Delhi High Court - Orders
Nyeq Technologies Private Limited vs Thor Ventures (Opc) Private Limited on 15 February, 2024
Author: Anup Jairam Bhambhani
Bench: Anup Jairam Bhambhani
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB. A. (COMM.) 33/2023 and I.A. 15495/2023
NYEQ TECHNOLOGIES PRIVATE LIMITED ..... Petitioner
Through: Mr. Sahil Sethi, Mr. Kanishk Kumar,
Mr. Samriddh Bindal and Mr.
Priyansh Kohli, Advocates.
versus
THOR VENTURES (OPC) PRIVATE LIMITED ..... Respondent
Through: Mr. Rajiv Bajaj and Mr. Vidur
Marwah, Advocates via video-
conferencing.
CORAM:
HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
ORDER
% 15.02.2024 By way of the present appeal under Section 37 of the Arbitration & Conciliation Act 1996 („A&C Act‟), the appellant impugns order dated 08/18.05.2023 made by the learned Sole Arbitrator on an application under section 17 of the A&C Act, whereby in a claim for specific performance of 02 Agreements to Sell, both dated 04.05.2019 („Agreements‟), the learned Sole Arbitrator has continued an earlier order restraining the appellant from alienating, creating any third-party interests or parting with possession of the two properties that are subject matter of the arbitral proceedings.
This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 1 of 7The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:21
2. Notice on this petition was issued on 18.08.2023; whereupon short reply dated 04.12.2023 has been filed by the respondent. Mr. Sahil Sethi, learned counsel appearing for the appellant submits that they do not wish to file a rejoinder.
3. Briefly, the impugned order has come to be made in the following backdrop :
3.1. Two Agreements to Sell, both dated 04.05.2019, were signed between the parties for 02 different properties bearing Nos. B-
7/4 DLF City, Phase-1, DLF Qutub Enclave, Tehsil & District Gurgaon, Haryana and A-2/1DLF City, Phase-1, DLF Qutub Enclave, Tehsil & District Gurgaon, Haryana („subject properties‟).
3.2. Since disputes arose between the parties, the respondent appointed a Sole Arbitrator in view of the arbitration clause contained in the Agreements. Vide order dated 11.02.2021 the learned Arbitrator so appointed passed an ex-parte interim order restraining the appellant from alienating, creating any third-party interests or parting with possession of the subject properties that were subject matter of the arbitral proceedings. 3.3. In the meantime, the appellant moved a petition bearing O.M.P.(T)(COMM.) No. 1/2023 titled NyeQ Technologies Private Limited vs. Thor Ventures (OPC) Private Limited before this court; whereupon, vide order dated 15.02.2023, a Coordinate Bench of this court set-aside the appointment of the learned Arbitrator, since he had been unilaterally appointed, in view of the law laid down by the Supreme Court inter-alia in This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 2 of 7 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:21 Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd.1; and proceeded to appoint an alternate Sole Arbitrator to adjudicate upon the disputes between the parties. 3.4. Thereafter, the appellant moved an application under section 17 of the A&C Act before the learned Arbitrator so appointed, who has, vide impugned order dated 08/18.05.2023, after a detailed discussion on the contentions raised by both sides, continued interim order dated 11.02.2021 passed by the previous learned Arbitrator, until disposal of the arbitral proceedings.
4. Mr. Sethi argues that the learned Arbitrator ought not to have continued the interim order passed earlier for the following reasons :
4.1. Mr Sethi explains that the learned Arbitrator has, in fact, proceeded on a basis that was never argued before him.
Counsel submits that the respondent had neither expressed nor demonstrated their readiness or willingness to perform their part of the obligation under the Agreements. Counsel argues that the respondent had sought to satisfy the learned Arbitrator as to their readiness and willingness to perform their part of the contract based only on two Loan Sanction Letters both dated 07.07.2019, issued by one M/s. Pooja Finelease Ltd, a Non- Banking Financial Company („NBFC‟) in favour of the respondent/M/s Thor Ventures (OPC) Pvt. Ltd., which is not sufficient to satisfy the requirement of law that requires a party 1 (2020) 20 SCC 760 This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 3 of 7 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:22 seeking specific performance to satisfy the court that they are ready and willing to perform their part of the contract. Counsel has drawn attention of this court to section 16(c) of the Specific Relief Act, 1963 to support that submission.
4.2. Mr. Sethi further argues, that under the Master Directions issued by the Reserve Bank of India relating to Non-Banking Financial Company-Housing Finance Company (Reserve Bank) Directions, 2021, an NBFC is not entitled to extend any loan towards housing finance. Counsel submits that a perusal of Loan Sanction Letters dated 07.07.2019 would show that the loan purportedly sanctioned was in any case "Loan Against Property" which is not the same as a loan towards housing finance. Mr. Sethi has taken the court through the details of the loan sanction letters to parse-out his submission. The details of those letters however show, that the loans had been sanctioned specifically against purchase of the subject properties, also referencing the Agreements based on which the properties were to be purchased from the funds advanced by the NBFC, with all details contained in the loan sanction letters.
4.3. Besides, the question of whether an NBFC is entitled to extend a housing loan or not; and, more importantly, whether the loan sanctioned in favour of the respondent is a „Housing Loan‟ or a „Loan Against Property‟ are not matters that can be dealt with at an interim stage, much less, in the present appeal under section 37 of the A&C Act.
This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 4 of 7The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:22 4.4. The essence of the appellant‟s contention is that even if the Loan Sanction Letters are considered to be genuine and valid, that does not evidence the respondent‟s ability to have the wherewithal to purchase the subject properties; and therefore the mere filing of the loan sanction letters does not meet the requirements of section 16(c) of the Specific Relief Act. 4.5. Furthermore, learned counsel for the appellant argues that the transaction was also vitiated by fraud, inasmuch as the subject properties are purported to have been transacted under the Agreements for a price much lower that their true market value.
5. Be that as it may, a perusal of the impugned order shows that the learned Arbitrator has given clear and cogent reasons for continuing the interim order granted by the previous learned Arbitrator vide order dated 11.02.2021; and that the learned Arbitrator has dealt with all the contentions raised on behalf of the appellant.
6. It is settled law that interference by court under section 37(2)(b) of the A&C Act is warranted only in exceptional circumstances, if the court finds that the use of the discretionary power under section 17 of the A&C Act by the Arbitral Tribunal is palpably arbitrary, capricious, irrational or perverse.2
7. Furthermore, a quick reference to the relevant portion of section 17 of the A&C Act shows that it specifically empowers an Arbitral Tribunal to preserve the subject matter of the dispute, when it reads :
2Indiabulls Housing Finance Ltd. vs. Shipra Estate Ltd., 2023 SCC OnLine Del 1087 at para 29 This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 5 of 7 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:22
17. Interim measures ordered by arbitral tribunal.--(1) A party may, during the arbitral proceedings, apply to the arbitral tribunal--
(i) .........
(ii) for an interim measure of protection in respect of any of the following matters, namely--
*****
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken, or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
***** (emphasis supplied)
8. In a claim for specific performance of an agreement to sell therefore, an order passed by the learned Arbitrator in aid of preserving the subject matter of the proceedings, that is to say an order restraining the appellant from alienating, creating third-party interests or parting with possession of the properties that are subject matter of the arbitral proceedings - so that the subject matter of the disputes is not dissipated or alienated to a third-party during the pendency of the arbitral proceedings - cannot be faulted. If upon conclusion of the arbitral proceedings the learned Arbitrator does come to the conclusion that the claim for specific performance deserves to be allowed, but in the meantime the subject properties have been alienated in favour of a third-party, the entire arbitral proceedings would be rendered infructuous.
This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 6 of 7The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:23
9. In the circumstances, this court is of the view that no ground is made-
out for interference in the impugned order dated 08/18.05.2023.
10. At this stage, learned counsel for the appellant submits that at the very least, the learned Arbitrator ought to have put the respondent to some terms inter-alia by directing the respondent to deposit the sale consideration of the subject properties before proceeding further with the matter, as a condition for grant of the interim restraint against the petitioner. In that regard, the appellant is granted liberty to move an appropriate application before the learned Arbitrator seeking such relief, if so advised, which the learned Arbitrator may decide, in accordance with law. This court has however, not expressed any opinion in that regard.
11. As a sequitur to the above, the appeal stands dismissed.
12. Pending applications, if any, also stand disposed-of.
ANUP JAIRAM BHAMBHANI, J FEBRUARY 15, 2024/MR This is a digitally signed order. ARB. A. (COMM.) 33/2023 Page 7 of 7 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 01/03/2024 at 21:13:23