Madras High Court
Foxconn Hon Hai Technology India Mega vs Venpa Staffing And Services India ... on 4 September, 2025
Author: N. Anand Venkatesh
Bench: N. Anand Venkatesh
O.A.No.314 of 2025
and
Arb. Apln. Nos.513 & 514 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.09.2025
CORAM
THE HONOURABLE Mr.JUSTICE N. ANAND VENKATESH
O.A.No.314 of 2025
AND
Arb. Apln. Nos.513 & 514 of 2025
Foxconn Hon Hai Technology India Mega
Development Private Limited
Rep. by its Authorised Signatory Mr.S.Muthu
M2/A & M2/B SIPCOT Industrial Park, PH-II
Hi Tech SEZ, Chennai-Bangalore NH
Sunguvarchatram, Kanchipuram
Tamil Nadu 602 106 .. Applicant in all cases
Vs.
1.Venpa Staffing and Services India Private Limited
Rep. by its Director Mr.Pushparathinam.A
#211, Cherry Road, 2nd Floor, Shop No.3, Sai Towers
Near Vincent Bus Stop, Salem 636 007
2.International Maritime Academy Trust
Rep. by its Managing Trustee Mr.Senthil Kumar.J
Puduchatram, Korattur Village
Jamin Korattur, Poonamallee Taluk
Chennai 600 124, Thiruvallur District
3.Senthil Kumar .. Respondents in all cases
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O.A.No.314 of 2025
and
Arb. Apln. Nos.513 & 514 of 2025
Original Application filed under Order XIV Rule 8 of Original Side
Rules, read with Section 9(ii)(e) of the Arbitration and Conciliation Act, 1996,
to pass an order of injunction restraining the respondents, their men, agents,
successors or any person claiming under them, from selling, alienating or
disposing off in any manner the assets, more fully described in the Schedule-A.
Arbitration Application No.513 of 2025 filed under Order XIV Rule 8 of
Original Side Rules, read with Section 9(ii)(d) of the Arbitration and
Conciliation Act, 1996, to appoint an Advocate Commissioner to inventorise
the schedule-A assets in the premises more fully described in schedule
hereunder and take stock of the current condition in which the assets are being
kept.
Arbitration Application No.514 of 2025 filed under Order XIV Rule 8 of
Original Side Rules, read with Section 9(ii)(e) of the Arbitration and
Conciliation Act, 1996, for a direction to the 1st respondent to cause
respondents 2 and 3 to immediately release and handover to the applicant the
assets, more fully described in the Schedule-A hereunder and failing the same
to furnish security to the applicant to the extent of Rs.4,64,82,420/- being the
written down value of the same as on date.
For applicant : Mr.Bhagavath Krishnan PMN
in all cases
For R1 : Mr.S.Arivazhagan
For RR2 & 3 : Ms.Ramya
for M/s.McGan Law Firm
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O.A.No.314 of 2025
and
Arb. Apln. Nos.513 & 514 of 2025
COMMONORDER
These applications have been filed for an interim direction restraining the
respondents or their men, agents or any other person claiming under them from
selling, alienating or disposing off in any manner the assets prescribed in the
schedule and for appointment of an Advocate Commissioner to take inventory
of the assets and for a further direction to the respondents to release and
handover the assets to the applicant or in the alternative, to furnish security to
the applicant to the extent of Rs.4,64,82,420/-.
2. The applicant is engaged in the production of mobile phones and other
electronic products and operates a manufacturing unit at Sunguvarchatram,
Kanchipuram District. The applicant, in the course of their business, engaged
regular employees as well as contract employees in the factory. During the year
2021-2022, the 1st respondent approached the applicant and offered to provide
contract workers. It was also informed to the applicant that they have resources
to provide for accommodation facilities by taking the premises on lease from
third parties.
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Arb. Apln. Nos.513 & 514 of 2025
3. On 01.04.2022 and 26.09.2022, the applicant and the
1st respondent entered into a Dormitory Management Agreement for IMA-1 and
IMA-2, under which, the 1st respondent was responsible for providing
accommodation, food and over all maintenance facilities for the contract
workers.
4. The 1st respondent had independently entered into a lease agreement
with the 2nd respondent. This arrangement went on well for sometime.
However, the applicant was informed by the land owners that the 1st respondent
defaulted in making rental payments for the month of May and June 2024. In
order to take control of the situation, the applicant had discussions with the
1st respondent and the land owners and it was decided between the parties to
enter into a Tripartite Memorandum of Understanding. Thus, the Tripartite
Agreements were entered into in July 2024. As per the agreement, the
applicant agreed to remit the rental payments for IMA-1 and IMA-2 to the
1st respondent on or before 10th of every successive calendar month and the
1st respondent, in turn, was under the obligation to remit the rental payments to
the 2nd respondent within two working days. It was further agreed that the
applicant's obligation is only to supervise the rental payments by the
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Arb. Apln. Nos.513 & 514 of 2025
1st respondent to the land owners. The applicant has spent money and created
the assets in terms of bunker beds, lockers, etc., in order to enable the contract
workers to stay conveniently.
5. On 24.12.2024, the 2nd respondent issued a letter to the applicant
stating that they have initiated legal proceedings before the District Court,
Tiruvallur, for recovering the outstanding rental dues from the 1st respondent
and that the assets of the applicant will not be released until the issue is
resolved.
6. The applicant was further informed that the assets belonging to the
applicant will not be permitted to be taken away till the court case initiated by
the land owner comes to an end.
7. The applicant relocated the contract workers from IMA-1 and IMA-2
on 29.12.2024. On 05.02.2025, the applicant informed the 2nd respondent
regarding relocation of the contract workers and the 2nd respondent through an
e-mail dated 06.02.2025, informed the applicant that there is rental payment
dues from December 2024 from the applicant and the 1st respondent. Through
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subsequent e-mails dated 11.02.2025 and 17.02.2025, the 2nd respondent was
claiming for a total amount of Rs.8,25,30,000/- + GST.
8. It is under these circumstances, these applications came to be filed
before this Court seeking for an interim injunction restraining the respondents
from alienating or disposing off the assets and for appointment of Advocate
Commissioner to prepare an inventory of the assets and for a further direction
to the respondents to release and handover the assets of the applicant.
9. The respondents have filed counter affidavit and the applicant has filed
rejoinder and a reply has been filed for the rejoinder.
10. This Court carefully considered the submissions made on either side
and perused the materials available on record.
11. The main ground that was urged by the learned counsel for the
respondents 2 and 3 is that the present application filed under Section 9 of the
Arbitration and Conciliation Act, 1996, (in short “the Act”) is not maintainable,
since the respondents 2 and 3 are not parties to the parent agreement entered
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into between the applicant and the 1st respondent and in the Tripartite
Agreement, the parties never contemplated referring the dispute for arbitration.
It was further submitted that the respondents 2 and 3 have already filed a
commercial suit in O.S.No.476 of 2025 before the Principal District Judge,
Tiruvallur, claiming rental arrears and other charges and therefore, the present
application as against the respondents 2 and 3, cannot be sustained.
12. The learned counsel for the respondents 2 and 3 submitted that the
outstanding that is payable to the respondents 2 and 3 stands at
Rs.8,25,30,000/- + GST. Towards such huge arrears, the assets belonging to
the applicant is kept as security, failing which, this amount can never be
realised by the respondents 2 and 3.
13. The learned counsel for the 1st respondent submitted that the claim
made by the respondents 2 and 3 is untenable and the same is denied by the
1st respondent.
14. Per contra, the learned counsel for the applicant submitted that the
Tripartite Agreement that was entered into between the parties is covered by the
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parent agreement entered into between the applicant and the 1st respondent and
therefore, the respondents 2 and 3 will also be bound by the terms of the parent
agreement. In the alternative, it was contended that if for the sake of
arguments, the respondents 2 and 3 are not bound by the parent agreement,
even then, the application can be sustained under Section 9 of the Act even as
against the third party, since the intention behind Section 9 of the Act is only to
preserve and protect the subject matter, even if it is in the hands of the third
parties. To substantiate this submission, the learned counsel relied upon the
judgment of this Court in Embassy Property Developments Limited Vs.
Jumbo World Holdings Limited (2013 SCC OnLine Mad 1795). The learned
counsel also relied upon the judgment of the Delhi High Court in Gatx India
Pvt. Ltd. Vs. Arshiya Rail Infrastructure Limited and Another (2014 SCC
OnLine Del 4181).
15. The crux of the dispute between the parties is confined to the assets
belonging to the applicant which is available in IMA-1 and IMA-2. The
applicant wants these assets to be preserved and that is the intent behind filing
all these applications under Section 9 of the Act.
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16. The respondents 2 and 3 are having a claim as against the applicant
and the 1st respondent with respect to arrears of rent and already a commercial
suit has been filed before the competent Court for recovery of arrears of rent
and other charges. A combined reading of the parent agreement and the
Tripartite Agreement between the parties shows that the assets belonging to the
applicant is now under the control of the respondents 2 and 3. Therefore, even
assuming that the respondents 2 and 3 are not parties to the parent agreement
between the applicant and the 1st respondent, those assets that remain in the
hands of the respondents 2 and 3 can always be preserved/protected. The law
on this issue was explained by this Court in the matter of Embassy Property
Developments Limited referred supra and the relevant portions are extracted
hereunder :
“55. Taking into consideration the rival contentions and the principles
underlined the decisions of the various Courts of law, we are of the considered view
that the Appellant, in O.S.A. Nos. 1 to 4 of 2013, is entitled to the interim relief prayed
for by it in the Original Applications, in O.A. Nos. 452 to 455 of 2006 and O.A. No. 731
of 2009. We are of the view that the power of this Court, under Section 9 of the
Arbitration and Conciliation Act, 1996, is wide in scope and it would extend even to
third parties in whom the properties or goods are vested, even though such parties
may not be a party to the Arbitration clause in an Agreement. Even though Section 9
of the Arbitration and Conciliation Act, 1996, could be invoked only by a party to the
Arbitration Agreement, the interim relief could be granted by this Court even against
the third parties. Unless such a power is available, under Section 9 of the Arbitration
and Conciliation Act, 1996, the parties to the Arbitral Agreement could be frustrated
even if they succeed in the Arbitral proceedings before the Arbitration Tribunal
concerned.
56. It could be noted that Section 9 is enacted only with the intention of
preserving and protecting the subject matter of the Arbitral proceedings, even if it is in
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the hands of third parties. However, it could be seen that there should be some nexus
between the parties to the agreement and the subject matter of such an Agreement. It
is also found that the Applicant, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of
2009, the Appellant in the O.S.A. Nos. 1 to 4 of 2013, had shown that a prima facie
case is in existence to grant of the interim relief, as the balance of convenience is in
its favour.“
17. The learned counsel for the respondents 2 and 3 submitted that the
assets belonging to the applicant in IMA-1 and IMA-2 has now been kept in the
basement. Insofar yet another dormitory which is IMA-3, it is stated that it has
been locked and possession has not been handed over to the respondents 2
and 3. It is not necessary to go into that dispute, since the present case pertains
to the assets that are lying in IMA-1 and IMA-2.
18. Taking into consideration the overall facts and circumstances and by
balancing the rights of both the parties, it will suffice, if a direction is issued to
the respondents 2 and 3 to hold on to the assets belonging to the applicant by
preserving it in a separate place and the same shall not be alienated or
encumbered. However, it will not stop the respondents 2 and 3 to file an
appropriate application in the pending suit in O.S.No.476 of 2025 before the
Principal District Judge, Tiruvallur, with respect to those assets. If and when
any such application is filed by the respondents 2 and 3, it is left open to the
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applicant to raise their grounds and it will be dealt with by the Court on its own
merits and in accordance with law. By resorting to this interim arrangement,
the interest of applicant as well as the interest of the respondents 2 and 3 will be
sufficiently protected.
19. Insofar as the dispute between the applicant and the 1 st respondent, it
is left open to the applicant to issue the notice under Section 21 of the Act and
proceed further in accordance with law. The applicant has sought for a
direction to the 1st respondent to furnish security. This Court is not inclined to
issue any such direction, since the applicant, till now, has not even issued the
trigger notice under Section 21 of the Act and therefore, the manifest intention
to arbitrate is missing in this case.
All the applications are disposed of with the above terms.
04.09.2025
gya
Index : Yes/No
Neutral Citation : Yes/No
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and
Arb. Apln. Nos.513 & 514 of 2025
N. ANAND VENKATESH, J.
gya
AND
Arb. Apln. Nos.513 & 514 of 2025
04.09.2025
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