Tata Capital Financial Services on Monday moved the Supreme Court seeking extension of time for the international arbitral tribunal to decide on its dispute related to recovery of an outstanding claim of over Rs 334.33 crore from C Sivasankaran and his company Siva Industries and Holdings.
A Bench led by Chief Justice UU Lalit sought response from Siva Industries and Sivasankaran, a Seychelles resident now, as to why the time period should not be extended till the final award is passed. The Siva group is supposed to file objections by Thursday and the matter is kept for further hearing on Friday.
The Tata group company, which is engaged in financial services, said the arbitration is at the advanced stage of evidentiary hearings and it will “suffer irreparable injury” if the mandate of the arbitral tribunal is not extended as it has incurred huge legal expenses.
Tata Capital said the filing of the present application is necessitated because of the long delay caused by Sivasankaran in joining the arbitration proceedings. The company alleged that Sivasankaran “came forward only in December 2019, when the matter was fixed for evidentiary hearing, with a plea to file his pleadings and evidence… This disrupted the arbitral tribunal’s schedule,” counsel Kunal Chatterji, appearing for Tata, told the SC. Senior counsel Mukul Rohatgi represented the Siva group.
While the Supreme Court in January 2018 had allowed the Tatas’ petition by appointing its former judge SN Variava as the sole arbitrator and had given a year to decide the dispute, the Bombay High Court had later extended time till February 2020. “This extended period has expired and the arbitral proceedings could not be concluded due to the conduct of Sivasankaran who joined the proceedings at a “much belated stage and in the process disrupted the tribunal’s schedule,” the application stated.
Tata’s claim relates to a 2012 loan of Rs 200 crore to Siva Industries, secured against equity shares of Tata Teleservices held by Siva Industries. Siva Industries had defaulted on this loan and finally the parties had arrived at a settlement in June 10, 2014, under which its 6,22,50,000 pledged shares were acquired by Tata Capital, with a put option to sell those shares back after three years.
According to the application, Sivasankaran had personally guaranteed due performance of the obligations of Siva Industries, which defaulted in May 2017, when the put option had become due. In June 2017, Tata Capital invoked Sivasankaran’s guarantee and called upon him to fulfill his obligations as a guarantor but he also reneged from his obligations.
Tata Capital said that it tried to resolve the dispute through negotiations, but ultimately invoked arbitration against both Siva Industries and Sivasankaran in October 2017. However, Siva failed to nominate an arbitrator, thus prompting Tata Capital to move the SC. The NCLT, Chennai, had in July 2019 also admitted the IDBI Bank’s petition seeking to initiate insolvency proceedings against Siva Industries and had appointed Savan Godiawala as an interim resolution professional.