Bombay High Court
Nimbus Communications Ltd vs Board Of Control For Cricket In ... on 3 September, 2015
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 167 OF 2012
Board of Control for Cricket in India, )
a society registered under the Tamil Nadu )
Societies Registration Act, 1975, having its )
head office at Cricket Centre, Wankhade Stadium)
'D' Road, Churchgate, Mumbai - 400 020 )
suing in the name of its Secretary, )
Mr.Sanjay Jagdale ) ..... Petitioner
Versus
1. Nimbus Communications Ltd.,
a company registered under the provisions of
)
)
the Companies Act, 1956 having its registered )
office at Nimbus Centre, Oberoi Complex, )
Off. New Link Road, Andheri (West), )
Mumbai - 400 053 )
2. Neo Sports Broadcast Private Limited )
company registered under the provisions of the )
Companies Act, 1956 having its registered )
office at Nimbus Centre, Oberoi Complex, )
Off. New Link Road, Andheri (West), )
Mumbai - 400 053 ) ..... Respondents
ALONGWITH
ARBITRATION PETITION NO. 595 OF 2012
Nimbus Communications Ltd. )
a company registered under the Companies Act,)
1956 having its registered office at )
Nimbus Centre, Oberoi Complex, )
Off. New Link Road, Andheri (West), )
Mumbai - 400 053 ) ..... Petitioner
Versus
Board of Control for Cricket in India, )
::: Uploaded on - 03/09/2015 ::: Downloaded on - 06/09/2015 23:08:26 :::
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a Society Registered under the Tamil Nadu )
Societies Registration Act and having its address)
at Cricket Center, Wankhade Stadium, )
Mumbai - 400020 ) ..... Respondent
Mr.T.N.Subramanian, Senior Advocate, a/w. Ms.Akhila Premkumar, Mr.Aditya
Mehta, Mr.Adarsh Saxena, Ms.Prabhjyot Chhabra, i/b.Cyril Amarchand Mangaldas
for the Petitioner in Arbitration Petition No.167 of 2012 and for the Respondents in
Arbitration Petition No.595 of 2012.
Mr.Aspi Chinoy, Senior Advocate, a/w. Ms.L.M.Jenkins, i/b.Juris Consultus for the
Respondent no.1 in Arbitration Petition No.167 of 2012 and for the Petitioner in
Arbitration Petition No.595 of 2012.
Mr.Zal Andhyarujina, a/w. Mr.Naser Rizvi, i/b.Thakore Jariwala & Associates for
the Respondent no.2 in Arbitration Petition No.167 of 2012.
CORAM : R.D. DHANUKA, J.
RESERVED ON : 28th JULY, 2015
PRONOUNCED ON : 3RD SEPTEMBER, 2015
JUDGMENT :
By this petition filed under section 9 of the Arbitration and Conciliation Act,
1996 the petitioner seeks an order and directions against the respondents to deposit
all the monies which they have received from the advertisers as consideration for
broadcast of advertisements on the television channels owned and operated by the
respondents in relation to 2011 Cricket Series under the Media Rights License
Agreement (for sake of convenience hereinafter referred to as the said MRLA) and
seeks injunction against the respondent no.2 from paying over, parting with,
reimbursing, adjusting or in any way transferring the said monies payable under
the purported Television Rights Agreement dated 16 th September, 2010 to the
respondent no.1 and seeks various other reliefs. Some of the relevant facts for the
purpose of deciding this petition are as under :-
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2. On 15th October, 2009, the petitioner and respondent no.1 entered into
the said MRLA for broadcasting international cricket matches (Tests, ODIs and
Twenty20s) for the years 2010 to 2014, Rights Period commencing from 1 st April,
2010 until 31st March, 2014. Under the said agreement, the respondent no.1 had
agreed to deliver to the petitioner an irrevocable and unconditional bank guarantee
for the purpose of securing its obligation to pay, the Rights Fee payable in
accordance with clause 7 of the said agreement to the petitioner. The said
agreement provided for payment schedule and various other rights and obligation
of the parties. Clause 28 of the said agreement provides for an arbitration
agreement.
3. On 21st October, 2009, the petitioner and respondent no.1 executed an
addendum to the said agreement dated 15th October, 2009. It was provided that the
said addendum will prevail over the said agreement dated 15th October, 2009.
4. The respondent no.1 became liable to pay the Rights Fee to the
petitioner on various dates provided under the said agreement dated 15 th October,
2009 in respect of Australia, New Zealand, West Indies series. It is the case of the
petitioner that the respondent no.1 did not comply with its obligation of the
payment of Rights Fees of the petitioner within time and committed breaches of its
obligation. Though there was some part payment made by the respondent no.1, the
same was paid belatedly.
5. On 17th March, 2011, the petitioner issued a notice for invocation of
the bank guarantee and termination of contact in view of the overdue payment in
relation to second installment of Rights Fees for 2010 New Zealand series. On 11 th
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June, 2011, the petitioner issued a notice of invocation of the bank guarantee and
termination of contract in view of overdue payment of Rs.86,02,19,232/-.
6. On 22nd August, 2011, the petitioner and respondent no.1 executed
another addendum to the said agreement dated 15 th October, 2009. On 5th
November, 2011, the petitioner issued a notice for invocation of the bank guarantee
and termination of contract in view of the overdue payment of Rs.137,87,50,000/-
towards Rights Fees in respect of West Indies Series.
7. On 16th November, 2011, the petitioner through its advocate issued a
notice to the respondent no.1 pointing out various breaches on the part of the
respondent no.1 of the said agreement and called upon the respondent no.1 to pay
the balance amount of Rs.87,87,50,000/- along with interest on the sum of
Rs.137,87,50,000/- within a period of 5 days from the date of the said letter
making it clear that in case of failure, the petitioner would be constrained to
exercise its available rights and remedies under the said agreement including
termination of the said agreement under clause 10.3(a) thereof and invocation of
the bank guarantee provided by the respondent no.1 and also to claim damages
arising out of the breaches committed by the respondent no.1.
8. The respondent no.1 vide its letter dated 21st November, 2011 to the
petitioner apologized for delay in making full payment of the first 50% of the West
Indies tour of India 2011. The respondent no.1 stated that in view of a tumultuous
phase for the economy in general and the advertising industry in specific in last
two months, those extra ordinary circumstances had severally impacted the
business of its licensee broadcasters in India and across the world. It was also
stated that the large amount of cricket being played has caused a degree of fans
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apathy towards the game which had not help the matter unfortunately as a result
thereof, there had been the extraordinary poor turnout of cricket fans for even the
International ODI and Test matches. It was alleged that even in respect of T-20
format played at the cricket passionate city of Kolkata, it showed turnout of 50% in
number of spectators.
9. The respondent no.1 requested the petitioner to grant 45 days grace
period for the payment towards dues of Rs.740,875,000/- on the West Indies Tour
of India and assured to make the said payment on or before 20 th December, 2011
and undertook to pay the said payment latest by 30 th December, 2011.
ig The
respondent no.1 also requested for 30 days extension for the other payments due
from the respondent no.1 to the petitioner for the season 2011-12 as per the said
agreement dated 15th October, 2009. The respondent no.1 acknowledged that in
past the petitioner had been sympathic towards respondent no.1 for adjustment of
the payment schedule and requested for extension of the payment due date and to
hold in abeyance the notice of 16th November, 2011 issued to the respondent no.1.
10. On 5th December, 2011, the petitioner replied to the said letter dated
21st November, 2011 and called upon the respondent no.1 to make the balance
payment of Rs.87,87,50,000/- with overdue interest immediately and rejected the
request of the respondent no.1 for additional time.
11. On 12th December, 2011, the petitioner through its advocates
addressed a letter to the respondent no.1 recording that respondent no.1 had
committed breaches of the provisions of clause 7.2 of the said agreement and the
said material breach had not been remedied inspite of the notice issued by the
petitioner by the said notice the petitioner terminated the said agreement and
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informed all their actions to invoke the bank guarantee separately.
12. On 13th December, 2011, the petitioner by three separate letters
invoked the bank guarantees issued by the Indian Bank, Punjab National Bank and
Union Bank of India on behalf of the respondent no.1 under the said MRLA. The
petitioner forwarded copies of those three letters addressed to the banks for
invocation of the bank guarantees to the respondent no.1.
13. On 13th December, 2011, the petitioner through its advocates' letter to
the respondent no.1 issued a cease and desist notice to the respondent no.1 from
broadcasting the feed and footage of the ongoing Ranji Trophy Match between
Gujarat and Tamil Nadu on its television channel Neo Cricket or any other
television channel and called upon to forthwith remove all equipment and
personnel that had been stationed by the respondent no.1 at the stadium at Gujarat.
14. On 13th December, 2011, the respondent addressed a letter to the
petitioner and stated that it was always willing to pay the balance sum of Rs.50
crores to the petitioner but requested for an extension of time due to poor economic
conditions and non confirmation of the Pakistan Tour of Indian 2012. The
respondent no.1 alleged that it had authorised the petitioner to encash the bank
guarantees for the amount of payment due if Rs.50 crores making it fully
compliant as per the said MRLA and if the petitioner choose not to opt for the
payment mode suggested by the respondent no.1, it would continue to make
outstanding payment of Rs. 50 crores to the petitioner immediately and requested
to confirm that no further action would be taken on the respondent no.1 and the
termination would be withdrawn on such payment.
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15. On 13th December, 2011, the respondent no.1 by three separate letters
all dated 13th December, 2011 requested the Union Bank of India, Punjab National
Bank and Indian Bank of India and not to act on the notice received from the
petitioner for encashment of the bank guarantees. On 14th December, 2011, the
respondent no.1 by three separate letters to three banks requested not to allow the
petitioner to encash the bank guarantee on the basis of the reasons stated in the
said letters.
16. On 14th December, 2011, the respondents filed an Arbitration Petition
(L) No. 1425 of 2011 in this court against the petitioner and three banks inter alia
praying for an injunction against the petitioner from demanding or receiving or
recovering any amount from the banks and injunction against the banks from
making any payment to the petitioner or any one else under those bank guarantees
and also applied for termination of the said MRLA dated 15th October, 2009.
17. On 15th December, 2011, the banks through its counsel made a
statement before this court that those banks did not intend to make payment
pursuant to the invocation of the guarantees to the petitioner herein and contended
that they were not liable to make any payment under the said guarantees. In view
of the statement made by the bank, this court did not think it necessary to consider
the application for injunction restraining those banks from making payment under
the bank guarantees at that stage. It was however made clear that in the event of
those banks changing their views and decided to make payment pursuant to the
invocation of the bank guarantees, they shall not make payment thereunder for a
period of three working days after service of the notice to that effect upon the
petitioner and their advocates and also upon the respondent no.1 herein.
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18. On 16th December, 2011, the petitioner herein filed a petition (L)
No.1439 of 2011 for interim measures against the respondent no.1 and also the
banks. The banks through its learned counsel made a statement before this court
that the banks did not intend at that time to return the margin moneys placed by the
respondent no.1 herein with them in respect of the guarantees issued by those
banks at the request of respondent no.1 in favour of the petitioner. This court
accordingly directed the banks not to return the margin money to the respondent
no.1 till the expiry of the three working days after service of a notice in writing
upon the petitioner and its advocates informing them of their intention to do so.
19.
On 29th December, 2011, the respondent no.1 addressed a letter to the
petitioner demanding refund of Rights Fees already paid on various grounds under
the said MRLA. On 5 th January, 2012, the petitioner rejected the said demand
made by the respondent no.1 and invoked Clause 28.3 of the said MRLA and
referred the dispute to the arbitration in terms thereof. The petitioner nominated
and appointed a former Chief Justice of India as an arbitrator and called upon the
respondent no.1 to appoint an arbitrator on their behalf within a period of 30 days.
20. According to the petitioner, the respondent no.2 which is the only
subsidiary company of respondent no.1 was generating suitable amount of revenue
by airing advertisement through television channels owned and operated by
respondent no.1. It was the case of the petitioner that the revenue generated from
the said advertising would ultimately be accounted for and paid to the 1 st
respondent by the respondent no.2.
21. On 6th January, 2012, the petitioner filed the present petition praying
for an order directing the respondents to disclose the amounts already received
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and/or receivable from the advertisement and praying for furnishing security in the
form of deposit and various other reliefs. According to the petitioner on the date of
filing of the present petition, the respondent no.1 was liable to pay amount of
Rs.305,06,87,500/- to the petitioner with further interest thereon. On 13 th January,
2012, the respondent no.1 filed an affidavit in the present proceedings and
disclosed that the respondent no.1 had entered into purported television rights
agreement with respondent no.2 and also addendum dated 11th July, 2011.
22. On 19th January, 2012, the learned Single Judge of this court passed an
ad-interim order in this petition directing the respondent no.1 to disclose the
amounts already received/receivable from the advertisers towards consideration for
broadcast of advertisements of television channels owned and operated by the
respondents in relation to the 2011-Cricket Series and directed the respondent no.1
to furnish the security by depositing Rs.305 crores in this court within four weeks.
23. On 27th January, 2012, the learned Single Judge of this court in the
draft chamber summons handed in by the petitioner for amendment of the present
petition, passed an order directing the respondent no.1 not to dispose of, alienate,
encumber, part with possession or create any third party rights in respect of the
shares held by it in respondent no.2 and not to modify the shareholding pattern of
respondent no.2 without giving two weeks notice to the petitioner. The petitioner
thereafter filed Chamber Summons No.249 of 2012 for amendment of the present
petition.
24. On 10th February, 2012, the respondent no.1 and respondent no.2 filed
separate appeals bearing Nos. 191 of 2012 and 193 of 2012 impugning the order
dated 19th January, 2012 passed by the learned Single Judge. Respondent no.2
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filed Appeal No.192 of 2012 impugning order dated 27th January, 2012.
25. On 27th January, 2012, the Division Bench of this court directed the
respondent no.1 to furnish solvent security in the form of a bank guarantee of a
nationalised bank in the amount of Rs.305 crores within two weeks. The Division
Bench allowed the Chamber Summons No. 249 of 2012 filed by the petitioner and
permitted the amendment to the arbitration petition. The Division Bench also
extended ad-interim order passed by the learned Single Judge on 27 th January, 2012
for a further period of four weeks from the date of the said order to enable the
petitioner to apply for appropriate reliefs before the learned Single Judge in the
arbitration petition. The Division Bench vacated the directions contained in the
order passed by the learned Single Judge in terms of the statement which had been
made by the petitioner before the Court leaving it open to the petitioner to apply
before the learned Single Judge for appropriate reliefs against the respondent. All
the rights and contentions of the parties were kept open to be urged before the
learned Single Judge in the present arbitration petition.
26. The respondent no.1 filed Special Leave Petition against the said order
and judgment dated 27th February, 2012 (Special Leave to Appeal No.9314 of
2012) in the Supreme Court. By an order dated 4 th April, 2012, Supreme Court
refused to entertain the said Special Leave Petition and directed the learned Single
Judge to dispose of the proceeding at the earliest and preferably within four weeks
from the date of the communication of the said order. It was clarified that the
matter was to be decided by the learned Single Judge without being influenced by
the observations made while passing ad-interim order.
27. On 19th March, 2012, the respondent no.1 filed an affidavit in reply
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alleging that respondent no.2 had various other businesses apart from those rights
accrued from the respondent no.1. It was alleged that the revenue generated by the
respondent no.2 is not payable to respondent no.1. Respondent no.1 had granted
broadcasting rights relating to the subject matter of the said MRLA to the
respondent no.2 vide television rights agreement and alleged that respondent no.2
was exclusively entitled to exploit all the rights under the said MRLA. On 19 th
March, 2012, the respondent no.2 filed affidavit in reply contending that the
arbitration petition was not maintainable against respondent no.2. It was alleged
that the respondent no.2 had acquired rights to generate the revenue from the
exploitation of the said rights under the said MRLA from the respondent no.1 and
that the respondent no.2 was not entitled to collect revenue from the advertisement.
It was alleged that there were certain disputes between the respondent no.1 and
respondent no.2.
28. Sometime in the year 2012, the petitioner filed three summary suits in
this court against Punjab National Bank, Indian Bank and Union Bank of India
respectively since the banks had refused to permit the petitioner to encash various
bank guarantees issued on behalf of the respondent no.1. By an order dated 20 th
December, 2012, the learned Single Judge of this court disposed of the summons
for judgment filed by the petitioner in the said three summary suits and directed
those three banks to deposit the aggregate sum of Rs.400 crores with the
Prothonotary and Senior Master of this court on or before 15 th February, 2012 as
the condition for granting leave to defend the suit granted to those three banks. In
the appeal filed by the banks, the Division Bench extended the date for deposit of
Rs.400 crores.
29. The petitioner challenged the said order before the Supreme Court.
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By an order dated 15th April, 2013, the Supreme Court disposed of the said Special
Leave Petition, converted into a Special Appeal to Appeal No.4834 of 2013 and
directed the banks to deposit the said amount of Rs.400 crores in this court with the
Prothonotary and Senior Master within fortnight from the date of the said order and
permitted the petitioner herein to withdraw the said amount if deposited by those
three banks subject to undertaking given by the petitioner that in case the suit fails,
the petitioner shall return the deposited amount to the respective banks along with
interest at the rates that would have earned if kept in a fixed deposit with the
respondent banks as directed in the order of the Court. The petitioner furnished the
undertaking before the Supreme Court and has withdrawn the said amount of
Rs.400 crores which are lying with the petitioner today.
30. During the pendency of the present petition, the respondents made
various statements before this court which are continued from time to time and
continued till disposal of this petition. The petitioner has also filed a Contempt
Petition No.34 of 2012 in this court against the respondents alleging deliberate
violation of the order passed by the Division Bench on 27 th February, 2012 and the
said contempt petition was argued along with this arbitration petition.
31. During the hearing of the present petition, the petitioner also filed
Arbitration Petition (L) No.1449 of 2015 in this court against the respondent no.1
herein inter alia praying for interim measures and applied for attachment of the
amount due and payable by the petitioner to the respondent no.1 under an arbitral
award dated 14th August, 2014 arising out of the equipment agreement.
32. By an order dated 12th August, 2015, this court has passed an ad-
interim order in the said arbitration petition and has directed the petitioner herein to
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deposit the sum of Rs.7,42,32,492/- with interest at the rate of 10% per annum
from 1st May, 2013 and cost within a period of four weeks from the date of the
said order and has directed the Prothonotary and Senior Master to invest the said
amount in the fixed deposit of a nationalised bank. This court has made it clear
that if the petitioner deposits the said amount, the petitioner would not be liable to
make any payment to the respondents under the said award dated 14th August, 2014
along with cost and upon such deposit, there shall be an attachment on the said
amount to secure part of the claim of the petitioner. It was made clear by this court
that if the amount is deposited by the petitioner, the same would be subject to the
further orders that would be passed by this court in the present Arbitration Petition
No.167 of 2012 and other connected proceedings.
33. By an order dated 19th August, 2015, the said order dated 12 th August,
2015 was clarified and the petitioner is directed to deposit a sum of
Rs.8,70,66,010/- with further interest on the sum of Rs.7,42,32,492/- at the rate of
10% per annum from 1st May, 2013 until the date of deposit to the arbitration cost
within four weeks from the date of the said order dated 19th August, 2015. The said
order dated 12th August, 2015 was clarified with consent of the learned counsel
appearing for the respondent no.1 herein.
34. Mr.Subramanian, learned senior counsel appearing for the petitioner
invited my attention to the various annexures to the arbitration petition and also to
various affidavits filed by the parties including the orders passed by the learned
Single Judge of this court, by the Division Bench and also the Supreme Court. My
attention is also invited to the order passed by the learned Single Judge in the
summons for judgment filed by the petitioner, order passed by the Division Bench
and also by the Supreme Court arising out of such order passed in summons for
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judgment. My attention is also invited to various balance-sheets of the respondent
no.1, annual report and financial statement of respondent no.1 for various financial
years in support of his submission that the respondent no.1 is heavily indebted and
that the respondent no.1 has admitted its liability towards the petitioner.
35. It is submitted by the learned senior counsel that there was violation of
various obligations on the part of the respondent no.1 in making payment of the
Rights Fees to the petitioner on account of financial strain faced by the respondent
no.1.The respondent no.1 had apologized for delay in making payment and had
asked for extension from time to time. He submits that though the respondent no.1
had furnished unconditional bank guarantees to secure the payment of Rights Fee
of the petitioner, when the petitioner applied for encashment of those bank
guarantees, the respondent no.1 addressed letters to the banks not to permit the
petitioner for encashment of those bank guarantees on frivolous grounds. He
submits that the respondent no.1 had suppressed those letters addressed to the
banks from the petitioner and from this court. My attention is invited to those
letters addressed by the respondent no.1 to those banks not to permit the petitioner
to encash those bank guarantees. He submits that in view of such letters addressed
by respondent no.1, those banks refused to pay amount under those unconditional
bank guarantee to the petitioner.
36. Learned senior counsel submits that though the fact of filing summary
suits by the petitioner against those banks on the basis of the bank guarantees
issued by the banks on behalf of the respondent no.1 was brought to the notice of
this court in the present proceedings, the learned Single Judge after considering the
submission of both the parties had passed a detailed order and judgment directing
the respondent no.1 to deposit the sum of Rs.305 crores. He submits that though
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the said order passed by the learned Single Judge in the present proceedings was
upheld by the Division Bench and by the Supreme Court, the respondent no.1 has
not complied with the said order of deposit of Rs.305 crores till date deliberately
and has committed contempt of the order passed by this court.
37. Learned senior counsel also invited my attention to various paragraphs
from the affidavit filed by the respondent no.1 in the contempt petition filed by the
petitioner. It is contended in the affidavit that the respondent no.1 did not apply for
stay of the impugned order passed by the learned Single Judge since the Division
Bench had indicated that the matter would be disposed of finally at the admission
stage itself and no purpose would have been served by applying stay of the order
passed the learned Single Judge.
38. My attention is invited to the cross examination of the witness
examined by the respondent no.1 before the arbitral tribunal admitting that the
respondent no.1 had not complied with the directions of this court passed under
section 9 of the Arbitration and Conciliation Act, 1996. The witness has deposed
that despite of their discussion with the three banks who had issued the original
bank guarantees totaling to Rs.2000 crores, the respondent no.1 was not able to
convince the bank to issue another Rs.305 crores of the bank guarantee because
their view was that approximately Rs.1600 crores of bank guarantee remained in
possession of the petitioner and the status of those bank guarantees was being
agitated in another suit, so they would not risk issuing further bank guarantee.
39. Learned senior counsel invited my attention to paragraph (60) of the
sur-rejoinder dated 23rd April, 2012 filed by the respondent no.1 in the present
proceedings contending that there was no reason for the petitioner to retain those
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bank guarantees since the summary suits filed by the petitioner against three banks
were also infructuous and in as much as the guarantees were not encashable and
the petitioner was not entitled to receive any monies under the guarantees.
40. It is submitted by the learned senior counsel that the petitioner cannot
attach and recover the said amount of Rs.400 crores, which is allowed to be
withdrawn by the petitioner pursuant to the undertaking rendered by the petitioner
before the Supreme Court since the said amount will have to be returned by the
petitioner with interest in view of the order passed by the Supreme Court and
pursuant to an undertaking rendered by the petitioner if the petitioner fails in those
summary suits. He submits that since the said amount lying with the petitioner is
not available for attachment in view of the undertaking rendered by the petitioner,
the said amount cannot be considered as due security in the hands of the petitioner
and in any event cannot be considered as due compliance of the orders passed by
this court on the part of the respondent no.1. He submits that the deposit made by
the banks was towards conditional leave granted in those summary suits between
the petitioner and those banks and the said proceedings are independent
proceedings under independent contract. He submits that the said amounts thus
cannot be considered as the security in favour of the petitioner for attachment and
for satisfaction of the award if any rendered in faovur of the petitioner. He submits
that those banks are contesting the suits filed by the petitioner and have filed third
party notices in the said proceedings.
41. Learned senior counsel for the petitioner invited my attention to the
auditor's report of the respondent no.1 as on 31st December, 2012 and submits that
the respondent no.1 has 89% shares of the respondent no.2. The loss is
underestimated by the respondent no.1. In the said auditor's report, the auditors
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have opined that the books were not properly maintained by the respondent no.1.
He submits that the financial status of the respondent no.1 has versioned today.
The respondent no.1 has not disputed the claims in the petitioner. He submits that
the statement made by the respondent no.1 in respect of the shares held by the
respondent no.1 in respondent no.2 is in force for more than two years. My
attention is also invited to the affidavit in reply filed by the respondent no.2 and it
is submitted that even according to the respondent no.2, shareholding of the
respondent no.1 in respondent no.2 could be reduced.
42. It is submitted that the petitioner would not be able to recover its
legitimate dues even if succeeds in the arbitral proceedings from the respondent
no.1 if the shareholding of respondent no.1 in respondent no.2 is reduced and thus
respondent no.1 shall be restrained diluting shares of respondent no.1 in respondent
no.2. He submits that there are no other assets available in the hands of the
petitioner for recovery of its legitimate dues against the respondent no.1. He
submits that the petitioner has good chances of succeeding in the arbitral
proceedings.
43. It is submitted by the learned senior counsel for the petitioner that
though the respondent no.1 has made false counter claim of Rs.2000 crores against
the petitioner in the arbitral proceedings, respondent no.1 did not apply for
providing any security against the petitioner which itself indicates that there is no
substance in their counter claim.
44. Mr.Subramanian, learned senior counsel placed reliance on the
judgment of this court in case of Deccan Chronicle Holdings Limited vs. L & T
Finance Limited in Appeal (L) No. 130 of 2013, delivered on 8 th August, 2013 and
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in particular paragraphs 9 and 10 and submits that even if while deciding an
application for attachment before judgment, basis of Order 38 Rule 5 would have
to be borne in mind by the court, the rigors of every procedural provisions of the
Code of Civil Procedure cannot be put in place of defeat the grant of relief which
would subserve the paramount interests of justice. He submits that this court has
ample power to mould the relief in appropriate cases to secure the ends of justice
and to perverse the sanctity of the arbitral process. He submits that after
considering the financial condition of the borrower in that matter, this court has
upheld the order passed by the learned single judge directing the borrower to
furnish security to secure the claim of the lenders.
45. Learned senior counsel also placed reliance on the law laid down by
the Division bench of this court in this matter and would submit that though the
Supreme Court has directed the learned Single Judge to decide the matter without
being influenced by the orders passed by this court, the law laid down by the
learned Single Judge and Division Bench of this court can be still be relied upon by
the petitioner and is binding on the learned Single Judge.
46. It is submitted by the learned senior counsel that even if the
respondent no.1 was not able to arrange for margin money to enable the banks to
furnish security as ordered by the Court, the petitioner is not responsible for the
same. The banks have also made claims against the respondent no.1 and thus
respondent no.1 itself is responsible for not complying with the orders passed by
this court and Supreme Court. He submits that since the respondents have not
complied by the orders passed by this court and also by the Supreme Court, interim
measures as prayed in the petition be granted.
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47. Learned senior counsel however submits that the petitioner is not
pressing any relief against the respondent no.2 directly which would be in the
nature of garnishee proceedings but seeks injunction against the respondent no.1
from diluting its shareholding in respondent no.2. He submits that the respondent
no.1 be also directed to file an affidavit of disclosure disclosing about all the assets
whether encumbered or unencumbered within such time as this court may deem fit.
48. Mr.Andhyarujina, learned counsel appearing for respondent no.2
submits that the respondent no.2 is a separate legal entity. There is no arbitration
agreement between the petitioner and the respondent no.2. He submits that since
no arbitration award can be made against the respondent no.2, no interim relief can
be granted by this court against the respondent no.2. He submits that the
respondent no.2 is a subsidiary company of the respondent no.1 and is an
independent company. The court has to consider the facts of each case. The
respondent no.2 has a separate shareholding management. There is an independent
agreement between the respondent no.2 and third party which would be affected if
any interim relief as prayed against the respondent no.2 is granted by this court.
He submits that there is arms length transaction between the respondent no.1 and
respondent no.2. It is submitted that the petitioner has not made out any case for
reliefs against a third party in this proceedings under section 9 of the Arbitration
Act. He submits that if the reliefs in terms of prayer clause (cc), (cd) and (ce) of
the petition are granted, it would seriously prejudice the interest of respondent no.2
and no relief can be granted against the respondent no.2 in the present proceedings.
Learned counsel for the respondent no.2 submits that at one stage, the respondent
no.2 had decided to reduce the shareholding of the respondent no.1. The
respondent no.2 has already made statement before this court which is in force.
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49. Mr.Chinoy, learned senior counsel for the respondent no.1 submits
that this court cannot adjudicate upon the merits of the claims made by the
petitioner against the respondent no.1 and the counter claim made by the
respondent no.1 against the petitioner which are subject matter of the arbitral
proceedings. He submits that no claim has been made by the petitioner against the
respondent no.1 arising out of the termination of the said MRLA. The respondent
no.1 has already made payment of substantial amount to the petitioner.
50. Learned senior counsel invited my attention to the averments made by
the petitioner in paragraphs 6 to 9 of the arbitration petition and submits that none
of those averments would fall under Order 38 Rule 5 of Code of Civil Procedure
even on demurer. He submits that reliefs claimed for securing the claim of the
petitioner under section 9(ii) (b) of the Arbitration Act read with Order 38 Rule 5
of the Code of Civil Procedure, 1908 which are drastic provisions have to be
strictly construed and satisfied before granting any relief under those provisions.
He submits that the petitioner has not produced any credible material to show the
intention of the respondent no.1 to defeat or delay the execution of the award. He
submits that this court has to keep in mind the principles under Order 38 Rule 5 of
the Code of Civil Procedure while passing any such order which would be in the
nature of attachment before judgment.
51. In support of this submission, learned senior counsel placed reliance
on the judgment of this court in case of Networth Stock Broking Ltd. vs. K.Vinaya
Prasad (2009) 4 Bom.C.R.553 and in particular paragraph 8 and judgment of this
court in case of Vijay Agarwal vs. Lehman Brothers Advisors Pvt. Ltd., 2009(5)
Mh.L.J. 302 and in particular paragraph 11. Learned senior counsel also placed
reliance on the judgment of this court in case of Raman Tech.& Process Engg.Co.
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And another vs. Sonanki Traders (2008) 2 SCC 302 and in particular paragraphs 4
to 6 and would submit that the respondent no.1 had not furnished any security in
favour of the petitioner and thus unsecured claim of the petitioner cannot be
converted into a secured claim by granting any order for providing security under
section 9(ii) (b) of the Arbitration Act read with Order 38 Rule 5 of the Code of
Civil Procedure.
52. Learned senior counsel for the respondent no.1 submits that the TRA
between the respondent nos.1 and 2 was executed much prior to the date of
termination of the MRLA. ig It is submitted that the petitioner thus cannot be
allowed to urge that the agreement entered into between the respondent nos.1 and 2
was with an intention to delay or defeat the outcome of the arbitral proceedings.
He submits that the onus is on the petitioner to show that the respondent has sold
any properties or is likely to sell any property with an intention to delay or defeat
the outcome of the arbitral proceedings which the petitioner has not able to
demonstrate before this court. He submits that the petitioner has not made out any
requirement under section 9(ii) (b) nor has made any averments in the arbitration
petition.
53. In his alternate submission, learned senior counsel for the respondent
no.1 submits that the petitioner has already security in its hand of Rs.400 crores
which are deposited by the banks in this court and which are allowed to be
withdrawn by the petitioner. My attention is invited to paragraph 8 of the
arbitration petition and it is submitted that even the arbitration petition filed by the
petitioner proceeds on the footing that the petitioner already has security of Rs.400
crores in its hands. He submits that providing of additional security entails huge
margin money. Since the petitioner has retained the security which entails margin
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money, the petitioner cannot be allowed to ask for further security from the
respondent no.1. He submits that the petitioner has affirmed and confirmed the
existence of security and thus cannot be granted double security. He submits that
before seeking any relief in the present proceedings for furnishing security again
by the respondent no.1, the petitioner shall be directed to give up its security of
Rs.400 crores. My attention is also invited to paragraph (nn) of the averments
made by the petitioner at page 441 of the affidavit in which the petitioner has
denied that the petitioner has given up the security of Rs.400 crores.
54. Learned senior counsel placed reliance on the judgment of Supreme
Court in case of V.G.Quenim and another vs. Bandekar Brothers (P) Ltd. (2002)
10 SCC 513 and in particular paragraphs 2 and 3 and it is submitted that this court
cannot grant an order by way of attachment before judgment and also by way of
injunction at the same time.
55. Mr.Chinoy, learned senior counsel does not press Arbitration Petition
No.595 of 2012.
56. Mr.Subramanian, learned senior counsel for the petitioner in rejoinder
submits that though this court has to bear in mind principles of Order 38 Rule 5
while passing any interim order for attachment and/or securing the claim of the
petitioner under section 9, rigors of Order 38 Rule 5 does not apply to application
under section 9. He submits that the purpose of granting the relief under section 9
is to ensure to protect the claim of the petitioner and to secure the amount in
dispute. He submits that since the respondent no.1 had sent letters to the banks not
to permit encashment of the unconditional bank guarantees and such letters were
suppressed, the petitioner could not encash those bank guarantees. He submits that
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pursuant to the liberty granted by the Supreme Court, the said amount of Rs.400
crores deposited by those three banks have been allowed to be withdrawn by the
petitioner upon the petitioner rendering an undertaking to return the said amount
with interest. He submits that the said amounts were deposited by those banks to
defend summary suits filed by the petitioner against those banks under Order 37
Rule 6. He submits that those banks are opposing the suits filed by the petitioner
and have also filed third party notices. He submits that those banks are not party to
this proceedings.
57. Learned senior counsel submits that the suits filed by the petitioner
against bank was for more than Rs.1600 crores and not only Rs.400 crores. He
submits that the petitioner has already returned the bank guarantee of substantial
amount to the respondent no.1 and in view of the return of such bank guarantee,
the bank also must have returned the margin money paid by the respondent no.1 to
those banks. He submits that the respondent no.1 has already admitted in the
correspondence that the respondent no.1 would not be able to comply with the ad-
interim order passed by this court in view of the bad financial condition of the
respondent no.1.
58. Learned senior counsel for the petitioner submits that though the
petitioner has been permitted to withdraw an amount of Rs.400 crores pursuant to
the liberty granted by the Supreme Court, the said amount in the hands of the
petitioner cannot be construed as a security and cannot be attached by the
petitioner in the event of the petitioner succeeding in the arbitral proceedings. He
submits that for the purpose of attachment of the property, such property must be
available for the purpose of attachment and sale to recover the decreetal amount.
He submits that the banks have not given their no objection in favour of the
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petitioner to attach the said amount of Rs.400 crores lying with the petitioner. It is
submitted that the said amount lying in the hands of the petitioner is coupled with
obligation of the petitioner to return the said amount to the respondent no.1 with
interest if the petitioner fails in the summary suits filed by the petitioner against
those banks. Learned senior counsel submits that the petitioner thus does not claim
any double security as canvassed by the learned senior counsel for the respondent
no.1.
59. It is submitted by the learned senior counsel for the petitioner that if
the court direct the respondent no.1 to secure the claim and if the respondent no.1
complies with the said direction issued by the court, the petitioner is ready to
deposit the said amount in the summary suits. Statement is accepted.
60. Learned senior counsel for the petitioner invited my attention to
various financial documents and also the annual reports of the respondent no.1 and
submits that the respondent no. 1 has admitted the liability of the petitioner and is
heavily indebted.
61. Learned senior counsel also distinguished the judgment of this Court
in case of Vijay Agarwal (supra), V.G.Quenim and another (supra) and Networth
Stock Broking (supra) on the ground that the rigors of Order 38 Rule 5 are not
applicable to reliefs which can be granted under section 9(ii) (b) of the Arbitration
Act.
62. Insofar as judgment of Supreme Court in case of Raman Tech. &
Process Engg. Co. And another (supra) is concerned, learned senior counsel
distinguishes the said judgment on the ground that the said judgment is not under
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section 9 of the Arbitration and Conciliation Act, 1996 but has dealt with the
proceedings under Order 38 Rule 5 of the Code of Civil Procedure. He submits
that the said judgment of Supreme Court in case of Raman Tech. & Process Engg.
Co. And another (supra) has been distinguished by the Division Bench of this
court in case of present parties and also in several other judgments.
63. Learned senior counsel submits that insofar as respondent no.2 is
concerned, the transaction between respondent nos.1 and 2 are not at arms length.
Respondent no.2 is subsidiary of respondent no.1. Respondent no.1 is major
shareholder of respondent no.2. He submits that the petitioner does not press
reliefs which are in the nature of garnishee proceedings against the respondent
no.2. However other reliefs are being pressed by the petitioner.
REASONS AND CONCLUSIONS :
64. A perusal of the record indicates that though the learned Single Judge
of this court in this proceedings had granted ad-interim measures in favour of the
petitioner, which order has been upheld by the Division Bench and by the Supreme
Court, the respondent no.1 has not complied with the said orders mainly on the
ground that the petitioner has already retained substantial part of the bank
guarantee submitted by the respondent no.1 and the bank had not issued further
bank guarantees so as to comply with the orders passed by this court for want of
margin money by the respondent no.1. The fact remains that the respondent no.1
was not in a position to comply with the ad-interim order passed by this court
which was upheld by the Division Bench and the Supreme Court in view of the bad
financial condition of the respondent no.1.
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65. A perusal of the financial documents produced on record in the present
proceedings clearly indicates that the respondent no.1 is heavily indebted to
various creditors including the petitioner. The liability of the respondent no.1 to
the petitioner has been admitted in such financial documents and also in the
pleadings. I am not inclined to accept the plea of the learned senior counsel for the
respondent no.1 that even if any amount is due and payable by the respondent no.1
to the petitioner, no such order for deposit or for securing the claim of the
petitioner can be passed by this court or that the claim of the petitioner being
unsecured, cannot be directed to be secured in the manner in which the petitioner
has prayed for. The judgment of Supreme Court in case of Raman Tech.&
Process Engg.Co. And another (supra) has been distinguished by this court in
various judgments referred to aforesaid while dealing with the proceedings filed
under section 9 of the Arbitration and Conciliation Act, 1996. It has been held by
the Division Bench of this court that though the principles of Order 38 Rule 5 of
the Code of Civil Procedure, 1908 has to be kept in mind while deciding an
application under section 9 of the Arbitration Act, rigors of Order 38 Rule 5 of the
Code of Civil Procedure does not apply to the proceedings under section 9. I am
respectfully bound by the judgment of Division Bench of this court.
66. In case of Deccan Chronicle Holdings Limited vs. L & T Finance
Limited (supra), Division Bench has followed the judgment of this court in case of
Nimbus Communications Ltd. and another vs. Board of Control for Cricket in
India which had arisen out of the ad-interim order passed by the learned Single
Judge in the present proceedings has held that for deciding an application under
section 9, the court would while bearing in mind the fundamental principles
underlying the provisions of the Code of Civil Procedure, at the same time, have
the discretion to mould the relief in appropriate cases to secure the ends of justice
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and to preserve the sanctity of the arbitral process. It is also held in the said
judgment that the rigors of every procedural provision of Code of Civil Procedure
cannot be put into place to defeat the grant of relief which would subserve the
paramount interests of justice.
67. The learned Single Judge of this court in the case of L & T Finance
Limited vs. Deccan Chronicle Holdings Limited, to secure the claims of the lender
on the ground that the condition of the borrower was not such that the lender could
recover any amount in case of succeeding in arbitration proceedings and on the
ground that lender had good chances of succeeding in the arbitral proceedings has
directed to secure the claim of the lender. The judgment of the learned Single
Judge was upheld by the Division Bench in the matter of Deccan Chronicle
Holdings Limited (supra) and the appeal of the borrower was dismissed. The said
judgment applies to the facts of this case. I am respectfully bound by the said
judgment of the Division Bench.
68. Insofar as judgment of this court in case of Vijay Agarwal (supra) is
concerned, the Division Bench of this court in case of Nimbus Communications
Ltd. vs. Board of Control for Cricket in India in Appeal (L) Nos. 90 of 2012, 91
of 2012 and 92 of 2012 dated 27th February, 2012 has adverted to the judgment of
Supreme Court in case of Adhunik Steels Ltd. vs. Orissa Manganese and
Minerals (P) Ltd. (2007) 7 SCC 125 and has held that rigors of every provisions of
Code of Civil Procedure, 1908 cannot be extended to the proceedings under section
9 of the Arbitration Act. In my view, the said judgment of the learned Single Judge
in case of Vijay Agarwal (supra) thus does not assist the case of the respondents.
69. Insofar as judgment of Supreme Court in case of V.G.Quenim and
another (supra) is concerned, the Supreme Court has held that the court cannot
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grant injunction in respect of the property and also attachment thereof before
judgment at the same time. In my view, the said judgment does not apply to the
facts of this case at all in any manner. The petitioner has not applied for any such
duplicated relief in the present proceedings nor this court has proposed to grant
such alleged duplicated relief in the present proceedings.
70. Insofar as judgment of this court in case of Networth Stock Broking
Ltd. (supra) is concerned, the said judgment also has been decided relying upon the
judgment of Supreme Court in case of Adhunik Steels Ltd.(supra) which was
adverted to by the Division Bench of this court referred to aforesaid.
ig The
judgment relied upon by the learned senior counsel for respondent no.1 does not
assist the case of the respondents.
71. The next submission of the learned senior counsel for the respondent
no.1 is that the petitioner has already withdrawn a sum of Rs.400 crores pursuant
to the liberty granted by the Supreme Court in the Special Leave Petition arising
out of the orders passed by this court in the summons for judgment filed by the
petitioner which amount are with the petitioner. It is the case of the respondent
no.1 that the petitioner cannot be permitted to demand double security in respect
of the same claim. It is not in dispute that the respondent no.1 had submitted
various bank guarantees in favour of the petitioner through three banks under the
provisions of the agreement entered into between the parties. All such bank
guarantees issued by the banks on behalf of the respondent no.1 were
unconditional bank guarantees.
72. A perusal of the record prima facie indicates that the respondent no.1
did not pay various amounts due and payable to the petitioner by the respondent
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no.1 and had committed default of their obligation. The petitioner has thus
invoked those bank guarantees. A perusal of the record further indicates that the
respondent no.1 however had written various letters to those banks not to permit
the petitioner to encash those bank guarantees on various grounds. In view of
those banks not permitting the petitioner to encash the bank guarantees though
were unconditional bank guarantees, the petitioner was required to file three
summary suits in this court against those three banks and has filed summons for
judgment in each of those three suits. Those banks had opposed the reliefs prayed
by the petitioner in those three summons for judgment on various grounds.
73.
The learned Single Judge of this court directed the banks to deposit
diverse amount in this court. The Supreme Court ultimately disposed of the
Special Leave Petition filed by the petitioner and directed those banks to deposit
the sum of Rs.400 crores in this court and granted liberty to the petitioner to
withdraw such amount upon the petitioner furnishing undertaking that in the event
of the petitioner failing in those three suits, the petitioner would return the said
amount with interest to those three banks. The petitioner has already rendered an
undertaking and withdrew the said amount. The said three suits are defended by
those three banks and the same are pending. It is not in dispute that those three
banks have also filed third party notices in the said proceedings against the
respondent no.1 herein. It is the case of the respondent no.1 itself that the banks
were not willing to issue further bank guarantees in favour of the petitioner on
behalf of the respondent no.1 and were demanding further margin money.
74. The question that arises for consideration of this court is whether
amount of Rs.400 crores in the hands of the petitioner could be construed as a
security which can be enforced by the petitioner in the event of the petitioner
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succeeding in the arbitral proceedings and such amount would be available for
attachment and for recovery of the awarded sum. Similarly issue has arisen
between the parties in the Arbitration Petition (L) No.1449 of 2015 in case of
Board of Control for Cricket in India vs. Nimbus Communications Ltd. This court
by an order dated 12th August, 2015 has considered this issue and has taken a prima
facie view that in view of the letters addressed by the respondent no.1 to those
three banks not to permit encashment of those bank guarantees, the banks did not
allow the petitioner to encash those three banks guarantees, though the same were
unconditional bank guarantees.
75.
It is held that if the respondent no.1 would not have prevented the
bank from allowing the encashment of bank guarantees, the petitioner would have
encashed those guarantees. It is held by this court that the said amounts in the
hands of the petitioner are coupled with an obligation to return the same with
interest to the banks in the event of the petitioner not succeeding in the said suits.
It is held that the said amount is allowed to be retained by the Supreme Court in the
hands of the petitioner for the time being with an undertaking to return the same
and is not allowed to be appropriated and thus in the prima facie view of the court,
the said amount thus could not be considered as security free from all
encumbrances.
76. This court has also taken a prima facie view that the three banks were
granted leave to defend those suits on deposit of Rs.400 crores in the summary
suits under Order 37 Rule 6(b) of the Code of Civil Procedure and thus it could not
be said that the said amount of Rs.400 crores lying in the hands of the petitioner
would be a security available in the hands of the petitioner in the event of the
petitioner succeeding in the arbitral proceedings. This court has also considered
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that fact that the banks have not made any statement in that proceedings that the
bank would not have any claim in the said amount deposited in this court and
allowed to be withdrawn by the petitioner. This court held that the petitioner is
entitled to secure its claim in view of the defaults committed by the respondent by
not complying with the order passed by this court in arbitration petition, order
passed by the Division Bench and also by the Supreme Court.
77. By the said order, the petitioner passed an order of attachment of the
amount which the petitioner were liable to pay to the respondent no.1 arising out of
the arbitral award in another matter upon the petitioner depositing the said amount
in this court. The said order was also made subject to the further orders that maybe
passed in the present petition filed by the petitioner and other connected
proceedings. The prima facie view taken by this court in the said Arbitration
Petition (L) No.1449 of 2015 would also apply in the present proceedings between
the same party on the same issue while dealing with this petition under section 9
and in taking prima facie view again in the present proceedings.
78. The petitioner has already made a statement before this court that in
the event of respondent no.1 furnishing security in compliance with the order
passed by this court so as to secure the claim of the petitioner, the petitioner would
deposit the said amount of Rs.400 crores in this court and would not claim any
right in the said amount.
79. Though the Supreme Court has while dismissing the special leave
petition filed by the respondent no.1 has held that the learned Single Judge shall
decide the present proceedings without being influenced by the order passed by
this court, there is no dispute on the proposition that the law laid down by the
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learned Single Judge of this court and Division Bench would be binding on this
court while deciding the present proceedings.
80. A perusal of the record indicates that due to delay in making payment
by the respondent no.1, it had apologized to the petitioner and had asked for
extension from time to time. In my view, if the respondent no.1 would not have
compelled those banks not to make payment to the petitioner in respect of those
unconditional bank guarantees, the petitioner would have recovered the said
amount and would not have required to file any suit against those banks. In that
event, the petitioner would not have been required to furnish any such undertaking
for withdrawing the said amounts to return the said amount with interest.
81. In my view, the said amount of Rs.400 crores allowed to be withdrawn
by the petitioner pursuant to the liberty granted subject to the petitioner furnishing
undertaking thus cannot be considered as a security which could be enforced for
recovery of the dues of the petitioner if the petitioner succeeds in the arbitral
proceedings. The banks who had deposited such amount have not withdrawn their
rights and interest in the said amount of deposit and the matter is sub-judice. In my
view there is thus no substance in the submission of the learned senior counsel for
the respondent no.1 that the petitioner has prayed for double security in respect of
the same claim from the respondent no.1.
82. In my view merely because the respondent no.1 has made counter
claim of about 2000 crores against the petitioner, that could not be a ground for
non complying with the ad-interim order passed by this court. Be that as it may,
the liability of the respondent no.1 having been admitted, counter claim made by
the respondent no.1 which is in the nature of damages cannot be equated with the
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admitted liability of the petitioner. The orders passed by this court thus cannot be
refused to be complied with by the respondent no.1 on that ground. The
respondent no.1 could not have refused to comply with the ad-interim order passed
by this court on the ground that the banks were demanding margin money for
issuing further bank guarantees on behalf of the respondent no.1 in favour of the
petitioner. The respondent no.1 itself was responsible for the same.
83. It is not in dispute that the respondent no.2 is fully owned subsidiary
of respondent no.1. Respondent nos.1 and 2 had executed a Memorandum of
Understanding dated 15th March, 2010 by which the 2nd respondent was granted
certain television rights over international cricket matches played under the
auspices or control of the petitioner which took place in India. A perusal of the
agreement entered into between the respondent nos. 1 and 2 indicates that the
respondents had arrived at an arrangement so as to implement the said MRLA.
The petitioner has already terminated the said MRLA by the notice dated 12 th
December, 2011. In my prima facie view the financial condition of the respondent
no.1 has worsened that what it was when the ad-interim order was passed by this
court on 19th January, 2012.
84. A perusal of the provisions of the agreement entered into between the
respondents clearly indicates that the business which was being carried on by the
respondent no.2 was assigned to the respondent no.2 by the respondent no.1. A
perusal of the affidavit filed by the respondent no.1 itself would indicate that it was
the contention of the 1st respondent that if the termination of the said MRLA was
not stayed, the business of the respondent no.2 which was entirely built from the
most valuable asset i.e. MRLA and the cricket series would result in closure of the
business of the respondent no.2. The financial documents of the respondent no.2
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and respondent no.1 produced on record clearly indicates that the respondent no.2
has admitted that approximately more than Rs.700 crores was due and payable by
the respondent no.2 to the respondent no.1. A similar amount is also reflected as
recoverable in the accounts of the respondent no.1 from the respondent no.2.
85. The correspondence on record and the affidavits filed by the
respondent no.2 also clearly indicates that at one stage, the respondent no.2 had
proposed to dilute the shareholding of the respondent no.1 in respondent no.2. The
respondent no.1 has already made a statement before this court from time to time
which is in force. I am not inclined to accept the submission of the learned counsel
appearing for the respondent no.2 that there is a dispute between the respondent
no.1 and respondent no.2 and thus the respondent no.2 is not bound to pay any
amount to the respondent no.1. No proceedings are brought to the notice of the
court if any, filed by the respondent no.1 against the respondent no.2 or vis-a-versa.
The petitioner thus in my view has made out a case for securing its claim made
before the arbitral tribunal.
86. The Division Bench of this court by a common order passed on 27 th
February, 2012 in the appeals filed by the respondent nos.1 and 2 respectively has
negatived the contention raised by the respondents. The respondent no.1 has not
complied with the said order passed by the Division Bench also.
87. On perusal of the pleadings and documents filed in the present
proceedings which were brought to my notice by the learned senior counsel
appearing for the petitioner, respondent no.1 and the learned counsel for
respondent no.2, I am of the view that the petitioner has good chances of
succeeding in the arbitral proceedings. The respondent no.1 has not complied with
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the ad-interim order passed by the learned Single Judge and also by the Division
Bench being in financial distress. In my view, even if the petitioner succeeds in the
arbitral proceedings, if respondent no.1 is not directed to secure the claim of the
petitioner in this situation, the petitioner would not be entitled to recover its
legitimate dues against the respondent no.1. The balance of convenience is in
favour of the petitioner.
88. Insofar as submission of the learned senior counsel for the respondent no.1
that when the ad-interim order was passed by this court, the petitioner was without
any security whatsoever in respect of its claims, however as on the date of hearing
of the present application, the petitioner has sufficient security in its hand of
Rs.400 crores allowed to be withdrawn pursuant to the liberty granted by the
Supreme Court and thus no interim measures should be granted is concerned, in
my view there is no merit in this submission of the learned senior counsel for the
respondent no.1. This court has already take a prima facie view in Arbitration
Petition (L) No.1449 of 2015 and has negatived this contention.
89. I, therefore, pass the following order :-
(a) The respondent no.1 is directed to furnish security by
depositing in this court a sum of Rs. Three Ninety Crores only
within four weeks from today.
(b) Prothonotary and Senior Master is directed to invest the
said amount of Rs. Three Ninety Crores only if deposited by
the respondent no.1 in the fixed deposit of a nationalized bank,
initially for a period of one year and thereafter for like period
This Order is modified/corrected by Speaking to Minutes Order dated 04/09/2015
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ARBP167.12FINAL
of one year each after obtaining further orders from this court.
The petitioner would be at liberty to apply for enhancement of
security amount.
(c) There shall be interim relief in terms of prayer clause
(cb).
(d) The respondent no.2 is restrained by an order and
injunction from paying over, parting with, reimbursing,
adjusting or in any way transferring any amount due and
payable to the respondent no.1 and shall deposit the said
amount in this court within six weeks from today.
(e) If the respondent no.1 deposits the sum of Rs. Three
Ninety Crores only as directed aforesaid in this court within
the time prescribed, the interim measures granted in
paragraphs (c) and (d) aforesaid shall stand vacated.
(f) Arbitration Petition Nos. 167 of 2012 and 595 of 2012
are disposed of in the aforesaid terms. No order as to costs.
(R.D. DHANUKA,J.)
Mr.Andhyarujina, learned counsel for the respondent no.2 seeks stay of the
operation of the order recorded in paragraph 89(c) which is opposed by the learned
counsel for the petitioner. Application for stay is rejected.
(R.D. DHANUKA,J.)
This Order is modified/corrected by Speaking to Minutes Order dated 04/09/2015
Kvm
ARBP167.12FINAL
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Uploaded by : K.V.Mayekar Uploaded on 03/09/2015
