DM South India Hospitality Private Limited & Ors. v. L and T Finance Limited

1. This appeal, at the instance of M/s DM South India Hospitality Private Limited, is directed against an order dated 17th April, 2021 passed by the learned Arbitral Tribunal, on an application under Section 17 of the Arbitration and Conciliation Act, 1996 (“1996 Act”, in short), preferred by the appellants.

2. The appellants had, in the application, sought a restraint against the respondent dealing with the shares pledged against advancing of a loan by the respondent to the appellants.

3. The learned Arbitral Tribunal had, vide order dated 8th June, 2021:DHC:3545 2020 directed return of the pledged shares by the respondent to the appellants, against the appellants liquidating the dues of the respondent, as reflected in its statement of account and subject to the caveat that the appellants would remain liable to pay to the respondent any additional amount, which may be found payable at the final stage.

4. That order was challenged before this Court by way of ARB A (Comm.) 14/2020.

5. As, during the pendency of the said Arb A (Comm.) 14/2020 before this Court, the appellants apprehended that the respondent would alienate the pledged shares, the appellants moved a fresh application under Section 17 of the 1996 Act, before the learned Arbitral Tribunal, which has come to be decided by the presently impugned order dated 17th April, 2021.

6. Para 14 of the impugned order dated 17th April, 2021, to which Mr. Jayant Mehta, learned Senior Counsel draws my attention, reads thus: “14. Mr. Rajeev Nayyar, learned senior appearing for the Respondent, however, submitted that the apprehension of the Claimants is completely misconceived and imaginary, and is only an attempt to obtain interim reliefs. Mr Nayyar assured the Tribunal that the Respondent would not deal with the balance pledged shares, including ZF shares, till the decision of the Appeal from the High Court, and the Respondent would be naturally abiding by the order of the High Court. In case the Respondent succeeds before the High Court, it would be entitled to sell the shares in terms of the order of the High Court.”

7. Clearly, the above paragraph records the undertaking by the appellants, to abide by the order to be passed by this Court in Arb A (Comm.) 14/2020 and a further undertaking that, were the respondent to succeed in the said appeal, it would be entitled to sell the pledged shares. The respondent has, as it transpires, not succeeded in Arb. A (Comm) 14/2020 which stands decided in the appellant’s favor vide judgment dated 8th November, 2021.

8. Mr. Mehta correctly points out, therefore that the present appeal may be disposed of, on the basis of para 14, by interdicting the respondent from dealing with the pledged shares pending passing of the final award by the learned Arbitral Tribunal.

9. Mr. Mehta additionally submits that, in fact, the final award stands reserved by the learned Arbitral Tribunal and that, therefore, it would be in the interests of justice that the respondent is directed to maintain status quo regarding the pledged shares till the award is delivered by the learned Arbitral Tribunal.

10. Prima facie, the submission merits acceptance.

11. Mr. Chaturvedi, learned Counsel for the respondent, submits, very fairly, that in view of the order dated 8th November, 2021, passed by this Court in Arb A (Comm.) 14/2020, his client would not be dealing with the pledged shares, pending passing of the final award by the Arbitral Tribunal.

12. In view thereof, the prayer in the appeal stands satisfied. Recording the submission of Mr. Chaturvedi and binding the respondent thereto, the appeal stands disposed of. I.A. 6630/2021 (ex-parte ad interim stay) & I.A. 6631/2021 (exemption)

13. In view of the order passed in Arb. A. (Comm) 24/2021, nothing survives in these applications. The applications are disposed of.