2021 (5) TMI 1086 - HC - Indian Laws

Seeking directions to the Respondents to deposit the outstanding amount due and payable - order of restraint from selling, transferring, alienating, relinquishing or creating any third party interest in respect of the assets/properties etc. - HELD THAT - There is a consensus between the parties regarding the existence of the Arbitration Agreement and disputes having arisen between the parties and that the same have to be adjudicated in terms of the dispute resolution mechanism agreed upon. Since the Arbitrator has been appointed, the learned counsel for the parties jointly pray that the present petition be directed to be considered by the learned Arbitrator as an application under Section 17 of the Act. The said request is accepted and accordingly, the present petition is disposed of, with a direction that same shall be treated as an application under Section 17 of the Act, which shall be considered and decided by the learned Arbitrator in accordance with law. Till such time, the statement made by Mr. Sikri, as recorded in the order dated 20th November, 2020, with the clarification as observed today, shall continue to bind the Respondents. The parties are directed to appear before the learned Sole Arbitrator as and when notified. This is subject to the Arbitrator making the necessary disclosure under Section 12(1) of the Act and not being ineligible under Section 12(5) of the Act. Petition disposed off.

Issues Involved:
1. Exemption from filing attested affidavits.
2. Relief under Section 9 of the Arbitration and Conciliation Act, 1996.
3. Permission to sell mortgaged property.
4. Appointment of an Arbitrator.
5. Disclosure of assets by Respondents.

Detailed Analysis:

1. Exemption from Filing Attested Affidavits:
The petitioner sought exemption from filing attested affidavits due to lockdown restrictions. The court allowed the application, granting the petitioner two weeks to file the required documents once restrictions are lifted and attestation facilities resume.

2. Relief under Section 9 of the Arbitration and Conciliation Act, 1996:
The petitioner filed a petition under Section 9 seeking directions for the respondents to deposit outstanding amounts, disclose assets, and restrain from transferring any assets. The petitioner had sanctioned a term loan to SPDPL, which defaulted, leading to the invocation of personal guarantees by the respondents. The court noted that SPDPL is under corporate insolvency resolution, and the respondents might clandestinely dispose of assets to defeat the petitioner's claims. The court recorded the respondents' undertaking not to create third-party interests in their assets, which continues to be in effect.

3. Permission to Sell Mortgaged Property:
Respondent No. 1 sought permission to sell a mortgaged property to satisfy dues to Union Bank of India (UBI) under the SARFAESI Act. The petitioner opposed, citing clauses in the Deed prohibiting the sale or encumbrance of assets without their consent. The court held that the relief sought by Respondent No. 1 could not be granted as the property is mortgaged with UBI. The court clarified that UBI could enforce its rights under the SARFAESI notices, and the petitioner's injunction request is only against the respondents, not UBI.

4. Appointment of an Arbitrator:
Both parties agreed on the existence of an arbitration agreement and the need for arbitration to resolve disputes. The court appointed Hon'ble Mr. Justice D.K. Jain (Retd.) as the Sole Arbitrator to adjudicate the disputes arising from the personal guarantee deeds. The petition was directed to be considered as an application under Section 17 of the Act by the Arbitrator.

5. Disclosure of Assets by Respondents:
The court directed the respondents to disclose their assets by filing an affidavit, in line with the decision in Bhandari Engineers & Builders Pvt. Ltd. v. Maharia Raj Joint Ventures & Ors. This disclosure is to be made before the Arbitrator within four weeks.

Conclusion:
The court disposed of the petition, directing that the Arbitrator will consider the application under Section 17 and decide in accordance with the law. The respondents are bound by their undertaking not to alienate assets, and UBI's rights to enforce the mortgage are not impeded. All rights and contentions of the parties remain open for adjudication by the Arbitrator. The parties are to appear before the Arbitrator as notified, subject to disclosure and eligibility under the Act.

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