Calcutta High Court
Larika Resorts Pvt. Ltd vs West Bengal Tourism Development ... on 10 September, 2018
Equivalent citations: AIR 2019 (NOC) 157 (CAL.)
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
IN THE HIGH COURT AT CALCUTTA
ORIGINAL JURISDICTION
ORIGINAL SIDE
G.A. No. 2250 of 2018
with
A.P.O. 233 of 2018
Larika Resorts Pvt. Ltd.
VS.
West Bengal Tourism Development Corporation
And
G.A. No. 2393 of 2018
G.A. No. 2394 of 2018
With
A.P.O. 249 of 2018
West Bengal Tourism Development Corporation
Vs.
Larika Resorts Pvt. Ltd.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the Appellant : Mr. Anirban Ray, Adv.
(APO 233 of 2018) Ms. Reshmi Ghosh, Adv.
Mr. S. Ghose, Adv.
Mr. G. Jajodia, Adv.
For the Respondent : Mr. Debnath Ghosh, Adv.
(APO 233 of 2018) Mr. Avijit Dey, Adv.
For the Appellant : Mr. Debnath Ghosh, Adv.
(APO 249 of 2018) Mr. Avijit Dey, Adv.
For the Respondent : Mr. Anirban Ray, Adv.
(APO 249 of 2018) Ms. Reshmi Ghosh, Adv.
Mr. S. Ghose, Adv.
Mr. G. Jajodia, Adv.
Heard on : 23.08.2018, 27.08.2018
Judgment on : 10.09.2018
Ashis Kumar Chakraborty, J.
These appeals have filed by the claimant as well as the respondent in the arbitration proceeding against the order dated May 15, 2018 passed by the learned sole arbitrator, a former Judge of this Court, in an application filed by the claimant under Section 17 of the Arbitration and Conciliation Act, 1996, as amended by Act 3 of 2016 (in short "the Act of 1996").
The appellant in the first appeal, A.P.O. No. 233 of 2018 is the claimant in the arbitral proceeding while, the appellant in the second appeal, A.P.O. No. 249 of 2018 is the respondent before the learned arbitrator. In its appeal the claimant has also filed an application, G.A. No.2250 of 2018 praying for the relief mentioned hereinafter. The appellant in the second appeal, A.P.O. No. 249 has also filed two applications, G.A. No.2393 of 2018 and G.A. No.2394 of 2018. The application G.A. No.2393 of 2018 is for condonation of delay in preferring it appeal and the relief claimed in the said second application has been mentioned hereinafter.
Considering the statements made in the application, G.A. No.2393 of 2018 the delay in preferring the appeal, A.P.O. No. 249 of 2018 is condoned.
Since both the appeals are directed against the same order passed by the learned arbitrator and involve same set of facts and common question of law, with consent of the parties, the same are taken up for hearing together and disposed of by this common judgment. For the sake of convenience, the parties herein are described hereinafter as per their array in the arbitral proceeding before the learned arbitrator.
The disputes between the parties relate to the Management Contract Agreement dated April 04, 1995 (hereinafter referred to as "the said management contract") by which the respondent granted slicence of New Digha Second Tourist Lodge comprising the five storied building, with rooms, dining hall, toilets, restaurants etc.(hereinafter referred to as "the tourist lodge") to the claimant for a period of 21 years on payment of licence fees. Subsequently, some of the terms of the said management contract were modified by the revised management agreement dated September19, 2005 . According to the claimant, on June 23, 2016 it was wrongfully and illegally dispossessed from the tourist lodge. The respondent on the other hand claims that the claimant had defaulted in discharge of its obligation under the said management contract and, as such, the possession of the tourist lodge was taken over by operation of law under the West Bengal Premises (Tenancy) Regulation Act, 1976. It further claims that the said management contract has already expired by efflux of time and by a letter dated March 31, 2016 the claimant has applied for extension of the said licence in respect of the tourist lodge. Claiming to be wrongfully and illegally dispossessed from the tourist lodge, the claimant filed a writ petition, W.P. No. 11372(W) of 2016, before this High Court, against the respondent praying for, inter alia, a writ of mandamus commanding the respondent to immediately restore possession of the tourist lodge and recall the notice dated June 23, 2016 towards taking over possession of the tourist lodge. In the said writ petition, on June 24, 2016 a learned Single Judge of this Court passed an ex-parte order directing the claimant to deposit Rs. 10 lakh with the respondent, without prejudice to its rights and contentions and immediately upon deposit of the said amount the respondent was directed to hand over peaceful possession of the tourist lodge to the claimant. Subsequently, however, by an order dated July 27, 2017 the said writ petition was dismissed, with liberty granted to the claimant to avail of the remedies in accordance with law before the appropriate forum and the parties were directed to maintain status quo for four weeks from the date of the said order. In view of the fact that the said management contract contained an arbitration clause providing for adjudication of all disputes between the parties through arbitration, the claimant filed an application, A.P. No. 682 of 2017 under Section 9 of the Act of 1996, before this High Court, against the respondent. In the said application, on August 03, 2017 a learned Single Judge of this Court passed an order directing the respondent not to change the status quo by execution of any document. By the said order, a Special Officer was also appointed to visit the tourist lodge, make an inventory of the movable items lying there and file a report before the Court. By order dated September 07, 2017 certain typographical errors appearing in the said order dated August 03, 2017 were corrected. Since the parties could not agree to the appointment of the sole arbitrator to adjudicate the disputes between themselves, the claimant filed an application, A.P. No.988 of 2017, under Section 11(6) of the Act of 1996, for appointment of an arbitrator. By the order dated November 06, 2017 this Court disposed of the said application by appointing the learned arbitrator to adjudicate the disputes between the parties. In the meantime, due to certain defects the claimant had withdrawn the application, A.P. 682 of 2017 with liberty to file a fresh application and all interim orders passed in the said application were vacated. When the claimant filed a fresh application, A.P. No. 968 of 2017 under Section 9 of the Act of 1996, before this Court, seeking further interim relief against the respondent the disputes between the parties had already been referred to arbitration. Accordingly, by order dated December, 2017 this Court disposed of the said application, A.P. No. 968 of 2017 by directing the claimant to file an application under Section 17 of the Act of 1996 before the learned arbitrator. On December 13, 2017 in the first sitting of the arbitral proceeding, the claimant filed an application under Section 17 of the Act of 1996. It appears that in the said application the respondent filed its counter-affidavit and the claimant also filed its rejoinder. The claimant also filed its statement of claim in the arbitral proceeding claiming, inter alia, declarations that the termination and taking possession of the tourist lodge on June 23,2016 by the respondent is illegal and the claimant is entitled to renewal of the said management contract.. The claimant has further claimed money awards against the respondent on account of compensation, loss of profit of business and loss of goodwill and reputation etc. On March 28, 2018 the respondent issued an e-tender notice in for the work of restoration and upgradation of the tourist lodge. Thereafter, the claimant filed a fresh application under Section 17 of the Act of 1996 before the arbitrator praying for an order of injunction restraining the respondent from taking any step with respect to the said notice inviting e- tender dated March 28, 2018. The claimant also prayed for an order of injunction restraining the respondent from dealing with and/or disposing of and/or encumbering and/or creating any third party right or interest or inducting any third party in the tourist lodge or from changing the nature and character of the tourist lodge. The respondent contested the said application before the learned arbitrator. As recorded in the minutes of the arbitral sittings held on May 4, 2018 and May 15, 2018, at the instance of the parties the learned arbitrator appointed a valuer to inspect the tourist lodge in presence of the representatives of both parties and make a valuation of the properties. But, when the said valuer inspected to the tourist lodge none appeared from the claimant's side. The valuer has, however, filed his valuation report before the learned arbitrator. In support of the relief claimed in the said second application it was submitted by the claimant before the learned arbitrator that by issuing the notice inviting tender, the respondent has sought to frustrate its rights in respect of the said tourist lodge as well as the movable and immovable properties thereat. On the other hand, the respondent contended that indisputably the claimant is not in possession of the tourist lodge and in any event, in the statement of claim the claimant has quantified its claim for damages against the respondent. Thus, no case has been made out to hold that the claimant would suffer any 'irreparable injury' in case of refusal of its prayer for injunction. It was further submitted by the respondent before the learned arbitrator that it has no intention to create any third party interest in respect of the said tourist lodge and it is seeking to run the tourist lodge on its own.
By an order dated May 15, 2018 the learned arbitrator disposed of the second application filed by the claimant under Section 17 of the Act of 1996. By the said order the learned arbitrator held that indisputably the claimant is not in possession of the said tourist lodge, but the claimant's claim in respect of the properties cannot also be said to be without any basis. According to the learned arbitrator, in order to avoid creation of third party interest and multiplicity of proceeding, as well as for the sake of convenience the parties should be directed to maintain status quo for a period of six months from the date of the said order. It has also been held that it cannot be disputed that the claimant has prima facie claim in respect of the properties described in its application, 'money' is an adequate compensation to ascertain the amount, but there is need for preservation of the concerned properties and in the facts of the present case, it cannot be said that the balance of convenience and inconvenience is not in favour of the petitioner. With these findings, the learned arbitrator disposed of the claimant's second application under Section 17 of the Act of 1996 by directing that the respondent may very well proceed with the tender but nothing should be done so as to disturb the status quo in respect of the properties under reference. The said direction was passed on the assumption that the arbitration proceeding with the co-operation of the learned counsel for both parties will certainly be adjudicated by the said time. It is the said order dated May 15, 2018 which has been challenged in the first appeal by the claimant, in so far as the same allowed the respondent to proceed with the notice inviting tender dated March 28, 2018. In the appeal the claimant has also filed an application, G.A. No.2250 of 2018 praying for an order of injunction restraining the respondent from giving any effect to or taking any step in terms of the sad e-tender notice date March 28, 2018. However, the appeal filed by the respondent is directed against the said order passed by the learned arbitrator, in so far as the same directed that nothing should be done so as to disturb the status quo in respect of the properties under reference. In its application, G.A. No.2394 0f 2018 filed in A.P.O. No.249 of 2018 the respondent has prayed for stay of operation of the order challenged by it before this Court.
Mr. Anirban Roy, learned advocate appearing in support of the first appeal filed by the claimant contended that in the instant case the respondent has wrongfully and illegally dispossessed the claimant from the said tourist lodge and in the arbitral proceeding the claimant has claimed an award for extension of the said management contract in respect of the tourist lodge. Therefore, during the pendency of the arbitral proceeding the learned arbitrator fell into an error of law in allowing the respondent to proceed with the said notice inviting tender dated March 28, 2018. It was further contended that the respondent had issued the said e- tender notice , inviting offers for the work of restoration and upgradation of the tourist lodge with the sole intention to frustrate/defeat the claim of the claimant in the arbitration proceeding. Therefore, according to Mr. Roy, the learned arbitrator failed to exercise judicial discretion vested in him in passing the impugned order allowing the respondent to procced with the said notice inviting tender. It was further argued for the claimant that as per clause 19 of the said revised management contract dated September 19, 2005 after the expiry of the contract period/termination of the said agreement the respondent, if it so desires, can take over any or all furniture, fixtures and other movable assets financed by the claimant at the original cost price, less depreciation or the realisable value, whichever is higher. Otherwise, the claimant is entitled to remove all movable assets and properties it has brought in at its cost for functioning of the tourist lodge. It was, therefore, submitted that without taking any decision with regard to the furniture, fixture and other movable assets brought in by the claimant at the tourist lodge the respondent has no right to issue the said notice inviting tender dated March 28, 2018. Therefore, according to Mr. Roy, the learned arbitrator committed a patent illegality in passing the impugned order allowing the respondent to proceed with the said notice inviting tender. Urging all these grounds, learned counsel appearing for the claimant, pressed for setting aside of the order dated May 15, 2018 passed by the learned arbitrator in so far as the same allowed the respondent to proceed with the notice inviting tender dated March 28, 2018. Mr. Roy further submitted that when the learned arbitrator has held that the claimant has a prima facie claim in respect of the tourist lodge, there is no merit in the appeal filed by the respondent against the decision of the learned arbitrator directing that nothing should be done so as to disturb the status quo in respect of the said tourist lodge. Learned counsel for the claimant pressed for summary dismissal of the appeal filed by the respondent.
On the other hand, Mr. Debnath Ghosh, learned advocate appearing for the respondent and opposing the appeal filed by the claimant submitted that the impugned order passed by the learned arbitrator in so far as the same rejected the prayer of the claimant for injunction restraining the respondent from giving any effect to the said notice inviting tender dated March 28, 2018 suffers from no infirmity calling for any interference by this Court. He emphatically submitted that the respondent is not going to create any third party interest in respect of the tourist lodge and the respondent issued the e-tender notice dated March 28, 2018 inviting offers for restoration and upgradation of the tourist lodge to be run by it. Learned counsel for the respondent argued that even a bare reading of the said notice inviting tender shows that the same has been issued only for the purpose of restoration and upgradation of the said tourist lodge and not to create any third party interest in the said property. According to the respondent, it is a fact that under clause 19 of the said revised agreement for management contract dated September 19, 2005, after the expiry of the contract or the termination thereof the respondent has an option to retain any or all furniture, fixtures and other movable assets brought in by the claimant at the said tourist lodge and if the respondent does not exercise such option, the claimant would be entitled to remove all such movable assets from the said tourist lodge. However, under clause 20 of the said revised agreement the fixed immovable assets which have been developed by the claimant during the course of the contract shall be left behind with the respondent against such compensation as shall be determined on the basis of a valuation to be done by an approved valuer. He further submitted that at the instance of the claimant, the learned arbitrator appointed the valuer, but when the latter visited the tourist lodge upon notice to the parties the claimant intentionally did not send any representative to attend the inspection and valuation of the properties. It was strenuously contended by the respondent that in any event, by the letter dated March 31, 2016 the claimant acknowledged the expiry of the said management contract by efflux of time and requested for renewals of the said licence. The claimant has, however, suppressed the said letter dated March 31, 2016 in the arbitration proceeding before the learned arbitrator, as well as in its appeal filed before this Court against the impugned order passed by the learned arbitrator. Mr. Ghosh emphasised that from the conduct of the claimant it is evident that although it has admitted the expiry of its licence, but it is trying to mala fide avoid the process of valuation of the movable and immovable assets under clauses 19 and 20 of the said revised agreement. It was further argued that indisputably the respondent is in possession of the said tourist lodge and inasmuch as, the respondent wants to run the tourist lodge by itself, the notice inviting tender dated March 28, 2018 been issued for restoration and upgradation of the tourist lodge and there is no question of the respondent creating any third party interest in respect of the tourist lodge. Further, in the statement of claim the claimant has not claimed any relief for recovery of possession of the tourist lodge. Therefore, according to Mr. Ghosh, even if the claimant succeeds in obtaining the relief claimed in the arbitral proceeding for declarations and money claims, there is no possibility of the arbitral award being rendered infructuous by virtue of the restoration and upgradation of the tourist lodge being undertaken by the respondent. Urging all these grounds, it was strongly contended by the learned counsel for the respondent that the learned arbitrator committed a patent illegality to hold that the claimant's claim in respect of the properties cannot be said to be without any basis and that the claimant has a prima facie claim in respect of the properties, as described in its application. The respondent vehemently contended that in the facts of the present case, the learned arbitrator failed to exercise judicial discretion to pass the impugned order, in so far as the same directed that nothing should be done to disturb the status quo in respect of the tourist lodge. It was also submitted by the respondent that if the claimant wants, it can remove all furniture, fixtures and other movable assets financed by it and lying at the tourist lodge. According to Mr. Ghosh, in view of the grounds urged by the respondent the impugned order passed by the learned arbitrator in so far as the same directed that nothing should be done so as to disturb the status quo in respect of the tourist lodge cannot be sustained and pressed for setting aside of the same.
I have considered the materials on record and the submissions made by the learned advocates of the respective parties. In the present case, the claimant in the arbitral proceeding is not in possession of the tourist lodge and it is the respondent in the arbitral proceeding, who is in possession of the tourist lodge. In the arbitral proceeding, the claimant has claimed the relief, inter alia, a declaration that termination and taking possession of the tourist lodge on June 23, 2016 by the respondent is illegal and that it is entitled to renewal of the said management contract. The claimant has also claimed awards for Rs. 10,24,72,860/- and Rs. 8,91,23,434/- on account of compensation and loss of profit of business, respectively. It has further claimed an award for Rs. 5,19,986/- against the respondent on account of the refund of excess MAGR and interest paid to the respondent. However, the claimant has not claimed any award for recovery of possession of the tourist lodge. Therefore, in the absence of any relief for recovery of possession of the tourist lodge in the arbitral proceeding, I find that the learned counsel for the respondent is justified in his contention that in the present case the respondent is entitled to run the tourist lodge by itself. Even if the claimant succeeds in obtaining awards in the arbitral proceeding the renovation and upgradation of the tourist lodge and operation of the same by the respondent will not affect the claimant. In order to oppose the steps taken by the respondent for renovation and upgradation of the tourist lodge the claimant has relied upon clause 19 of the said revised management contract dated September 19, 2005. However, from the conduct of the claimant in not participating in the inspection carried on by the valuer appointed by the learned arbitrator for valuation of movable and immovable assets of the tourist lodge demonstrates the intention of the claimant to avoid valuation of the properties of the tourist lodge under clauses 19 and 20 of the said revised management contract dated September 19, 2005. In any event, the valuer has performed his duty in terms of the direction passed by the learned arbitrator and has also filed his report before the learned arbitrator. The valuation report by the said valuer has been disclosed, before this Court, by the respondent in the arbitral proceeding. No submission was made by the claimant to point out any defect in the report of the valuer. For all these reasons, I find no merit in the appeal filed by the claimant and the same stands rejected.
In the facts of the present case as discussed above, I find that the order dated May 15, 2018 passed by the learned arbitrator, in so far as the same directed that nothing should be done so as to disturb the status quo in respect of the tourist lodge is patently erroneous and vitiated by failure of exercise of judicial discretion. Accordingly, the appeal filed at the instance of the respondent in the arbitral proceeding, being A.P.O. 249 of 2018 is allowed. The order dated May 15, 2018 passed by the learned arbitrator, in the arbitration proceeding between the parties herein, in so far as the same directed that nothing should be done so as to disturb the status quo in respect of the tourist lodge is set aside. The respondent in the arbitral proceeding is allowed to proceed with the e-tender notice dated March 28, 2018. In the event the respondent in the arbitral proceeding is not interested to retain the furniture, fixtures and other movable assets financed by the claimant lying at the tourist lodge in terms of clause 19 of the said revised management contract dated September 19, 2005 it shall forthwith communicate such decision to the claimant. Thereafter, the Advocates - on-Record of the respective parties in these appeals, who are appointed as the Special Officers without remuneration, shall make an inventory of the said furniture, fixtures and other movable assets and make over the same to the claimant within six weeks from date. The entire exercise shall be without prejudice to the rights and contentions of the respective parties in the arbitral proceeding.
In view of the disposal of the both the appeals as directed above, the applications filed by the respective parties, being G.A. No. 2250 of 2018 and G.A. No. 2394 of 2018 stand disposed of without any order.
There shall, however, be no order as to costs.
Urgent certified copies of this judgement, if applied for, be made available to the pasrties subject to compliance with all requisite formalities.
(ASHIS KUMAR CHAKRABORTY, J.)