*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP 457/2009
% Date of decision: 24th September, 2009
M/S ERA LANDMARKS (INDIA) LTD ....Petitioner
Through: Mr. Manoj K. Singh and Mr. Vishal, Advocates.
Versus
SHRI DHANROOP MAL MEHTA ... Respondent
Through: Mr. N.M. Sharma and Ms. Shivani Sanghi,
Advocates
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? No
2. To be referred to the reporter or not? No
3. Whether the judgment should be reported No
in the Digest?
RAJIV SAHAI ENDLAW, J.
1. This petition has been preferred under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter to be referred as „the Act‟) for interim measures. The parties hereto were parties to a document titled „Memorandum of Understanding‟ (for short „MOU‟) dated 26th February, 2008 whereunder the petitioner herein agreed to develop the land of the respondent at Udaipur in Rajasthan. The petitioner, under the said agreement, has paid a sum of Rs.75,00,000/- to the respondent by way of a refundable deposit. Clause 19 of the said agreement between the parties is as under:-
"19. THAT in the event of this MoU being rescinded or otherwise becoming inoperative for whatever reason, all amounts paid by the Second Party to the First Party pursuant to this MoU shall forthwith become payable by the First Party to the Second Party. Any delay in refunding the same by the First Party to the Second Party beyond 7 days of its becoming due shall attract an interest @15% p.a. for the entire period from OMP 457/2009 Page 1 of 5 the day it shall fall due."
2. It is the case of the petitioner that owing to breaches by the respondent, it is not possible for the petitioner to go forward with the agreement and the petitioner had as such called upon the respondent to refund the sum of Rs.75,00,000/- which the respondent had failed to do. The petition is filed for restraining the respondent from alienating, encumbering or parting with the property, subject matter of the aforesaid agreement, on the contention that if the respondent succeeds in doing so, the petitioner shall have no other way/means to recover its money.
3. Vide an ex parte order dated 11th August, 2009, the respondent was restrained from selling, alienating, transferring or encumbering the property, subject matter of the aforesaid agreement.
4. The counsel for the respondent has filed a reply opposing the petition.
The counsel for the parties have been heard.
5. The counsel for the petitioner has contended that the petition is not maintainable because the petitioner has not evidenced any intention to commence arbitration proceedings. Reliance is placed on Sundaram Finance Ltd. vs. NEPC India Ltd. AIR 1999 SC 565 in this regard.
6. Secondly, it is contended that the petitioner has concealed the material facts from this Court and is not entitled to the discretionary relief. It is contended that the petitioner has alleged that it is not possible to go forward with the agreement and/or that the petitioner has renegated from the contract for a defect in title of the OMP 457/2009 Page 2 of 5 respondent. The said statement in the petition is stated to be false in view of the annexures to the agreement wherein the alleged defect in title of the respondent is stated to have been disclosed.
7. Thirdly, it is contended that the petitioner was to pay a total sum of Rs.4, 50,00,000/- towards the refundable deposit and is in breach of the agreement and the respondent has claims, therefor against the petitioner and the petitioner is not entitled to refund of the sum of Rs.75,00,000/- for this reason.
8. Per contra, the counsel for the petitioner has urged that the respondent had in reply to the legal notice admitted his liability to refund the sum of Rs.75,00,000/- and is now falsely denying the liability. The counsel for the petitioner has also controverted the other contentions recorded aforesaid of the counsel for the respondent.
9. I have put to the counsel for the respondent that the petition cannot be dismissed owing to concealment by the petitioner for the reason that the petitioner has approached this Court on the basis that under the agreement, it is entitled to refund of Rs.75,00,000/- irrespective of the reason for which the MOU has been rescinded or has become inoperative; thus, the correctness of the reason for which the petitioner renegated from the contract is not relevant. Similarly, it has been put to the counsel for the respondent that the fear of the respondent of the petitioner holding up the property of the respondent by obtaining an interim order without commencing arbitration can be allayed by direction with respect thereto being made herein. The counsel for the petitioner states that an Arbitrator may be appointed by this Court only.
OMP 457/2009 Page 3 of 5
10. Faced with the aforesaid, the counsel for the respondent states that the respondent will furnish a bank guarantee in the sum of Rs.75,00,000/- in favour of the Registrar General of this Court within four weeks from today to ensure the payment of the said sum of Rs.75,00,000/- to the petitioner in the event of Award finding such money payable to the petitioner attaining finality. It is stated that upon such bank guarantee being furnished, the interim order be vacated. He has also agreed that the Arbitrator be appointed by this Court only and the arbitration proceedings be directed to be disposed of in a time bound schedule.
Accordingly, this petition is disposed of with the directions:
(i) That the interim order made on 11th August, 2009 to continue till the respondent furnishes the bank guarantee in the aforesaid terms to the satisfaction of the Registrar General of this Court; upon the said bank guarantee being accepted by the Registrar General, the said order shall stand vacated and the respondent shall be entitled to deal with the property subject matter of the MOU dated 26th February, 2008; the bank guarantee be valid for a term of one year in the first instance and to be kept alive till the Award attains finality; however if the Award finds the petitioner not entitled to the said sum of Rs.75,00,000/-, and the petitioner prefers a petition under Section 34 of the Act, the respondent shall be entitled to seek modification of this order;
(ii) The agreement between the parties being of a sole arbitrator and the parties being unable to agree upon an Arbitrator, Justice A.B. Saharya (Retd) is appointed as the sole Arbitrator to adjudicate the disputes and differences, subject matter of the arbitration clause in the agreement aforesaid between the parties. It is clarified that the petitioner shall be entitled to make claims besides that for refund OMP 457/2009 Page 4 of 5 of Rs.75,00,000/- and the respondent shall also be entitled to make claims against the petitioner. The maximum fee of the Arbitrator is fixed at Rs.5,00,000/- (besides out of pocket expenses), to be shared equally by the parties and subject to award as to costs. The Arbitrator is requested to dispose of the arbitral proceedings within a period of one year from the date of first appearance of the parties before the Arbitrator. The parties to appear before the Arbitrator with prior appointment on 23rd October, 2009.
RAJIV SAHAI ENDLAW,J th September 24 , 2009 sb OMP 457/2009 Page 5 of 5