2023 Supreme(Del) 4225

IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, J.
Vistra Itcl India Limited – Appellant
Versus
Ansal Properties And Infrastructures Limited – Respondent
O.M.P.(I) (COMM.) 136 of 2021, I.A. 4802 of 2022 & ARB.P. 389 of 2022
Decided On : 23-05-2023

A court will refer a dispute to arbitration if there is a valid arbitration agreement between the parties and the disputes arise out of a contractual relationship.

Headnote:

ARBITRATION - APPOINTMENT OF ARBITRATOR - DCG - DSA - DPA - NOVATION - SUPERSESSION - SECTION 7(5) OF THE ACT OF 1996 - SECTION 11 OF THE ACT OF 1996 - SECTION 9 OF THE ACT OF 1996 - ORDER XXXIX OF CPC - SECTION 12 OF THE ACT OF 1996 - SECTION 17 OF THE ACT OF 1996 - SECTION 62 OF THE INDIAN CONTRACT ACT, 1872.

Fact of the Case:

The petitioner, Vistra ITCL (India) Private Limited, formerly known as IL&FS Trust Company Limited, approached the court seeking condonation of 41 days' delay in filing the rejoinder-affidavit. The court condoned the delay and took the rejoinder-affidavit on record. The petitioner also filed two petitions under Sections 9 and 11 of the Arbitration and Conciliation Act, 1996 (`Act of 1996', hereinafter) respectively. The respondent in both petitions was Ansal Properties & Infrastructure Limited (`APIL', for short). The petitions arose from the same factual matrix and were decided together. The petitioner alleged that the respondent had alienated its assets with a view to defeat any decree that may be passed against them. The petitioner sought an order restraining the respondent from dealing with, selling, transferring, disposing off, alienating, encumbering, mortgaging, hypothecating, charging or parting with possession of or inducting anyone else into or creating any right, title, interest or license in favour of any third party in respect of all the movable and immovable assets/investments/properties of the respondent. The petitioner also sought an order directing the respondent to furnish security as may be sufficient to satisfy the decree.

Finding of the Court:

The court held that the petitioner had established a robust prima facie case in its favour and that there was an imminent threat that the respondent would defeat, delay or obstruct the enforcement of any award passed by the court. The court also held that the arbitration agreement between the parties was valid and enforceable and that the disputes between the parties should be referred to arbitration. The court appointed Justice M.R. Shah, a former Judge of the Supreme Court of India, as the Sole Arbitrator for adjudication of disputes between the parties. The court further held that the petition under Section 9 of the Act of 1996 should be treated as an application under Section 17 of the Act for a decision by the learned Arbitrator.

Issues: 1. Whether the petitioner had established a robust prima facie case in its favour? 2. Whether there was an imminent threat that the respondent would defeat, delay or obstruct the enforcement of any award passed by the court? 3. Whether the arbitration agreement between the parties was valid and enforceable? 4. Whether the disputes between the parties should be referred to arbitration?

Ratio Decidendi: 1. The court held that the petitioner had established a robust prima facie case in its favour based on the following factors: (i) the respondent had alienated its assets with a view to defeat any decree that may be passed against them; (ii) the respondent had not contested its liability on the outstanding amount; and (iii) the petitioner had produced cogent material on record to support its claim. 2. The court held that there was an imminent threat that the respondent would defeat, delay or obstruct the enforcement of any award passed by the court based on the following factors: (i) the respondent had repeatedly flouted orders of the court; and (ii) the respondent had made preferential payments to the Dalmia Family Office Trust in violation of a court order. 3. The court held that the arbitration agreement between the parties was valid and enforceable based on the following factors: (i) the arbitration agreement was contained in a written document signed by the parties; (ii) the arbitration agreement was clear and unambiguous; and (iii) the arbitration agreement was not contrary to public policy. 4. The court held that the disputes between the parties should be referred to arbitration based on the following factors: (i) the arbitration agreement between the parties was valid and enforceable; and (ii) the disputes between the parties arose out of a contractual relationship.

Final Decision: The court appointed Justice M.R. Shah, a former Judge of the Supreme Court of India, as the Sole Arbitrator for adjudication of disputes between the parties. The court further held that the petition under Section 9 of the Act of 1996 should be treated as an application under Section 17 of the Act for a decision by the learned Arbitrator.