The Supreme Court has extended the tenure of the international arbitral tribunal till March 31 to decide the Tata Capital Financial Services’ dispute for recovery of its outstanding dues of over Rs 334.33 crore from C Sivasankaran and his company Siva Industries and Holdings.
A Bench led by Chief Justice UU Lalit, without going into the factual details of the case, rejected the Siva Group’s stand that the arbitration proceedings for last five years has been just “harassment” and once mandate had come to an end, Tata thereafter would not be able to resurrect it.
The apex court noted that Tata Capital had highlighted that the proceedings could not be completed within the mandated time for reasons beyond the control of parties. “…Case for extension is made out. Time to complete the proceedings is extended for six months,” it said in its order. The tribunal is scheduled to hear the case on October 3.
The Tata group company had sought extension of the tenure of the tribunal on the grounds that the arbitration was at the advanced stage of evidentiary hearings and it would “suffer irreparable injury.”
Tata Capital alleged that the long delay was caused by Sivasankaran not joining the arbitration proceedings in time. 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,” senior counsel Jaideep Gupta and counsel Kunal Chatterji, appearing for Tata, told the SC. Senior counsel Mukul Rohatgi represented the Siva group.
While the Supreme Court had in January 2018 allowed the Tatas’ petition by appointing its former judge S N 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”,” the application stated.
Tata Capital’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, which had defaulted on this loan. However, the parties had then arrived at a settlement on 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.
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. While Tata invoked arbitration against both in October 2017, Sivasankaran 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.