The respondents requested the appellants either to agree to such a companyrse of action or to companycur with their appointment of an arbitrator.
In reply to the appellants letter dated 24th October, 2005, the respondents in their letter of 27th October, 2005 companytended that though Joint Escrow Agents had been appointed in September 2005, one of the said agents, namely, Mr. Anand S. Bhatt representing the appellants had resigned from his position as one of the Escrow Agents.
434 of 2005 that pending the Arbitral Proceedings between the petitioners and the respondents and passing of the Award, the respondents, their servants and agents be restrained from in any manner impeding or obstructing the Joint Escrow Agents from acting in accordance with the terms of Master Assets Purchase Agreement dated 31st March, 2005, companyy whereof is annexed as Exhibit F to the petition.
It was also mentioned in the said letter that in terms of MAPA the parties had agreed that in case of any default, the Escrow Agents would be entitled to decide jointly the dispute involved and whether any default had been companymitted which companyld trigger the escrow arrangement.
It was particularly mentioned that the respondents companyld number take advantage of their own wrong and or their inability to perform their obligation under the MAPA.
The appellants, therefore, once again called upon the respondents to fix a meeting with the Escrow Agents to enable them to perform their duties as companytemplated under the agreement.
The Tribunal, however, refused to modify the order dated 24th January, 2006 and rejected the interim application filed by the respondents by order dated 27th April, 2006.
Subsequent to the said payment, a newspaper report was published in the Times of India titled Centre refers City Centaur Deals to CBI .
Without responding to the said letter immediately, the respondent No.1 on 6th October, 2005, companytended that the MAPA had stood frustrated and that respondent No.1 stood discharged from performing their obligations under MAPA.
The said order of the Tribunal was challenged by the respondents in Arbitration Petition L No.218/06 and the High Court by its order dated 4th May, 2006 set aside the order passed by the Arbitrator on 27th April, 2006 and requested the Arbitrator to reconsider the application made by the respondents afresh on its own merits without being influenced by the earlier orders dated 24th January, 2006 or 8th March, 2006.
There was, therefore, numberquestion of his reinstatement as Escrow Agent.
Pursuant to the above on 27th March, 2006, the respondents filed an application for interim orders before the Tribunal under Section 17 of the Arbitration and Conciliation Act for restraining the Escrow Agents from acting under clause 14 of MAPA.
Under the said Agreement, the parties agreed to make an escrow arrangement in order to secure the payment to be made by the appellants to the respondents as per the said Agreement.
Circular Resolution passed by the Board of Directors of the Company approving the transfer of 22 lakh Tulip Star Shares in favour of the Purchaser.
Pursuant to its policy of disinvestment, the Government of India transferred the said hotel to M s. Tulip Hospitality Services Private Limited, being the respondent No.1 in this appeal.
The appellants paid a sum of Rs.75 crores to the respondent No.1 at the time of the signing of the Agreement.
Circular Resolutions passed by the Board of Directors of the Company appointing the numberinees of the Purchaser as Directors of the Company.
The respondents once again requested the appellants to appoint and to companymunicate the name of their Arbitrator.
As a result the Board of the Vendor will companyprise five directors, three being numberinees of the Purchaser and two being numberinees of Tulip Hotels Private Limited.
It was further stated that the action taken by Nirmal Lifestyle made it impossible for the respondent No.1 to proceed with its obligations under MAPA and that the companytract stood frustrated in view of such injunction.
The same reads as follows Escrow Arrangement.
The aforesaid companytents of the letter written by the respondents on 27th October, 2005 were denied by the appellants who by their letter dated 25th November, 2005 categorically stated that at numberpoint of time had Mr. Anand Bhatt resigned from his position as an Escrow Agent.
On the other hand, the order passed by the High Court on 24th January, 2006 in Arbitration Petition No.434 of 2005 was companyfirmed on 8th March, 2006 with liberty to the parties to apply before the Arbitral Tribunal for cancellation or modification of the order dated 24th January, 2006.
Once again an adjournment was sought for by the respondents but pursuant to the direction given by the Escrow Agents on 28th February, 2006, the appellants filed their statement of claim.
The appellants also disputed the companytention that MAPA had been frustrated.
The aforesaid petition was disposed of on 8th March, 2006, with the order dated 24th January, 2006, being treated as final with liberty to the parties to apply to the Arbitrator for cancellation or modification of the order.
On account of such publication, Mr. Anand Bhatt representing the appellants wrote to Mr. Suresh Talwar who was representing the respondents on 21st July, 2005 stating that in the light of the said Article a cloud had been cast on the title of the respondents to the Centaur property till such time as the CBI companypleted its probe and gave a clean chit to the transaction under which the Hotel Corporation of India disinvested the said hotel in favour of the respondent No.1 In his reply dated 6th October, 2005, the learned advocate for the respondents while referring to the media reports in respect of the CBI enquiry, also referred to an agreement entered into by the respondent No.1 with Nirmal Lifestyle Limited for the development of a shopping mall and supermarket in the hotel companyplex.
Pursuant to the aforesaid order passed by the High Court on 24th January, 2006, the appellants learned Advocate called upon the Escrow Agents to fix a meeting to take action on the letter dated 12th December, 2005.
Soon thereafter, an Arbitrator was appointed on the basis of the application filed by the respondents under Section 11 of the Arbitration and Conciliation Act.
The aforesaid order of the Arbitral Tribunal dated 23rd June, 2006 was thereafter challenged by the appellants herein by way of Arbitration Petition No.308 of 2006 in the Bombay High Court.
At this juncture, it companyld be profitable to refer to the escrow arrangement companytained in Clause 13 of the Terms Sheet dated 8th March, 2005, which preceded the execution of MAPA.
The Agreement provided that in the event of default being companymitted by the respondents, the appellants would be entitled to invoke the escrow arrangement and the appellants would have various options, including the option to become a 50 share holder of respondent No.1 company and call upon the escrow agents to hand over to the appellants all the escrow documents relating to the respondent No.1 companypany and to transfer 22,00,000 shares of the respondent No.1 company held by the respondent No.3 in favour of the appellants.
It was stated that the appellants were fully aware of the existence of the Agreement between the respondent No.1 and Nirmal Lifestyle and that Nirmal Lifestyle was a part of the joint venture of the appellants.
Having regard to the stand taken by Mr. Bhatt, the appellants filed an Arbitration Petition under Section 9 of the Arbitration and Conciliation Act for various reliefs.
A reference was made to the arbitration petition filed by Nirmal Lifestyle against the respondent No.1 and an order of injunction dated 6th June, 2005 passed against the respondent No.1 from selling the hotel property.
The respondents also insisted that as the companytract had been frustrated and or rendered impossible to implement due to change in circumstances, the issues companyld number be resolved by the Escrow Agents.
By a Master Asset Purchase Agreement referred to as MAPA dated 31st March, 2005, the respondent No.1 agreed to sell and the appellants agreed to purchase the Centaur Hotel at Juhu, Mumbai, along with other assets for the price of Rs.
Since numberone appeared for the respondents before the Escrow Agents on 16th February, 2006, the matter was adjourned till 28th February, 2006 for direction.
In reply to the aforesaid letter of 6th October, 2005, the learned advocate for the appellants wrote back on 24th October, 2005, denying all the allegations companytained in the said letter of 6th October, 2005.
Arising out of SLP C No.20126/2006 ALTAMAS KABIR, J. Leave granted.
The Escrow Agents by their letter dated 13th February, 2006 fixed 16th February, 2006 for passing of necessary direction.
On account of the letter written on behalf of the respondents on 6th October, 2005, the appellants objected to the appointment of an arbitrator in terms of paragraph 19 of MAPA and called upon the respondents by their advocates letter dated 24th October, 2005, to fix a time for appearing before the Joint Escrow Agents.
In response to the aforesaid numberice given by the Escrow Agents, the respondents advocate by his letter dated 15th February, 2006 informed the Escrow Agents and the appellants that the respondents had filed an appeal against the aforesaid order dated 24th January, 2006 and prayed for an adjournment for a period of six weeks.
Accordingly, the advocates of the respective parties, Mr. Anand Bhatt and Mr. Suresh Talwar were appointed as joint escrow agents and various documents were deposited by the respondents with them.
The respondents by their letter of 14th December, 2005 informed the Joint Escrow Agents that they had already applied to the High Court for the appointment of an Arbitrator on 29th November, 2005 and that the Joint Escrow Agents should number, therefore, take any action in terms of clause 14 of MAPA as the fact at issue in the dispute between the parties was beyond their scope.
Notwithstanding the aforesaid circumstances, the appellants wrote to the Joint Escrow Agents on 12th December, 2005 and called upon them to fix a time for a meeting and to indicate the venue of the meeting with numberice to the respondents.
Circular Resolutions passed by the Board of Directors of the Company accepting the resignation of the Directors of the Company.
349.06 crores.
For the purpose of securing the Purchaser for the payments made to be made prior to the Closing Date or the Extended Closing Date, as the case may be , a separate Escrow Letter has been simultaneously executed on the Signing Date pursuant to which the following documents Escrow Documents are being handed over by the Company and Tulip Star to the joint Escrow Agents i.e Mr. Suresh Talwar and Mr. Anand Bhatt, to be retained by them in escrow on the terms and companyditions as set out thereunder Escrow Documents relating to the Company Undated resignation letters of all the directors of the Company.
The interim application filed by the respondents under section 17 of the Arbitration and Conciliation Act, 1996 was thereafter heard by the Tribunal on 16th June, 2006 and by its order dated 23rd June, 2006 the Tribunal went into and decided the question of bias which had been disregarded in the earlier orders and expedited the arbitration proceedings upon restraining the appellants herein from proceeding before the Escrow Agents pending the arbitration.
This appeal companycerns a hotel known as Centaur Hotel situated at Juhu, Mumbai, which formerly belonged to the Hotel Corporation of India under the companytrol of the Union Government.
On 24th January, 2006, the High Court passed the following ad interim order in Arbitration Petition No.
It was also companytended that since the appellants had refused to perform their obligations as a result of the CBI enquiry, the said issue companyld number be decided by the Escrow Agents.
In addition, the appellants were entitled to receive the undated resignation letters, resolutions for appointment of Directors and transfer of shares in favour of the appellants with the right to appoint three Directors on the Board of the respondent No.1 companypany.
The respondents stated that they stood discharged from fulfilling their obligations under MAPA and that the amounts received by the respondents from the appellants would be refunded to the appellants after deduction of a sum of Rs.
In view of the aforesaid letter dated 14th December, 2005 written by the respondents, Mr. Anand Bhatt, one of the Joint Escrow Agents by his letter dated 19th December, 2005 expressed his inability to call a meeting or to take any action under clause 14 of MAPA.
Apart from the above, out of the four original Directors of the respondent No.1, two would resign and along with the three Directors to be appointed by the respondent No.1, there would in all be five Directors, three being the numberinees of the appellants and two being the numberinees of the respondent No.2.
The respondents thereafter informed the appellants by their letter of 28th November, 2005 that since the appellants had failed to appoint an Arbitrator, the said respondents had moved the High Court for appointment of an Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.
The respondents also indicated that they were unwilling to give companysent to Mr. Bhatts reinstatement as Escrow Agent along with Mr. Suresh Talwar.
2 crores within a reasonable time.
