Twarit Consultancy Services Pte Ltd and another v GPE (India) Ltd and others

CourtInternational Commercial Court (Singapore)
JudgeRoger Giles IJ
Judgment Date24 December 2021
Neutral Citation[2021] SGHC(I) 17
Citation[2021] SGHC(I) 17
Docket NumberOriginating Summons No 10 of 2021
Plaintiff CounselMohamed Baiross, Rabi Ahmad s/o Abdul Ravoof, Joshua Chow Shao Wei (IRB Law LLP)
Defendant CounselPrakash Pillai, Koh Junxiang, Charis Toh Si Ying (Clasis LLC)
Roger Giles IJ: Introduction

The plaintiffs applied to set aside, in whole or in part, the final award made on 7 January 2021 (“the Award”) in consolidated arbitrations conducted under the rules of the Singapore International Arbitration Centre (“SIAC”). In the Originating Summons, they applied on the grounds: that the Award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, within the meaning of Article 34(2)(a)(iii) of the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”) read with s 3 of the International Arbitration Act (Cap 143A, 2002 Rev Ed) (“the IAA”); that the composition of the arbitral tribunal and/or the arbitral procedure was not in accordance with the agreement of the parties, within the meaning of Article 34(2)(a)(iv) of the Model Law read with s 3 of the IAA; that they were not given proper notice of the arbitral proceedings and/or were otherwise unable to present their case, within the meaning of Article 34(2)(a)(ii) of the Model Law read with s 3 of the IAA; that there was a breach of the rules of natural justice in connection with the making of the Award by which their rights were prejudiced, within the meaning of s 24(b) of the IAA; and that the Award is in conflict with the public policy of Singapore, within the meaning of Article 34(2)(b)(ii) of the Model Law read with s 3 of the IAA.

Background Events leading to the arbitration

The plaintiffs are companies registered in India. The first plaintiff (“Twarit”) provides management consultancy and technical management services in India and abroad.1 The second plaintiff (“SEPC”) is a publicly listed company providing multi-disciplinary engineering, procurement and construction services in a number of infrastructure sectors for governmental and private clients in India and abroad.2

The first and second defendants (“GPE India” and “GPE JV1” respectively) are companies incorporated in Mauritius; the third defendant (“Gaja”) is a company incorporated in India. Each of the defendants conducts a private equity investment business.3

In 2010–2011 the defendants subscribed to shares in Haldia Coke and Chemicals Private Ltd (“Haldia”), a company in the business of manufacturing, processing, trading, supplying and distributing coke (carbon) coal. GPE India and GPE JV1 subscribed by way of one of two Share Subscription and Shareholders Agreements dated 31 May 2010, as amended by amending agreements dated 1 July 2010, 2 July 2010 and 15 November 2011 (“the SSHAs”); Gaja subscribed by way of the other of the SSHAs. In total, between them, the defendants subscribed for (in Indian numeration) 10,84,36,850 Compulsory Convertible Preference Shares and 1,65,61,950 Optional Convertible Preference Shares, for the subscription amount of INR125,00,00,000.4

SEPC was a party to both SSHAs as a Promoter. Twarit was not a party to either of them.5 There were a number of other parties, as Promoters and otherwise; it was not suggested in the submissions in the Originating Summons that they should have been joined in the arbitrations or in the Originating Summons.

Under the SSHAs the Promoters undertook to procure a “Listing Event” by 31 March 2014, being either an initial public offering (“IPO”) of the shares of Haldia or a merger of Haldia with its listed subsidiary Ennore Coke Limited (“Ennore”).6 If the Listing Event did not occur by 31 March 2014, there was provision for an “Exit Mechanism”, being an entitlement in the defendants under cl 15.2 of the SSHAs to exercise one or a combination of a number of rights. In summary, the rights were requiring an IPO (cl 15.2.1); sale of the shares (cl 15.2.2); buy back (cl 15.2.3); a put option (cl 15.2.4); a call option (cl 15.2.5); what was called securing an economic interest in certain mines (cl 15.2.6); and requiring a merger with Ennore (cl 15.2 7).7

The rights included reference to a guaranteed return, which I will call “the 24% IRR”, which assumed significance in the arbitrations. In its final form, the first paragraph of cl 15.2.3 dealing with buy back read:8

… [t]he Investor shall be entitled to receive an IRR [a compounded annual rate of return] of at least 24% (twenty four percent) on its Total Investment Amount by exercising any of the rights under Clauses 15.2.4, 15.2.3, or 15.2.5 (‘Put Buy Back Return’). …

A Listing Event was not procured by 31 March 2014. But none of the exit mechanism rights was exercised; instead, on 28 September 2015, a series of agreements were entered into.9

First, three Share Purchase Agreements (“the SPAs”), in materially identical terms, were entered into. The parties to each SPA were one of the defendants (one for each SPA), the plaintiffs, and some others. In each, it was agreed that the plaintiffs would purchase the majority of the shares in Haldia held by the relevant defendant, for a total price in the three SPAs of INR200,00,00,000.10 The plaintiffs were to purchase the shares in 14 tranches on various dates from 30 September 2015 to 30 June 2018.11

Secondly, a so-called letter agreement (“the First Letter Agreement”) was entered into between the plaintiffs, the defendants and other parties, providing for the suspension of the exit mechanisms and setting out consequences of breach of the plaintiffs’ obligations under the SPAs.12 The relevant provisions were:13 Purchase of 124,998,800 Subscription Shares by the Purchasers from the Investors

The Purchasers have agreed to provide an exit to the Investors from the Company, and accordingly each Investor has entered into a share purchase agreement on even date with the Company and the Purchasers (collectively ‘SPAs’), pursuant to which the Purchasers have agreed to purchase 124,998,800 (Twelve crores forty nine lakhs ninety eight thousand eight hundred) Subscription Shares from the Investors, on the terms and subject to the conditions contained therein.

Rights under the Existing SSHA The Parties to this Letter Agreement have agreed that the rights of the Investor under Clause 15.2 of the Existing SSHA shall stand suspended for a period commencing from the date of signing of the Transaction Documents, until the Purchasers or any of them have committed a breach of any of their obligations to make any payment under the relevant provisions of the SPAs (‘Purchaser Payment Breach’). For the avoidance of doubt, it is clarified that in case of a Purchaser Payment Breach, the rights of the Investors under Clause 15.2 of the Existing SSHA shall forthwith stand reinstated and may be exercised by the Investor, without requirement of any notification or act by the Investors and/or any other Party to the Letter Agreement or the Existing SSHA. If on the date of occurrence of a Purchaser Payment Breach (‘Purchaser Breach Date’) the Investors have received an amount equal to or greater than Rs. 125,00,00,000 (Rupees One Hundred and Twenty Five Crores only) from the Purchasers under the SPAs, then the Purchasers’ [sic] shall be liable to pay the Investors an amount equal to the difference between the aggregate amount payable by the Purchasers to the Investors under the SPAs and the amount actually received by the Investors until the Purchaser Breach Date. If until the Purchaser Breach Date, the Investors have received an amount which is lesser [sic] than Rs. 125,00,00,000 (Rupees One Hundred and Twenty Five Crores only) from the Purchasers under the SPAs, then the Purchasers’ [sic] shall be liable to pay the Investors all amounts as are payable under the Existing SHA [sic] less amounts paid by the Purchasers under the SPAs till the Purchaser Breach Date.

For the purposes of this Letter Agreement, the term Transaction Documents shall mean: the SPAs; and this Letter Agreement.

It is clarified that till such time that the Investors have received the consideration as specified under this Paragraph 3 i.e. excluding the amounts to be received from the sale of the mine assets, all the other rights and obligations of the parties under the Existing SSHA shall continue to apply.

As later described, in the arbitrations, the defendants sued on the SPAs and the First Letter Agreement. Again, it was not suggested in the submissions in the Originating Summons that the other parties to these agreements should have been joined in the arbitrations or in the Originating Summons.

Thirdly, two further agreements were entered into. One was a Share Purchase Agreement (“the SVL SPA”) between the defendants and SVL Limited (“SVL”), a shareholder in SEPC, pursuant to which the defendants agreed to purchase certain shares in SEPC from SVL and Gaja could be required to purchase or subscribe to shares in SEPC.14 The other was a letter agreement (“the Second Letter Agreement”), entered into between the defendants amongst others and SVL, pursuant to which GPE India and GPE JV1 were to purchase shares in SEPC from SVL following completion of events under the SPAs.15

The plaintiffs paid for and acquired shares in respect of the first tranche under the SPAs, a total payment of INR5,00,00,000. They paid nothing thereafter.16

On 11 July 2017, Haldia was admitted into a voluntary corporate insolvency resolution process under Indian law. This brought a moratorium (“the moratorium”),17 as to which see later in these reasons (at [87] below).

On 14 December 2017, the defendants commenced the SIAC arbitral proceedings by filing a Notice of Arbitration in respect of the three SPAs and the First Letter Agreement. In the Notice of Arbitration, the defendants alleged that the plaintiffs had evinced an intention not to perform their contractual obligations under the SPAs and the First Letter Agreement, and sought damages to be assessed, interest, compensation and legal costs....

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