The Bombay High Court recently dismissed petitions filed by the city-based businessmen brothers Yogesh Mehra and Ajay Mehra challenging an Arbitral Award, directing them to pay about Rs 700 crore ‘siphoned off’ by them from a joint venture company between them and German wind turbine major Enercon GmbH.
“The award is not vitiated by any illegality especially in view of the fact that it cannot be set aside merely because there has been erroneous application of law or appreciation of evidence. There is nothing in the award which has been shown to me as being in contravention of policy of Indian Law or being in conflict with basic notions of morality and justice, far from being influenced by fraud or corruption none of which have been pressed as grounds of challenge,” Justice A K Menon observed.
The court granted ad-interim protection, directing that no steps in execution of the orders shall be taken for four weeks.
The Mehra brothers, petitioners in the Arbitration Petitions filed in 2016, had set up a renewable energy business. They entered into a Joint Venture Agreement (JVA) to set up a company Wind World India Limited (WWIL) as renamed later. WWIL was set up between Enercon GmbH (EG), a German entity which holds 56 per cent of the shares of WWIL. The Mehras and their family members hold the remaining 44 per cent. In or around 2006, certain disputes arose between the parties, including allegations of mismanagement by the Mehras of WWIL; and non-payment of royalties and the nature of the technology rights granted by EG to WWIL. The dispute also arose out of an Intellectual Property License Agreement (IPLA) which one of the parties, Mehras and WWIL contended to be a draft. After several rounds of litigation, the Supreme Court, appointed a presiding Arbitrator. The three member tribunal by majority of 2 : 1 dissenting member passed the Award in 2016 which was under challenge.
The Award held that WWIL was due to make payments of royalties of 55 million euros (plus interest) to EG and return the technology previously provided by EG to WWIL, WWIL was due to make payments of parts and components previously supplied by EG to the tune of 19 million euros (plus interest) and the Mehras had siphoned off sums to the tune of almost Rs 700 crore from WWIL into Vish Wind Infrastructure Ltd. (a company owned by the Mehras themselves), which they were directed to repay to WWIL. WWIL and the Mehras challenged this Arbitral Award before the Bombay High Court in the same year. Justice A K Menon dismissed the petition, stating that the petitioners case is that “they were prejudiced by want of a proper opportunity to defend the case against them and resulting in the award being perverse has not been made out.”
Justice Menon said, “In my view, the tribunal had given a full opportunity to the petitioners of presenting their case including by permitting leading of evidence and filing closing written submissions. The tribunal had already indicated that closing oral submissions may be scheduled only if it was deemed necessary. The approach of the tribunal has by far been transparent and I am unable to accept the contention that absence of an opportunity to make closing oral submissions had caused any prejudice.”