IN THE HIGH COURT OF JUDICATURE AT BOMBAY
G. S. Kulkarni, J.
Godrej Properties Ltd - Appellant
Versus
Goldbricks Infrastructure Pvt. Ltd - Respondent
Commercial Arbitration Petition (L.) No. 23500 of 2021
Decided On : 13-10-2021
Arbitration - Section 17 - Act,1996 - Summary of Acts and Sections: Section 17, Section 18, Section 19, Section 24 - The court discussed the provisions of Section 17, Section 18, Section 19, and Section 24 of the Arbitration and Conciliation Act, 1996, emphasizing the requirement for parties to be treated with equality and given a full opportunity to present their case. The court highlighted the need for sufficient advance notice of any hearing and the obligation of the tribunal to treat all parties equally. The court also compared the provisions with the UNCITRAL Model Law on International Commercial Arbitration and discussed the controversial nature of ex parte orders under the amended provisions.
Fact of the Case:
The parties were before the arbitral tribunal, and the appellant expected the tribunal to hear the parties before passing any order on a fresh Section 17 application. The respondent filed a second Section 17 application, and the arbitral tribunal passed an ex-parte ad-interim order without hearing the parties.
Finding of the Court:
The court found that the ex-parte ad-interim order passed by the arbitral tribunal was inappropriate and not warranted, considering the nature of the Section 17 application. The court emphasized the need for parties to be treated fairly at all stages of the arbitral proceedings and the requirement for sufficient notice of any hearing to the parties before the tribunal.
Issues: The main issue was whether it was appropriate for the arbitral tribunal to pass an ex-parte ad-interim order on the respondent's Section 17 application without hearing the parties.
Ratio Decidendi: The court held that the provisions of the Arbitration and Conciliation Act, 1996, required parties to be treated with equality and given a full opportunity to present their case. The court also discussed the controversial nature of ex parte orders under the amended provisions of the UNCITRAL Model Law on International Commercial Arbitration.
Final Decision: The impugned order dated 8 October 2021 was set aside, and the respondent was allowed to move the arbitral tribunal on its second Section 17 application with notice to the appellant. The arbitral tribunal was directed to hear the parties on the respondent's second Section 17 application and to pass appropriate ad-interim or interim orders. All contentions of the parties were expressly kept open, and no costs were awarded.
JUDGMENT
G. S. Kulkarni, J. - This is an appeal filed under Section 37 of the Arbitration and Conciliation Act,1996 (for short the Act) assailing an ex-parte order 8 October 2021 passed by the learned Sole Arbitrator on a Section 17 application filed by the respondent. By the impugned order, the learned Sole Arbitrator has granted ex-parte ad-interim reliefs in terms of prayer clauses (a), (b), (c) and (d) of the respondents application, which read thus:
(a) Restrain the Respondent and its agents, servants, employees, directors, officers, representatives and/or any one claiming through or under the Respondent, from dealing with, alienating, encumbering, creating third party rights or selling the unsold flats/inventories of Residential Zone-II in any manner whatsoever, without express/written permission or consensus of the claimant and sharing of the Gross Sales Revenue thereof with the Claimant in accordance with terms agreed upon between the parties, pending adjudication of the present proceeding by the Honble Tribunal;
b) Restrain the Respondent from deducting the alleged pending D. M. Fees towards Facilities Agreement and Villa DMA or any other claim/s from the Gross Sales Revenue of the unsold inventories or any other receivables from Flat purchasers in the Residential Zone-II Project, pending adjudication of its claims by the Honble Tribunal and without express permission to the effect being granted by the Honble Tribunal, in the peculiar facts and circumstances of the present case;
c) Direct the Respondent to disclose all the transactions made by it in respect of all the inventories of Tower F or any other part of the Residential Zone-II, and also to provide copies of all Deeds, Sale Agreements etc. in respect of all such transactions, which are yet not provided by the Respondent to the Claimant;
d) Direct the Respondent to disclose all the actions performed/taken by it in pursuance to the Power of Attorney granted by the Claimant to the Respondent on 05/10/2012 in respect of the Residential Zone-II and not to use the said Power of Attorney for any purpose, whatsoever without express permission of the Claimant, in the facts and circumstances of the present matter, pending adjudication of the present dispute by the Honble Tribunal ;"
2. The relevant facts are :- By an order dated 22 January 2021 passed by this Court in Commercial Arbitration Application (lodg) No.6975 of 2020, by consent of the parties, the learned Sole Arbitrator came to be appointed to adjudicate the disputes between the parties. The learned Sole Arbitrator entered arbitral reference. Applications under Section 17 praying for interim measures were filed by both the parties. On 8 September 2021 and thereafter on 12 September 2021, these Section 17 applications were reserved for orders, which are awaited.
3. It is the appellants case that subsequent to 12 September 2021 there was an exchange of e-mails between the parties in regard to sale of unsold flats in Tower F in Residential Zone II and in regard to the DM Fees, facilities agreement, Villa DMA etc. On this backdrop, on 7 October 2021 at 6 p.m. the appellant received an e-mail, from the Advocates for the respondent, which was a copy of the email addressed by the respondent to the learned Arbitrator, enclosing therewith a second application being filed by the respondent under section 17 of the Act. The respondent recorded in the email that it was compelled to move such application for the reasons as set out in the said application. It was stated that the appellant was trying to arbitrarily sale the balance inventories of Tower F, without sharing the Gross Sales Revenue with the respondents. It was stated that the appellant was high-handedly threatening appropriation of the share of the respondent/claimant, towards the alleged pending D.M.Fees of "Facilities Agreement" and "Villa DMA", although the issue pertaining to the entitlement of the appellant was pending adjudication before the tribunal. By the said e
Shiv Kumar Chadha vs. Municipal Corporation of Delhi & Ors. (1993) 3 SCC 161
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