Delhi High Court
Mr. Vijay Shukla & Anr. vs Career Launcher Infrastructure ... on 3 December, 2021
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 25.11.2021
Pronounced on: 03.12.2021
(i) + ARB. A. (COMM.) 51/2021 & I.A. 12443-44/2021
(ii) + ARB. A. (COMM.) 52/2021 & I.A. 12445-46/2021
(iii) + ARB. A. (COMM.) 53/2021 & I.A. 12447-48/2021
(iv) + ARB. A. (COMM.) 54/2021 & I.A. 12449-50/2021
(i) MR. VIJAY SHUKLA & ANR. .... Petitioners
(ii) MR. BHARAT PARMAR ..... Petitioner
(iii) NALANDA FOUNDATION ..... Petitioner
Through: Mr. Jayant Mehta, Senior Advocate
with Mr. Mani Gupta &
Ms.Aishwarya Nabh, Advocates
(iv) SHIVENDRA MISRA & ANR. .... Petitioners
Through: Mr. Rajshekhar Rao, Senior Advocate
with Ms. Samiksha Godiyal &
Mr. Govind Manoharan, Advocates
Versus
CAREER LAUNCHER INFRASTRUCTURE PVT.
LTD. & ORS. .... Respondents
Through: Mr. Akhil Sibal, Senior Advocates
with Mr.Rajat Arora, Mr. Ekansh
Bansal, Ms. Asavari Jain &
Ms.Deboshree Mukherjee, Advocates
CORAM:
HON'BLE MR. JUSTICE SURESH KUMAR KAIT
JUDGMENT
1. The above captioned four appeals have been filed under the
provisions of Section 37(2) (b) of the Arbitration and Conciliation Act, 1996
read with Section 10 of the Commercial Courts Act, 2015 against the interim
Award/order dated 25.08.2021 passed by the learned Arbitrator.
2. Appellants- Mr. Vijay Shukla and Mr. Sanjeev Kumar in the above
captioned first appeal [ARB.A. 51/2021] are respondents No.2 and 6 and
appellant- Mr. Bharat Parmar in the above captioned second appeal [ARB.A.
52/2021] is respondent No.3 in the arbitration proceedings. Appellant-
Nalanda Foundation in the above captioned third appeal [ARB.A. 53/2021]
is a public charitable trust, which was formed by Mr. Rakesh K. Sehgal, Mr.
Puneet Rathi and Mr. Gopinathan C.P., who are associated with respondent
No.1 herein and its group of companies, Career Launcher Educate Ltd., and
is also respondent No.1 in the arbitral proceedings. Appellants- Shivendra
Misra and Gautam Bhasin in the above captioned fourth appeal [ARB.A.
54/2021], who are respondents No. 4 & 5 in the arbitral proceedings, were
Trustees of Nalanda Foundation from 11.04.2017 to 12.02.2019 and
11.04.2017 to 28.01.2019,who is respondent No.1 in the arbitration
proceedings. Pertinently, Bharat Parmar, Shivendera Misra, Gautam Bhasin,
Vijay Shukla and Sanjeev Kumar are erstwhile Trustees of Nalanda
Foundation.
3. Respondent No.1- Career Launcher in the above captioned appeals is
a private limited company, which owns several parcels of land and provides
land, building and infrastructure services.
4. The above captioned four appeals are directed against the interim
order dated 25.08.2021 passed by the learned Arbitrator vide which
application filed by the respondent No.1 under the provisions of Section 17
of the Arbitration and Conciliation Act, 1996 read with Order XXXIX R 10
CPC as well as three applications filed by the petitioners [one jointly filed
by Vijay Parmar, Sanjeev Kumar and Bharat Parmar and two separately
filed by Shivendra Misra and Gautam Bhasin] under Section 16 of the Act,
have been disposed of.
5. Since parties to these appeals and before the Arbitral Tribunal, are
common and challenge in these appeals is to the common impugned interim
arbitral Award/order dated 25.08.2021, therefore, with the consent of
learned counsel for the parties, these appeals have been heard together and
are being disposed of by this common judgment.
6. The foundation of these appeals rests upon License Agreement dated
01.04.2009 executed between Nalanda Foundation with Career Launcher
Infrastructure Private Limited (henceforth referred to "Career Launcher") in
respect of a school to be operated in Raipur, Chhattisgarh for a period of 30
years, whereunder on consideration of License Fee and Infrastructure
Charges, respondent No.1-Career Launcher agreed to provide infrastructure,
including provision of Open Space (Land), Covered Space (Building etc.)
and other necessary infrastructure services including premises to run the
schools with necessary fixtures, furniture for students and buses for
transportation of students to and from School. The said License Agreement
stood amended on various dates i.e. 01.04.2010, 01.11.2017, 15.04.2018 and
01.04.2019. Further, a similar License Agreement was also entered between
the same parties for operating a school in Indore, which also stood amended
several times i.e. 01.11.2017, 15.04.2018 and 01.04.2019 to revise the
rental/ license fee to be paid by Nalanda Foundation to respondent No. 1-
Career Launcher.
7. The arbitration proceedings between the parties relate to rent which
allegedly became due and payable by the Nalanda Foundation to respondent
No. 1/Career Launcher (claimant) in respect of aforesaid Agreements dated
01.04.2009 (as amended on 01.04.2010) and 01.04.2011 read with
Addendums dated 01.11.2017, 15.04.2018 and 01.04.2019. Respondent
No.1- Career Launcher, who is claimant in arbitral proceedings, has jointly
and severally claimed recovery of rent from Nalanda Foundation, along with
some former Trustees.
8. At the hearing, Mr. Jayant Mehta, learned senior counsel appearing on
behalf of appellants submitted that Nalanda Foundation is a public charitable
trust which was formed by persons related to respondent No.1- Career
Launcher and its group of companies, with whom the management of the
Foundation remained until 30.1.2017. The said Nalanda Foundation is a not-
for-profit, charitable trust which is involved in the activity of running of
schools, who had entered into Agreement dated 01.04.2009 with respect to a
property at Raipur, Chhattisgarh (amended on 01.04.2010 and Addendums
dated 01.11.2017, 15.04.2018 and 01.04.2019) and another Agreement dated
01.04.2011 (Addendums dated 01.11.2017, 15.04.2018 and 01.04.2019)
with respect to property at Jhalaria, Indore, Madhya Pradesh, through its
various Trustees on behalf of Nalanda Foundation in their representative
capacity with respondent No.1- Career Launcher.
9. It is submitted on behalf of appellants that the financial position of
Nalanda Foundation was well within the knowledge of respondent No.1-
Career Launcher at all points of time and the aforesaid Lease Agreements
were not commercially arrived at and the rent was charged on per student
basis or as percentage of non-refundable fee. However, pursuant to partial
change in the management of Nalanda Foundation, it raised the issue that the
lease rents need to be brought down to market levels, as the rentals as a
share of total revenues of the school was two to three times higher in the
schools where the land was leased by respondent No.1-Career Launcher to
Nalanda Foundation, as compared to the schools where land was leased
from independent contractors/entities. Thereafter, various addendums were
signed in the year 2019 with regard to Raipur Agreement and Indore
Agreement and each of these addendums were clearly known and mentioned
to be signed as "Trustees" in representative capacity. However, Nalanda
Foundation had been in default for a long period of time in payment of rent
to respondent No.1-Career Launcher due to exorbitant fee charged under the
License Agreements dated 01.04.2009 and 01.04.2011. Further, since
March, 2020, due to Covid pandemic and subsequent lock down, the school
remained closed but when in August, 2020, respondent No.1-Career
Launcher pressed for payment of rentals, Nalanda Foundation through its
Trustees requested to consider the said period as force majeure event and
take a benevolent view of the situation. To the contrary, respondent No.1-
Career Launcher terminated the Lease Deeds and commenced the arbitration
proceedings.
10. Pertinently, a petition under Section 11(6) of the Act [ARB.P.
155/2021] seeking appointment of an Arbitrator was filed by respondent
No.1-Career Launcher before this Court, wherein this Court had appointed
sole Arbitrator for adjudication of disputes between the parties. Also, the
petition under Section 9 of the Act, filed by respondent No.1-Career
Launcher [O.M.P.(I) (COMM.) 245/2020] was directed to be treated as the
one filed under Section 17 of the Act and to be placed before the learned
Arbitrator for consideration and disposal.
11. An application under Section 16 of the Act is also stated to have been
filed by the appellants before the learned Arbitral Tribunal challenging its
jurisdiction and seeking deletion of name from the Array of Parties, as the
addendums to the Lease Agreements were signed by them in the
representative capacity of Nalanda Foundation. Another ground urged
before the learned Arbitrator was that they were never arrayed as parties in
the applications filed under Sections 9 and Section 11 of the Act before this
Court. After hearing both the sides on applications filed under Section 16 as
well as Section 17 of the Act, the learned Arbitrator passed the interim
Award 25.08.2021, which is under challenge before this Court.
12. Learned senior counsel appearing on behalf of appellants submitted
that at the stage of hearing the parties for interim relief, the final relief
cannot be granted. Further submitted that Trustees of Nalanda Foundation
cannot be made parties to the arbitration proceedings and no orders of
personal liability for the alleged dues of the trust can be issued against such
Trustees. It was submitted that under Section 30 of the Trust Act, Trustees
are accountable only for such moneys, stocks, and funds as actually come
into their hands and that one Trustee shall not be accountable for the neglect,
default, acts, omission or commission of the other Trustees and thereby,
claim of respondent No.1-Career Launcher that the appellants herein has to
bear the burden of payment jointly and severally is unsustainable.
13. Learned senior counsel also submitted that the impugned order
directing all the respondents therein to jointly and severally pay an amount
of Rs.3crore to Career Launcher is based purportedly upon an admission of
liability made in an email dated 25.7.2019 and selective contents thereof
have been relied upon by learned Arbitrator. However, relevance thereof in
its entirety has to be seen during trial and not at the stage of grant of interim
relief. Learned senior counsel vehemently submitted that by passing the
impugned order, the learned Arbitrator has infact granted partial final relief,
which is contrary to contractual terms. Thus, final relief cannot be granted at
interim stage, including in proceedings under Section 17 of the Arbitration
Act.
14. Likewise, the learned Arbitrator has also ordered the appellants to
jointly and severally pay amount of Rs.7,01,112/- to respondent No.1-Career
Launcher towards alleged electricity dues, which amounts to grant of final
relief. It was emphatically submitted by learned senior counsel for appellants
that the order of attachment before pronouncement of final judgment has
been issued without applying the principles of Order XXXVIII Rule 5 of the
Code of Civil Procedure Code, 1908. Merely having a valid claim or a prima
facie case will not entitle an order of attachment before pronouncement of
judgment/final Award and to arrive at this decision, it has to be first
established that the party against whom such an order is proposed to be
made is attempting to remove or dispose of the assets with the intention of
defeating the decree/award that may be passed. It was submitted that no
averment was made before the learned Arbitrator that appellants are seeking
to alienate their assets to defeat the interest of the claimant/ respondent
No.1-Career Launcher and thereby, direction to secure the amount of
Rs.4,08,24,688/- through an encumbrance on their assets or any other valid
and proper security (like a bank guarantee) is contrary to the settled
principles governing attachment before judgment and deserves to be set
aside.
15. To substantiate the submissions advanced by learned senior counsel
Mr. Jayant Mehta, it was submitted by Mr. Rajshekhar Rao, learned senior
counsel that appellants - Shivender Misra & Gautam Bhasin had no
knowledge of the email dated 25.7.2019 until it was filed in arbitration
proceedings. These appellants have not written this email, who were
Trustees of Nalanda Foundation only from 11.4.2017 and 28.1.2019 and
thereby, the impugned interim order holding joint and several liability could
not have been passed, as this issue could not have been decided at an interim
stage. Learned senior counsel submitted that the direction of learned
Arbitrator to pay Rs.3 Crores and further to secure an amount of
Rs.4,08,24,688/- by way of attachment is bad in law.
16. In support of above submissions, reliance was placed by Mr. Jayant
Mehta & Mr. Rajshekhar Rao, learned senior counsel, upon decisions in
State of U.P. Vs. Ram, Sukhi Devi (2005) 9 SCC 733; State Bank of India
Vs. Ericsson India Private Limited And Others (2018) 16 SCC 617; TATA
Advanced Systems Limited Vs. Telexcell Information Systems Limited
2020 SCC OnLine Del 1716; Raman Tech. & Process Engg. Co. and
Another Vs. Solanki Traders (2008) 2 SCC 302 and C.V. Rao & Ors. Vs.
Strategic Port Investments KPC Ltd. & Ors. 2014 SCC OnLine Del 4441.
17. On the other hand, Mr. Akhil Sibbal, learned senior counsel appearing
on behalf of respondent No.1-Career Launcher vehemently opposed these
appeals on the ground that the learned Arbitrator after hearing both the sides
has passed a detailed interim Award with respect to liability of the Trustees.
18. Learned senior counsel submitted that the grounds urged before this
Court were not even pleaded and argued before the learned Arbitrator and
cannot be agitated for the first time in the appeal, as the same is contrary to
the settled law that powers of the Appellate Court for consideration of
Appeal under Section 37(1)(b) of the Act, are quite restricted and should not
be invoked lightly. It was submitted that the impugned interim Award is
based upon documents and submissions filed by the parties before the
learned Arbitrator and in no way can be called contrary to law.
19. Learned senior counsel emphasized that a Trust is not a distinct
juristic personality capable to sue or being sued in its own name without its
Trustees and all the Trustees are necessary parties to any suit in relation to
the Trust and the said position was not disputed before the learned Arbitrator
at the time of hearing on the point of interim Award. It was also submitted
that the provisions of Trust Act relied upon by the appellants shall be
applicable only for the determination of the liability of the Trustees in
relation to the beneficiaries of Trust and not qua the contracts with the third
parties. Learned senior counsel submitted that the impugned interim Award
is premised upon various communications between the parties and the
categorical admissions and assurances regarding the payment of the
outstanding dues.
20. Learned senior counsel for respondent No.1-Career Launcher next
submitted that whether the Trustees are on board or have retired is
immaterial, as these Trustees had participated in the acts of
commission/omission as alleged in the statement of claim and the various
addendums were signed during the period when they were controlling the
management of the Trust. All the Trustees were aware of the financial
condition of the Trust and the addendums were executed only after mutual
discussions that took place between the parties and this fact has been noted
in the impugned interim Award.
21. Learned senior counsel submitted that the Trustees were illegally
enjoying the property of respondent no. 1 without paying a penny despite
termination of the license agreement and it is only after intervention of this
Court and observations made in its order dated 04.01.2021 [in OMP (I)
(COMM) (No.) 245/2020] that the possession of the licensed infrastructure
was handed over to the respondent No. 1 on 11.01.2021.
22. Learned senior counsel further submitted that according to affidavit
dated 20.10.2021 filed by the Trust before this Court, no payment can be
made by the Trust towards the payment of dues claimed by respondent No.1
in the arbitration proceedings and therefore, to secure the admitted amount
and other dues during the pendency of the arbitral proceedings, the
impugned interim Award has been passed.
23. With regard to appellants' averment that the learned Arbitrator was
bound to follow principles of Order XXXIIX Rule 5 CPC, it was submitted
that it is contrary to the provisions of Arbitration and Conciliation Act,
1996.
24. Attention of this Court was drawn to decisions in Ajay Singh Vs. Kal
Airways Private Limited and Ors. 2017 SCC Online Del 8934; Steel
Authority of India Ltd. Vs. AMCI PTY Ltd. 2011 SCC Online Del 3689;
Gatx India Pvt. Ltd. Vs. Arshiya Rail Infrastructure Limited & Anr. 2014
SCC Online Del 4181; Adhunik Steels Ltd. Vs. Orissa Manganese &
Minerals (P) Ltd. (2007) 7 SCC 125.
25. The submissions advanced by learned counsel representing both the
sides were heard at length and the impugned interim order dated 25.08.2021,
material placed on record as well as decisions cited by both the parties, have
been carefully considered.
26. According to statement of claim filed before the learned Arbitrator,
respondent No.1-Career Launcher has claimed recovery of license fee
payable by the appellants (respondents therein) for the period October-
December, 2017 and has therefore, roped in all the Trustees who served
during 2017 as parties.
27. The appellants herein had filed applications under Section 16 of the
Act before the learned Arbitrator inter alia praying for striking of their
names from the array of parties in the arbitration proceedings and also
raising an objection that the arbitral tribunal had no jurisdiction to proceed
with the matter.
28. The stand of appellants herein was that they were not a party to the
Lease/Infrastructure License Agreements dated 01.04.2009 and 01.04.2011
nor to the addendums executed thereafter. Also that these appellants were
neither Trustees nor associated with the claimant/ respondent No.1 when the
Agreements were signed in 2009; they have not at any point of time
furnished a personal guarantee nor have they agreed to act as the surety for
the liabilities of respondent No. 1. Further averred that since they were not a
party to the arbitration agreement contained in the aforesaid Agreements, so
the requirement under Section 7 of the Act does not stand satisfied and
thereby, the arbitral Tribunal had no jurisdiction to bind third parties to the
arbitration proceedings.
29. On the other hand, the claimant/ respondent No.1-Career Launcher
had pleaded before the learned Arbitrator that the Trustees are not third
parties in relation to the suits by or against the trust and it is enough to have
an arbitration agreement with the trust to bind the Trustees.
30. While deciding application under Section 16 of the Act filed by the
appellants (respondents therein), the learned Arbitrator noted the rival
contentions of the parties in the impugned interim Award dated 25.08.2021
and observed as under:-
"After careful consideration of all the oral & written
submissions advanced by the learned counsels for the rival
parties and the facts. record and law, I conclude that the
respondents' three applications U/s. 16 of the Act-one dated
27.03.2021 filed by respondents Nos. 2, 3 & 6 and two
separate applications both dated 01.06.2021 filed by
respondents Nos. 4 & 5 respectively arc liable to be dismissed
and the same arc hereby dismissed being not maintainable.
This tribunal is within its power and jurisdiction to entertain
and try the present claim against all the respondents.
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The Trust i.e. Respondent no. 1 is not a separate legal entity in
law and has no distinct juristic personality capable to sue or
being sued in its own mime without its Trustees (unlike a
company). A "Trust" is not a juristic person or a legal entity,
as the juristic person has a legal existence of its own and
hence it is capable of suing and being sued in a Court of law.
Thus it appears that a "Trust" is not like a body corporate,
which has a legal existence of its own and therefore can
appoint an agent. The judgments (supra) cited by the claimant
have brought the point home. I am in agreement with the
submissions made by the claimant in its replies to the
applications U/s. 16 and its synopsis coupled with the
judgments cited in support thereof.
Similarly, the contention raised by the respondents that the
Trustees were not impleaded in section 11 petition is also
completely misplaced. The Trustees are not separate to the
Trust and therefore every claim by/against the trust will have
to be instituted/defended by the Trustees. Further, the joint and
several liability of the Respondents cannot be decided at this
stage and is a matter of trial. Therefore, the Respondent Nos.
2 to 6 cannot be deleted from the array of parties."
31. Further, in the application filed under Section 17 of the Act, read with
Order XXXIX Rule 10 of the CPC, the claimant/ respondent No.1 - Career
Launcher had prayed for the following interim directions:-
a. Direct the Respondents therein to pay the Claimant an
amount of Rs. 3 Crores admitted by the Respondent No. 1
vide in its email dated 25.07.2019;
b. Deposit with the Hon'ble Arbitral Tribunal a balance
sum of Rs.4,08,24,6881- being an amount of outstanding
license fee arising out of the Agreement dated 01.04.2009
read with addendums dated 01.04.2010, 01.11.2017,
15.04.2018 and 01.04.2019 and Agreement dated
01.04.2011 read with addendums dated 01.11.2017,
15.04.2018 and 01.04.2019; Alternatively, it was also
sought that the Ld Tribunal may direct the Respondents
therein to furnish adequate security in the form of a bank
guarantee issued by a nationalized bank in India or such
other security that shall cover the entire sum in dispute
between the parties and the amount so deposited by the
Respondents therein by kept in an interest bearing fixed
deposit until the conclusion of the arbitration
proceedings;
c. Direct the Respondents to pay the Claimant a sum of
Rs.07,01,1121- being the outstanding electricity dues
payable by the Respondent No. 1 as on the date of
handing over the possession, i.e. 11.01.2021 as stated
above;
d. Direct the Respondent to file an affidavit of its assets
and income as per the directions and judgment dated 05.
08.2020 by Hon'ble High Court of Delhi in M/s Bhandari
Engineers and Builders Pvt. Ltd. Vs. Maharia Raj Joint
Ventures bearing case no. Ex. P. 27512012;
e. Direct the Respondent No. 1 to disclose its Trustees
since 2017 till the date of filing of this claim petition.
32. The learned Arbitrator after considering the replies and rejoinder filed
to the aforesaid applications, observed as under:-
"I tend to agree with the afore-mentioned stand
and reasoning given by the claimant vis-à-vis
the liability of all the respondents, including
respondents Nos. 4 & 5. The e-mail dated
25.07.20 19 (supra) by respondent No. 2 to the
claimant only re-affirms the liability of the
respondent No.1 towards the claimant, as per
Agreement dated 0 1.04.2009 read with
addendums dated 01.04.2010. 15.04.2018 and
01.04.20 19 and Agreement dated 01.04.2011
read with addendums dated 15.04.2018 and
01.04.20 19 which were entered between the
claimant on the one hand and respondents on
the other. Broadly speaking in all fairness,
prima facie, the, claimant is entitled to receive
the license fee (as agreed between the rival
parties and amended from time-to-time) from
the respondent No.1 besides the electricity
charges levied by the Electricity Department of
both the States during the relevant period till the
possession of the properties in question was
handed over back to the claimant. It is not out of
place to mention here the observation made by
the Hon'ble Delhi High Court in its order dated
04.01.2021 (supra) in OMP (I) (COMM) No.
245/2020.
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The claimant has made out a prima facie case in
its favour. Respondents cannot be allowed to
run away from their liability of payment of
licence fee and electricity dues during the
period of their use & occupation of the
claimant's premises as per the agreed rate. The
amount runs in crores of rupees. Respondents'
conduct is wanting in bonafide. Despite their
clear assurance & commitment to make part
payment (refer e-mail dated 25.07.2019), the
respondents have neglected to honour their
commitment and did not pay a penny towards
the same to the claimant. In view of the afore-
mentioned facts documents and the record
coupled with the judicial pronouncements
(supra), claimant's interest is liable to be
protected lest the claimant may suffer
irreparable injury. Balance of convenience also
lies in favour of the claimant in safe-guarding
its interest."
33. While returning the aforesaid findings, the learned Arbitrator held as
under:-
"INTERIM AWARD/ORDER ON PRAYER CLAUSE (a):
For the reasons stated here-in-above and for the reasons
stated in my separate order of disposing respondents'
applications U/s. 16 of the A & C Act, the prayer clause (a)
is allowed. All the respondents, jointly & severally, are
hereby directed to pay to the Claimant an amount of
Rs.3,00,000,00/= (Rupees Three Crores only). Claimant
may take steps as per law.
INTERIM AWARD/ORDER ON PRAYER CLAUSES (b)
& (d):
For the reasons stated here-in-above and for the reasons
stated in my separate order of disposing respondents'
applications U/s. 16 of the A & C Act, the prayer clause (b)
in the alternative and prayer clause (d) are allowed. The
respondents are hereby directed to file separate affidavits
truthfully disclosing their personal assets and income
details. Respondents are further directed to secure the said
amount of Rs.4,08,24,688/= (Rupees Four Crores Eight
Lakhs Twenty Four Thousand Six Hundred and Eighty Eight
only) by not alienating and/or encumbering their assets to
the extent of said amount of Rs.4,08,24,688/=. For this
purpose, the respondents shall file individual declarations
in the form of affidavits. These affidavits shall be filed by the
respondents within two weeks of the pronouncement of this
Interim Award. In the alternative, the respondents are
permitted to file any other valid and proper security, such
as bank guarantee, deposit with the Registrar General,
Delhi High Court or Fixed Deposit Receipts etc. to the tune
of Rs4,08,24,688/=.
INTERIM AWARD/ ORDER ON PRAYER CLAUSE (c):
For the reasons stated here-in-above and for the reasons
stated in my separate order of disposing respondents'
applications U/s. 16 of the A & C Act, the prayer clause (c)
is allowed. All the respondents, jointly & severally, are
hereby directed to pay to the Claimant an amount of
Rs.7,01,112/= (Rupees Seven Lakhs One Thousand One
Hundred and Twelve only) towards the outstanding
electricity dues payable by the respondent No.1 as on the
date of handing over the possession, i.e., 11.01.2021.
Claimant may take steps as per law.
INTERIM AWARD/ORDER ON PRAYER CLAUSE (e):
For the reasons stated here-in-above and for the reasons
stated in my separate order of disposing respondents'
applications U/s. 16 of the A & C Act, the prayer clause (e)
is allowed. The respondent No.1 is directed to disclose its
Trustees since 2017 till the date of filing of the claim
petition. It is noted that the respondent No.1 has already
annexed the copy of the register of Trustees of Respondent
No. 1, as Annexure: R-12 with its Statement of Defence
dated 27.03.2021. In its rejoinder dated 14.04.2021, the
claimant has not disputed the correctness of this annexure,
hence the same is presumed to be correct. Thus, this prayer
clause (e) has been met. The claimant is expected not to
cherry-pick few Trustees' and to leave others from arraying
them as party/respondents in its claim, especially after the
Annexure: R-12 has been filed on record. If the claimant
still fails to make all the Trustees as party/respondents then
its effect shall be seen on the claim at the appropriate stage.
The claimant's application dated 01.03.2021 U/s. 17 of the A
& C Act read with Order XXXIX Rule 10 C.P.C. is
accordingly disposed off in above terms."
34. Before adverting to aforesaid finding returned by the learned
Arbitrator while passing the interim Award and testing its legality or
illegality, this Court finds it appropriate to first look into the statement of
claims made by respondent No.1/Claimant- Career Launcher before the
learned Tribunal, which reads as under:-
a) Award a sum of INR 7,08,24,688 (Rupees Seven
Crores Eight Lakhs Twenty Four Thousand Six Hundred
and Eighty Eight) towards the total amount due and payable
till date of filing of this Statement of Claim under the
Agreement along with interest @15% per annum from the
date it became due till the date of filing of this Statement of
Claim, be passed in favour of the Claimant and against the
Respondents jointly and severally;
b) Award a sum of INR 7,01,112(Rupees Seven Lakhs
One Thousand One Hundred and Twelve) towards the
electricity charges along with interest @15% per annum
from the date it became due till the date of filing of this
Statement of Claim, be passed in favour of the Claimant and
against the Respondents jointly and severally;
c) Award pendente lite and future interest @15% per
annum from the date of filing of this Statement of Claim till
realization, be passed in favour of the Claimants and
against the Respondents jointly and severally;
d) Award litigation expenses incurred by the Claimant
in favour of the Claimants and against the Respondents
jointly and severally;
e) Award costs of arbitration proceedings to the
Claimant in favour of the Claimants and against the
Respondents jointly and severally;
35. The prayers made by both the sides in their respective applications
filed under the provisions of Sections 16 and 17 of the Arbitration and
Conciliation Act and the findings returned by the learned Arbitrator
thereupon, have been carefully considered in the light of statement of claims
made before the arbitral Tribunal.
36. Based upon a purported admission in e-mail dated 25.07.2019, the
learned Arbitrator has allowed application under Section 17 of the Act filed
by the respondent. The provisions of Section 17(1) of the Act provides as
under:-
"17. Interim measures ordered by arbitral tribunal.--
(1) Unless otherwise agreed by the parties, the arbitral
tribunal may, at the request of a party, order a party to
take any interim measure of protection as the arbitral
tribunal may consider necessary in respect of the
subject-matter of the dispute.
(2) The arbitral tribunal may require a party to
provide appropriate security in connection with a
measure ordered under sub-section (1)."
37. A Coordinate Bench of this Court in a somewhat similar case in Tata
Advanced Systems Limited (Supra) has observed as under:-
"23. There cannot be a quarrel with the settled law that
interference by the Courts should be the least in the
orders of the Arbitral Tribunals. However, this cannot be
understood to be laying down an absolute proposition
that the orders of the Tribunal are totally immune to
interference and in no case can they be set aside. The
facts and circumstances of each case would determine
whether the orders deserve to be interfered or not.
24. The issue that arises for consideration is what are the
guiding principles for grant of relief by the Arbitral
Tribunal under Section 17 of the Act. This law is no
more res integra. It is settled that in exercising discretion
while granting an interim relief under Section 17 of the
Act, Tribunal should be extremely cautious and the power
should be exercised for purpose of safeguarding the
interests of the parties to the proceedings, so that the
subject matter of the Arbitration is preserved. There
should be adequate material on record to show that the
Respondent will fritter away the property or assets or
funds, being the subject matter of Arbitration, so as to
frustrate the Award, in case the Claimant succeeds."
38. The power of Arbitral Tribunal to pass interim Awards on the basis of
apparent and explicit admissions by a party is undisputed, however, the
admission has to be specific and categorical. In the case in hand, appellants-
Vijay Shukla and Sanjeev Kumar have alleged that the learned Arbitrator
has considered the selective portions of e-mail dated 25.07.2019 and also
stand of appellants - Shiveder Misra, Gautam Bhasin, Bharat Parmar is that
they had no knowledge of the email dated 25.7.2019 until it was filed in
arbitration proceedings. In the opinion of this Court, the relief based upon a
disputed admission, that too without trial, cannot be permitted on the basis
of piecemeal consideration of a document. Moreover, this court fails to
understand on what premise the learned Arbitrator has directed that the
respondents (appellants herein) shall jointly and severally pay the
claimant/respondent No.1 the amount of R.3 crores. The reason is obvious,
the learned Arbitrator in the impugned order dated 25.08.2021 has observed
that the claimant i.e. respondent No.1-Career Launcher cannot "cherry pick"
the Trustees to be made party to the arbitration proceedings and has
therefore directed the respondent No.-1/Nalanda Foundation to disclose its
Trustees since 2017 till the date of filing of the claim petition. The Arbitral
Tribunal in its further order dated 18.11.2021 has observed and held as
under:-
"It is made clear that this Interim Order, is however,
without prejudice to the rights, title, contentions and
interest of the parties. Meaning thereby, the effect of non-
impleadment of the individuals, named by the respondents
(supra), as parties respondents in the present arbitration
proceedings, shall be seen on the claim at the appropriate
stage, as already ruled by this Tribunal in its Interim
Award/ Order dated 25.08.2021"
39. In view of what has been observed by the learned Arbitrator
hereinabove, the matter is yet to be adjudicated on the point as to which
individual/ Trustee shall be held liable for the activities of Nalanda
Foundation and without answering this disputed question, passing a
direction to appellants to jointly and severally pay the amount of Rs.3 Crores
[on Prayer Clause-(a)] to claimant, cannot sustain.
40. Similarly, the direction to appellants to jointly and severally pay
amount of Rs.7,01,112/- towards the outstanding electricity dues payable by
Nalanda Foundation cannot sustain in the absence of fixing the liability.
Moreover, as per Statement of Claims filed by the claimant before the
learned Arbitrator, similar relief has been claimed and by issuing this
direction, the learned Arbitrator has infact granted the main relief claimed in
the arbitral proceedings, that too without therebeing any trial.
41. With regard to prayer Clause (b) and (d), this Courts finds that the
learned Arbitrator has directed the appellants to file separate affidavit
disclosing their personal assets and income or to furnish bank guarantee/
fixed deposit receipt to the tune of Rs.4,08,24,688/- before this Court. In the
opinion of this Court, such a direction is passed to secure the disputed
amount. However, prior to passing of such direction, the learned Arbitrator
was not only required to fix the liability in specific but also to establish that
there is likelihood of escaping the person liable, which is not the case in
hand.
42. It is not disputed that the vacant possession of the premises has been
handed over to the first respondent on 11.01.2021 pursuant to directions of
this Court vide order dated 04.01.2021 [in OMP (I) (COMM) (No.)
245/2020] i.e. during pendency of the arbitration proceedings.
43. In view of afore-going narration, these appeals are allowed and the
impugned Award dated 25.08.2021 is hereby set aside. Pending applications
are also disposed of being infructuous.
(SURESH KUMAR KAIT)
JUDGE
DECEMBER 03, 2021
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