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IN THE HIGH COURT OF CALCUTTA
Indira Banerjee and Sahidullah Munshi, JJ.
Star Track Agency Pvt. Ltd. - Appellant
Versus
Efcalon Tie Up Pvt. Ltd. - Respondent
F.M.A.T. No. 744 of 2015 With C.A.N. 11551 of 2015 with C.A.N. No. 6919 of 2015 with C.A.N. No. 7982 of 2015 with F.M.A.T. No. 650 of 2015 with C.A.N. No. 6114 of 2015
Decided On : 20-05-2016
ARBITRATION - Interim relief - Application under Section 9 of the Arbitration and Conciliation Act, 1996 - Appointment of Special Officer/Receiver to make an inventory of occupants and to keep accounts of occupation charges collected by respondent - Whether justified - Held, yes.
Fact of the Case:
Appellant, Efcalon Tie Up Pvt. Ltd. (Efcalon), filed an application for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, in a suit against respondent, Star Track Agency Pvt. Ltd. (Star Track), for cancellation of a license agreement and refund of license fees. The license agreement was induced by misrepresentation of Efcalon that arrears of rent had been paid to Kolkata Port Trust. The learned arbitrator passed an award in favor of Star Track for refund of license fees with interest. Efcalon filed an application under Section 34 of the Act to set aside the award, which was allowed by the learned 10th Additional District Judge. Star Track filed an appeal against the said judgment and order, which was dismissed by a judgment and order passed by the High Court earlier today. In the meanwhile, Efcalon filed an application under Section 9 of the Act for appointment of a Special Officer with a direction to prepare an inventory of all persons occupying the said premises, the agreements on the basis whereof they have been allowed to occupy and possess their respective portions of the same, the rent payable by them under such agreements, the mode of payment of such rent and since then they have made payment of the same to the respondent and outstanding rent, if any, due by them under such agreements as on the date of such inventory and also be further directed to take possession of the said premises to collect all rents payable by the occupants of the same and to ensure that no new occupant is inducted by the respondent into the same. The learned Court below allowed the application in part and appointed Mr. Pratik Gorai, Advocate as Special Officer, Receiver, to carry out an inventory of the occupants at the said premises, and to maintain accounts of occupational charges paid by the occupants of the said premises to Star Track.
Finding of the Court:
The High Court held that the learned Court below rightly appointed a Special Officer/Receiver to make an inventory of the occupants and to keep accounts of occupation charges collected by Star Track from the occupants inducted by Star Track. The High Court further held that the Special Officer/Receiver should also realize the occupation charges and hold the same until the disposal of the arbitration proceedings or further orders in arbitration whichever is earlier. The occupation charges realized by the Receiver may be kept in deposit in short-term automatically renewable interest bearing Fixed Deposits in a nationalised bank.
Issues: Whether the learned Court below was justified in appointing a Special Officer/Receiver to make an inventory of occupants and to keep accounts of occupation charges collected by respondent?
Ratio Decidendi: The High Court held that the learned Court below was justified in appointing a Special Officer/Receiver to make an inventory of occupants and to keep accounts of occupation charges collected by respondent. The High Court reasoned that Star Track had no right whatsoever to the said premises and was obliged to pay license fee/occupation charges/mesne profits. No prejudice could be suffered by Star Track by appointment of Special Officer/Receiver to make a list of the occupants in the said premises and keep accounts of the occupation charges paid by said occupants. It was just and proper that the Special Officer/Receiver should also realise the occupation charges and hold the same until the disposal of the arbitration proceedings or further orders in arbitration whichever is earlier.
Final Decision: The appeals were disposed of. The High Court refused the prayer for stay of operation of the judgment.
Indira Banerjee, J.
Both these appeals under Section 37(1) of the Arbitration and Conciliation Act, 1996, hereinafter referred to as the 1996 Act, are against an order dated 8th June, 2015, passed by the 6th Additional District Judge, Alipore, District - South 24-Parganas, in an application for interim relief under Section 9 of the 1996 Act being Title Suit No. 3 of 2015 filed by Efcalon Tie Up Pvt. Ltd., the appellant in the appeal being FMAT 744 of 2015, and hereinafter referred to as Efcalon. The respondent impleaded in the said application, Star Track Agency Pvt. Ltd., hereinafter referred to as ‘Star Track’ has also filed an appeal being FMAT No. 650 of 2015 against the said order.
2. Kolkata Port Trust is the owner of the said premises. By an indenture of lease executed by and between Kolkata Port Trust and one Das Reprographics Limited, a company within the meaning of the Companies Act, 1956, which has since been wound up, Kolkata Port Trust had leased out the said premises to the said company for a period of 29 years, 1 month and 25 days with effect from December, 1963.
3. The said indenture of lease provided option of renewal of the lease for a further term of 30 years, subject to the conditions as contained in the said indenture of lease. It appears that the company had applied for renewal of the lease some time in August, 1991 about five months before the date of its expiry. The lease was not renewed, but the company continued in possession of the said premises, without interference.
4. By an order dated 21st December, 1994, of this Court in Company Petition No.151 of 1996, the company was directed to be wound up and the Official Liquidator was directed to take possession of the assets of the company in liquidation.
5. Pursuant to an order dated 27th August, 1997, passed in the winding up proceedings, advertisements were issued for sale of the assets of the company in liquidation.
6. By an order dated 16th January, 1998, this Court accepted the offer of Efcalon, of Rs.50 lakhs for purchase of the assets of the company in liquidation, having regard to an agreement made by Efcalon with the workmen of the company in liquidation, to re employ the workmen.
7. United Bank of India filed an appeal against the said Order dated 16th January, 1998, contending that the sale of the assets had been conducted with undue haste, without trying to ensure the best price for the assets of the company in liquidation.
8. By a judgment and order dated 9th April, 2003, a Division Bench of this Court, comprising Their Lordships, the Hon’ble Justice Altamas Kabir and Hon’ble Justice Aloke Kumar Basu (as Their Lordships then were) confirmed the sale of the assets in favour of Efcalon.
9. On consideration of the fact that Efcalon was going to run the factory and re-employ its workers, the Division Bench observed that it was desirable that Kolkata Port Trust, should grant a fresh lease of the said premises in favour of Efcalon, since the earlier lease had expired in the meanwhile.
10. Efcalon filed an application for modification of the order dated 9th April, 2003, and sought a direction on Kolkata Port Trust to renew the lease in favour of Efcalon or its nominee, on the same terms.
11. By an order dated 1st December, 2004, the Court modified its earlier order dated 9th April, 2003, observing that even though the initial lease had expired on 22nd January, 1992, the lease contained a clause giving the parties option of renewal.
12. Some of the relevant parts of the order dated 1st December, 2004 are extracted herein below:
"....While considering the matter we cannot lose sight of the fact that the applicant herein purchased the assets of the company (in liquidation) with the intention of running the company as a going concern as to provide employment to the workmen of the said company. It is with such objective in mind that we had requested the Kolkata Port Trust to grant a fresh lease on mutually agreed terms of the applicant despite the fact tha
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