Important Point – Non – fundamental defects in original petitions will not render those petitions as not having been filed at all.

1. The present order proposes to deal with the preliminary objections raised by the Respondent in these two petitions - OMP (Comm.) Nos. 16 and 17 of 2016 - that being fundamentally defective and time-barred, they ought to be dismissed in limine.

2. These two petitions, under Section 34 of the Arbitration and Conciliation Act 1996 ('Act'), challenge the impugned Award dated 18th July, 2015 passed by the Sole Arbitrator. OMP (Comm.) No. 16/2016 has been filed by Sunair Hotel Ltd. (‘SHL’) whereas OMP (Comm.) No. 17/2016 has been filed by Mr. S.P. Gupta (Petitioner No.1) and his two sons Mr. Kaveen Gupta and Mr. Vipul Gupta (Petitioner Nos. 2 and 3 respectively) (hereafter collectively referred to, where the context requires, as 'Guptas'). The Respondent in both these petitions is VLS Finance Ltd. (‘VLS’).

Background facts

3. The background facts (according to SHL) are that SHL was allotted land by NDMC in 1982 for the construction of a hotel. A supplemental licence deed was executed between SHL and NDMC in 1988. On 10th July 1990 NDMC cancelled the licence. SHL filed a writ petition challenging the cancellation. By an interim order dated 30th March 1992 in the said petition, possession of the land was restored to SHL. Meanwhile in 1993 Aeroflot approached 'SHL' to develop the Hotel, through a joint-venture company and for which a 100% subsidiary company i.e. Sunaero Ltd. (hereafter 'Sunaero') was incorporated. A Memorandum of Understanding (MoU) dated 17th June 1993 was executed by SHL and Aeroflot. As per the said MOU, Aeroflot was to arrange entire finance for the hotel project. The contribution by SHL and its promoters, the Guptas, was the land i.e. equity against land. Equity shared would be in the ratio 51:49.

4. SHL states in August 1993 that it applied to NDMC for transfer of the hotel development rights to Sunaero. Meanwhile in March 1994 Aeroflot withdrew from the project. On 29th August 1994 a new MoU was entered into by Sunaero with a new collaborator ACCOR in terms of which ACCOR agreed to bring the 3 million US dollars (USD) in the equity, besides arranging loan for a sum of 16.58 million USD. On 7th October 1994 the High Court aside NDMC's order cancelling the licence granted to SHL. In November 1994 ACCOR introduced VLS to SHL. Being satisfied with the viability and profitability of the project, VLS approached SHL and advised it and the Guptas to structure the transactions in accordance with their directions as a prelude to taking out a public issue of equity shares.

5. SHL states that since NDMC was neither agreeing to nor refusing the transfer of development rights to Sunaero, SHL decided to take back the said rights for which it agreed to pay Rs. 21 crores to Sunaero. SHL alleges that in the knowledge of the above developments VLS approached the Tourist Finance Corporation of India (‘TFCI’) for grant of a loan for the proposed hotel project.

6. An MoU was entered into by VLS with SHL and the Guptas in terms of which (again according to SHL), VLS undertook to inter alia arrange for the full mobilization of funds to the extent of Rs. 85 crores for the project, ensure that the hotel project should not get delayed due to lack of funds, in case of shortfall or delay to arrange for temporary loans even by providing personal corporate guarantees, make a public offer of Rs. 10 crores of capital at not less than Rs. 100/- per share, provide interest bearing security deposit of Rs. 10 Cr on or before 15th May 1995 and not to sell the shares of SHL allotted to it.

7. At this time the shares of SHL were held by the Guptas. It is stated that M/s Chirag Tanner and Exports Pvt. Ltd., a company owned and controlled by Mr. S.P. Gupta, renounced 70 lakh equity shares of SHL in rights issue in favour of VLS pursuant to the aforementioned MoU. According to SHL, aware of all the above facts, VLS’s promoters brought in Rs.21 c