M/S. Sagar Ratna Restaurants Pvt. ... vs Tarseem Kumar & Ors.
2015 Latest Caselaw 1569 Del

*          IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                  Judgment reserved on February 18, 2015
                                                 Judgment delivered on February 24, 2015
+                     IA Nos. 497/2014 & 17214/2013 in OMP 1064/2012


M/S. SAGAR RATNA RESTAURANTS PVT. LTD.                                    ..... Petitioner

                                 Through:              Mr.Jagjit Singh, Advocate with
                                                       Ms.Nisha, Advocate

                                 versus

TARSEEM KUMAR & ORS.                                                    ..... Respondent

                                 Through:              Mr.Anil Kumar, Advocate with
                                                       Mr. Pramod Pandey, Advocate for
                                                       R1 to R3
                                                       Mr.Ravi Gupta, Sr.Advocate with
                                                       Mr.Manoj Gupta, Advocate for
                                                       applicant M/s. Shree Rathanam
                                                       Restaurant

CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.

IA Nos. 497/2014 (filed on behalf of impleaded respondent M/s. Shree Rathnam Restaurant Pvt. Ltd. to modify the order dated 17.4.2013) & 17214/2013 (under Section 151 CPC filed on behalf of the petitioner for appointment of fresh Receiver)

1. By this order, I would dispose of two applications, one being IA

17214 of 2013 filed by the petitioner for appointing a new Receiver

pursuant to order dated April 17, 2013 and IA 497/2014 filed by M/s.

Shree Rathanam Restaurant Pvt. Ltd. („SRRP‟, in short), impleaded

respondent seeking directions for working of Receiver.

2. The brief facts, are, an agreement dated May 01, 2005 was

executed between the respondent Nos. 1 to 3 and M/s. Sagar Ratna

Hotels Pvt. Ltd. („SRHP‟, in short) in respect of a commercial premises

bearing No. 33, 35 & 36, Pocket C-9, Sector 7, Rohini, Delhi situated on

the ground and first floors, whereby, it was agreed by the said

respondents to provide the same to SRHP for running a restaurant on the

terms and conditions stipulated therein. One of the terms being that the

duration of the agreement was for a period of ten years from the date of

opening the restaurant, which could be increased further for such a

period on the terms and conditions, as may be mutually agreed between

the parties. Another important term as stipulated in Clause 19 of the said

agreement is that both the parties could terminate the agreement by

serving three months notice in writing in the event of there being

violation of any of the terms and conditions thereof. In the case of

termination, SRHP was to hand over the possession of the premises

along with the fixtures etc. to the respondents. Further, one of the

important term as stipulated in Clause 20 is that in the event of expiry of

the agreement, the respondents could not use the name "SAGAR

RATNA" or any other name identical to it, and could not continue the

restaurant business for a further period of seven years. After the

agreement dated May 1, 2005, another supplementary agreement dated

June 17, 2011 was executed between the respondents, the petitioner

herein and SRHP. By virtue of this agreement, the present petitioner

acquired all the rights of SRHP in respect of the restaurant business that

was being carried by SRHP in the suit premises. All the terms and

conditions as stipulated in agreement of May 1, 2005 executed between

the respondents and SRHP were to be applicable to the petitioner herein.

In other words, the petitioner stepped into the shoes of SRHP qua the

suit premises and the restaurant business being carried therein on all the

terms and conditions of the agreement dated May 1, 2005.

3. It is the case of the petitioner that the respondents have

unauthorizedly dispossessed it in connivance with some of its staff

officials on 24.09.2012. It is also noted that notice of termination of the

agreement was sent by the respondent Nos. 1 to 3 to the petitioner on

September 23, 2012. The respondent Nos. 1 to 3 raised certain disputes

and differences. The petitioner was called by the respondent Nos. 1 to 3

for rendition and settlement of accounts and was asked to give the

possession of the premises and fixtures immediately.

4. Suffice to state, the aforesaid OMP was filed by the petitioner

under Section 9 of the Arbitration and Conciliation Act, 1996 seeking for

certain interim reliefs. The said petition was decided by this Court vide

order dated April 17, 2013, wherein this Court had passed the following

order:

"6. With the consent of the both the parties, the Receiver is to be appointed till such time, the disputes and differences between the parties are settled by the Arbitrator. Accordingly, Sh. J.P.Sharma, Addl. District & Sessions Judge (Retd.) is appointed as Receiver as regard to the affairs and conduct of the restaurant business by the respondents themselves or through M/s. Shree Rathnam in the premises i.e. 33, 35 & 36, Pocket C-9, Sector 7, Rohini, Delhi. Sh. J.P.Sharma would device his own means and methods for maintaining the details of the accounts of the business including the expenses and sales etc. He would be at liberty to control and regulate the business in a computerized manner, if not already done, and is also authorized to employ some suitable Manager of his own choice to look after the day to day business & affairs of the restaurant business. He will also be at liberty to open an account and operate the same for the purpose of conduct of the business. His remuneration is fixed at Rs. 50,000/- per month exclusive of other out of pocket expenses including conveyance etc. The learned counsel representing both the parties have requested for the appointment of Arbitrator in the present proceedings itself to avoid another litigation in this regard. With their consent,

Sh. Dinesh Dayal, Addl. District & Sessions Judge (Retd.) is appointed as an Arbitrator. His remuneration would be Rs. 50,000/- per sitting. On being informed about the arbitration proceedings nearing conclusion, the Receiver shall submit his report with accounts to Arbitrator. The learned Arbitrator shall take into consideration the detailed report of Receiver while making an award. All these expenses of the Receiver and Arbitrator shall be borne by the parties equally.

7. Copy of the order be sent to Sh. J.P.Sharma and Sh. Dinesh Dayal, AD&SJ (Retd.) and also be given dasti to both the parties. The parties are advised to appear before Sh. J.P.Sharma (Receiver) on 22.04.2012 at 3.00 p.m. and before Sh. Dinesh Dayal on 23.04.2012 at 3.00 p.m".

5. It is noted that an IA being 6855/2013 was filed by the respondent

Nos. 1 and 3 seeking modification of order dated April 17, 2013. The

said application was dismissed by this Court on April 29, 2013. Against

the said order, the respondent Nos. 1 and 3 had filed an appeal before the

Division Bench vide FAO(OS) 283/2013. The said appeal was

withdrawn by the respondent Nos. 1 and 3. I note, that, SRRP had filed

applications i.e. IAs 9260-61 of 2013 under Order 1 Rule 10 CPC and

under Section 151 CPC. The said applications were listed on May 29,

2013, on which date, a notice was issued to the non applicants,

returnable on October 25, 2013. The SRRP filed an appeal before the

Division Bench, challenging the order dated April 17, 2013 and May 29,

2013. The appeal initially was listed before the court on July 15, 2013,

on which date, the Division Bench had stayed the proceedings before

this Court. Thereafter, when the matter was listed on August 23, 2013,

learned counsel for the SRRP had sought liberty to withdraw the appeal

to approach this Court to iron out practical difficulties arising as a result

of order dated April 17, 2013 with regard to the working of the Receiver,

to which, the learned counsel for the petitioner herein had consented.

Pursuant thereto, SRRP has filed one of the application being IA

497/2014, which is under consideration.

5. That apart, the stand of the petitioner in IA 17214/2013 is that Mr.

J.P.Sharma (Retd. ADJ), the Receiver initially appointed has resigned.

This fact has been noted by this Court in its order dated May 13, 2013.

This Court on the said day itself appointed Mr. R.C.Yaduvanshi, Retd.

ADJ as a Receiver in place of Mr. J.P.Sharma.

6. A perusal of the application (IA 17214/2013) filed by the

petitioner would reveal that SRRP, despite repeated demands of the

Receiver for tendering the accounts and other details, stopped

cooperating with the Receiver. The Receiver Mr. R.C.Yaduvanshi had

appointed Mr. Hitesh Luthra, Chartered Accountant. Even his requests

were not responded. It is the stand of the petitioner in the application that

the Receiver had given an interim report whereby, he has observed that

the respondent Nos. 1 to 3 Mr. Tarseem Kumar and others and SRRP

had not cooperated with him and it is, under said circumstances, the said

Receiver has resigned.

7. Mr. Jagjit Singh, learned counsel for the petitioner and applicant

in IA 17214/2013 has taken me through the application and the

documents filed in both the applications. He would reiterate the

submissions as made in the application. He would state that the conduct

of the respondent Nos. 1 to 3 as well as SRRP is a mala fide, only to

ensure that the order passed by this Court is not implemented and SRRP

has its own way in running the restaurant and to thwart the legitimate

claim made by the petitioner before the learned Arbitrator. He states that

a contempt petition has been filed by the petitioner against the

respondents for the illegal acts committed by them.

8. On the other hand, Mr. Ravi Gupta, learned Senior Counsel

appearing for the applicant SRRP i.e. applicant in IA 497/2014 would

submit that the Receiver had appointed Mr. Hitesh Luthra, Chartered

Accountant as an Auditor-cum-Manager, who was supposed to look after

the day-to-day function of the restaurant at the premises and not run and

manage the restaurant business. He would state that Mr. Luthra,

Chartered Accountant sought vital and confidential information from the

applicant which are in the realm of trade secrets, which were otherwise

not available to the petitioner. The parting out such information sought

by the petitioner through the Receiver shall be detrimental to the interest

of the applicant company as a whole. He would also state that since the

applicant company is being managed and processed on a centralized

system basis wherein entire purchases, sale and other resources are

employed on a centralized system and even the entire accounts are being

managed at the head office, it would be impossible for the company to

have a separate system for the outlet at Rohini. According to him,

similar is the position with respect to the sales tax and service tax and

also with respect to the employment of staff. In the last, it was his

submission that the applicant is ready to give to the Receiver all the

information regarding audited accounts for the Financial Year 2013-14

and even thereafter, till date. As long as the information sought by the

Receiver is, not confidential information, which cannot be divulged in

the larger commercial interest of the applicant, the applicant is ready to

give it.

9. Mr. Pramod Pandey, learned counsel appearing for the respondent

Nos. 1 to 3, would state, that as the petitioner had quantified its claim

before the learned Arbitrator, the appointment of Receiver has lost its

relevance. He states that the effect of the agreement for not carrying the

business from the premises till 7 years from its expiry is going to expire

in May, 2015. Suffice to state, the respondent Nos. 1 to 3 are supporting

the relief claimed by the applicant in IA 497/2014.

10. Mr. Jagjit Singh, in response to the submission made by Mr.Ravi

Gupta would state that the petitioner is not interested in seeking any

confidential information of the applicant SRRP. The endeavour of the

petitioner and also the spirit of the order, passed by this Court on April

17, 2013 was to ensure that the income from restaurant, which has a

bearing on the claim, should be divulged so that an appropriate award be

made by the learned Arbitrator.

11. Having heard the learned counsel for the parties, insofar as IA

17214/2013 seeking appointment of Receiver is concerned, I note that

Mr. R.C.Yaduvanshi, Retd. ADJ had tendered his resignation on

September 9, 2013. The learned counsel for the parties during the

submissions had stated that even Mr. Hitesh Luthra has resigned. The

position which emerges is, with effect from September 9, 2013, no

Receiver is in place to look after the affairs and conduct of the restaurant

business for almost more than one year. I accordingly, appoint Mr.

Padam Kant Saxena, Retd. Addl. District & Sessions Judge (Mobile

No.9910384668) as the Receiver with regard to the affairs and conduct

of the restaurant, strictly in accordance with the order of this Court dated

April 17, 2013. He would be entitled to the remuneration as fixed in the

said order and would be at liberty to employ a suitable Manager of his

own choice to look after the day-to-day affairs and conduct of the

business of the restaurant. It is made clear that respondents and the

applicant would cooperate with the Receiver in running the affairs and

conduct of the restaurant, including the Manager so appointed by the

Receiver.

12. Insofar as IA 497/2014 is concerned, the said application has been

filed by the applicant SRRP on January 07, 2014. The prayers made in

the said application reads as under:

"In view of the above said it is therefore most humbly prayed that Hon'ble Court may please to modify the terms of order dated 17.04.2013 in terms of order passed in FAO(OS) 293/2013 dated 23.08.2013 to the extent of:-

(a) Accounts to the extent of commission paid to the respondent i.e. 18% of net sales be directed to be furnished;

(b) The petitioner shall be restrained from interfering into the business of the applicant company;

(c) Such other and further order(s) which may this court deems fit and proper in the facts and circumstances of the case."

13. Interestingly, the prayers would show that the same are beyond the

liberty granted by the Division Bench in FAO (OS) 293/2013, which I

reiterate that the same was to be for pointing out difficulties in working

out implementation of the order and nothing more. No such prayer has

been made. Rather, the prayers reveal an attempt to circumvent the order

passed by this Court on April 17, 2013. In fact, this Court is of the view

that, since no Receiver was in place, an application of this nature is not

maintainable being pre-mature.

14. The submissions made by Mr. Ravi Gupta, learned Senior Counsel

by drawing attention to the various proceedings held by the Receiver

would not reveal that the Receiver/Auditor have exceeded their mandate.

The endeavour of the Receiver has been to ensure the affairs and conduct

of restaurant in terms of the orders passed by this Court. I do not say

anything more on this.

15. Insofar as the submission of Ravi Gupta, the respondent Nos. 1 to

3 and the applicant being asked to reveal the confidential information, is

concerned, I take on record the statement of Mr.Jagjit Singh, learned

counsel that no such information would be asked for. In any case,

whether a particular information is a relevant information, confidential

information, need to be decided by the Receiver. Surely, the Receiver,

would take into consideration the view of the parties before forming an

opinion. No attempt should be made by the applicant to withhold any

information on that ground. As I note from the order dated April 17,

2013, the Receiver is required to submit a report with accounts to the

learned Arbitrator which has to be taken into consideration, while

making the award, I call upon the applicant to submit to the

Receiver/Manager the relevant documents/record including the accounts,

balance sheet and any information as required/asked for by the

Receiver/Manager relevant to the Financial Year 2013-14, and thereafter,

till date, with regard to the restaurant at Rohini, within 10 days from the

date of this order. The record shall be collated and kept by the Receiver

in his custody to enable him to prepare the report for submission to

learned Arbitrator.

16. The Registrar General of this Court would transmit the relevant

record as received by the Registrar General in terms of letter dated May

09, 2013 of Mr. R.C.Yaduvanshi. Any document, which was part of the

proceedings held by the earlier Receiver and is not in possession with the

Registrar General, shall be given by the parties to the Receiver so that

record on that count is complete.

17. The parties shall appear before the Receiver on March 2, 2015 at

4.00 p.m at the venue to be fixed by the Receiver and in that regard, the

Receiver shall inform the parties at least two days before the date of

hearing.

18. The applications are disposed of in terms of the above.

(V.KAMESWAR RAO) JUDGE

FEBRUARY 24, 2015 akb