The sufficiency of pleadings in a petition under section 9 of the Arbitration Act and the court's power to grant interim measures to secure a claim, considering the financial condition of the party and the lack of defense on the merits of the claim.

JUDGMENT :

R.D. Dhanuka, J.

1. By these two Appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘the Arbitration Act’), the appellants (original respondents) have impugned the order dated 10th December, 2020 passed by the learned Single Judge directing the appellants to deposit with the Prothonotary and Senior Master of this Court an amount of Rs.35.5 crores and Rs.47.41 crores respectively within eight weeks from the date of the said order or in the alternate to furnish a bank guarantee of any nationalized bank for the entire amount along with all interest earned thereon.

2. The learned Single Judge has also directed the appellants to make an affidavit of disclosure of movable and immovable assets including monthly receivable, without exception including financial investments, all liabilities including the nature of encumbrances, if any. The learned Single Judge has granted an injunction against the appellant from disposing of, alienating, transferring or parting with possession or creating any third party rights over any of its assets, except in the ordinary and usual course of its business.

3. By consent of parties, both these Appeals were heard together and are being disposed of by a common order. The facts in both the mattes are almost identical.

Brief facts in Comm. Arbitration Appeal (L) No. 1022 of 2021 filed by the Essar House Pvt. Ltd.:-

4. On 1st April, 2016, Essar Steel India Limited entered into a Rental Agreement with the appellant to occupy the ground floor, podium and twenty upper floors at 11 Keshavrao Khadye Marg, Opp. Race Course, Mahalaxmi, Mumbai – 400 034 on leave and license basis. The said Essar Steel India Limited paid the appellant an amount of Rs.25,80,00,000/- toward security deposit under the said Rental Agreement. On 2nd August, 2017, the Ahmedabad bench of the National Company Law Tribunal (NCLT) admitted the Company Petitions filed by Standard Chartered Bank and State Bank of India against Essar Steel India Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. 100% shareholding of Essar Steel India Limited was acquired by Arcelor Mittal India Pvt. Ltd. (AMIPL), the respondent no.1 herein.

5. On 17th September, 2018, Essar Steel India Limited entered into a Business Centre Agreement with the appellant for availing Business Centre Facilities on 6 floors of Essar House owned by the appellant situated at the same address. On 17th September, 2018, Essar House Pvt. Ltd. assigned Rs.9,71,89,875/- to the appellant on behalf of the Essar Steel India Limited towards part payment of the Security Deposit under the Business Centre Agreement. On 15th November, 2019, the Supreme Court of India approved the respondent as the successful resolution applicant for Essar Steel India Limited. As a result, the respondent assumed the right of Essar Steel India Limited under the Business Centre Agreement. On 27th November, 2019, the appellant vide its email requested the respondent to vacate the premises. On 15th December, 2019, the respondent vacated the premises and handed over the peaceful possession to the appellant.

6. It is the case of the respondent that though the respondent sent several reminders by emails to the appellant to refund the security deposit under the said Business Centre Agreement during the period between 11th January, 2020 and 4th March, 2020, the appellant did not refund the said security deposit. On 17th June, 2020, the respondent issued a legal notice through its advocate to the appellant calling upon to refund the security deposit with interest. On 27th June, 2020, the appellant replied to the said legal notice and contended that the security deposit made by the respondent was adjusted against dues owed to one Marvel Mineral Pvt. Ltd. On 14th July, 2020, the respondent through its advocate’s reply letter to the said letter dated 27th June, 2020 denied the allegations made by the appellant in the said reply to the legal notice sent by the respondent.