Bombay High Court
Saifee Developers Private Limited vs Shanklesha Constructions And 5 Ors on 31 January, 2020
Author: G. S. Patel
Bench: G.S. Patel
914-914.1-CARBP1060-19+.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION NO. 1060 OF 2019
Saifee Developers Pvt Ltd ...Petitioner
Versus
Shanklesha Constructions & Ors ...Respondents
WITH
COMM ARBITRATION APPLICATION (L) NO. 2 OF 2020
Mr Karl Tamboly, with Mr ZA Jariwala and Ms Nishi Abuwala, i/b
Dua Associates, for the Petitioner.
Mr Mayur Khandeparkar, with Mr Anosh Sequeiria and Mr Ativ
Patel, i/b AVP Partners, for Respondents Nos. 1, 2 & 4 to 6.
Khevana D, i/b AM Saraogi, for Respondent No.3.
CORAM: G.S. PATEL, J.
DATED: 31st January 2020 PC:-
1. There is an Arbitration Petition under Section 9 and Arbitration Application under Section 11 of the Arbitration and Conciliation Act 1996. So far as the Arbitration Application is concerned, there is an Afdavit in Reply. Mr Tamboly for the Applicant states that a Rejoinder is necessary. That Afdavit in Page 1 of 5 31st January 2020 ::: Uploaded on - 03/02/2020 ::: Downloaded on - 12/06/2020 13:36:14 ::: 914-914.1-CARBP1060-19+.DOC Rejoinder is to be fled and served on or before 7th February 2020. No further Afdavits without leave of the Court.
2. List the Arbitration Application on 11th February 2020.
3. I note, however, that there are serious objections in the Section 11 Application. Not only is there a question of insufciency of stamp duty but also a question of whether the physical document that has been relied on by the Applicant (and on which some stamp has been paid) is in fact the actual physical agreement signed by the parties. The reason for this contention is that while the 1st Respondent frm and four of its fve partners do not dispute having signed the agreement in question, they say that the signed agreement did not have on its last page a tabulation or chart showing 44 fats. It is the document with that chart on which stamp has been paid by the Applicant.
4. Another objection taken is that one of the fve partners, the present 4th Respondent, did not sign the Agreement at all. This objection is sought to be placed within the frame of Section 19(2) of the Indian Partnership Act 1932.
5. I have only noted these submissions so that there is no ambiguity about the questions that will have to be addressed when that Arbitration Application is taken up.
6. In the Arbitration Petition under Section 9, there are three important orders. The frst is the order of GS Kulkarni J of 15th July Page 2 of 5 31st January 2020 ::: Uploaded on - 03/02/2020 ::: Downloaded on - 12/06/2020 13:36:14 ::: 914-914.1-CARBP1060-19+.DOC 2019. At that time, an objection was taken even on the Section 9 Petition in regard to sufciency of stamping. GS Kulkarni J made an order saying that the question would not arise in the Section 9 Petition. That matter was carried in appeal. The appeal was disposed of on 13th August 2019. The Appeal Court only suspended GS Kulkarni J's directions in regard to a disclosure that he had ordered.
7. In the meantime, when the matter was before me on 13th December 2019, I considered an Interim Application fled by the Respondent represented by Mr Khandeparkar. There was a question of payment of GST and in paragraph 6 of that order I said this:
"6. So far as prayer clause (c) is concerned, this is for a direction to the original Petitioners to pay to the Respondent No. 1 represented by Mr Khandeparkar (the applicants in the IA) an amount of Rs. 2,53,85,000/- due as GST. Mr Tamboly has tendered an Afdavit dated 13th December 2019 which says that the GST due is Rs. 35,30,200/- and that this amount will be paid to the 1st Respondent before 1st January 2020. In fact he has a cheque in favour of the Respondent No. 1 to the Petition dated 31st December 2019 for this amount drawn on HDFC Bank. Mr Khandeparkar accepts this cheque on a without prejudice basis. Mr Tamboly makes a further statement, which he says may be treated as an undertaking, that whenever a GST demand is found due it will be paid to the 1st Respondent. Any claims for refund, or adjustment will be taken up separately but on no account will the 1st Respondent be exposed to a GST recovery or penalty proceeding or interest on account of delay on the part of the Petitioner. The statement is noted and accepted as an undertaking to the Court."Page 3 of 5
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8. Mr Khandeparkar tells me that there is an appeal fled against this portion of the order and there is an Interim Application in that Appeal. Both are pending and the Interim Application has been placed for fnal disposal. It has been partly argued.
9. I was at frst hesitant to take up the Section 9 Petition at all as I felt that would amount to over-reaching the Appeal Court, but when both sides agreed that the only issue in the Interim Application was the question of the Petitioners' liability to make payment to GST, and both sides agreed to attempt a mutually satisfactory arrangement immediately in regard to that issue, I permitted both Mr Tamboly and Mr Khandeparkar to place their rival submissions as both indicated that the entire question of GST liability could perhaps be satisfactorily resolved here and now. I suggested to both sides some safeguards while yet ensuring that payment is made into revenue so that the interests of neither side are compromised on account of a later demand by revenue or the imposition of interest and penalty. Both sides agreed in principle. But a fnal order will require both sides to make appropriate statements on Afdavit. I have broadly indicated the frame of those statements. Specifcally, Mr Khandeparkar will need to provide a sufcient assurance to Mr Tamboly's clients that GST payments, applications for refund or adjustment, etc will be openly and transparently handled and that the Petitioner will be kept apprised of all these developments. If there is any refund, Mr Tamboly's clients must be assured of receiving a pro-rated reimbursement to the extent of that refund as well. Mr Tamboly has for his part indicated quite clearly what are the safeguards that are required because, as he puts it, his client is making payment of an amount Page 4 of 5 31st January 2020 ::: Uploaded on - 03/02/2020 ::: Downloaded on - 12/06/2020 13:36:14 ::: 914-914.1-CARBP1060-19+.DOC towards tax that, according to the Petitioner, is frstly not due and secondly, under an Agreement between the Parties, was the responsibility of the Respondents represented by Mr Khandeparkar. I am not addressing the merits of this contention at all. I am only endeavouring to neutralise the question of GST so that this does not become an additional externality or destabilising factor in the disputes between the two parties which are entirely contractual and with which the revenue is in no way concerned. Mr Khandeparkar states that a resolution in this fashion -- i.e. a without prejudice payment to his clients by Mr Tamboly's clients of the amount of GST in dispute, a simultaneous payment to revenue by Mr Khandeparkar's clients, and the foregoing mutual assurances on afdavit -- will effeectively resolve the dispute and he need not pursue his Appeal and Interim Application.
10. I will accordingly place the Section 9 matter for this limited purpose on 4th February 2020. Again, I emphasize that the endeavour is only to fnd a mutually satisfactory solution to the GST question so that the Section 9 petition can proceed. If, for any reason, parties are unable to agree on the GST aspect, then I do not think I can in fairness presently take up the Section 9 petition at all.
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