Khaitan & Co Represents Senior Management Of Prominent Hospitality Group In Section 9 Arbitration Petition

Khaitan & Co Represents Senior Management of Prominent Hospitality Group in Section 9 Arbitration Petition

The leading law firm in India, Khaitan & Co successfully advised and represented the senior management of a prominent hospitality group (“Clients”) in a petition filed under Section 9 of the Arbitration & Conciliation Act, 1996 (“Section 9 Petition”).

The Section 9 Petition was filed seeking reliefs against the Clients pursuant to an article contained in the Articles of Association (AoA) of a private company in which both Clients serve as directors and shareholders. On behalf of the Clients, it was contended that:

• The Section 9 Petition is founded on an article contained in the AoA which merely provides for an internal, quasi-administrative mechanism and does not constitute a valid arbitration agreement;
• The said article does not reflect any intention of the parties to provide for a final, binding, and conclusive adjudicatory mechanism, which is a sine qua non for a valid arbitration agreement.

Further, in any event:

• The AoA is a contract between the members and the company, the petitioner being a director cannot rely on the same;
• The AoA is not signed by the petitioner; and disputes arising out of, or in relation to, oppression, mismanagement, and internal corporate governance are not arbitrable, and therefore the petition is not maintainable.

It was also submitted that the article in the AoA relied upon as the purported arbitration agreement fell within the larger ambit of indemnity and did not apply to disputes in general.

The Hon’ble High Court of Delhi accepted the submissions advanced on behalf of the Clients and dismissed the Section 9 Petition.

Unique Feature: The case involved a nuanced analysis of the interface between the Articles of Association, the Companies Act, 2013, and the Arbitration and Conciliation Act, 1996, particularly where overlapping governance frameworks created ambiguities. Key issues included the interpretation of the AoA clause described as an “arbitration” provision, the scope of powers of the Court under Section 9, and the arbitrability of corporate governance disputes, including matters of oppression and mismanagement.

The Khaitan & Co team representing the matter comprised Haigreve Khaitan (Senior Partner), Aseem Chaturvedi (Partner), Aakash Bajaj (Partner), Shivank Diddi (Principal Associate), Prerona Banerjee (Senior Associate), and Sania Abbasi (Associate).

Click to know more about Khaitan & Co

If you have a news or deal publication or would like to collaborate on content, columns, or article publications, connect with the Legal Era News Network Team and email us at info@legalera.in or call us on +91 8879634922.