Embassy Of United States Of ... vs M/S Green Line Promoters Pvt Ltd
2013 Latest Caselaw 2122 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                     DECIDED ON: 08th May, 2013

+                      EFA(OS) 9/2013

       EMBASSY OF UNITED STATES OF AMERICA IN INDIA
                                                               ..... Appellant
                            Through:      Mr. Neeraj Kishan Kaul, Senior
                                          Advocate with Mr. Tejas, Mr.
                                          Radhika Arora, Mr. Karan Mehra,
                                          Mr. Rohan Jaitley and Mr. Kapil
                                          Rustugi, Advocates.

                            versus

       M/S GREEN LINE PROMOTERS PVT LTD
                                                             ..... Respondent

                            Through:      Mr. Raman Kapoor, Senior Advocate
                                          with Mr. Rahul Kumar and Ms.
                                          Snigdha Sharma, Advocates.

       CORAM:
       HON'BLE MR. JUSTICE S. RAVINDRA BHAT
       HON'BLE MR. JUSTICE NAJMI WAZIRI

%      MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT)
CM APPL. 7389/2013 (condonation of delay)
       Issue notice.

Having considered the averments made in the application and the submission of parties, the delay in filing the appeal is condoned. The application is allowed.

CAV 440/2013




EFA (OS) 9/2013                                                       Page 1
 Caveat is discharged.
CM APPL. No. 7385-7387/2013 (Exemption)
Allowed, subject to all just exceptions.

CM APPL. No. 7388/2013 (seeking permission for filing detailed synopsis and list of dates.) The application is allowed for the reasons mentioned in the application.

EFA(OS) 9/2013

1. The appellant is aggrieved by the two orders of the learned Single Judge in execution proceedings i.e. Ex. P. No. 210 of 2010. These orders were made on 14.12.2012 and 09.4.2013. Counsel submits that the appeal can be disposed finally.

2. Briefly, the parties to these proceedings had entered into an agreement whereby the appellant- US Government, through its Embassy had agreed to purchase property bearing No. 10, Tilak Marg (hereinafter referred to as the 'suit property') in view of terms and conditions of an agreement dated 27.12.2004. The permission of the Central Government was necessary to effectuate the said agreement. However, the appellant's request for permission originally made on 20.1.2004, appears to have been rejected. Eventually, the parties referred that dispute in terms of arbitration clause to the Arbitral Tribunal of three retired judges, two out of which were retired Chief Justices of India. The Tribunal announced its award on 23.12.2009. The operative portion of the award is extracted below:

"1. The Respondent shall within a period of one month from the date of communication of this Award move an appropriate application through diplomatic channel as before, seeking permission/concurrence of the Government of India (Ministry of External Affairs) for completing the sale in terms of the

EFA (OS) 9/2013 Page 2 Agreement to Sell dated 27.12.2004 except that the price shall be Rs. 80 crores in place of Rs. 46 crores as agreed to earlier;

2. The Respondent shall await for a period of six months for the grant of permission/concurrence of the Government of India as above. If the permission/concurrence is forthcoming, the Respondent shall within a period of one month thereafter execute the sale deed in respect of property No. 10, Tilak Marg, New Delhi admeasuring 2.2 Acres (Approx. 10.648 sq. yds.) consisting of two stories built-up portions after getting all requisite permissions from the Government of India for sale against the receipt of the balance payment of Rs. 75,40,00,000 (Rs. Seventy Five Crores Forty Lakhs only) and deliver the physical, peaceful and vacant possession of the same to Claimants. All the expenses relating to execution and registration of the sale deed shall be borne by the Claimants;

3. In case the permission/concurrence as above being refused or not forthcoming within the period of six month as above, the agreement to sell dated 27.12.2004 shall be deemed to have been rendered impossible of performance and hence rendered void within the meaning of Section 56 of the Indian Contract Act and the consequences shall follow;

4. The prayer of the Claimants for a direction to the Respondent to permit or authorize the Claimants to pursue the application under Regulation 5A on its behalf and to initiate and follow any legal proceedings in that regard is refused;

5. The Counter Claim seeking passing of an Award declaring that the agreement to sell dated December 27, 2004 is void and unenforceable is refused as the relief is premature and can not be granted unless and until permission/concurrence under Regulation 5A has been finally refused by the GOI, MEA or held back for the period referred to in clauses 2 and 3 above;"

3. Further to the award, the appellant applied to the Central Government on 07.1.2010 seeking permission to sell the property to the respondent/vendee. No response was forthcoming on the application. In the

EFA (OS) 9/2013 Page 3 meanwhile, the respondent approached this Court for proceedings under Article 226 (W.P. (C) 4370/2010) claiming that it had right to represent to the Government about the necessity for approval. The learned Single Judge of this Court by his order dated 05.7.2010 rejected the petition, inter alia, holding that the respondent did not possess the requisite locus standi. In the course of that order, it was observed that if the respondent had any other rights to approach the Court under other provisions of law, it could avail of those remedies. The respondent accordingly applied for execution proceedings citing section 36 of the Arbitration and Conciliation Act, 1996 stating that the appellant had not complied with the terms of the award and notwithstanding the lapse of six months period directed /stipulated in the award the sale deed had to be executed in its favour. Notice was issued and the execution proceedings were entertained.

4. In the meanwhile, the respondent had challenged the Arbitral Award (OMP 64/2010). This was not pursued and the petition was withdrawn on 03.2.2010. The order permitting the withdrawal of the petition is on record of this Court.

5. Before the learned Single Judge in the execution proceedings, the respondent apparently contended that the appellant did not act in accordance with law as it has failed or omitted to mention in its application dated 07.10.2010 that a fresh request for permission was being made pursuant to the award. The respondent also apparently relied upon the fact that the previous rejection of the Central Government on 24.10.2006 was not absolute and heavily relied upon the directions of the letter which stated that:

"The Ministry would like to inform the Embassy that the matter

EFA (OS) 9/2013 Page 4 has been considered by the authorities concerned and it has been decided that permission to sell 10, Tilak Marg New Delhi cannot be granted at this stage."

6. Further the respondent also relied upon certain letters of 2007. The respondent also had applied for certain information in terms of the Right to Information Act, 2005 (RTI) which was granted on 16.4.2007. The information supplied was that the US Supreme Court had entertained a challenge petition of the US Government in respect of same property claimed by the New York City Council against the Permanent Mission of India at New York. The respondent's endeavour apparently was to suggest that the Central Government was not adverse to grant the permission and the latter had linked the issue with the pending dispute of the Indian Mission in US Courts.

7. The appellant through senior counsel urges that the award has worked itself out inasmuch as the letter dated 07.1.2010 was made to the Central Government pursuant to the directions of the Arbitral Tribunal. The result of omission of the Government to grant the necessary approval is that the award becomes impossible of performance. This result was envisioned and factored-in in the award. The respondent relied upon clause 3 of the directions. It is submitted that the executing court, therefore, fell into an error in making the orders dated 14.12.2012 and 09.4.2013 linking the issue of outcome of the US Court's decision with the obligation arising out of the award in the present case.

8. The respondent through its senior counsel urges that a fair reading of the award and the directions involving it clearly set out the appellant's obligation to disclose that the second application made to the Government

EFA (OS) 9/2013 Page 5 had to necessarily contain information that the request was made pursuant to the directions in the award. It is highlighted that the omission of the US Government to disclose this fact resulted in the present situation whereby the Central Government's permission is not forthcoming. Learned counsel submitted that the request, therefore, was not a request in the eye of law i.e. impossibility of the performance of contract has not really occurred. Learned counsel has relied upon Order XXI Rule 34 of the Code of Civil Procedure (CPC) and submits that in the circumstances it is open to the executing court to make appropriate directions for execution of necessary documents which in this case would be a letter disclosing of material particulars to the Central Government which in turn would the basis for its final decision. Even the lack of any communication cannot be determinative or adverse or deemed adverse against the respondent/decree holder.

9. This Court has considered the submissions. It is evident from the above discussion that the eventuality of refusal by the Central Government to accord permission was recognised by the Arbitral Tribunal-as it is evident from a plain reading of direction 3. The respondents challenged that award which was unsuccessful and it even abandoned the move when it withdrew the petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 03.2.2010.

10. The respondent was apparently aware that the appellant had applied to the Central Government on 07.1.2010. It, therefore, sought direction that it should be allowed to make a proper representation or refer the certain facts to the Central Government, for a fuller appreciation of the events. This move was also declined when its writ petition (W.P. (C) 4370/2010) was dismissed on 05.7.2010. In these circumstances, it is therefore evident that

EFA (OS) 9/2013 Page 6 the direction in the award had worked itself out in the sense that the six months period within which the Central Government had to respond and grant permission, lapsed. If one sees the entire dispute from this perspective, the arguments sought to be advanced by the respondent that the letter dated 07.1.2010 did not mention the fact that it was being made pursuant to the award is really a matter of detail. To this Court's mind whether such letter contained those details or did not disclose these details is immaterial. The award did not direct the manner in which the letter had to be made or to declare that the contents should disclose the directions. In the absence of such obligations the respondent's contentions in this Court's opinion are misconceived and devoid of any merit. Likewise the respondent's attempts to link the entire issue of approval with Central Government's thinking on the subject - in turn based on some court proceedings in the US Courts, is irrelevant. By the time, the arbitration notice was made on 05.11.2008, the US court proceedings presumably had run through its course. In any event, there is no allusion to these proceedings in the reply of the Government, nor can they be the subject matter of proceedings in Indian Courts. The Arbitral Tribunal directed that the appellant was to apply afresh, which it did on 07.1.2010. That the Central Government did not respond or grant the approval is also a matter of fact. In these circumstances, the respondent attempts to re-open the matter after having lost in all fora, both substantive award as well as efforts to establish some kind of foothold in the consideration of the appellant's application for approval and seek execution of what is plainly an unexecutable award.

11. In view of the above discussion, the appeal has to succeed. The

EFA (OS) 9/2013 Page 7 impugned orders are set aside. This Court is aware that the view taken in the present order virtually renders the execution proceedings infructuous. However, this Court does not propose to make any further order on the merits of the execution proceedings and would leave it on the learned Single Judge to decide the petition in light of the orders passed herein. The appeal is allowed in above terms. No costs.

S. RAVINDRA BHAT (JUDGE)

NAJMI WAZIRI (JUDGE) MAY 08, 2013 mv

EFA (OS) 9/2013 Page 8