ARBITRATION PETITION NO. 419 OF 2018

2nd March 2020

Petitioner Counsel: Mr. Rohan Kelkar Mr. Shadad Khan
Respondent Counsel: Mr. Jitendra B Mishra
Act Name: Arbitration and Conciliation Act, 1996

Section :
Section 34(2-A) Arbitration and Conciliation Act, 1996

Cases Cited :
Para 2: Ssangyong Engineering Construction Company Ltd Vs. National Highway Authority of India, (2019) 15 SCC 131
Paras 3, 4: Associate Builders Vs. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204
Paras 5, 17: McDermott International Inc Vs. Burn Standard Co Ltd., [(2006) 11 SCC 181]
Para 5: Pure Helium India (P) Ltd Vs. Oil and Natural Gas Commission, (2003) 8 SCC 593 : 2003 Supp (4) SCR 561
Para 5: DD Sharma Vs. Union of India, [(2004) 5 SCC 325]
Para 5: MSK Projects (I) (JV) Ltd Vs. State of Rajasthan, [(2011) 10 SCC 573 : (2012) 3 SCC (Civ) 818]
Para 5: Gobardhan Das Vs. Lachhmi Ram, [AIR 1954 SC 689]
Para 5: Thawardas Pherumal Vs. Union of India, [AIR 1955 SC 468]
Para 5: Union of India Vs. Kishorilal Gupta & Bros, [AIR 1959 SC 1362
Para 5: Alopi Parshad & Sons Ltd Vs. Union of India, [AIR 1960 SC 588]
Para 5: Jivarajbhai Ujamshi Sheth Vs. Chintamanrao Balaji, [AIR 1965 SC 214]
Para 5: Renusagar Power Co Ltd Vs. General Electric Co., [(1984) 4 SCC 679 : AIR 1985 SC 1156]
Para 5: Rashtriya Ispat Nigam Ltd Vs. Dewan Chand Ram Saran, [(2012) 5 SCC 306]
Para 5: SAIL Vs. Gupta Brother Steel Tubes Ltd., [(2009) 10 SCC 63 : (2009) 4 SCC (Civ) 16]
Para 5: Sumitomo Heavy Industries Ltd Vs. ONGC Ltd., [(2010) 11 SCC 296 : (2010) 4 SCC (Civ) 459]
Para 5: Kwality Mfg Corpn Vs. Central Warehousing Corpn., [(2009) 5 SCC 142 : (2009) 2 SCC (Civ) 406]

JUDGEMENT

1. This judgment will dispose of the Section 34 Petition itself which I heard by consent at the stage of admission. The order will thus necessarily dispose of the Notice of Motion for stay.

2. The Petition assails a short award dated 6th December 2017 by a sole Arbitrator, Gulnar Mistry, an advocate of this Court. There is a single point canvassed in assailing this award. In view of the decisions of the Supreme Court in Ssangyong Engineering Construction Company Ltd vs National Highway Authority of India, (2019) 15 SCC 131. the argument is positioned in the only place it can be, the perversity dimension under the patent illegality head under Section 34(2-A) of the Arbitration and Conciliation Act, 1996.

3. As Ssangyong Engineering and previous authorities tell us, the perversity challenge has diferent facets. We are concerned here with only one of these, placed by Mr Kelkar for the Petitioners thus: that while the Arbitrator is undoubtedly the person to primarily interpret and construct the contract, he or she cannot do so in a manner that no fair-minded or unreasonable person would and cannot wonder beyond the confnes of the contract. This is pegged to an express pronouncement in these words in paragraph 40 of Ssangyong Engineering:
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A). (Emphasis added)

4. For completeness, I reproduce the relevant statutory provisions and paragraphs 42.3 to 45 of Associate Builders v Delhi Development Authority. (2015) 3 SCC 49. Ssangyong Engineering extensively reviewed the progression of law from Associate Builders following the 2015 Amendment to the Arbitration Act, one that came into efect on 23rd October 2015. First, Sections 28 and 34: The portions in square brackets indicate the 2015 amendments.
CHAPTER VI
Making of arbitral award and termination of proceedings
28. Rules applicable to substance of dispute.—
(1) Where the place of arbitration is situate in India,—
(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;
(b) in international commercial arbitration,—
(i) the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute;
(ii) any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its confict of laws rules;
(iii) failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute.
(2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so.
[(3) While deciding and making an award, the arbitral tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transaction.]
34. Application for setting aside arbitral award.—
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if—
(a) the party making the application furnishes proof that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(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
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in confict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court fnds that—
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in confict with the public policy of India.
[Explanation 1.—For the avoidance of any doubt, it is clarifed that an award is in confict with the public policy of India, only if,—
(i) the making of the award was induced or afected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in confict with the most basic notions of morality or justice. Explanation 2.—For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]
[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court fnds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.]
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfed that the applicant was prevented by sufcient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
[(5) An application under this section shall be fled by a party only after issuing a prior notice to the other party and such application shall be accompanied by an afdavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in subsection (5) is served upon the other party.] (Emphasis added)

5. Paragraphs 42.3 to 45 of Associate Builders say:
42. In the 1996 Act, this principle is substituted by the “patent illegality” principle which, in turn, contains three subheads:
42.1(a) …
42.2(b) …
42.3.(c) Equally, the third subhead of patent illegality is really a contravention of Section 28(3) of the Arbitration Act, which reads as under:
“28 Rules applicable to substance of dispute.—(1)-(2)***
(3) In all cases, the Arbitral Tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.”
This last contravention must be understood with a caveat. An Arbitral Tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair-minded or reasonable person could do.
43. In McDermott International Inc v Burn Standard Co Ltd [(2006) 11 SCC 181], this Court held as under: (SCC pp. 225-26, paras 112-13)
“112. It is trite that the terms of the contract can be express or implied. The conduct of the parties would also be a relevant factor in the matter of construction of a contract. The construction of the contract agreement is within the jurisdiction of the arbitrators having regard to the wide nature, scope and ambit of the arbitration agreement and they cannot be said to have misdirected themselves in passing the award by taking into consideration the conduct of the parties. It is also trite that correspondences exchanged by the parties are required to be taken into consideration for the purpose of construction of a contract. Interpretation of a contract is a matter for the arbitrator to determine, even if it gives rise to determination of a question of law. [See Pure Helium India (P) Ltd v Oil and Natural Gas Commission [(2003) 8 SCC 593 : 2003 Supp (4) SCR 561] and DD Sharma v Union of India [(2004) 5 SCC 325].]
113. Once, thus, it is held that the arbitrator had the jurisdiction, no further question shall be raised and the court will not exercise its jurisdiction unless it is found that there exists any bar on the face of the award.”
44. In MSK Projects (I) (JV) Ltd v State of Rajasthan [(2011) 10 SCC 573 : (2012) 3 SCC (Civ) 818], the Court held: (SCC pp. 581-82, para 17)
“17. If the arbitrator commits an error in the construction of the contract, that is an error within his jurisdiction. But if he wanders outside the contract and deals with matters not allotted to him, he commits a jurisdictional error. Extrinsic evidence is admissible in such cases because the dispute is not something which arises under or in relation to the contract or dependent on the construction of the contract or to be determined within the award. The ambiguity of the award can, in such cases, be resolved by admitting extrinsic evidence. The rationale of this rule is that the nature of the dispute is something which has to be determined outside and independent of what appears in the award. Such a jurisdictional error needs to be proved by evidence extrinsic to the award. (See Gobardhan Das v Lachhmi Ram [AIR 1954 SC 689], Thawardas Pherumal v Union of India [AIR 1955 SC 468], Union of India v Kishorilal Gupta & Bros [AIR 1959 SC 1362], Alopi Parshad & Sons Ltd v Union of India [AIR 1960 SC 588], Jivarajbhai Ujamshi Sheth v Chintamanrao Balaji [AIR 1965 SC 214] and Renusagar Power Co Ltd v General Electric Co [(1984) 4 SCC 679 : AIR 1985 SC 1156] )”
45. In Rashtriya Ispat Nigam Ltd v Dewan Chand Ram Saran [(2012) 5 SCC 306], the Court held: (SCC pp. 320- 21, paras 43-45)
“43. In any case, assuming that Clause 9.3 was capable of two interpretations, the view taken by the arbitrator was clearly a possible if not a plausible one. It is not possible to say that the arbitrator had travelled outside his jurisdiction, or that the view taken by him was against the terms of contract. That being the position, the High Court had no reason to interfere with the award and substitute its view in place of the interpretation accepted by the arbitrator.
44. The legal position in this behalf has been summarised in para 18 of the judgment of this Court in SAIL v Gupta Brother Steel Tubes Ltd [(2009) 10 SCC 63 : (2009) 4 SCC (Civ) 16] and which has been referred to above. Similar view has been taken later in Sumitomo Heavy Industries Ltd v ONGC Ltd [(2010) 11 SCC 296 : (2010) 4 SCC (Civ) 459] to which one of us (Gokhale, J.) was a party. The observations in para 43 thereof are instructive in this behalf.
45. This para 43 reads as follows: (Sumitomo case [(2010) 11 SCC 296 : (2010) 4 SCC (Civ) 459] , SCC p. 313)
‘43. … The umpire has considered the fact situation and placed a construction on the clauses of the agreement which according to him was the correct one. One may at the highest say that one would have preferred another construction of Clause 17.3 but that cannot make the award in any way perverse. Nor can one substitute one’s own view in such a situation, in place of the one taken by the umpire, which would amount to sitting in appeal. As held by this Court in Kwality Mfg Corpn v Central Warehousing Corpn [(2009) 5 SCC 142 : (2009) 2 SCC (Civ) 406] the Court while considering challenge to arbitral award does not sit in appeal over the fndings and decision of the arbitrator, which is what the High Court has practically done in this matter. The umpire is legitimately entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the agreement. If he does so, the decision of the umpire has to be accepted as fnal and binding.’” (Emphasis added throughout)

6. Therefore, for over half a century this position has remained constant: (i) that the construction of the contract is primarily for an arbitrator to decide; and (ii) that (a) unless the view the arbitral tribunal takes (on construction of the contract) is one that no fairminded or reasonable person would, i.e. it is not even a possible view, or (b) the arbitrator ‘wanders’ outside the contract and deals with matters not allotted to him, a Section 34 court cannot and will not interfere.

7. In this case, no more than two clauses need to be examined. The briefest background is sufcient. The Respondent, Ranjiv Kumar Bhasin (“Bhasin”), took employment as a General Manager (Marketing) with the Gateway Rail Freight Limited (“GRFL”), the 2nd Petitioner. This is a subsidiary of Gateway Distriparks Limited (“GDL”), the 1st Petitioner. As part of their internal strategies to attract and retain personnel in their logistic enterprise, GRFL formulated what was known as the GRFL Employee Sweat Equity Scheme in August 2007. On 21st September 2007, GRFL shareholders approved a proposal to issue ‘Sweat Equity’ shares to Bhasin and one other employee. This lead to a Tripartite Contract for the equity issue on 29th November 2007.

8. The term or tenure of this contract was fve years. It was to be reckoned from the date of the General Body resolution, 21st September 2007 (“the Efective Date”) until 20th September 2012.

9. Under this Sweat Equity Scheme, Bhasin got some three lakh shares of GRFL. These shares were subjected to staggered lock-in periods. The contract has a specifc provision for this and I will turn to the relevant portions of the contract immediately. We must look at three clauses. The frst is the defnition of ‘discounted price’. Then there is clause 4 that provides for a staggered release of the locked-in shares, and fnally there is clause 6 which tells us what is to be done if the employee in question leaves at any point during this fve-year term or tenure. These are the relevant clauses.
“Discounted Price” shall mean—
(i) during the period commencing from the Efective Date and ending 1 year from the Efective Date, 10e of the face value of the Shares,
(ii) during the period commencing 1 year from the Efective Date and ending 2 years from the Efective Date, 30e of the face value of the Shares.
(iii) during the period commencing 2 years from the Efective Date and ending 3 years from the Efective Date, 50e of the face value of the Shares;
(iv) during the period commencing 3 years from the Efective Date and ending 4 years from the Efective Date, 70e of the face value of the shares; and
(v) during the period commencing 4 years from the Efective Date and ending 5 years from the Efective Date, 90e of the face value of the Shares.”
4. The Shares issued in terms of Clause 3 above shall not, in accordance with the Sweat Equity Rules, be sold, transferred or otherwise disposed of by the Employee for a period of 3 years from the date of allotment i.e. 29th November, 2007 (the “Statutory” Lock-In”). On the expiry of the Statutory Lock-In 1,20,000 shares forming 40e of the Shares allotted to the Employee shall not be sold, transferred or otherwise disposed of by the Employee for a further period of 1 year from the end of the Statutory Lock-In. Further 60,000 Shares forming 20e of the Shares allotted to the Employee shall not be sold, transferred or otherwise disposed of by the Employee for a period of 1 year commencing from the date 1 year from the end of the Statutory Lock-In.
6. If the Employee of his own volition leaves the services of the Employer during the Statutory Lock-In, then, in that event, the Employee shall, subject to the statutory Lock-In, sell and transfer the Shares forthwith to GDL at the Discounted Price. In the event the Employee of his own volition leaves the services of the Employer during the period of the Statutory Lock-In, the Employee shall hold the Shares in trust for GDL until the expiry of the Statutory Lock-In and, thereafter, shall forthwith sell and transfer the Shares to GDL at the Discounted Price. It is hereby clarifed that during such period when the Shares are held in trust by the Employee, the economic benefts of the Shares will accrue to GDL and the Employee shall, on a show of hands and/or on a poll, exercise voting rights in respect of such Shares only in accordance with the instructions of GDL. If the Employee, of his own volition, leaves the services of the Employer after the Statutory Lock-In but before the completion of the Term, then in that event GDL will have the option to call upon the Employee to sell and transfer the Shares under lock-in under clause 4 during such period, forthwith to GDL at the applicable Discounted Price. In the event of exercise of such call option by GDL, the Employee shall forthwith sell and Transfer such Shares on which call option has been exercised to GDL at the applicable Discounted Price.” (Emphasis added)

10. Bhasin left on 13th August 2011. It was not until 10th September 2013 that GDL made the call for repurchase. It invoked the clause for 40e i.e. 1,20,00 shares. The fve-year term of the contract itself had ended a year earlier, on 20th September 2012.

11. Clause 6 is actually in several parts. It is to be read with defnition of ‘statutory lock-in’ that we fnd in the frst sentence of Clause 4. The statutory lock-in is from 29th November 2007 for a period of three years and that takes us to 28th November 2010. During this statutory lock-in period, 100e of the sweat equity shares were subjected to the discipline of the lock-in. What Clauses 4 and 6 read together tell us is that if Bhasin had left in this three-year period, 100e of his sweat equity was liable to be transferred forthwith to GDL. Clause 4 also deals with two further periods, as it necessarily had to do because the statutory lock-in period was only for three years and the term was for fve years. For this reason, Clause 4 spoke of another period of one year i.e. from 29th November 2010 to 28th November 2011 when the non-statutory lock-in sell-back reduced to 40e (60e was Bhasin’s to keep), and then there was a third lock-in period of one year from 29th November 2011 to 28th November 2012 when only 20e of the sweat equity shares were thus at sell-back risk. The lock-in periods thus operated on a 3+1+1 formula for the fve-year period with proportionately reducing equity being subjected to the contractual sell-back: 100e in the frst three-year period (the so-called ‘statutory lock-in’); 40e in the next or fourth year; and 20e in the last or ffth year.

12. The emphasized portion of Clause 6 deals with what is to happen if Bhasin left the services of the company after the statutory lock-in period, i.e. after fnishing three years with GRFL/GDL. Bhasin left on 13th August 2011, towards the end of the second lockin period but after the end of the statutory lock-in period. What Clause 6 said was that in this scenario GDL would have the ‘option’ — and this meant that it was not bound to act in the manner but could do so if it wished — to call upon Bhasin to sell and transfer the shares under lock-in under Clause 4 to GDL at the applicable discounted price.

13. There is no dispute about the defnition or meaning of the discounted price.

14. The only dispute was when that forced sell-back call had to be made by the Petitioners. In other words, did the expression ‘during such period’ qualify and apply to the shares in the lock-in period or did it qualify the time when the optional call on Bhasin had to be made? This is the question to which the learned sole Arbitrator was asked addressed herself.

15. Mr Kelkar most energetically contends that the expression ‘during such period’ necessarily qualifes the shares under the nonstatutory lock-in during such period. But surely that is a redundancy. The shares under lock-in are on this 3+1+1 formula, and the percentage proceeds in stepped diminution from 100e to 40e to 20e, and this is known from Clause 4. That clause clearly shows the shares that are subjected to repurchase during each of these three periods.

16. In actual terms, this meant that during the frst statutory lockin period of three years, the entire three lakh shares were subject to a repurchase. In the fourth year, (the second lock-in period, and the frst lock-in after the statutory lock-in), 1.2 lakh (40e of the sweat equity) were subject to the call. In the ffth year (the third lock-in period, and the second lock-in after the statutory lock-in) 60,000 shares (20e of the sweat equity) were subjected to the compulsory repurchase call. From Clause 4, therefore, we know the periods, we know the amount of shares and we know the percentages.

17. A question may have been raised as to whether ‘during such period’ meant the entire balance or some fractional percentage of it: the entire percentage for that period or for that period plus the next period, i.e. 40e plus 20e, totally 60e, since Bhasin left in the second term. The view that Ms Mistry took on the construction of the contract was that the words ‘during such period’ related to the time when the call had to be made. That call was not actually made until 10th September 2013, and it was made only for 40% i.e. 1,20,00 shares. Consequently, the argument as to whether it pertained to 40e only or to 40e+20e= 60e is more a legal advisor’s latter-day epiphany than a point of substance. Certainly the parties did not encounter any such notional problem at that time. Both sides saw it as a call for 40e. This conduct puts this particular argument beyond the pale. For, as we have seen, in paragraph 43, Associate Builders cited with approval inter alia the earlier decision of the Supreme Court in McDermott International Inc v Burn Standard Co Ltd., (2006) 11 SCC 181. where it said that the conduct of the parties would also be a relevant factor in the matter of construction of a contract. This portion of Associate Builders continues to hold the feld, as Ssangyong Engineering clarifes. Therefore, this question does not and did not ever arise and is unavailable as a ground of challenge.

18. The only question therefore was what did the three words ‘during such period’ qualify? The shares or the time? The diference in practical terms is enormous. If it qualifed the shares, then no matter when the Petitioner made the repurchase call, Bhasin would have to return the 40e equity. If the phrase qualifed the time for making the call, then a call made after the prescribed imposed no obligation on Bhasin to transfer any shares at all.

19. The submission before Ms Mistry, based on an argument commending the well-established “business efcacy test”, was that the phrase should be read to be to qualify the percentage shareholding that had been put under the call. In other words, there would be no time limit when GDL could make that call. It could make that call, conceivably, and subject only perhaps to the statute of limitation, at any time that it liked, even well after Bhasin had totally severed ties with both companies.

20. The learned sole Arbitrator rejected this submission and held that a more correct and logical interpretation was to say that the call had to be made within that lock-in period when the call was being invoked. There existed no possibility of making that call at some remote point in time.

21. Before the learned sole Arbitrator a submission was canvassed that the word ‘held’ should be inserted before the phrase ‘during this period’. This argument is — wisely — not canvassed before me today in challenging the order. Even the business efcacy test argument is not deployed.

22. It is only contended that the expression ‘during such period’ relates not to the time of making the call — for which no time at all is provided — but only to the period when sweat equity was held. This was precisely the argument before Ms Mistry.

23. Rejecting this submission, Ms Mistry said in paragraphs 29 and 30 of her award:
“29. In my opinion, the Claimants’ argument is entirely unsustainable. The interpretation of the Contract proffered by the Claimant is a curious one — it implores me to disregard the word “forthwith” that is contained in clause 6, and to introduce the word “held” not contained in it. In short, it requires me to do that which the law prohibits. Needless to say, I am not inclined to do so. Given that the Contract is as clear as it is, one need look no further.
30. A plain reading of clause 6 indicates that the shares issued to the Respondent can be purchased by GDL at a discounted price immediately upon the Respondent leaving the services of GRFL after the statutory lock-in period but before the completion of the Term. Had the Claimant wished to purchase the said shares, they ought to have been diligent in exercising the option conferred upon them by the Contract. Issue Nos. 3 and 4 are, consequently, answered in the negative.” (Emphasis added)

24. I am quite unable to see how this can be possibly be said to be an ‘unreasonable’ view, or one no fair-minded person would take, or one that is simply not possible to bring it within the perversity standard under the patent illegality head contemplated by Ssangyong Engineering. Indeed, it seems to me to be the other way around: accepting the Petitioners’ argument might have been completely perverse. The view that the sole Arbitrator is not only reasonable, rational and fair but it seems to me to be the only possible view in the circumstances and on any fair reading of the contract.

25. There is another way to see this. Clause 4 specifed two things: it specifed each lock-in period, on the 3+1+1 formula, and it also specifed the percentage of shares subjected to a repurchase call: 100e–40e-20e. The phrase ‘during such period’ could not be read in isolation. It was part of the longer expression ‘the Shares under lock-in under Clause 4 during such period’. Therefore, logically, to say that ‘during such period’ qualifed the shares held was to introduce a redundancy, because the preceding expression ‘the Shares under lock-in under Clause 4’ already specifed exactly the number of shares subjected to a repurchase optional call for each period. To put it diferently, if ‘during such period’ qualifed the shares subjected to a repurchase call, then it would more or less be synonymous with ‘under Clause 4’: for both would then specify exactly the same thing, viz., the period and percentage already set out in Clause 4.

26. Second, there is the all-important expression ‘GDL will have the option’. Mr Kelkar’s argument before me (and before Ms Mistry in arbitration) totally overlooks this. GDL did not have to make this call. It could choose to do so. It seems to me self-evident that the option had to be exercised at some known point in time. The time for exercising that option could not be indefnitely open-ended or continue so long as Bhasin held the sweat equity shares. To interpret it that way would be both unfair and unreasonable. What Ms Mistry did, and in my view correctly, was to conclude that ‘during such period’ would qualify ‘shall have the option’, i.e. the time when that option made to be exercised, failing which it was foresworn. This is important, for it speaks to ‘option’. When might one say the option was foregone, given up, and unavailable any longer? On Mr Kelkar’s construct, the answer is never; this would be an option available in perpetuity. That is entirely unreasonable. It put Bhasin’s sweat equity under a perennial cloud for all time to come, with no timerestriction at all applicable to GDL within which it had to exercise its ‘option’.

27. Therefore, putting these two together, we get the following result: accepting the Petitioners’ arguments would introduce an unacceptable redundancy in the contract by making ‘during such period’ synonymous with ‘under clause 4’; and it would simultaneously leave open, essentially in perpetuity, the time when GDL could exercise its ‘option’, thus efectively putting a stranglehold forever on Bhasin’s sweat equity shares. That would be a resultant absurdity in interpretation of the contract, and Ms Mistry therefore correctly abjured it. On the other hand, by positioning ‘during such period’ against ‘shall have the option’ returned an entirely viable result: requiring GDL to act with promptitude in exercising its option. If it did not do so during such period, it could not do so thereafter. That is hardly an unreasonable or unfair view. To the contrary, it seems to me to both reasonable and fair, and not just a plausible or possible view, but the only one that could have been taken. I am in complete agreement with the interpretation placed by Ms Mistry. Her decision is admirably compact and precise.

28. There is no merit in the Petition. It is dismissed. The Notice of Motion will not survive and disposed of as infructuous.