Tag: Arbitration Challenge To Award

Order - Status 9: IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPLICATION NO. 16 OF 2014 IN ARBITRATION APPEAL NO. 42 OF 2013 Mr.Kobad Dorabji Davierwalla ...Applicant / Orig.Respondent No.1 In the matter between Mrs.Perin Hoshang Davierwalla & Anr. ...Appellants vs. Mr.Kobad Dorabji Davierwalla & Ors. ...Respondents AND REVIEW PETITION (STAMP) NO. 19448 OF 2014 IN ARBITRATION APPEAL NO. 42 OF 2013 WITH CIVIL APPLIATION NO. 171 OF 2014 Mrs.Perin Hoshang Davierwalla & Anr. vs. Petitioners / Orig.Appellants Mr.A.V. Anturkar, Senior Advocate with Mr.Prathamesh Bhargav i/b. Mr.S.B. Deshmukh for Applicant (Original Respondent No.1). Mr.Darius Khambata, Senior Advocate with Mr.J.B. Sen, Senior Advocate, Mr.Akshay Patil i/b. M/s.Federal & Rashmikant for Respondent No.1 and 2 (Original Appellants). Mr.Priyanka Vegad for Respondent No.2 in Review Petition No**.**19448/2014, Arb.Appeal No.42/2013, Respondent No.3 in CA 16/2014. Mr.B.K. Bali i/b. M/s.Bali Associates for Respondent No.3. CORAM : S.C. GUPTE, J. 01 SEPTEMBER 2014 P.C. : The delay of fourty-five days in taking out the review petition is condoned, and the review petition is taken up for hearing. 2 The review petition is filed by the original Appellants seeking a review of paragraphs 16 and 17(ii) of the order passed by this Court on 7 May 2014 and modification of the same by directing Respondent No.1 to vacate the two rooms in the hotel premises, currently in occupation of Respondent No.1 as agent of the Court Receiver without payment of royalty and security. The application is made in the following facts. 3 The Appellants and Respondents are partners in a partnership firm called IL Palazzo Hotel running a business of lodging and boarding house at Panchgani in Maharashtra. During the pendency of the arbitration proceedings between the parties for adjudication of disputes arising out of dissolution of this partnership firm by the Appellants, by an order passed by this Court on 7 May 2014, Court Receiver, High Court, Bombay has been appointed as a receiver of the assets and business of the partnership firm. The Appellants have been appointed as agents of the Court Receiver for conducting the business of IL Palazzo Hotel on payment of royalty. Paragraph 15 of this order inter alia records that Respondent No.1, who was carrying on business on the date of this order, not only had the suit business as the only source of livelihood, but even lived in two rooms within the building where the partnership business of lodging and boarding house was carried on. The order records the plea of Respondent No.1 that the residence of Respondent No.1 inter alia needs to be protected since he was actually using the two rooms. Accordingly, paragraph 17(ii) of the order provides that Respondent No.1 would be entitled to retain these two rooms presently in his personal use for the residence of himself and his family as agent of the Court Receiver without payment of any royalty or security. 4 It is a case of the Appellants in the present review petition that on or about 20 April 2014, after the conclusion of the hearings in the appeal, the Appellants came to know that Respondent No.1 has been in possession of a two storied apartment bungalow with a workable basement in Khinger village (about 3 to 4 km from IL Palazzo Hotel) admeasuring an area of more than 2000 sq.ft.; that this bungalow was in the name of Respondent No.1 and his wife; that the bungalow has a telephone installed therein; that the Respondent has been paying telephone and electricity charges; that this bungalow has been used by Respondent No.1 for the residence of himself and his family since much before the passing of the order dated 7 May 2014 and till today; that in the premises, Respondent No.1 has never actually resided in the hotel premises even once after the charge of the hotel was handed over to the Appellants, as agents of the Court Receiver and that, on the other hand, Respondent No.1 and his wife have only visited the two rooms occasionally during all this period; that the wife of Respondent No.1 had been interfering with the administration and functioning of the hotel and ordering around the staff and interacting with the hotel guests; and that in the premises, it is necessary and in the interests of justice that the directions in the order dated 7 May 2014 be modified and Respondent No.1 and his family be directed to vacate the rooms occupied by them in the hotel premises. 4 Along with the review petition, there is an application filed by Respondent No.1 himself inter alia for certain modifications to the order of 7 May 2014. It is prayed by Respondent No.1 that he should be allowed to use all common facilities, services, amenities, etc. provided in the hotel such as common hot and cold water, appliances, common generators and other infrastructure and utility services without any charge. Respondent No.1 has also applied for use of boarding facilities and services provided by the hotel at a charge of Rs.10,000/ per month. By an amendment proposed in the affidavit dated 22 June 2014, Respondent No.1 sought to amend the prayer inter alia providing for payment of charges in the sum of Rs.3500/- per month for use of the common and shared amenities and services provided in the hotel. Respondent No.1 does not press his prayer for provision of boarding facilities against payment of Rs.10,000/- per month, as originally proposed in his civil application. Thus, the application is now for permission to use all common amenities and facilities provided by the hotel on payment of a charge of Rs.3500/- per month. 5 It is obvious that the original application for permission to retain the two rooms claimed to be in occupation of Respondent No.1, as agent of the Court Receiver and without payment of royalty or security, was on the express footing that Respondent No.1 had all along been using, and even now requires, the two rooms for residence of himself and his family. At no stage in the pending appeal, before the order was passed on 7 May 2014, had the Respondent indicated that he was in possession of, and using, a bungalow of more than 2000 sq.ft. at Khinger village near IL Palazzo Hotel. In fact, in his reply filed in the review petition, Respondent No.1 has not disputed his residence in the bungalow at Khinger. All that the Respondent mentions in his reply to the review petition is that the two rooms in the hotel are his permanent residence; that all official documents, fax documents and administrative documents have the address of the hotel as his permanent residence; and that it would cause great difficulty to Respondent No.1 if this permanent address has to be changed temporarily. It is also submitted by Respondent No.1 that the bungalow at Khinger is not habitable round the year; that residence at this bungalow is not practicable due to its distant location, extreme weather conditions, etc. However, Respondent No.1 has not said that he does not actually use the bungalow as his residence. 6 Secondly, it is submitted by the learned Counsel for Respondent No.1 that photographs of this bungalow were shown to the Court by the Appellants, before this Court passed its order on 7 May 2014. Since these photographs were before the Court, it is submitted that the attention of the Court was invited to the existence of this bungalow and that therefore, the facts narrated before the Court in the review petition are neither new nor brought for the first time before the Court to enable the Appellants to apply for review of the order. It may be that the photographs were shown to the Court when this Court passed its order on 7 May 2013. The photographs were, however, not shown by Respondent No.1. The contest as to whether this bungalow was actually used as residence by Respondent No.1 throughout the relevant period was not before the Court when the order of 7 May 2014 was passed. The Appellants have claimed in the review petition that this fact came to light after the hearing of the matter concluded on 23 April 2014 and the order was reserved. On the basis of their knowledge acquired subsequently, the Appellants have averred in the review petition that Respondent No.1 and his family have been residing in the bungalow at Khinger and have not used the two rooms for residence at any time during the period of pendency of the arbitration appeal. There is no effective denial of this fact in the reply of Respondent No.1. Secondly, it is submitted that right from inception, four rooms have been kept for three groups of partners of the firm for their residence and that these rooms have been kept for residence of the parties in spite of the fact that even the Appellants have their bungalow at Panchgani, not very far from IL Palazzo hotel. It is submitted that even today, two rooms are in occupation of the Appellants. Whether or not the two rooms are in occupation of the Appellants, it is a fact that these two rooms have been treated to be a part of the hotel premises under the order of 7 May 2014 and the compensation payable by the Appellants as agents of the Court Receiver has been worked out on that basis. Whether the rooms are, in fact, used as guest rooms to be rented out for the hotel business or whether they are actually used for occupation of the Appellants, is immaterial as long as these two rooms are in occupation of the Appellants as agents of the Court Receiver for conducting the hotel business and the Appellants are paying compensation for the same as agents of the Court Receiver. In fact, the fact that two rooms in occupation of the Appellants for their residence have been made part of the hotel premises, in occupation of the agents of the Court Receiver and for which compensation is payable by the agents, supports the Appellants' case that the two rooms which are in occupation of Respondent No.1 and which are not actually used for his residence ought to be made over to the Court Receiver for conducting the hotel business. The Appellants have offered to pay an additional royalty of Rs.6 lakhs per annum for the two rooms to be vacated by Respondent No.1 and allowed to be used for the hotel. This additional royalty is offered with a view to account for the additional revenue that may accrue to the agents, if these two rooms are allowed to be used for the hotel. 7 Lastly, it is submitted that the Court Receiver has not been appointed of the four rooms which were in occupation of the partners for their respective residence. This submission is made on the basis of the licence issued by the authorities, which is in respect of 17 rooms only. It may be that the licence for renting out room to the guests exists in respect of 17 rooms for the lodging business of the hotel, but there is nothing to indicate that these two rooms are not part of the assets of the partnership firm of which Court Receiver is appointed. In fact, it is on the basis that the Court Receiver is appointed also of these four rooms that the two rooms in occupation of the Appellants have been made part of the agency business and for which the Appellants have been asked to pay compensation. So also, it is on the same basis that Respondent No.1 is directed to be appointed as agent of the Court Receiver without any royalty for the two rooms purportedly in his occupation. There is no substance in the plea that the Court Receiver is not appointed of these four rooms. 8 In the premises, the review petition filed by the Appellants deserves to be allowed. Accordingly, the order of 7 May 2014 is modified by directing Respondent No.1 to vacate the two rooms in his occupation and make over the same to the Court Receiver for being used as part of the hotel premises. With effect from the expiry of a period of 45 days after the rooms are vacated and possession thereof is handed over to the Court Receiver by Respondent No.1, the Appellants shall pay an additional royalty of Rs.6 lakhs per annum for use of these two rooms as part of the agency agreement. This amount shall be paid on a quarterly basis as in the case of royalty of Rs.70 lakhs payable per annum for the agency of the hotel. 9 At the time of handing over of the two rooms by Respondent No.1 to the Court Receiver, the Court Receiver shall prepare an inventory of the furnitures and fixtures lying within the premises. Respondent No.1 shall be at liberty to make a claim in respect of these furnitures and fixtures at the hearing before the District Court or before the Arbitrator, as the case may be. The Court Receiver will, of course, permit Respondent No.1 to take away his movables lying within the two rooms. 10 Having regard to the order passed on the review petition, the civil application of Respondent No.1 for use of additional amenities and facilities provided by the hotel in connection with the two rooms in his occupation as agent of the Receiver, does not survive and is disposed of. 11 There shall be no order as to costs. 12 On the application of the learned Counsel for Respondent No.1, this order is stayed for a period of five weeks from today. (S.C. Gupte, J.)

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