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TMI Blog2020 (6) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and not disburse any part thereof to the Respondent No. 1; b. Alternatively, direct the Respondent No. 2 not to release the amounts lying with it into the account of the Respondent No. 1 or otherwise, without the prior permission of this Hon'ble Court;" 2. Respondent No. 1 is a Public Listed Company in hotel business and previously owned the Park Hyatt Hotel in Goa. The case of the Petitioner is that Respondent No. 1 had participated in a bidding process and secured the right from Delhi International Airport Limited (hereinafter referred to as 'DIAL') to develop a commercial space at Asset Area No. 3 measuring 5.3 acres at Aerocity, New Delhi International Airport (hereinafter referred to as 'Aerocity Project'). 3. A Special Purpose Vehicle (hereinafter referred to as 'SPV') was floated by Respondent No. 1, namely, Silver Resort Hotel India Private Limited (hereinafter referred to as 'Silver Resorts') to develop the Aerocity Project. A Development Agreement dated 26.02.2010 and an Infrastructure Development and Service Agreement dated 26.02.2010 were executed between DIAL and Silver Resorts. 4. Contemporaneously Silver Resorts and the Petitioner entered into a Joint Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er referred to as 'PACL') and Respondent No.1, to subscribe 12% of 10,000 Secured Redeemable, Non-convertible Debentures (hereinafter referred to as 'NCD'), aggregating to Rs. 100 crores with a premium of 8% p.a. on redemption. The said NCDs were secured by way of a second charge on the Goa property and SBI Markets Limited was appointed as the Debenture Trustee. 9. It is stated that Respondent No. 1 defaulted in its obligations under the CLA and the DSSA and accordingly Loan recall notices were issued by Respondent No. 2 and PACL and proceedings were initiated by Respondent No.2 under Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARFAESI Act'). Pursuant to the SARFAESI Proceedings, Respondent No. 2 auctioned the Goa property and sold it to the ITC Group on 23.02.2015 for an amount of Rs. 515.44 crores. Out of the sale proceeds, Respondent No. 2, being the first charge holder appropriated Rs. 3,11,71,85,424/- towards its loan and equity in Respondent No. 1 and Silver Resorts, respectively. 10. It is averred that on 10.01.2015, 88 unit holders of commercial spaces in the Aerocity Project, filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the Petitioner had been authorized by Silver Resorts under the JDA to collect monies from the investors for allotment of commercial spaces in the Aerocity Project. Respondent No. 1 had issued a Letter of Comfort on 15.03.2010 clearly undertaking that monies collected by the Petitioner would be put to the specified purpose of developing the Aerocity Project and in case Silver Resorts was unable to deliver the units to the unit holders, within the stipulated time, Respondent No. 1 will suitably compensate the Petitioner and indemnify for any loss/damage, limited to refund of monies arranged by the Petitioner. As an original allottee of the plot at the site and owners of Silver Resorts, Respondent No. 1 undertook to abide by all the terms and conditions of the JDA. 15. Learned Senior Counsel next contends that another Letter of Comfort was issued by Respondent No. 1 on 28.03.2018, undertaking to the Petitioner that as soon as any money is remitted by Respondent No. 2, out of the said Rs. 85 crores, including interest thereon, the same shall be passed on to the Petitioner for liquidation of the claims of the investors. Respondent No. 2 vide its letter dated 06.02.2019 informed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 2, at the outset submits that the present petition is not maintainable against Respondent No. 2, as the dispute which is the subject matter of the present petition is primarily between the Petitioner, Respondent No. 1, SEBI and the investors who are Plaintiffs in the Representative Suit being CS (OS) No.176/2015, pending in this Court. There is no privity of contract between the Petitioner and Respondent No. 2 and in fact Respondent No. 1 also does not have any contract with the Petitioner. The present petition has been filed on the strength of an Arbitration Clause 17.8 which is incorporated in the JDA, entered into between the Petitioner and Silver Resorts. Since, Respondent No. 2 is neither a party nor a signatory to the Arbitration Agreement, the present petition needs to be dismissed qua Respondent No. 2 being a third party. 18. Learned counsel further contends that the issues raised before this Court are sub-judice before the Bombay High Court at Goa in W.P. (C) 924/2018 filed by Respondent No. 1 and an application has been filed by Respondent No. 1 therein seeking the relief of restraining Respondent No. 2 herein from disbursing the balance sale consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst a third party who is not a party to an Arbitration Agreement, if he were to be a person claiming under the party to an Arbitration Agreement and likely to be affected by the interim measures, which is not the case here. 22. Mr. Sethi, arguing in rejoinder reiterates that Respondent No. 1 has undertaken to pay to the Petitioner its dues as soon as the monies are remitted to it by Respondent No. 2. Learned Senior Counsel further argues that it is an admitted case of Respondent No. 2 that it is not entitled to the sum of Rs. 85 crores, as it has already appropriated what was due to it from the sale proceeds of the auction. Mr. Sethi further argues that the Bombay High Court has granted no stay in favour of Respondent No. 1 against disbursal of the money lying with Respondent No. 2 and even in the Suit pending in this Court, there is no order which restrains Respondent No. 2 from releasing any money in favour of Respondent No. 1. Mr. Sethi argues that there is no dispute that Respondent No. 1 owes money to the Petitioner and by various Letters of Comfort has undertaken to do so in the event of the SPV unable to perform its obligations. The factum of Respondent No. 1 having appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 9 can be invoked only by a party to the Arbitration Agreement. Section 9, however, does not limit the jurisdiction of the Court to pass order of interim measures only against party to an Arbitration Agreement or Arbitration Proceedings; whereas the Court is free to exercise same power for making appropriate order against the party to the Petition under Section 9 of the Act as any proceedings before it. The fact that the order would affect the person who is not party to the Arbitration Agreement or Arbitration Proceedings does not affect the jurisdiction of the Court under Section 9 of the Act which is intended to pass interim measures of protection or preservation of the subject matter of the Arbitration Agreement." 26. In Gatx India Pvt. Ltd v. Arshiya Rail Infrastructure Limited, 2015 VAD (Delhi) 190, this Court again examined the legal position regarding the power of a Court under Section 9 of the Act to issue interim orders against third parties to the Arbitration. The Court clearly drew a distinction between Section 9 of the Act and Section 17 of the Act and the powers of the Court and an Arbitral Tribunal thereunder respectively. It was held that unlike Section 17 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any goods, securing the amount in dispute, an order affecting a third party can be made or not. 14.In my view, if as a general rule it is laid down that in exercise of power under Section 9, no direction can be issued to parties not parties to agreement containing an arbitration clause or not parties to arbitration proceedings, the same will hamper the efficacy of the said provision. Under Clause (i) thereof, the guardian to be appointed may not be such a party; similarly the goods under Clause (ii) (a) may be or may be required to be in custody of or delivered to or sold to such third parties - further orders against such third parties may also be required in connection with such sale; under Clause (ii)(b) the amount to be secured may be in the form of money payable or property in hands of such third party - the scope cannot / ought not to be restricted to securing possible with orders against parties to arbitration only. Similar examples can be given with respect to other clauses also." 71. Undoubtedly, section 9 provides that the court shall have the same powers for making interim orders under section 9 as a civil court has for the purpose of, and in relation to, any pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entally affects the third party. Pertinently, it is expressly provided in the C.P.C. that attachment before judgment shall not affect the prior existing rights of third parties in the property of the defendant sought to be attached. Injunction against a third party bank from honouring a bank guarantee is consequential to interim relief of restraining a party from encashing the same against the petitioner. To sum up, the court may issue interim orders against the third parties to arbitration only in exceptional circumstances which are such that denial thereof might frustrate the petitioner's rights in arbitration; defeat the very object of arbitration between the parties thereto; render the arbitration proceedings infructuous; lead to gross injustice; and/or, leave the petitioner remediless, depending on facts of each case." 27. Reading of Section 9 of the Act as well as the judgments in Value Advisory (supra) and Gatx India (supra) makes it clear that the scope of power of a Court under Section 9 of the Act is not limited to parties to an Arbitration Agreement and the Court can issue interim directions even against a third party. The distinction between the powers under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it into the account of Respondent No. 1, without the permission of this Court. 32. Respondent No. 2 has categorically admitted that the amount of Rs. 85 crores is lying with it along with interest accrued thereon in the fixed deposits in the Banks. Respondent No. 2 has also candidly admitted that this money does not belong to Respondent No. 2, as it has already appropriated what was due to it against the loan that it had advanced to Respondent No. 1. Admittedly, one of the second charge holder, Bank of Mysore has also been paid its dues. The charge of PACL/SEBI is what remains to be satisfied. It is also undisputed that Respondent No. 1 has filed a writ petition in the Bombay High Court for redemption of the property in Goa sold by Respondent No. 2, in auction under the SARFAESI Act. 33. It is undisputed that the Representative Suit in this Court and the writ petition in Bombay High Court are still pending and the rights of the parties therein are yet to be adjudicated. The suit as noticed above was filed by the investors and on 31.07.2015, the Court had passed the following order: "I.A. No.5001/2015 (bv the plaintiffs u/S 151 CPC) 1. The present application has been filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any, shall be filed within three weeks thereafter. 8. List for arguments on 30.10.2015." 34. Subsequently, SEBI filed an application for recall of the order to enable IFCI, who was a party therein, to release the sum of Rs. 85 crores in favour of SEBI. Vide order dated 27.08.2018, Court vacated and recalled the order dated 31.07.2015 so that the said sum could be released in favour of SEBI. However, parties were given time to take recourse to their other legal remedies and thus the order was put in abeyance for 6 weeks and IFCI was directed not to disburse the amount to SEBI for a period of 6 weeks. It is pertinent that Petitioner herein is a party to the suit and was represented when this order was passed. It is not the Petitioner's case that the order was challenged and has been set aside. Under the said order at present SEBI has acquired a right to claim this sum of Rs. 85 Crores. Thus, any direction by this Court in the present petition to encumber the said amount by directing deposit in this Court and/or imposing a condition on IFCI/SEBI to withdraw with the said amount with leave of this Court, would be in direct conflict with the said order and will amount to negatin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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