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Rakesh Zangada
Brief Facts:
1. Applicant and respondent were friends who ran a software firm.
2. Some disputes arose between them, and led to the intervention of Mr. Niranjan
Nanavati, a leading stockbroker. Both parties were fine with his interference,
as they had trust and confidence in him.
3. As a result of discussions arising out of this interference, the applicant
submitted his resignation as director of one of the respondents companies.
4. One of the clauses in the letter was that in case of any disputes regarding
valuation of shares, the decision of Mr. Nanavati would be final.
5. This condition was not fulfilled with regard to valuation, and hence the
applicant filed this suit.
6. Respondents contended that not only had the shares been valued correctly, but
also there was no arbitration agreement between the parties, and hence Mr.
Nanavati could not act as sole arbitrator, and the application was not
maintainable.
Judgment:
@4: Letter of resignation reproduced. It said that resignation would become final
subject to the fulfillment of certain conditions. Condition (h) was that In case
of any dispute in valuation, the decision of Mr. Nanavati will be final.
@5: The letter is a unilateral act of the applicant. The signature of Rakesh Zangada
on the letter can only be treated as acknowledgment of receipt of the letter,
and not as conclusion of any contract between them. Further, the clause is not
an arbitration clause because it is vague in terms of the arbitration and/or
arbitral tribunal.
In this case, no contract, so would not bind the party not writing the letter (since
the condition itself is unilateral). Therefore, no arbitration clause.