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Venture Global Engineering V. Satyam Computer Services LTD

Venture Global Engineering and Satyam Computer Services established a joint venture company called Satyam Venture Engineering Services. A dispute later arose over retained receipts, which was referred to arbitration. The arbitrator ordered Venture to transfer its shares in the company to Satyam. Venture filed a suit seeking to set aside the award, which was dismissed. The Supreme Court remanded the case, directing the parties to maintain the status quo. Venture later filed an application to introduce additional facts about financial irregularities at Satyam, which the Trial Court allowed but the High Court impugned.

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RISHAV BHARDWAJ
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447 views

Venture Global Engineering V. Satyam Computer Services LTD

Venture Global Engineering and Satyam Computer Services established a joint venture company called Satyam Venture Engineering Services. A dispute later arose over retained receipts, which was referred to arbitration. The arbitrator ordered Venture to transfer its shares in the company to Satyam. Venture filed a suit seeking to set aside the award, which was dismissed. The Supreme Court remanded the case, directing the parties to maintain the status quo. Venture later filed an application to introduce additional facts about financial irregularities at Satyam, which the Trial Court allowed but the High Court impugned.

Uploaded by

RISHAV BHARDWAJ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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VENTURE GLOBAL ENGINEERING V. SATYAM COMPUTER SERVICES LTD.

CASE ANALYSIS

Venture Global Engineering (“Venture”) and Satyam Computer Services Ltd. (“Satyam”)
entered into a Joint Venture Agreement and a Shareholders Agreement to establish a company
called Satyam Venture Engineering Services (the “Company”). Thereafter the Company entered
into an agreement with TRW Inc. for IT services.  Subsequently, a dispute on the quantum of the
retained receipts arose and the dispute were referred to arbitration. The arbitrator, by an Award
dated April 3, 2006, directed Venture to transfer its entire shareholding in the Company to
Satyam. Satyam filed a Petition for the recognition and enforcement of the said Award before the
U.S. District Court in Michigan. Following Satyam’s Petition, Venture filed a Suit inter alia
seeking a declaration to set aside the Award under Section 34 of the Arbitration and Conciliation
Act of 1996 (the “Act”). The Trial Court dismissed the Suit on the grounds that the Award being
a foreign Award could not be challenged under Section 34 of the Act.

Venture challenged the Trial Court’s Order before the Andhra Pradesh and which challenge
came to be dismissed. Venture preferred a Special Leave Petition wherein the Supreme Court by
its Judgment held that a foreign Award could be challenged under Section 34 of the Act and
remanded the case to the City Civil Court at Hyderabad, directing the parties to maintain status
quo in relation to the transfer of shares.  In or around 2008/09 Satyam’s Chairman confessed to
forging its Balance Sheets; PWC, Satyam’s Auditors also declared that Satyam’s financial
statements could no longer be considered reliable or accurate. Venture filed an interim
application before the Trial Court to bring certain facts on record under the provisions of Order
VIII Rule 9 of the Civil Procedure Code of 1908. The Trial Court allowed Venture’s application
which Satyam impugned before the Hon’ble Andhra Pradesh High Court

Analysis of the Judgment

Particularly, the additional facts that Venture sought to introduce inter alia included (a) details of
exaggeration of the financial statements and accounts; (b) extracts of investigations by SEBI and
CBI into the “Satyam Scam”; (c) government ordered inspections of Satyam affairs; (d)
confessions of Mr. Raju on the diversion of funds and other such criminal activities in relation to
Satyam’s business. The Supreme Court was pleased to held that an amendment to bring
additional suppressed facts on record would be allowed as long as the following conditions were
must:-: The facts concealed must have a causative link with the passing of the Award.
If the concealed facts, disclosed after the passing of the award, have a causative link with the
facts constituting or inducing the Award, such facts will be considered pertinent in a setting aside
proceeding and the Award may be set aside as affected or induced by fraud.

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