Delhi High Court
Neeru Jain vs Jasmine Buildmart Pvt. Ltd. on 27 July, 2020
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on : 28.02.2020
Pronounced on: 27.07.2020
+ O.M.P. (I) (COMM.) 280/2019
NEERU JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P. (I) (COMM.) 281/2019
M.K. JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P (I) (COMM.) 282/2019
M.K. JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
OMP (I)(COMM) 280/2019 & conn. Page 1 of 7
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P. (I) (COMM.) 283/2019
M.K. JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P. (I) (COMM.) 284/2019
RISHABH JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P. (I) (COMM.) 285/2019
OMP (I)(COMM) 280/2019 & conn. Page 2 of 7
M.K. JAIN (HUF) THROUGH MR. M.K.
JAIN, KARTA ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
+ O.M.P (I) (COMM.) 286/2019
M.K. JAIN ......Petitioner
Through Mr. Akhil Sibal, Senior Advocate
with Mr. Vipul Wadhwa,
Mr. Swarna Kashyap and
Mr. Deboshree Mukherjee,
Advocates.
versus
JASMINE BUILDMART PVT. LTD. .....Respondent
Through Ms. Bina Gupta and Ms. Sheena
Taqui, Advocates.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
ORDER
I.A. 721/2020 in O.M.P.(I) (COMM.) 280/2019
I.A. 715/2020 in O.M.P.(I) (COMM.) 281/2019
I.A. 716/2020 in O.M.P.(I) (COMM.) 282/2019
I.A. 717/2020 in O.M.P.(I) (COMM.) 283/2019
I.A. 718/2020 in O.M.P.(I) (COMM.) 284/2019
I.A. 719/2020 in O.M.P.(I) (COMM.) 285/2019
I.A. 720/2020 in O.M.P.(I) (COMM.) 286/2019
1. All the above applications are being decided by this common order
since the original Petitions were decided by a common judgement by this
Court.
2. Present Applications have been filed by the Petitioners seeking
clarification / modification of Order dated 21.10.2019 passed by this
Court restraining the Respondents from executing sale deeds in respect of
the apartments in question as well as from parting with possession, to the
extent the Court directed that the interim order shall remain in operation
only for the period prescribed under Section 9 (2) of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the „Act‟).
3. At the outset, it needs to be noted that judgement in the present
Petitions was pronounced by the Court on 21.10.2019. Prior to the said
date neither party herein made any effort to bring to the notice of this
Court that steps had been taken for commencement of the Arbitral
Proceedings. It is only by way of the present Applications that the said
fact has been brought to the notice of this Court by the Petitioners.
4. In the present Applications Petitioners aver that prior to the
pronouncement of the judgement, parties had taken steps to commence
the Arbitral Proceedings. The chronology, as averred, is that vide email
dated 15.10.2019, Respondent had appointed a Sole Arbitrator to
adjudicate the disputes between the parties and vide emails dated
19.10.2019 and 29.10.2019, Learned Arbitrator apprised the Petitioners
about his appointment. Petitioners responded, by letter dated 31.10.2019,
objecting to the unilateral appointment by the Respondent with intimation
of the objection to the learned Arbitrator. In the light of the objections
raised by the Petitioners, learned Arbitrator withdrew his nomination and
communicated the same vide email dated 01.11.2019. Subsequent
thereto, Respondent nominated another Arbitrator on 05.11.2019, which
was again objected to by the Petitioners and finally, Petitions were filed
in this Court under Section 14 of the Act seeking termination of the
mandate of the said Arbitrator.
5. Learned Senior Counsel for the Petitioners argues that chronology
of facts and events indicates that parties took steps to commence Arbitral
Proceedings on 15.10.2019, which is prior to the pronouncement of the
judgement by this Court and therefore Section 9(2) of the Act will have
no application to the present case.
6. Reply has been filed by the Interim Resolution Professional (IRP).
It is not disputed in the reply that steps were taken for commencement of
the Arbitral Proceedings. Rather, it is admitted in para 7 of the reply that
the Sole Arbitrator initially appointed by the Respondent had withdrawn
once his appointment was questioned by the Petitioners. Applications
are contested on the ground that NCLT, vide its order dated 28.11.2019,
in IB No.1722/ND/2018, titled Mrs. Meera Ahuja & Ors. vs. Jasmine
Buildmart Pvt. Ltd. has admitted the Application under Section 7 of the
IBC, 2016 and has issued a moratorium under Sections 13 and 14 of the
Act. An IRP has been appointed to take over the management of the
Respondent Company. On being aggrieved by the order of NCLT, one
majority shareholder of the Corporate Debtor preferred an Appeal under
Section 61 of IBC before NCLAT. Vide order dated 29.11.2019,
NCLAT has stayed the publication and formation of Committee of
Creditors, however, the moratorium has not been stayed and the Appeal is
pending consideration.
7. A plain reading of Section 9(2) makes it clear that when a Court
passes an order for any interim measure of protection under sub-Section
(1) of Section 9 of the Act, before the commencement of the Arbitral
Proceedings, Arbitral Proceedings shall be commenced within a period of
90 days from the date of such order or within such further time as the
Court may determine. Section 21 of the Act deals with commencement
of Arbitral Proceedings and reads as under :-
"Section 21 - Unless otherwise agreed by the parties, the
arbitral proceedings in respect of a particular dispute
commence on the date on which a request for that dispute to
be referred to arbitration is received by the respondent."
8. The phrase "Arbitral Proceedings shall be commenced" in Section
9(2) has to be understood in light of Section 21 of the Act and when so
read it is evident that the Arbitral Proceedings would commence when the
opposite party receives a request for the dispute to be referred to
Arbitration. This is clearly fortified from a reading of the judgement of
the Supreme Court in Sundaram Finance Ltd. v. NEPC India Ltd.
(1999) 2 SCC 479. The relevant para of which reads as under :-
"11. The reading of Section 21 clearly shows that the arbitral
proceedings commence on the date on which a request for a
dispute to be referred to arbitration is received by the
respondent. It is in this context that we have to examine and
interpret the expression "before or during arbitral
proceedings" occurring in Section 9 of the 1996 Act. We may
here observe that though Section 17 gives the arbitral tribunal
the power to pass orders the same cannot be enforced as
orders of a Court. It is for this reason that Section 9
admittedly gives the Court power to pass interim orders
during the arbitration proceedings."
9. Reading Section 9(2) conjointly with Section 21 can lead only to
one inevitable conclusion that when the proceedings commence prior to
the Court passing an order granting interim relief to a party under Section
9(1) of the Act, provisions of Section 9(2) would have no application. In
view of this settled position of law Applications seeking modification
deserve to be allowed.
10. Direction of the Court in para 52 of the judgement dated
21.10.2019, whose modification is sought, is as follows :-
"52. Petitioners must take steps for constitution of the Arbitral
Tribunal as the present interim order shall remain in operation
only for the period as prescribed in Section 9(2) of the Act....."
11. This direction is deleted and the Judgement dated 21.10.2019
stands modified to this limited extent. Applications are disposed of
accordingly.
JYOTI SINGH, J
JULY 27th , 2020
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