been willing to re-open discussion about the 5% royalty agreed in the HoA. There is no credible evidence for this either.

126. The Tribunal has already rejected Mr Mehra's evidence that Dr Wobben agreed that the IPLA required amendment. It finds that Dr Wobben left the meeting having insisted that whatever Mr Mehra and Mr Kettwig put into the Agreed Principles. It should have no effect upon the IPLA, which should be executed as it stood before Mr Mehra left

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Germany. As has already been said, the IPLA had been drafted by in-house lawyers, tax advisers and patent lawyers over a lengthy period. Mr Kettwig was not a lawyer. It was one thing for Dr Wobben to entrust him with the drafting of a non-binding agreement stating the principles upon which the parties were to negotiate agreements still in draft. It was quite another for Mr Kettwig to be authorized to negotiate and agree the terms of a document in English which would amend the finalized IPLA. The Tribunal therefore rejects Mr Mehra's evidence and finds that he understood that the Agreed Principles would have no effect upon the IPLA and that the IPLA was expected to be executed by the Parties during his stay in Aurich.

127. There are various technical points which the Claimants make about the Agreed Principles (e.g. that it was expressed to be made between the shareholders in WWIL and not between the parties to the IPLA) but the Tribunal considers that in the circumstances in which it was drafted and signed, the Agreed Principles could not reasonably have been regarded as having any binding legal effect at all. They were principles,

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not contractual terms. The document was not an independent agreement but an agreement about the contents of agreement which, it was agreed, were still to be negotiated. It contained a statement that the agreed principles "shall be finally incorporated into"

four listed documents, including "IPLA 'Draft enclosed'". Much has been made of this language; and Mr Kettwig, if he had been an astute lawyer, might have foreseen that these words, which were true at the time he took part in drafting the Agreed Principles, could later be said to be inconsistent with Enercon's intention to have the IPLA executed without amendment. The Tribunal considers, however, that what mattered was the intention of the parties, objectively ascertained. The evidence of the relevant surrounding circumstances clearly shows that both sides understood that, before any discussion of other agreements took place, a binding IPLA in the form of the final draft was to be executed by the parties.

131. The Tribunal considers that the suggestion that the parties should have signed the document (in the case of Dr Wobben, twice, on behalf of WPG and Enercon) and initialled every page merely to identify

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it as the latest draft under discussion is highly implausible. It had never been done before by these parties; and was not thought necessary in the case of the drafts of any of the other agreements to which the Agreed Principles were to apply, all of which were available for the same treatment.

133. The Tribunal considers that this reproachful letter is inconsistent with Mr Mehra's evidence that Dr Wobben had immediately accepted that the IPLA needed amendment and that there had been no binding agreement between the parties. Mr Mehra felt strongly that Dr Wobben had behaved unfairly in insisting that he sign the IPLA and in particular in demanding a royalty of 5% "when the agreements do not even provide for any other technologies." The reference to the E-82 is clearly about the IPLA and not Agreed Principles. None of this recrimination would have made any sense if Mr Mehra really thought that everything was still open to negotiation, with the IPLA unexecuted. It is unclear what he meant by saying that he had signed the agreement "without even reading it". He had certainly read every word of the Agreed Principles and he had had a

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fortnight to study the final draft of the IPLA. Perhaps he meant that he did not check whether the execution copy of the IPLA which he signed corresponded with the final draft he had been sent. Perhaps he was a little overwrought".

134. Mr Mehra has tried to explain away his letter, and in particular his statement that he has "signed the agreement" by saying that he meant the Agreed Principles. But that does not explain why, if he had got his way, he was so upset at having done so. Nor does it explain why he said he had not read it. All he can offer is that since he obviously had read it, his statement was "not to be taken literally."

135. The account given by Mr Mehra in his evidence in these proceedings may be compared with the solemn affirmation which he made to the magistrate in July 2008 in India to support a criminal charge of financial fraud which he laid against Enercon, its officers and advisers. Their fraud, he alleged was achieved by:

"inducing and coercing me into signing the "Agreed Principles" dated 29.09.2006 and thereafter mala fide treating a Draft Intellectual

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property License Agreement (IPLA) enclosed thereto as a final and binding agreement, with a view to lowering the profit margin of the Company."

136. Mr Mehra does not now say that he was coerced into signing the Agreed Principles. He accepts that in fact they were his idea. But the allegation is revealing, because, as his letter to Dr Wobben makes clear, coercion is what he was complaining about. He was angry that Dr Wobben had insisted that if the collaboration between Enercon and WWIL was to continue, he had sign the IPLA. This was the coercion that he meant, but Mr Mehra could not say so because it would have been inconsistent with his claim that the IPLA had never been executed at all.

137. In his oral evidence, Mr Mehra was asked what he meant by saying that he had been coerced.

"The Chairman: I think you were asked whether it was true that there had been coercion upon you to sign the agreed principles? A. Well, coercion in the sense there was a lot of pressure when I landed on 29 September 2006.

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We have had the discussions and everything was to be done then and there. There was an atmosphere of a lot of tension of course at that point in time.

The Chairman: That, you say, was coercion? A Well, there was pressure,"

138. This evidence is not consistent with Mr Mehra's claim that almost immediately upon his arrival in Germany Dr Wobben accepted his objections to the IPLA and agreed that it should be renegotiated at some indeterminate future date. But the Tribunal considers that it is a great deal nearer the truth. Mr Mehra did not want to sign the IPLA but was put under pressure to do so, to which, with great regret, he succumbed.

139. That night in the Hilton in Bremen Mr Mehra knew perfectly well that he had signed the IPLA and that it had been duly executed. It was only afterwards that, in his own mind, he rewrote the history of what had happened in Germany".

268. With respect to the issue of payment of royalties by

Enercon (India) Ltd. post the execution of IPLA, it was submitted

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by Mr Dwarkadas that the same were unilaterally deposited by

Enercon (India) Ltd. without offering a working sheet of

calculations to suggest the basis of arriving at the figures. Further,

Enercon GmbH has only retained these amounts under protest

and not accepted/acquiesced that they satisfy their rightful claims.

269. Learned Senior Counsel supported the approach

adopted by the majority Arbitrators in quantifying the royalties

and damages. It was pointed to us that the Tribunal proceeded to

act upon the evidence of Mr Nicholas Good; an expert produced

by the Claimants. As a matter of fact, the quantum computed by

Mr Mark Taylor; the expert witness produced by the Appellants

herein was far exceeded the sum suggested by Mr Good.

270. Concluding his submissions, Mr Dwarkadas

submitted that once the learned Tribunal had found that the IPLA

was a concluded contract capable of binding parties, it committed

no error in consequently directing the return of documents and

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materials containing confidential technology as the same clearly

fell in purview of clause 2.11 of the IPLA.

271. Having endowed our anxious consideration to the

submissions canvassed before us, we now proceed to render our

findings on the issues raised during the course of hearing.

FAILURE TO GRANT OPPORTUNITY TO ADDRESS CLOSING ORAL SUBMISSIONS

272. The contention raised by the Appellants on this aspect

is anchored to the proviso appended with Section 24 of the

Arbitration and Conciliation Act, 1996 which mandates that the

Arbitral Tribunal would be obliged to grant oral hearings at an

appropriate stage of proceedings if the same are requested, unless

the parties by agreement have chosen to exclude such hearing.

273. In order to appreciate the rival submissions of the

learned Counsels in this regard, it would be opposite to examine

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the manner in which proceedings were undertaken by the learned

Arbitrators.

274. The chronology of proceedings has been exhaustively

catalogued in paragraphs 25 to 83 of the majority Award. We

extract certain relevant events in the itinerary upon which we

propose to advert our consideration.

275. On 31.07.2014, the parties signed the Terms and

Conditions for the arbitration.

276. On 05.09.2015, the Claimants served an Application

for interim relief, seeking disclosure of various classes of

documents, access to manufacturing sites and to books and

records.

277. On 30.09.2014, the Claimants served their Statement

of Claim.

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278. On 13.10.2014, the Respondents served a Response to

the Claimants' Application for interim relief.

279. On 03.11.2014, the Claimants served a Reply to the

Respondents' Response.

280. On 24.11.2014, the Respondents served a Surrejoinder

to the Claimants' Reply.

281. On 13.12.2014, the Tribunal held an oral hearing

concerning the Claimants' Application of 05.09.2014 at the Hong

Kong International Arbitration Centre, Hong Kong, China. The

Claimants were represented by Mr. David Joseph, QC and the

Respondents by Mr Darius Khambatta, SC.

282. On 22.12.2014, the Respondents served their Defence

and Counterclaim.

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283. On 09.03.2015, the Claimants served a Reply and

Defence to Counterclaim.

284. On 07.04.2015, the Respondents served a Reply to

the Defence to Counterclaim.

285. On 27.04.2015, the parties each served Requests for

the Production of Documents.

286. On 22.06.2015, the Tribunal issued Procedural

Order No 2, ruling upon the disputed Requests for the Production

of Documents.

287. On 15.09.2015, the Claimants served witness

statements made by Stefan Knottnerus-Meyer, Hans-Dieter

Kettwig and Nicole Fritsch-Nehring. The Respondents served

witness statements made by Girish Paliwal, Yogesh Mehra and

Kaushik Khona.

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288. On 25.09.2015, the Claimants served expert witness

reports by Anke Nestler, Nicholas Good, Shashank Karnad and

Salman Khurshid. The Respondents served expert witness reports

by Mark Taylor and Khizer Ahmed, an additional witness

statement by Kaushik Khona and a corrigendum to his earlier

statement by Yogesh Mehra.

289. On 03.11.2015, the Claimants served rebuttal witness

statements by Hans-Dieter Kettwig, Nicole Fritsch-Nehring, Dr

Warner Popkes and Jost Backhaus and rebuttal expert witness

reports by Salman Khurshid, Nicholas Good and Shashank

Karnad. The Respondents served rebuttal witness statements by

Girish Paliwal, Yogesh Mehra and Kaushlik Khona and rebuttal

expert witness reports from Labanyendu Mansingh, Khizer

Ahmed, Rahul Surana and Mark Taylor.

290. On 26.11.2015, the Tribunal held a procedural

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meeting by telephone conference-call with the parties to discuss

the forthcoming oral hearing. The parties also submitted to the

Tribunal their opening submissions in writing.

291. On 27.11.2015, the Tribunal issued Procedural Order

No. 4 setting out the arrangements agreed during the procedural

meeting of 26.11.2015. Since the learned Counsels appearing on

behalf of the appellants have referred this Court to the contents of

this Procedural Order, we reproduce the same in its entirety

hereinunder.

"PROCEDRUAL ORDER NO 4

This order is made following the procedural hearing by telephone on 26 November 2015.

It is ordered that:

1. The hearing commencing on 30 November 2015 shall comprise the hearing of the oral evidence and my oral submissions.

2. The time at the hearing is to be split equally between the parties, save as otherwise allowed at the discretion of the Tribunal. It is a matter for the parties how they allocate their time at the hearing. It

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is envisaged that the parties are like to wish to make oral opening statements of 30 to 40 minutes.

3. The sitting hours for Monday 30 November will be as follows:

(start) 10.00 - 11.30 (morning break) (restart) 11.45 - 1.15 (lunch break) (restart) 2.00 - 3.30 (afternoon break) (restart) 3.45 - 5.15 (finish)

4. At the end of each day, the Tribunal will consider whether the next day should commence at 9.30 a.m.

5. The order of the evidence will be as follows:

1. Ms. Fritsch-Nehring

2. Mr Kettwig

3. Mr. Popkes

4. Mr Backhaus

5. Mr Knottnerus-Meyer

6. Mr Yogesh Mehra

7. Mr Girish Paliwal

8. Mr Kaushik Khona

9. Dr Nestler

10. Mr Surana

11. Mr Salman Khurshid

12. Mr L Mansingh

13. Mr Khizer Ahmed

14. Mr Shashank Karnad

15. Mr Nicholas Good

16. Mr Mark Taylor

6. The Claimants do not maintain an application that the Respondents must elect whether to call either the

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evidence of Mr L Mansingh or Mr Khizer Ahmed.

For the avoidance of doubt, the Claimants will not be expected to put matters to one expert that have been put to the other.

7. At the end of the hearing, the Tribunal will make provision for brief written closing to follow and provide direction as to the form that these will take.

8. *[The parties each have a liberty to apply to the Tribunal for another hearing of oral closing submissions, such application to be determined at the discretion of the Tribunal.]

*This point is not agreed. The Respondents' position is that, " It is our understanding that it is open to us to request for an oral hearing in a second session if we so require. The Respondents very clearly wish for the opportunity to make oral arguments, even after the written submissions. That is what they want and will request. It is our understanding that the Presiding Arbitrator did not shut out this point." The Claimants do not believe that this was the outcome of the hearing. The Claimants believe that the Tribunal's view and decision is that the Claimants and Respondents each have 5 days at the hearing to use as they see fit, and that the current hearing constitutes the parties' opportunity to cross-examine and make any oral submissions that they wish to make, to be followed by brief written closing arguments in a form directed by the Tribunal. If the Tribunal is to hear from the parties further, it should be

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because the Tribunal itself identifies that it will assist the Tribunal."

292. A hearing took place at the International Disputes

Resolution Centre, 70 Fleet Street, London EC4Y IEU, United

Kingdom on 30.11.2015 and 1, 2, 3, 4, 7, 8, 9 and 10 December

2015 ( the "Hearing"). The parties were represented as stated in

Part II above. Mr Joseph, QC (for the Claimants) and Mr

Khambatta, SC (for the Respondents) made opening statements;

and the following factual and expert witnesses were cross-

examined: Nicole Fritsch-Nehring, Hans-Dieter Kettwig, Warner

Popkes, Jost Backhaus, Stefan Knottnerus-Meyer, Yogesh Mehra,

Girish Paliwal, Kaushik Khona, Anke Nestler, Rahul Surana,

Salman Khurshid, Labanyendu Mansingh, Khizer Ahmed,

Shashank Karnad, Nicholas Good and Mark Taylor.

293. On 11.12.2015, the Tribunal issued Procedural Order

No 5 by which the evidential record was declared closed, save for

the issue of whether the Mehra directors had been in breach of

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fiduciary duty and/or the SHA is connection with transactions

between WWIL and Vish Wind Infrastrucre LLP and other

entities ("the Vayuu Companies") which they controlled. The

Order set out an agreed timetable for the disposal of this issue and

the closing statements in the arbitration. We have already

reproduced Procedural Order No.5 in its entirety at paragraph 217

of our Judgment and, therefore, we refrain from doing the same

again.

294. On 13.12.2015, in accordance with the timetable in

Procedural Order No 5, the Claimants applied for the production

of documents relating to the Vayuu Companies and injunctive

relief pursuant to section 17 of the Indian Arbitration and

Conciliation Act 1996.

295. On 15.12.2015, Mr Darius Khambatta, learned Senior

Counsel and Dr Abhinav Chandrachud, learned Counsel

informed the Tribunal that they were no longer representing the

Respondents.

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296. On 16.12.2015, AZB Partners informed the Tribunal

that they were no longer representing the Respondents.

297. On 22.12.2015, Mr Yogesh Mehra, on behalf of the

Respondents, requested the Tribunal to extend the period for a

reply to the application for document production and injunctive

relief for four weeks.

298. On 24.12.2015, the Tribunal issued Procedural Order

No. 6 by which (subject to receiving certain undertakings from the

Mehra directors) it extended the period for a reply to the

Claimants' application until 21.01.2016 and made further

adjustments to the timetable laid down in Procedural Order No 5.

299. On 06.01.2016, Hariani & Co informed the Tribunal

that they were now representing the Respondents.

300. On 07.01.2016, the Respondents applied for a further

extension of 12 weeks to reply to the Claimants' application.

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301. On 09.01.2016, the Claimants opposed the grant of a

further extension.

302. On 03.02.2016, the Tribunal made Procedural Order

No. 7, by which it extended to 26.02.2016 the time for the

Respondents to reply to the Claimants' application and made

other adjustments to the timetable in Procedural Order No 5.

303. On 09.02.2016, the Respondents applied for further

extensions of the timetable in Procedural Order No. 7. The

Claimants opposed the requested extensions.

304. On 14.02.2016, the Tribunal gave directions by which

it modified but substantially maintained the timetable in

Procedural Order No. 7.

305. On 18.02.2016, the Respondents applied for

extensions of the timetable in Procedural Order No. 7, as

modified.

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306. On 14.04.2016, the Respondents applied for an

extension of the time for filing closing submissions and for a

further oral hearing.

307. On 15.04.2016, the Respondents submitted a further

factual witness statement by Kaushik Khona.

309. On 18.04.2016, the Respondents submitted an expert

witness report by D. Vaidyanathan.

310. On 20.04.2016, the Claimants notified the Tribunal

that they did not wish to cross-examine Kaushik Khona or D.

Vaidyanathan.

311. On 20.04.2016, the Tribunal directed that the

evidence of Kaushik Khona and D. Vaidyanathan be admitted into

the evidential record, that the evidential record be declared closed,

that the time for exchange of closing submissions be extended to

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13.05. 2016 and that the hearing provisionally fixed by Procedural

Orders Nos 5 and 7 for 27-28.04.2016 be cancelled.

312. On 22.04.2016, the Respondents made a further

application for extension of the time in which to serve closing

submissions and for an oral hearing.

313. On 22.04.2016, the Tribunal refused the

Respondent's application of 22.04.2016 and directed that no

further submissions on the timetable should be made, with the

provisional hearing of 27-28.04.2016 remaining cancelled.

314. On 11.05.2016, the Respondents notified the Tribunal

that their closing submissions would not be ready until

25.03.2016.

315. On 13.05.2016, the Claimants served their closing

written submissions.

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316. On 25.05.2016, the Respondents served their closing

written submissions.

317. At the outset, we notice that upon the completion of

pleadings and exchange of statements of witnesses, the Tribunal

accorded an opportunity for an oral hearing to the parties in

London before the commencement of evidential hearings.

'Opening statements' /submissions were addressed by learned

Counsels representing the parties.

318. During the course of recording evidence, whilst Mr.

Yogesh Mehra was under cross-examination, financial statements

of Vish Wind were required to be produced under the directions

of the Tribunal. The documents revealed high value transactions

between WWIL and Vish Wind, which also took the learned

Counsels representing the Appellants-herein by surprise. The

relevant extracts from the transcript of Day 9 of the Proceedings

dated 10.12.2006 are reproduced herein below.

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"Enercon & Wobben v WWIL & Ors. [Master] Day 9

207: 1 Housekeeping 2 THE CHAIRMAN: Well, now, Let's discuss where we go from 3 here.

4 Do you want to deal now with the question of the 5 breach of fiduciary claim, or do you want to leave that 6 over to tomorrow morning?

7 MR KHAMBATA: Let me put it this way: I still haven't 8 received any instructions on that aspect. 9 THE CHAIRMAN : Yes.

10 MR KHAMBATA: I am not sure I will receive them by tomorrow 11 morning either, I must be candid with the bench. But 12 let me give the client a chance overnight, if he has any 13 instructions. I think I must give him that sort of 14 time, since we do have tomorrow.

15 MR CHAIRMAN: Very well, yes.

16 MR KHAMBATA: I should also make one thing clear, and 17 I think it is better I do it today, rather than 18 tomorrow. We did request your Lordships for time to 19 make oral closing submissions, either at a separate 20 session or, as your Lordship decided, within these

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21 10 days.

22 THE CHAIRMAN: Yes.

23 MR KHAMBATA: I must confess that if I don't have adequate 24 instructions on this aspect of the matter, I pretty much 25 can't make any oral closing submissions on the related

208: 1 party issue at all.

2 THE CHAIRMAN: No. 3 MR KHAMBATA: Because I don't want to sort of improvise.

4 That is out of the question.

5 THE CHAIRMAN : No. 6 MR KHAMBATA: In which case, I am perfectly willing to make 7 some closing oral submissions on other aspects of the 8 case, would you like to do it that way or - I am perfectly happy to do it that way, or to file detailed 10 written submissions -

11 THE CHAIRMAN : Yes.

12 MR KHAMBATA: - on the state of the record as it is now.

13 THE CHAIRMAN: Yes, which would you prefer? Do you want to 14 be able to have the opportunity, say, to lunchtime 15 tomorrow to address us on the other -

16 MR KHABATA: On some parts of the evidence. 17 THE CHAIRMAN : Is that what you would prefer? 18 MR KHAMBATA: Could I take that decision and tell

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19 your Lordships tomorrow morning.

20 THE CHAIRMAN : All right.

21 MR KHAMBATA: Because I will have to see (1) whether I get 22 any instructions and, if I don't, whether it is really 23 worth my while, not addressing that aspect and 24 addressing other aspects.

25 THE CHAIRMAN: Yes, I see."

(Emphasis Supplied)

319. We may observe that at this stage of proceedings the

learned Senior Counsel representing the Appellants-herein before

the Arbitral Tribunal did remind the learned Arbitrators that a

request had been made on their behalf to address closing oral

submissions, however in wake of the recent developments he was

not prepared to make closing oral submissions on the aspect of

related party transactions at all owing to absence of adequate

instructions. The learned Senior Counsel proposed that either he

could address the Tribunal by making closing oral submissions on

other aspects of the case or he could file detailed written

submissions. The learned Senior Counsel thereafter requested the

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learned Arbitrators to defer the proceedings till next morning in

order to enable him to decide the course he intended to adopt after

receiving instructions, if any. Upon his request, the proceedings

stood adjourned for next morning i.e. 11.12.2015.

320. The crucial events which transpired on the next

session held on 11.12.2015 come to the fore from a perusal of the

relevant transcript that was prepared and the contents of which in

all fairness have never been disputed. The relevant portions of the

transcript of Proceedings dated 11.12.2015 are extracted

hereunder.

"...

The Chairman : "I assume we are not necessarily committed to an oral hearing at all?".

Mr Khambata : No, I understand.

The Chairman : It may be that no one wants to cross examine and then we just do it.

Mr Joseph: I think Lord Hoffmann, you are absolutely right. We are not committing ourselves, and I think, maybe we said closing

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submissions, if any are requested, or something along those lines.

The Chairman : Yes.

Mr Khambata : Yes, that would give us the opportunity to go back and make an appropriate application for oral submissions.

Mr Joseph : If any is required and that again would not commit the Tribunal to acceding to the request, if the request were made.

Mr Khambata : Of course not. Of course not.

..." (Emphasis Supplied)

321. The inescapable conclusion which emerges from the

perusal of the said transcript is that Mr. Khambatta, learned Senior

Counsel representing the Appellant's-herein before the Arbitral

Tribunal did concede that he was not necessarily committed to

address closing oral submissions and more significantly acceded

the position that in the eventuality such a request were made, it

would lie within the discretion of the Tribunal to accept such a

request or not. We regret that we are unable to subscribe to the

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submission urged by Mr. Mehta that such statements made by

learned Counsels during a polite verbal interchange with the

Bench could not be construed as a waiver. As a matter of fact, it

would rather be inconceivable to contend the same in the case at

hand in as much as the Appellant's-herein were ably represented

by an eminent Senior Counsel who is expected to make statements

upon instructions with utmost responsibility. The Courts of

Justice, including such private dispute resolution mechanisms,

proceed to act upon the statements made by the learned Counsels

during the course of proceedings, as agents of the parties who they

represent.

322. We find that it was under these attending

circumstances that the Tribunal proceeded to pass Procedural

Order No.5 on 11.12.2015 fixing a proposed calendar enumerating

the timeline to be adhered by the parties. Item No.9 of the

Procedural Order No. 5 clearly recorded the fact that opportunity

for Closing Oral Submissions would be accorded only if

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determined to be necessary by the Tribunal. It is palpable from the

opening lines of the Order itself that it was formulated upon clear

agreement between the parties as expressed by their lawyers. The

said position stands corroborated by the verbal interchange

between the learned Arbitrators and the counsels, as

contemporaneously recorded in the transcripts we referred above.

We have already noticed that Mr. Khambatta, learned Senior

Counsel did accede to the position that in the eventuality a request

for oral submissions was made, it would lie within the discretion of

the Tribunal to accept such a request or not. The submission of

Mr. Mehta that the relevant entry contained at S.No. 9 of

Procedural Order No. 5 was not based on consensus arrived at

between the parties but in the nature of directions cannot be

countenanced. It assumes significance that no demur was raised on

this count was raised at that time or immediately thereafter. As

taken note of by us in the preceding paragraphs, on an earlier

occasion when objections were expressed by the Appellant's-herein

at the time of recording Procedural Order No.4, a note of

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disagreement faithfully reflecting the said objections was inserted

therein. We find no objections or a challenge having been

contemporaneously mounted upon Procedural Order No. 5 to

suggest that it was premised upon the incorrect understanding of

the statements made by legal practitioners during the Proceedings.

We extrapolate the said Procedural Order in its entirety.

"The following Timetable is agreed between the parties:

Sr. No. Particulars Date 1 Claimants to file an Application 13 Dec 2015 under Sec 17 of the Arbitration & Conciliation Act 1996 2 Respondents to file their Reply 19 Dec 2015 to the Claimants Application under Sec 17 of the Arbitration & Conciliation Act 1996 3 Respondents to respond to the 15 Dec 2015 Claimants request for production of documents set out at Annex A 4 Tribunal to make a ruling on the 23 Dec 2015 Claimants Application (i) under sec. 17 of the Arbitration and Conciliation Act 1996 & (ii) in relation to any disputed item in Annex A

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5 Respondents to provide any 4 January 2016 documents/information in accordance with (3) and (4) Above 6 An Application to the Tribunal, 18 January 2016 if either party seeks to adduce further evidence responsive to the Vish Wind Infrastructure LLP documents or the new documents produced at (5) above 7 An Application to cross examine 25 January 2016 or respond to the evidence adduced pursuant to (5) above 8 Exchange of Closing Written 16 March 2016 submissions 9 Any oral evidence in 27 & 28 April 2016 accordance with (7) above in and London. Closing oral submissions if any are requested and if determined necessary by the Tribunal." (Emphasis Supplied)

323. It had been urged by Mr. Shyam Mehta and Dr.

Birendra Saraf, learned Counsels for the Appellants that the

transcript of Proceedings for Day 10 dated 11.12.2015 must be

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read in backdrop of the Proceedings conducted on Day 9 dated

10.12.2015 wherein request for oral hearing had been made by

Mr. Khambatta, the learned Senior Counsel representing the

Appellants-herein before the Tribunal and therefore waiver of the

right to oral hearing ought not to be lightly inferred from the

statements exchanged on the subsequent date i.e. Day 10 of

evidential hearings on 11.12.2015.

324. As discussed by us in paragraphs 318-319, a careful

reading of the transcript of Proceedings dated 10.12.2015 would

reveal that the learned Senior Counsel representing the

Appellants-herein did remind the learned Arbitrators that a

request had been made on their behalf to address closing oral

submissions, however in wake of the recent developments he was

not prepared to make closing oral submissions on the aspect of

related party transactions at all owing to absence of adequate

instructions. The learned Senior Counsel proposed that either he

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could address the Tribunal by making closing oral submissions on

other aspects of the case or he could file detailed written

submissions. The transcripts suggest that even on the said date the

learned Senior Counsel had himself offered the alternative

recourse of submitting Written Submissions instead of closing oral

hearing. It would thus emerge that he had no instructions to adopt

a hardened position committed to an Oral hearing. Further, as

held by us the Procedural Order No. 5 was made the following day

i.e on 11.12.2015 upon the consent of parties, and the same is

consistent with the contents of the verbal interchange that took

place between the learned Arbitrators and the Counsels which was

contemporaneously recorded in a transcript. The contents of the

transcript of Proceedings dated 11.12.2015 clearly establish that

the prior intention to the contrary, even if any, stood superseded

by the unequivocal and unambiguous submission by the learned

Senior Counsel to the discretion of the Tribunal to determine the

requirement of Closing Oral Hearing.

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325. We may also note that even the Solicitors that were

inducted subsequently and entered appearance on behalf of the

Appellants-herein on 07.01.2016 did not assert an indefeasible

right to make Closing Oral Submissions. Rather consistently

intent was expressed to apply to the Tribunal and ' to take leave' to

make such submissions. Various communications addressed by

their Solicitors to the Tribunal including the communication

dated 09.02.2016, 14.04.2016, 22.04.2016 and 11.05.2016

evidence that in view of the concessions made by erstwhile

counsel(s) they clearly understood the purport of Procedural

Order No. 5 to mean that the ' discretion now vested with the

Tribunal' to rule upon a request for closing oral submissions. As

rightly pointed by Mr. Chinoy, it was only on 25.05.2016 that the

Solicitors representing the Appellants-herein belatedly for the first

time asserted that they had a right to closing oral hearing in terms

of proviso to Section 24(1) of the Arbitration and Conciliation

Act, 1996 and that the parties had not excluded such a right. The

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said request was promptly rejected by the Tribunal on 26.05.2016

by highlighting that the Procedural Order No. 5 was made by

consent of parties and it expressly recorded the fact that closing

oral submissions would be granted only if requested and

determined to be necessary by the Tribunal.

326. This Court has microscopically examined the calendar

of proceedings, transcripts of discussions and various Procedural

Orders passed by the Tribunal in order satisfy its conscience and

ascertain if the Appellant's-herein were deprived of any legitimate

right(s) to present their case and if closing oral submissions, under

the circumstances, were wrongly denied.

327. We find that the procedure adopted by the Tribunal

was transparent and reasonable. Repeated accommodations were

granted in favour of the Appellants-herein by the extending time-

lines. The Tribunal was considerate to accede to such requests in

view of the fact that the legal team of Counsels and Solicitors

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representing the Appellants-herein withdrew from the case on 15-

16.12.2015.

328. Procedural Order No. 5 was subsequently modified by

Procedural Order No. 7 dated 03.02.2016 at the instance of the

Appellants-herein. The date of exchange of Closing Written

Submissions was extended from 16.03.2016 to 22.04.2016.

329. However, even after Procedural Order No. 7 further

extensions were sought by the Solicitor's vide communication

dated 09.02.2016 addressed to the learned Arbitrators. Extension

of time till 30.06.2016, inter alia, was sought for filing closing

written submissions. Vide communication dated 14.02.2016 the

Tribunal responded to the Solicitors representing the Appellants-

herein and underscored the need for submission of closing written

submissions in the prescribed time so that the Tribunal could

determine the request of granting closing oral submissions, if any.

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330. The issue precipitated further and vide

communication dated 18.02.2016 the Solicitors persisted with

their request seeking extension of time for submitting closing

written submissions and asserting that the same causes " severe

prejudice".

331. It was owing to such repeated requests for extensions

that the dates of 27-28 April 2016 initially reserved for possible

Closing Oral Submissions had to be cancelled by the Tribunal

vide communication dated 20.04.2016 as the Appellants-herein

had already indicated they were not in the position to submit their

Closing Written Submissions in the stipulated time and had thus

sought further extensions. The Tribunal extended the time for

exchange of Closing Written Submissions to 13.05.2016.

332. We note that the Appellants-herein ultimately

submitted their Closing Written Submissions only on 25.05.2016

again breaching the extended deadline fixed for 13.05.2016. It is

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evident that under such circumstances the Tribunal no longer had

the opportunity to peruse the written submissions in advance and

determine the necessity, if any, of permitting Closing Oral

Hearing.

333. As a matter of fact, the laxity on part of the Appellants

themselves in failing to submit the Closing Written Submissions in

the prescribed time disabled/precluded the Tribunal from

determining the request of Closing Oral Hearing after having had

the benefit of perusing the closing written submissions, as was

contemplated under Procedural Order No. 5 (as amended by

Procedural Order No.7). Thus, the grievance expressed by Mr.

Mehta that the Tribunal erred in hastily rejecting the request for

closing oral hearing without considering the closing written

submissions cannot be accepted.

334. We may note that what would be the scope and

amplitude of 'oral hearing', as envisaged under Section 24 of the

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Arbitration and Conciliation Act, 1996 was not argued before us.

The Tribunal in its ruling dated 26.05.2016 observed that oral

hearings were provided to the parties in December 2014 and

November-December 2015. It was further observed that Section

24 of the Act, 1996 could not be construed in a manner that a

party could virtually dictate to the Tribunal the number of

hearings it necessarily desired.

335. We observe that whatever be the amplitude of rights

conferred under proviso to Section 24 of the Act, 1996, yet the

said proviso itself recognizes waiver of such rights by agreement.

In the case at hand, we have already found that the learned Senior

Counsel representing the Appellants-herein consciously waived

the absolute right/prerogative vested under proviso to Section 24

of the Act and surrendered the same to the by subjecting it to the

discretion of the Tribunal. In view of such express surrender by the

learned Counsels representing both the parties, it legitimately fell

within the province of discretion of the Arbitral Tribunal as

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envisaged under Section 24(1) of the Act, 1996 to determine the

necessity of closing oral submissions. Thus, we conclude that there

is no infraction of proviso to Section 24 of the Act, 1996.

336. This Court has examined this cardinal issue

from another alternate standpoint to judge whether the

Appellants-herein suffered any possible prejudice stemming from

absence of such hearing and if the same resulted in violation of the

principles of natural justice. Having perused the exhaustive

Closing Written Submissions submitted on behalf of the

Appellants-herein before the Tribunal, we find that all issues,

including the issue of Third Party transactions-Vish Wind were

comprehensively contested. No prejudice could be demonstrated.

337. At any rate, the moot question- 'Whether 'oral

hearing' as contemplated under proviso to Section 24 of the Act,

1996 would necessarily enwomb within its fold the unfettered

right to insist upon addressing such closing oral submissions, need

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not be gone into as the same has not been argued and more

significantly even if such a right exists in law the same

unquestionably stood extinguished by agreement.

WHETHER THE DISPUTES RELATABLE TO THE SHA WHICH INCLUDED THE `VISH WIND' TRANSACTIONS WERE ARBITRABLE

338. The Supreme Court in paragraph 144 of its judgment

dated 14.02.2014 (paragraph 153 of the report of its decision as

contained in SCC) passed directions to refer all disputes arising

between parties in relation to various agreements, inter alia, the

SHA to arbitration. We have already recorded in paragraphs 18-32

of this judgment the spate of litigation which ensued between the

parties ultimately culminating before the Supreme Court wherein

these directions came up to be passed. For instilling clarity in our

discussion, we reproduce paragraph 144/153 herein-under.

"153. For the reasons recorded above, Civil Appeal No.2087 of 2014 @ SLP (C) No.10906 of 2013 is

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dismissed. The findings recorded by the Appellate Court that the parties can proceed to arbitration are affirmed. The findings recorded by the Trial Court dismissing the Application under Section 45 are set aside. In other words, the Application filed by the Respondents for reference of the dispute to arbitration under Section 45 has been correctly allowed by the Appellate Court as well as by the High Court. The findings of the High Court are affirmed to that extent. All the disputes arising between the parties in relation to the following agreements viz. SHA, TKHA, SSHAs and STKHA, Agreed Principles and IPLA, including the controversy as to whether IPLA is a concluded contract are referred to the Arbitral Tribunal for adjudication."

(Emphasis Supplied)

339. At the outset, we must observe that the directions are

clear and unambiguous.

340. It has been urged by Dr Saraf, learned Counsel

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appearing on behalf of the Appellant's-herein that the arbitral

clause comprised under the SHA (Clause 16) contemplated

reference of disputes arising thereunder for arbitration before the

Indo-German Chamber of Commerce. On the strength of this

circumstance, it was submitted that the Supreme Court would

never have intended to subject the disputes arising under the SHA

to be part of the reference for arbitration made by it under the

IPLA. As noted by us in paragraphs 170-175, Dr. Saraf had

labored to highlight that what had arisen for the consideration of

the Supreme Court was the application under Section 45 of the

Act, 1996 filed by Enercon GmbH in the 'Daman Suit'and it was

arbitral clause under the IPLA which had sought to be invoked.

341. We have endowed anxious consideration to the

submissions of Dr. Saraf with regard to the interpretation of the

directions of the Supreme Court comprised in Paragraph 153 of

the report of its judgment. A meaningful reading of the decision of

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the Supreme Court in its entirety makes it evident that the Court

proceeded to comprehensively refer the entire spectrum of

disputes for arbitration in view of the fact that the said disputes

had been precipitating for nearly a decade before different forums

and inordinate delays had occasioned. As is pellucid from a bare

perusal of paragraph 154 of the judgment, in the peculiar facts of

the present case, with a view to mitigate further delays, the Court

itself proceeded to nominate the Third Arbitrator.

342. The Supreme Court in paragraph 80 (SCC) of the

report of its judgment also noticed the circumstance that each of

the agreements- IPLA, HoA, SHA, TKHA comprised arbitral

clauses and thus there was a clear 'intention to arbitrate'.

Significantly, the Court observed that the parties were involved in

"unnecessarily complicated and convoluted proceedings". In

paragraph 94 (SCC) the Court expressed its disapproval to the

approach adopted by the Appellant's-herein in lingering on with

the disputes and remarked that the attitude of the Appellants-

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herein was to avoid arbitration at all costs.

343. In this context, the submission of Mr. Kadmar cannot

be brushed aside that the directions passed by the Supreme Court

in the case at hand were somewhat akin to its approach in an

earlier pronouncement reported as (2013) 1 SCC 641 Chloro

Controls India Private Ltd. v. Severn Trent Water Purification Inc ,

which was incidentally cited by the all the three learned Senior

Counsels before the Supreme Court in another context.

344. The Supreme Court in Chloro Control's case (Supra)

pertinently observed that when several parties are involved in a

dispute, it is usually considered desirable that the dispute should

be dealt with in the same proceedings rather than a series of

separate proceedings as it saves time, money and avoids possibility

of conflicting decisions [Paragraphs 86-89]. Significantly, a keen

perusal of the dictum in Chloro Control's case (Supra), in

particular paragraphs 150-153, would evince that even in the said

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case Court had taken note of the fact different arbitral forums were

prescribed under different agreements. Repelling this perceived

road-block the Court proceeded to make a composite-reference

arbitration in the said case as it was observed that in essence there

was an underlying intent under the various agreements to settle

the disputes by arbitration and as long as the alternative recourse

contemplated under some of the agreements had not been opted

by the parties, such a reference could always be made under the

mother/principal agreement.

345. We find that the Terms and Conditions of Tribunal's

Appointment also expressly contained reference to the directions

passed by the Supreme Court in its judgment dated 14.02.2014.

346. It had also been initially submitted during the course

of hearing by Dr. Saraf that the Supreme Court in its judgment

dated 14.02.2014 granted stay of various proceedings pending

before different Courts, however, the Court in its wisdom

consciously chose not stay the CLB proceedings. It was sought to

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be submitted that the disputes stemming from the SHA were

subject matter of the proceedings before the CLB and the said

circumstance would evidence that the Supreme Court did not

intend to bundle the disputes relatable to the SHA to the present

arbitration under the aegis of the IPLA. Countering the said

submission, it was pointed out on behalf of the Respondents-

herein that at the relevant time of passing judgment when the

Supreme Court was in seisin of the matter proceedings before the

CLB had already concluded and statutory appeals u/s 10F

Companies Act, 1956 were pending before the Bombay High

Court. Thus, there was no occasion to stay proceedings before the

CLB. In view of the said clarification, Dr. Saraf molded his initial

submission and contended that nonetheless, the Supreme Court

could have granted stay of the proceedings in Appeal. In this

regard it was highlighted by Mr. Kamdar that the ambit of CLB

proceedings was not restricted to merely disputes under SHA but

also enwombed within its fold disputes arising from unauthorized

amendment of Articles of Association and other breaches of other

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statutory rights/duties under the Companies Act, 1956 that were

not the subject matter of arbitration . Therefore, the two

proceedings though admittedly having some overlap could be

permitted to operate concurrently in their own spheres.

347. We hasten to observe that the directions comprised in

paragraph 153 of the judgment of the Supreme Court are categoric

and unambiguous. The attending circumstances in which the said

directions were passed have already been adverted by us in the

paragraphs 340-344 of this judgment. This Court cannot be

expected to second-guess the reasons which may have impelled the

Supreme Court not to injunct the proceedings in Section 10F

Company Appeals pending before this Court. It cannot be ruled

out that the Supreme Court was of the considered view that the

ambit of the Company Law Board proceedings was wider and

beyond the disputes relatable to SHA and therefore, it would have

been inappropriate to interfere with the said proceedings. In this

context, it would be pertinent to note that the CLB vide its Order

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dated 29.10.2007 whilst rejecting the Company Application No.

484 of 2007 preferred under Section 8 of the Act, 1996 by the

Appellant's-herein seeking reference to arbitration in terms of the

SHA, itself observed in paragraph 10 of its Order that some of the

allegations before the CLB could not be traced to the terms of

SHA. At any rate, the unequivocal directions contained in

paragraph 153 of the judgment of the Supreme Court cannot be

dislodged by a tenuous process of drawing a speculative inference

from what the Court did not choose to do. Such a process of

interpretation would be hazardous, to say the least and cannot be

countenanced.

348. It would be pertinent to highlight that, as a matter of

fact, the plea that the Supreme Court did not refer the disputes

relatable to the SHA was never raised by the Appellant's-herein

before the Arbitral Tribunal at any stage of the proceedings. The

Tribunal was merely called upon to exercise its discretion not to

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pronounce upon the matters relatable to SHA as the same were

also pending adjudication before the CLB and would result in

duplication of proceedings/possibility of conflicting findings. It

assumes significance that that what was urged before the Tribunal

was the plea that exercise of such jurisdiction would result in

duplication of proceedings and not that the Tribunal inherently

lacked jurisdiction as the Supreme Court did not intend to refer

disputes arising from the SHA. Reference was made by Mr.

Kamdar to paragraphs 83-85, 150 of the Statement of Defence,

Paragraphs XII (A)-(D) of the Written Opening Submissions and

Paragraph 139 of the Written Closing Submissions to demonstrate

the nature of objections raised before the Tribunal.

349. We may note that the entire thrust of arguments

before this Court has been that the judgment of the Supreme

Court dated 14.02.2014 did not intend to clothe the Arbitral

Tribunal the jurisdiction to deal with disputes relatable to SHA.

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The alternative contention of Dr. Saraf that even if the

jurisdiction to deal with such disputes was conferred upon the

Arbitral Tribunal by the Supreme Court yet, the Tribunal ought to

have refrained from exercising such jurisdiction was not developed

before us and no material in support thereof was placed.

350. The plea that at an earlier stage of proceedings before

the CLB Enercon GmbH had itself resisted the application

preferred by the Appellants-herein for reference to arbitration

pales into insignificance in view of the supervening circumstance

that ultimately the Supreme Court directed all the disputes,

including those arising under the SHA to be referred for

arbitration.

351. In view of the discussion as contained in the

preceding paragraphs, this Court is of the considered view that the

disputes relatable to SHA were required to be adjudicated by the

learned Arbitrators in terms of the directions of the Supreme

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Court in its judgment dated 14.02.2014 and no exception can be

taken on that count.

WHETHER THE AWARD QUA VISH WIND TRANSACTIONS IS LIABLE TO BE SET ASIDE OWING TO INSUFFICIENT PLEADINGS

352. It had been contended by Mr. Shyam Mehta, learned

Senior Counsel appearing on behalf of the Appellants that the

majority Arbitrators fell in grave error by proceeding to make an

Award with respect to Third Party transactions, more specifically,

the sale of development rights by Vish Wind to WWIL in view of

the fact that necessary averments in the pleadings of the Claimants

were clearly lacking which resulted in a complete failure to raise

the foundation of claim with respect to Third Party transactions.

353. In order to appreciate the submissions of Mr. Mehta,

we embark upon our quest to ascertain the nature of claims raised

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by the Respondents-herein (Claimants) before the Arbitral

Tribunal at different stages of the proceedings and whether the

same were backed by statement of material facts/concrete

particulars in support thereof.

354. We commence by analysing the Statement of Claim;

which triggered the pleadings. As highlighted by Mr. Chinoy, in

Para 96.2 and Para 96.3 of Part H of the Statement of Claim it had

been specifically claimed that Vaayu Companies had been set up

for exploiting the technology of the Claimant's and value was

transferred from WWIL to such companies. The relevant portions

of the same have been reproduced by us earlier while taking note

of the submissions addressed by Mr. Chinoy. However, for the sake

of coherence, we extract the same hereunder.

Para 96.2 of Part H of the Statement of Claim

"...set up the Vaayu Companies for the purpose of receiving and exploiting the Claimants technology

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and/or have assisted the Vaayu Companies in receiving and/or exploiting the Claimants technology and/or have transferred value from WWIL to the Vaayu companies, such also constitutes breaches of Mr Yogesh Mehra and/or Ajay Mehra's obligations under the SHA and/or Indian law, including their duties of good faith, which has caused loss to the claimants and for which the claimants are entitled to damages to be assessed and/or an account of profits, plus interest...".

(Emphasis Supplied)

Para 96.3 of Part H of Statement of Claim

"...The loss caused to Enercon by Mr Yogesh Mehra and/or Mr Ajay Mehra's breach of their duties under the SHA and/or under Indian Law, including their obligations of utmost good faith, trust, confidence and commitment towards Enercon, include the damage caused to the value of Enercon's shareholding in WWIL and Enercon is entitled to Damages (to be assessed) plus interest, in regards to this loss. Further and alternatively, Enercon

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is entitled to an account of profits plus interest, in relation to Mr Yogesh Mehra and/or Mr Ajay Mehra's breach of their duties of utmost good faith, trust, confidence and commitment towards Enercon..."

(Emphasis Supplied)

The Prayer Clause (I)(c) comprised in the Statement of Claim

reads as follows:

"(1) In respect of Mr Yogesh Mehra and Mr Ajay Mehra's breaches of the SHA :

(a) .. .. ..

(b) .. .. ..

(c) An order that Yogesh Mehra and Mr Ajay Mehra pay damages (to be assessed) and/or an account of profits for their breaches of the SHA and/or duties arising as a matter of Indian Law."

(Emphasis Supplied)

355. A keen perusal of the Statement of Claim also reveals

that the Claimant's furnished a list of 33 entities appended as

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'Annex B' to the Statement of Claim. The Claimants suspected

unauthorized dealings of WWIL with these entities. The said

entities were collectively referred as the " Vayuu

Companies/Partnerships". We note that Vish Wind Infrastructure

LLP figures at S.No. 12 of the said list.

356. We observe that the Statement of Claim did contain a

generic averment to the effect that the Mehra's had transferred

value from WWIL to the Vaayu Companies in breach of their

obligations under the SHA and/or Indian Law. Further, it had

been prayed that the Mehra brothers be held liable to pay damages

and/or account for the profits made by such transfer.

However, the Statement of Claim fell short of

disclosing any concrete particulars of the manner of such

unauthorized transfer of value was effected. As observed by us

earlier in paragraph 205, the Statement of Claim merely voiced

the apprehensions under which the Claimant's were laboring as

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they were in dark about the affairs of WWIL. Perhaps as a mark of

abundant caution, they did make speculative pleadings to this

effect so as to leave room for the possibility of exploring the issue

further. As events would subsequently unravel, the instinctive

premonition and apprehension of the Claimant's did turn out to

be correct.

357. As demonstrated by Mr. Chinoy, actionable

information with regard to such transactions had started to trickle

in sometime around September 2015 in view of the disclosures

made by the Appellants-herein pursuant to Procedural Order

No.2 dated 22.06.2015 passed by the Tribunal. Documents prima

facie revealed that transactions to the tune of Euro 124 million

had taken place between WWIL and Vish Wind. It was pointed

out that even at this stage, financial statements of the Vaayu

Companies were withheld by the Mehra's.

358. The Claimant's pursued their apprehension of

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unauthorized value transfer from WWIL in favour of Third

(Related) Party entities and subjected the documents received

through the process of disclosures to forensic scrutiny by Experts.

The report prepared by Mr. Nicholas Good lent credence to the

fears of the Claimant's and brought to notice past transactions to

the tune of Euro 124 million as described above. It is stated that

the said Report was also submitted before the Tribunal.

359. Armed with this material gained from disclosures

made during the course of Arbitral Proceedings, the Claimants

now proceeded to positively aver concrete/material particulars in

support of their claims with respect to value transfer having been

made to third (related) parties. We advert our consideration to

Para 114 of the Opening Written Submissions submitted by the

Claimants on 25.11.2015.

"114...In setting up the Vaayu Companies and procuring that WWIL transact with related companies, including but not limited to the Vaayu Companies, Mr

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Yogesh Mehra and/or Ajay Mehra have breached their obligations under the SHA and/or Indian Law including clauses 2.7 & 4.1 of the SHA and/or their duties of good faith towards Enercon. Accordingly Mr Yogesh Mehra and Mr Ajay Mehra should pay damages and/or account for profit in respect of transactions undertaken by WWIL with these related companies. By way of example it has now been seen that WWIL has purchased from related companies land or land rights at a cost of Euro 124 million in recent years. No valid consent from Enercon has been obtained for these transactions by which very large sums have been paid to entities which Yogesh Mehra or his family own or have a significant interest in. It amounts to self dealing on the part of Mr Yogesh Mehra and/or Ajay Mehra and/or consists of breaches by Mr Yogesh Mehra and Mr Ajay Mehra of clauses 2.7 and 4.1 of the SHA and/or their duties of good faith towards Enercon and they are obliged to account for all profits they have earned. The same legal principles apply with respect to benefits received from loans made by WWIL to related companies."

(Emphasis Supplied)

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360. We observe that the deficiency in initial pleadings viz.

the Statement of Claim was overcome at a later stage in the form

of Written Submissions and other applications preferred by the

Claimants detailing the Third (Related) Party transactions with a

greater degree of specificity. The requisite particulars of material

facts that are necessary to crystalise a claim, actionable in law, had

finally begun to surface.

361. The Appellant's-herein also took cognizance of the

issue of unauthorized value transfer in favour of Vish Wind that

had been raised by the Claimants and proceeded to expressly

denounce the same in their Opening Written Submissions.

Attention of this Court was drawn by Mr. Chinoy to the relevant

portions on this aspect contained at Paragraphs 87, 88(iii)(iv) and

Para 89(iii) of the Opening Written Submissions submitted before

the Tribunal on behalf of the Appellants. It had been contended

that there has been no transfer of value from WWIL to the Vaayu

Companies. The perceived lacunae in the Report submitted by Mr.

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Good were sought to be highlighted. They also defended the

purchase of Development rights by WWIL from the related

companies as being backed by independent valuation reports.

362. During the course of cross-examination of Mr. Yogesh

Mehra, substantial discoveries on this issue were made when he

finally produced financial statements of Vish Wind pursuant to

the directions of the Tribunal. As pointed out by Mr. Chinoy, the

documents brought to fore the following material facts.

-'Vish Wind' had a subscribed capital of Rs. 500,000 [Euro 7500], which had been subscribed by the Mehras.

-From 2007 'Vish Wind' had borrowed substantial sums interest free from WWIL; with Euro 650,000 being owing in 2008. These funds were used for purchasing land.

-In 2010-11 'Vish Wind' had sold development Rights to WWIL for Euro 50 million, as against the total operating expenses incurred of Euro 463,000. The Profit & Loss account showed a profit of over Euro 49 million.

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-In 2011-12 'Vish Wind' had sold Development Rights to WWIL for Euro 49 million against total expenses incurred of Euro 1.4 million.

-The contracts for the sale of Development Rights were signed by Yogesh Mehra for 'Vish Wind' and by Mr Ajay Mehra for WWIL.

-That 'Vish Wind' had no employees, no business and virtually no money apart from the loans received from WWIL.

363. In view of the dramatic developments that had

transpired during the course of evidential hearings, Procedural

Order No. 5 came up to be passed on 11.12.2015 wherein,

significantly, the Tribunal categorically recorded at Sr.No.6 the

fact that it proposed to give ample opportunity to the parties to

adduce further evidence with respect to Vish Wind Infrastructure

LLP. For the sake of clarity, we again reproduce the contents of

Procedural Order No. 5.

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"The following Timetable is agreed between the parties:

Sr.No. Particulars Date

1. Claimants to file an Application 13 Dec 2015 under Sec 17 of the Arbitration & Conciliation Act 1996

2. Respondents to file their Reply to 19 Dec 2015 the Claimants Application under Sec 17 of the Arbitration & Conciliation Act 1996

3. Respondents to respond to the 15 Dec 2015 Claimants request for production of documents set out at Annex A

4. Tribunal to make a ruling on the 23 Dec 2015 Claimants Application (i) under sec. 17 of the Arbitration and Conciliation Act 1996 & (ii) in relation to any disputed item in Annex A

5. Respondents to provide any 4 January 2016 documents/information in accordance with (3) and (4) Above

6. An Application to the Tribunal, if 18 January 2016 either party seeks to adduce further evidence responsive to the Vish Wind Infrastructure LLP documents or the new documents

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produced at (5) above

7. An Application to cross examine 25 January 2016 or respond to the evidence adduced pursuant to (5) above

8. Exchange of Closing Written 16 March 2016 submissions

9. Any oral evidence in 27 & 28 April accordance with (7) above and 2016 in London.

Closing oral submissions if any are requested and if determined necessary by the Tribunal."

364. We observe that it assumes significance that no

objection/demur was raised at this stage to resist the proposed

reception of evidence with respect to Vish Wind on any ground

including non-arbitrability of this claim or the alleged

insufficiency of pleadings. As a matter of fact, the Procedural

Order No. 5 was passed with the consent of parties. Even if the

opening written submissions submitted on behalf of the

Claimant's were not sufficient to dispel any doubt in the minds of

the Appellant's-herein, Procedural Order No. 5 furnished a clear

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signal that the issue of Vish Wind transactions fell within the

judicial calculus and realm of adjudication . Rather, the Appellants-

herein positively ventured to lead evidence in terms of such liberty

provided under Procedural Order No.5 by submitting the

statements of Mr. Kaushik Khona and Mr. D Vaidyanathan to

explain/justify these Third (Related) Party transactions.

365. Further, the Closing Written Submissions submitted