Bombay High Court
Royal Chains Private Limited vs Shirt Company (India) Limited on 17 January, 2020
Author: G. S. Patel
Bench: G.S. Patel
905-905.1-CARBP1444-19.DOC
Arun
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION NO. 1444 OF 2019
Royal Chains Private Limited ...Petitioner
Versus
Shirt Company (India) Ltd ...Respondent
WITH
COMM ARBITRATION APPLICATION NO. 451 OF 2019
Mr SN Vaishnawa, with Ms Nupur Mukherjee, i/b NN Vaishnawa &
Co, for the Petitioner.
Mr Sumit Patni, i/b Govind B Solanke, for the Respondent.
Mr DN Kher, Court Receiver present.
CORAM: G.S. PATEL, J.
DATED: 17th January 2020 PC:-
1. This is further to the order of 13th November 2019.
2. To begin with it is clarifed that Religare Finvest Limited has not taken symbolic possession of the factory premises at Trans Thane Creek Industrial Area, Village Pawane. It has only issued a notice.
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3. The relevant facts are set out in paragraphs 1 to 10 of my order of 13th November 2019. For ready reference these are reproduced below.
"1. Heard.
2. The petition is under Section 9 of the Arbitration and Conciliation Act 1996. The petitioner entered into a Memorandum of Understanding ("MoU") with the respondent. This is dated 29th December 2018. The respondents had an assignment or, at any rate, sufcient title to a plot of land of about 5,000 sq mtrs in the Trans Thane Creek Industrial Area, Village Pawane within the limits of the Navi Mumbai Municipal Corporation in District Thane. There stands on this plot a factory building of 4,709.52 sq mtrs. The plot is part of an industrial area owned and controlled by the Maharashtra Industrial Development Corporation ("MIDC"). It was frst leased in 2007 to one Foot Cast Rubber & Resins Ltd ("Foot Cast Rubber") by a registered lease deed for a period of 95 years commencing from 1st March 1994.
3. Foot Cast Rubber constructed the factory building. By an assignment dated 29th March 2008, Foot Cast Rubber sold, assigned, transferred and conveyed this land and building to the respondent after obtaining the necessary no objection certifcate and permission from MIDC. The respondents are in possession.
4. The respondents and the petitioners negotiated an agreement for a consideration of Rs. 33 crores by which the respondents agreed to further transfer, assign and convey the plot and building to the petitioner. The respondents had, in the meantime, obtained fnance from Religare Finvest Limited and created a mortgage in favour of that entity as security for the repayment of some dues.Page 2 of 7
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5. Under the MoU, the petitioner has paid an amount of Rs. 7.5 crores already to the respondent as an advance. The agreement in question contains an arbitration clause. This is reproduced at page 39 of the petition. It provides for a reference of all disputes arising out of the agreement to a sole Arbitrator. The seat and venue of the arbitration are to be in Mumbai.
6. The matter was frst listed before this Court after service on 3rd September 2019. The respondent was represented by Mr Patni, i/b Mr Govind Solanke on that date and again on 23rd September 2019 and 15th October 2019. For some reason that I am unable to understand, there appears to be no vakalatnama fled by the respondents. That is to be done within one week from today. It is not permissible for Advocates to keep appearing in a litigation without a supporting vakalatnama. This is in complete contravention of the Original Side Rules.
7. I note that there is no afdavit in reply. The reason for this is unclear and I am unwilling to accept a request for an adjournment for this purpose made today. For the respondent states that it does not dispute the agreement or its liability and responsibility under it to transfer the plot to the petitioner. It does not dispute that it received Rs 7.5 crores from the petitioner. What is being said is that the respondent has several hundred workmen organized in three unions, of which two are apparently quite militant, and are led by politically infuential persons. Some of these workmen have approached the Industrial Court at Thane and fled an Unfair Labour Practice Complaint No. 143 of 2019. In that complaint, they have expressed an apprehension of an unlawful and illegal retrenchment or termination of their employment by the respondent and have also sought reliefs restraining the respondent from disposing of its plant and machinery and more importantly Page 3 of 7 17th January 2020 ::: Uploaded on - 20/01/2020 ::: Downloaded on - 09/06/2020 22:16:32 ::: 905-905.1-CARBP1444-19.DOC in prayer clause 3(d) of the complaint from creating any third party interest in this land at TTC Industrial Area, MIDC Thane.
8. What is of greater concern, however, is that the respondent appears to have done nothing proactively to oppose those proceedings. I am told it is negotiating with the workmen and has arrived at some sort of understanding with some, but not all, of these agitating workmen. The order passed by the Industrial Court on 7th August 2019 grants the injunction sought including, inter alia, in respect of the plant and machinery and the MIDC land at Thane. Apart from seeking an adjournment, the respondent seems to have done nothing in at all those proceedings.
9. There is certainly no afdavit in reply before the Industrial Court. There is no particularized disclosure of its present transaction with the petitioner. There is no challenge to the order passed on 7th August 2019. There appears to be no application to vacate or modify the order passed by the Industrial Court on that date. In other words, the respondent has the petitioner's advance payment. It has used some of it, again admittedly, to pay some of its debts. It uses this as a reason to continue to delay the present arbitration petition. And it does not actively conduct Industrial Court proceedings where an order has been made directly affecting this contract.
10. The same submission that is made before me has been made before GS Kulkarni J ever since September 2019, i.e. for last three or four months. This is not a position that can be allowed to continue. Indeed I am very greatly surprised that the company, if it is indeed so concerned and professes such fdelity to its contract with the petitioner, has not moved any higher forum or even the Page 4 of 7 17th January 2020 ::: Uploaded on - 20/01/2020 ::: Downloaded on - 09/06/2020 22:16:32 ::: 905-905.1-CARBP1444-19.DOC writ Court against that order of 7th August 2019 of the Industrial Court at Thane."
4. It is in these circumstances that I directed the Court Receiver to take symbolic possession.
5. Mr Vaishnava for the Petitioner is clear that his client has parted with a substantial initial amount of Rs.7.50 crores as an advance against the negotiated total consideration of Rs. 33 crores. I note his statement today that his client is prepared within a period of three weeks from today to deposit the entire balance with the Court Receiver, High Court, Bombay. The statement is noted and accepted.
6. It is in view of this that I am unable to accept Mr Patni's submission that the matter should be simply adjourned for two or three weeks to enable his client to address other concerns unrelated to this transaction. Those have no bearing. His client is at liberty to continue with those negotiations with third parties.
7. However the Receiver will now take physical possession of the factory building and land and will put his sign board on both, if not already done. The Court Receiver will, at Mr Vaishnava's client's cost, post security guards and will seal the property.
8. I note that MIDC has given conditional permission for this transfer. It is to be paid a certain amount as transfer fees. Mr Vaishnava on instructions undertakes that this will be done once fnal orders are passed in this Petition.
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9. Mr Patni points out that there are certain movables that are not part of the Agreement that are within those premises. The Court Receiver will permit the Respondent's representative to visit the premises (but only the Respondent's authorised representative and not any workmen) to remove those movables. Mr Patni must inform the Receiver and give at least three optional dates when this visit will be made so that the Receiver can make the necessary arrangements.
10. In the meantime the police authorities at Trans Thane Creek Industrial Area Police Station are directed, upon a request made by the Court Receiver to make sufcient police personnel available, if required, to prevent any law and order problem or any disturbance by any workmen. It is clarifed that the workmen can have no right to enter the premises. Their remedies as against their employer, the Respondent, are left entirely unaffected by this order.
11. Finally it is made clear that if the Petitioner fails to deposit the balance amount within three weeks as provided above, this order will stand vacated and the Receiver will stand discharged.
12. In the meantime, within 10 days from today, Mr Patni will furnish to Mr Vaishnava a list of those persons who are creditors of the Respondent and who are claiming rights in respect of this particular plot and factory.
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13. List the matter high on board on 11th February 2020.
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