Anju Aggarwal v. Renu Protech Pvt Ltd & Ors.

Delhi High Court · 02 Sep 2022 · 2022:DHC:3497

Prateek Jalan

ARB. A. (COMM.) 18/2022

2022:DHC:3497

civil appeal_allowed Significant

AI Summary

The Delhi High Court set aside an interim arbitral order restraining a non-party purchaser from dealing with property, holding that such relief requires proper notice and prima facie findings of fraud or illegality.

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ARB. A. (COMM.) 18/2022
HIGH COURT OF DELHI
Date of Decision: 02.09.2022

ARB. A. (COMM.) 18/2022 & I.A. 6849/2022 (stay)
MRS ANJU AGGARWAL ..... Appellant
Through: Mr. Mudit Sharma, Mr. Parvez Alam Khan, Advocates.

VERSUS

RENU PROTECH PVT LTD & ORS. ..... Respondents
Through: Ms. Gurkamal Hora Arora, Mr. Jaisal Baath, Advocates for
R-1 [M: 7011810241].

CORAM:

HON’BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J. (ORAL)

JUDGMENT

1. The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 [“the Act”], is directed against an order dated 06.01.2021, passed under Section 17 of the Act, in arbitral proceedings between the respondents inter se. The appellant, who is not a party to the proceedings, claims to have purchased a parcel of land[1] from respondent No. 3 prior to commencement of the arbitral proceedings, and is aggrieved by the impugned order to the extent that it restrains further transactions in the said property.

1 Land measuring about 13 Bighas and 8 Biswas comprised in Khasra Nos. 1148 (0-10), 1150 (3- 6), 1151 (4-16), 1153 (4-16), Tehsil Saket, New Delhi 2022:DHC:3497

2. The arbitral proceedings arise out of an agreement dated 01.06.2017 between a company by the name of M/s Ninex Developers Limited [“Ninex”], and the three respondents herein. The agreement records that the respondent No. 1 had granted a loan facility of a cumulative sum of ₹25 crores to Ninex. By the aforesaid agreement, Ninex and the respondent No. 1 agreed that a sum of ₹30,39,94,500/was due under the said loan facility. The respondent Nos. 2 and 3 herein, who are father and son, stood as guarantors for repayment of the said amount on the terms and conditions contained in the said agreement. The agreement contained an arbitration clause (in Clause

28) which provided for adjudication of disputes by arbitration. Delhi was designated as the seat, venue and place of arbitration.

3. Ninex was apparently subjected to proceedings under the Insolvency and Bankruptcy Code, 2016 and is under Corporate Insolvency Resolution Process. The respondent No. 1 claims to have invoked the personal guarantees executed by the respondent Nos. 2 and 3 on 05.01.2019. On 02.08.2019, respondent No. 1 (the lender) served a notice of default on respondent Nos. 2 and 3 (the guarantors). The respondent No. 1 also sought recourse to arbitration. The arbitrator was appointed with the consent of the three respondents and a statement of claim was lodged before him on 14.08.2019. In the statement of claim, the respondent No. 1 sought recovery of approximately ₹45.91 crores and further interest from the respondent Nos. 2 and 3 as also a permanent injunction against the said respondents from dealing with their movable and immovable properties till the claims are finally realised. The respondent No. 1 also filed an application under Section 17 of the Act alongwith the statement of claim, in which it sought appointment of a receiver over the assets of the respondent Nos. 2 and 3, and an injunction restraining the said respondents from creating third party interests in their property.

4. In the meanwhile, the appellant claims to have purchased the land from the respondent No. 3 by a registered sale deed dated 08.03.2019. The registered sale deed records that the said property was transacted for a consideration of approximately ₹14 crores.

5. Some time after the filing of the statement of claim and the application under Section 17 of the Act, respondent No. 1 filed an application under Order I Rule 10 of the Code of Civil Procedure, 1908 on 12.09.2019, seeking impleadment of the appellant herein. It is the case of the respondent No. 1 that the respondent No. 3 entered into the transaction for sale of the said property with the appellant after the invocation of the personal guarantee against him. The respondent NO. 1 claimed that the said transaction was fraudulent and that the property continues to be available to the respondent No. 1 for recovery of its dues against the respondent Nos. 2 and 3.

6. Notice of this application was issued by the learned arbitrator to the appellant and a reply was filed on 23.10.2019. In the reply filed by the appellant, she specifically averred that she did not submit to the jurisdiction of the tribunal and was not a party to the arbitration agreement between the respondents inter se. She disclaimed any knowledge of the proceedings between the respondent No. 1 and the respondent Nos. 2 and 3, and asserted that she was a bona fide purchaser of the property from the respondent No.3.

7. By the impugned order dated 06.01.2021, the learned arbitrator held as follows:- “1. That upon analysing an appreciating the submissions of the parties in I.A. Nos. 02 of 2019 and 04 of 2019, it arises that the questions of law w.r.t. impleadment of Noticee Ms. Anju Aggarwal, who is the admitted Purchaser of the House in question from Respondent No.2 and the claim of the Claimant w.r.t. the same is not proper to proceed for adjudication pending disposal of W.P. (C) No.T.C. (C) No.000245 of 2020 and ors. listed for 18.01.2021 and accordingly the proceedings qua Respondent No.2 have been kept in abeyance, Since the matter has been kept in abeyance qua Respondent No.2 the Tribunal deems it proper to dispose of the Application post decision in the matter pending before the Hon'ble Supreme Court.

2. However, it is admitted fact that the property in question was owned by the Respondent No.2 and the same was transacted with the Noticee post the invocation of the due loan by the Claimant to makes it and arbitral issue to be disposed of either way once the proceedings qua the Respondent No.2 is decided and proceeded further in light of the Order in the pending case before the Hon'ble Supreme Court.

3. In view of the above it is imperative that no further transaction or third party rights are further created on the property being Agricultural Land for built up Farm House ad-measuring about 13 bighas 8 biswas comprising Khasra Nos. 1148 (0-10), 1150 (3-6), 1151 (4-16), 1153 (4-16) Village-Chhattarpur, Tehsil Saket, New Delhi till further proceedings qua Respondent No 2 is decided.

4. Further proceedings qua Respondent No. 1 shall be proceeded further and the next date for the same is scheduled for 22.01.2021 at 04:30 p.m. at my Office and/or through Video Conference.

5. The Order be communicated to all the parties including Noticee and their Counsels by E-mail and by Speed-Post to the Noticee.

6. Interim Orders dated 14.08.2019 to continue.”2

8. The appellant is aggrieved by the impugned order passed under Section 17 of the Act inasmuch as the learned arbitrator has directed that no further transaction or third party rights be created on the said property until further proceedings qua the respondent No. 3 herein are decided.

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9. I have heard Mr. Mudit Sharma, learned counsel for the appellant and Ms. Gurkamal Hora Arora, learned counsel for the respondent No. 1. The respondent Nos. 2 and 3 have not entered appearance despite service of notice.

10. Having heard learned counsel for the parties, I am of the view that the impugned order cannot be sustained in facts and in law, for the following reasons:-

A. No notice of the application under Section 17 of the Act was issued to the appellant. The appellant appeared before the arbitrator pursuant to notice issued on respondent No.1’s Emphasis supplied. application for impleadment, but was not called upon to answer any case for grant of interim measures of protection.

B. In any event, the application under Section 17 of the Act filed by the respondent No. 1 on 14.08.2019, pre-dates any attempt to implead the appellant in the arbitral proceedings and contains no averment against her, or assailing her purchase of the property from respondent No. 3 herein. However, it is on this application - no other application under Section 17 of the Act was admittedly filed before the learned arbitrator - that the present order against the appellant has been passed.

C. The learned arbitrator has not rendered any finding, even prima facie, in the impugned order against the appellant or in favour of the case of the respondent No. 1 for interim orders. There is no finding even prima facie, to the effect that the transaction in favour of the appellant was vitiated by fraud, as sought to be contended by the respondent No. 1. It is well settled that an order of interim injunction requires consideration of the case of the plaintiff on a prima facie basis, a consideration of balance of convenience and on the question of irreparable loss or injury. Reference in this regard may be made to the judgments of the Supreme Court inter alia in Morgan Stanley Mutual Fund vs. Kartick Das[3] and Ambalal Sarabhai Enterprise Limited vs. KS Infraspace LLP Limited and Another[4].

D. In the facts of the present case, respondent No. 1 had approached the arbitrator only in August 2019, long after invoking the personal guarantees given by respondent Nos. 2 and 3. In such circumstances, an intervening third party purchaser could not have been injuncted from exercise of her property rights without any finding, even prima facie, in support of the respondent No. 1’s case that the transaction between the appellant and respondent No. 3 was fraudulent.

E. The learned arbitrator has deferred the consideration of the application for impleadment of the appellant and indeed the proceedings qua respondent No. 3. At present, therefore, the appellant is not a party to the arbitral proceedings, but has suffered the impugned order, while proceedings against respondent No. 3, through whom she claims title, remain in abeyance.

F. In the facts of the present case, the respondent No. 1 (claimant) has not claimed that the property in question was mortgaged to it or offered as security to support the guarantee or the loan agreement dated 01.06.2017. As such, the learned arbitrator was required to consider whether an order of this nature, which tantamounts to an order of attachment against a purchaser of the property, was required in the facts and circumstances of the case. Ms. Hora has drawn my attention to Clause 18 of the agreement dated 01.06.2017, which required the guarantors to ensure that they maintain assets and income sufficient to cover the outstanding loan. However, I am prima facie of the view that such a clause cannot be held to constitute a mortgage of security against any particular property of the said respondents. Indeed, there is no material to show at this stage that the respondent Nos. 2 and 3 do not have other assets and incomes sufficient to meet their obligation under the said agreement.

11. For the aforesaid reasons, the appeal must succeed. Accordingly, paragraph 3 of the impugned order dated 06.01.2021, in so far as it affects the rights of the appellant herein, is set aside.

12. It is made clear that this order will not prevent the parties from agitating their rights and contentions before the learned arbitrator in accordance with law, including by way of a properly constituted application under Section 17 of the Act, upon proper notice to the appellant herein, if they are so advised.

13. The appeal, alongwith the pending application, is disposed of with the aforesaid observations.

PRATEEK JALAN, J SEPTEMBER 2, 2022 ‘Bhupi’/

Anju Aggarwal v. Renu Protech Pvt Ltd & Ors.

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