Full Text
HIGH COURT OF DELHI
Date of Decision: 13th December, 2022
M/S MANIRATNAM ENTERPRISES ..... Petitioner
Through: Mr.Manoj Swarup, Sr. Adv. with Mr.Akbar Ali, Mr.Neelmani Pant, Ms.Megha Singh and Mr.Anirudh
Bankura, Advs.
Through: Mr.K.S. Mahadeva and Mr.Rangarajan, Advs. for respondent
Mr.Siddharth Sangal, Ms.Nilanjani Tandon, Mr.Lalit Allawadhi, Advs. for intervener.
Civil Procedure, 1908]
JUDGMENT
1. This application has been filed by the ‘Kapda Mill Mazdoor Union’ seeking intervention in the present petition.
2. The learned counsel for the applicant has been heard in opposition to the prayer made in the main petition.
3. The application is accordingly disposed of. I.A.21179/2022 [U/s 151 of the Code of Civil Procedure, 1908 to take on record estimated cost of scrap lying in Modi Cloth Mill Compound]
4. The learned senior counsel for the petitioner does not press this application.
5. The same is accordingly disposed of as withdrawn. O.M.P.(I) (COMM.) 337/2022
6. This petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (in short, the ‘Act’) praying for an order protecting the subject property/scrap lying in the Modi Mill Premises, Modi Nagar, Ghaziabad, Uttar Pradesh, and for the grant of status quo ante as on 15.04.2022, that is, the date of issuance of the Notice of Termination by the respondent.
7. As I am intending to appoint an Arbitrator with the consent of the learned counsels for the parties in ARB.P.1283/2022, titled M/s Maniratnam Enterprises v. M/s Rajputana Fertilizers, I shall only briefly deal with the facts of the present petition, leaving it open to the Arbitrator to consider the appropriate order on hearing the parties on an application under Section 17 of the Act, if so filed, by the petitioner.
FACTUAL BACKGROUND
8. The disputes between the parties have arisen in relation to the ‘Agreement for Sale of Scrap’ dated 19.01.2021 executed between the parties. The same was preceded by an earlier Memorandum of Understanding dated 20.12.2018 and an Agreement dated 19.07.2019, as also some prior litigations, the details whereof may not be relevant for the purpose of the present petition.
9. In terms of the said Agreement, the petitioner is to purchase the scrap lying in the above mentioned premises of the respondent for a total consideration of Rs.12,34,00,000/- (Rupees Twelve Crore Thirty-Four Lakh only), out of which the petitioner, as on the date of the Agreement, has already paid Rs.5,34,00,000/- (Rupees Five Crore Thirty-Four Lakh only); leaving a balance of Rs.7,00,00,000/- (Rupees Seven Crore only). Even for Rs.5,34,00,000, a balance of Rs.2,84,00,000/- (Rupees Two Crore Eighty-Four Lakh only) was to be paid.
10. The respondent, claiming default to the tune of Rs.65.73 Lakh in payment of the invoices raised, issued the impugned Notice of Termination dated 15.04.2022 to the petitioner.
SUBMISSIONS ON BEHALF OF THE LEARNED SENIOR COUNSEL FOR THE PETITIONER
11. The learned senior counsel for the petitioner submits that the impugned Notice of Termination cannot be given effect to inasmuch as it does not give the mandatory seven-day ‘Defect Cure Period’ to the petitioner as required in Clauses 10 to 12 of the Agreement.
12. He further submits that the subject matter of arbitration deserves to be preserved during the pendency of the arbitration and in any event, till the Arbitrator enters into the reference.
13. He submits that in fact, the petitioner has made an over payment to the respondent and this fact was clearly brought to the notice of the respondent vide reply dated 30.04.2022 to the impugned Notice of Termination. He submits that the termination of the Agreement, therefore, is liable to be set aside and the Agreement deserves to be specifically enforced.
SUBMISSIONS ON BEHALF OF THE LEARNED COUNSEL FOR THE RESPONDENT
14. On the other hand, the learned counsel for the respondent submits that the relief of injunction cannot be granted to the petitioner as the contract by its own terms was determinable in nature. He submits that the petitioner can always be compensated in terms of money/damages.
15. The learned counsel for the respondent further submits that the impugned Notice of Termination clearly states that various opportunities were given to the petitioner to rectify its defect in making the payment. Therefore, the impugned Notice of Termination was preceded with the ‘Defect Cure Period’, however, the petitioner failed to cure the defects, leaving the respondent with no option but to terminate the Agreement.
16. He further submits that upon termination of the agreement, the respondent has entered into an arrangement with one ‘Arsh Enterprises’ and certain scrap has already been removed by the said entity by making payment to the respondent. He submits that therefore, no interim protection deserves to be passed in favour of the petitioner at the present stage.
SUBMISSION ON BEHALF OF THE LEARNED COUNSEL FOR THE KAPDA MILL MAZDOOR UNION
17. The learned counsel for ‘Kapda Mill Mazdoor Union’ submits that the scrap is being sold to pay the dues owed by the respondent to the workers and, therefore, any order of injunction would prejudicially affect the workers.
ANALYSIS AND FINDINGS
18. I have considered the submissions made by the learned counsels for the parties.
19. At the very outset, it is emphasized that any observation made by the Court in the present order is only prima facie in nature as the respondent is yet to file its response to the present petition.
20. Clause 8 of the Agreement inter-alia provides for the payment schedule as under:
21. Clauses 10 and 11 of the Agreement provide for the ‘Defect Cure Period’, and on failure thereof, termination of the Agreement, and read as under: “DEFAULT IN PAYMENTS AND TERMINATION xxxx
10. If the Buyer fails to make any payment or fails to honour any cheque under this Agreement the Buyer shall forthwith be barred from making any further removal of scrap from the Premises: In such an event, the Buyer shall make good such default within a period of 7 (seven) days from the date of any such default. The Buyer shall also make all other payments due up to date under this Agreement within the period of 7 (seven) days as stated above. The Buyer shall be allowed to restart the work of removal of scrap only after he has made all up to date payment as stated above.
11. If within this period of 7 days referred to in Clause 8 above the Buyer fails to make good the payments as stipulated therein, the Seller shal[1] be at liberty to terminate this Agreement and the Buyershallvacate the Premises forthwith. Upon any such termination, the Buyer shall have no claims of whatsoever nature on the Seller in connection therewith.”
22. The respondent issued the Notice of Termination dated 15.04.2022 to the petitioner alleging as under:
23. In response thereto, the petitioner vide reply dated 30.04.2022 inter-alia asserted as under:
24. Interestingly, while in the reply dated 30.04.2022, the petitioner has claimed that based on the scrap already removed an excess payment has been made to the respondent, in the ‘List of Dates and Events’ filed with the present petition, the petitioner asserts as under in relation to the said reply: “Petitioner gave a written notice for compromising the disputes and differences with the respondent by saying that your claimed dues of Rs.65.73 Lacs do not actually exist as petitioner has already paid in excess Rs.... in process of obtaining the documentation of mill required prior to removal of scraps. The expenditure in order get the clearance certificate from the concerned Labour Authority and etc. was to be borne by respondent as agreed between the parties in presence of Dr. Devendra Siwach. The petitioner paid dues amount (calculations shall be done in case required by Court/Arbitral Tribunal).”
25. The above assertion does not match with the letter now produced. I must note that the petitioner along with the petition had not even annexed a copy of the said reply dated 30.04.2022. The same came to be filed only on a query raised by this Court during the course of the arguments.
26. Be that as it may, the parties are today at a dispute as to whether the petitioner has made the payment for the scrap already removed from the premises of the respondent. The Agreement also provides for termination of the Agreement in the event of there being a payment remaining outstanding by the petitioner even upon the expiry of the seven-day period. As stated by the respondent, the respondent has already entered into an arrangement with a third-party namely ‘Arsh Enterprises’, who have already removed some scrap pursuant to the new arrangement. I may also note that the impugned Notice of Termination was challenged by the petitioner by way of the present petition only sometime in November, 2022, that is, with a delay of almost seven months.
27. In view of the above, no interim protection can be granted to the petitioner at the present stage.
28. The petition is accordingly dismissed, however, reiterating that it shall be open to the petitioner to claim an appropriate order from the learned Arbitrator in this regard, who shall consider any prayer so made by the petitioner, without being prejudiced or influenced by any observation made in the present petition.
NAVIN CHAWLA, J DECEMBER 13, 2022/Arya/AB