* HIGH COURT OF DELHI : NEW DELHI
+ OMP No.609/2011 and I.A. Nos. 13609/2011 &
13610/2011 & CCP (O) 76/2011
% Judgment decided on: 06.09.2011
COX AND KINGS INDIA LTD. ......Petitioner
Through: Mr Ashok Desai, Sr. Adv., Mr Mukul
Rohtagi, Sr. Adv. Mr Rajiv Nayar, Sr.
Adv., Mr N.K. Kaul, Sr. Adv. with Mr
Peter Lobo, Mr Rishi Agrawala, Mr
Mahesh Agarwal, Mr Akshay Ringe and
Mr Nikhil Rohtagi, Advs.
Versus
INDIA RAILWAY CATERING AND TOURISM CORP. LTD.
.....Respondent
Through: Mr. G.E. Vahanvati, AG, Mr A.S.
Chandhiok, ASG/Sr. Advocate
with Mr. Saurabh Aggarwal,
Mr Bhagat Singh, Mr. Abhijeet
Sinha, Mr. Vidit Gupta & Mr.
Yashwardhan Tiwari, Advs. for the
respondent.
Mr. Sandeep Sethi, Sr. Adv. with
Mr Abhimanyu Mahajan, Adv. for
applicant in IA No.13610/2011.
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
OMP No.609/2011 Page 1 of 52
3. Whether the judgment should be reported
in the Digest? Yes
MANMOHAN SINGH, J.
1. The petitioner Cox and Kings India Ltd. (for short as C&K)
has filed the present petition praying, inter alia, seeking stay of the
operation of the respondent’s letter dated 12.08.2011 seeking to
terminate the joint venture agreement between the petitioner and the
respondent and also from interfering or preventing the petitioner and
the JV Company, i.e. Royale Indian Rail Tours Limited from operating
the Luxury Tourist Train “Maharaja Express” and from obstructing the
petitioner in operation of the JV Company and as a consequence from
operating the bank accounts dealing with venders, suppliers and any
third parties for smooth functioning of the luxury tourist train.
2. Few relevant facts are that the respondent floated an
Expression of Interest for a joint venture partner for a luxury train
project and to operate, manage and run the luxury tourist train on a Pan
India Route within India in December, 2006. In June/July, 2007,
Ministry of Railways (Rail Mantralaya), Railway Board, approved the
proposal submitted by the respondent, i.e., Indian Railway Catering
And Tourism Corporation Ltd. (hereinafter referred to as IRCTC) for
OMP No.609/2011 Page 2 of 52
running a Luxury Tourist Train and broad principles for running the
said train were set out in the letter dated 29.11.2007 addressed by the
Indian Railways to the respondent which are reproduced as under:
“(a) The Respondent will own the rake;
(b) The Respondent will pay to the Indian Railways
the cost of maintenance and periodical over haul of
the rake;
(c) Railways be entitled to recover the haulage cost;
(d) The Respondent with their associate agencies will
manage on board/off board services, marketing,
booking, pricing etc.”
3. The petitioner was selected to be a joint venture partner by
the respondent for the operation of Luxury Tourist Train Project. After
some discussion, on 11.01.2008 the respondent forwarded to the
Indian Railways the draft Memorandum of Understanding which was
proposed to be executed between the petitioner and respondent.
4. The respondent by letter dated 14.01.2008 stated that:
a) the joint venture partner will bring in the funding for the
project and the Luxury Tourist Train would be leased by the
respondent to the JV Company on a 15 years lease term which can be
extended by another 10 years on conditions mutually agreed between
the petitioner and the respondent. As already mentioned, the JV
OMP No.609/2011 Page 3 of 52
Company is Royale Indian Rail Tours Limited (hereinafter referred to
as “JV Company/JVC or short as RIRTL).
b) The petitioner and respondent are equal shareholders of
the JV Company. The obligations of each of the joint venture partners
were mentioned in the said letter.
c) The estimated project cost was Rs.37.5 crores out of
which an amount of Rs.7.5 crores was to be contributed by the
Ministry of Tourism as a grant and an amount of Rs.15 crores was to
be contributed as an advance leased rental by the petitioner as its
share. Copy of the letter dated 14.01.2008 is already placed on
record.
5. After approval of Indian Railways to the respondent a
Memorandum of Understanding dated 10.07.2008 was executed
between the petitioner and the respondent. In the said MoU dated
10.07.2008, it was stated that the Ministry of Railways has given the
permission to the respondent to own and operate the Luxury Tourist
Train for the exclusive use of the JV Company for the period of 15
years and was renewable for a further period of 10 years. In the MoU,
it was also stated that the JV Company (RIRTL) will manage the on
board/off board services, marketing, booking, pricing etc. for the
OMP No.609/2011 Page 4 of 52
operation of the train on tracks with the Indian Railway was to be
coordinated by the respondent. In the said MoU, it is clear that the
respondent claimed that they are an extended arm of Indian Railways
and they had an extensive network. The petitioner and respondent
accordingly executed a Joint Venture Agreement dated 10.12.2008
recording in detail the terms of the agreement.
6. In the said agreement, it was also recorded that pursuant to
the permission given by Indian Railways to the respondent to own and
operate the Luxury Tourist Train consisting of approximately 23
coaches, the Joint Venture Company was formed.
7. Some of the relevant clauses of the Joint Venture
Agreement are as follows:
“Article -1 gives the definitions to the terms and
conditions of JVA.
Article -2 describes the business objective of the
JVC, Article – 2.2 deals with the Memorandum and
Articles of the Company and the main object of the
company is the business of acquiring, furnishing,
maintaining, managing and operating luxury train with a
view to market and sell holiday packages with such
luxury train being the principle mode of transportation.
Article -2.3 is a share capital of the company which is
Rs.5 crores and both parties have equally contributed
Rs.2.5 crores each.
OMP No.609/2011 Page 5 of 52
Article – 2.3.3.1 (c) talks about signing of contract
documents and none of these contracts have been signed
as of date save and except the contract for the on board
hospitality services which was IRCTC’s obligation has
been out sourced to hospitality partner Ninth Dimensions
Hotels and Resorts Pvt. Ltd. (better known as MAPPLE)
who incidentally are also the hospitality partner and on
board service providers to the Golden Chariot being the
other luxury tourist train operated in Karnataka, Goa and
South India by K.S.T.D.C.
Article -3 specifies the term of the agreement and states as
follows “This agreement shall take effect upon its
execution and shall continue to bind the parties initially
for a period of 15 (fifteen) years from date of first
commercial run of the train and thereafter renewable for
a further period of 10 (ten) years, on mutually acceptable
terms and conditions”. It has been clearly stated that
agreement shall continue to bind the parties for a period
of 15 years from the date of first commercial run of the
train and thereafter renewable for a further period of 10
years.
Article -5 deals with the provision of luxury train. This
clause specifies that IRCTC has agreed to lease the train
to the JVC. IRCTC would acquire the coaches/rake from
the Indian Railways. The JVC shall design the interior
concept at its cost and provide it to IRCTC. The JVC
would coordinate to ensure whether the train is
manufactured as per the specification and design.
Article -6 deals with the lease of the Luxury Train.
IRCTC was to bear the cost of the train and lease it to the
JVC for a period of 15 years from the dated of
commercial run, renewable for a further period of 10
years. The JVC has paid IRCTC an advance payment of
50% of the (total cost of the train minus capital subsidy)
towards lease charges (Advance Lease Charges) of the
Luxury Train C&K shall provide unsecured loan to theOMP No.609/2011 Page 6 of 52
tune of 50% of the (cost of the train capital subsidy) to
the JV company and the proceeds shall be utilized by the
JV Company towards payment of Advance Lease
Charges to IRCTC for partially meeting the cost of the
luxury train. The payment of advance lease charges is
paid to IRCTC as per Article 6. The advance lease
charges shall be adjusted against the annual lease charges
payable to IRCTC in equal installments over a period of
15 (fifteen) years.
Maintenance of the luxury train as per Article 7. The JVC
is responsible for bearing all expenses relating to
operation and maintenance of the luxury train which
includes maintenance of interior fittings and maintenance
and replacement of soft interior. Article – 7.2 relates to
payment of haulage charges to Railways. The JVC is
responsible for reimbursement of all payments made by
IRCTC to Indian Railways towards haulage charges.
The payment of haulage charges by JVC to IRCTC will
be in accordance with to the payment condition laid
down by Indian Railways and amount payable will be as
demanded by Indian Railways from times to time.
IRCTC was required to provide records and documents of
haulage payments made by IRCTC to Indian Railways.
Article – 8 : Unsecured Loans : C&K shall provide an
unsecured loan for a period of 15 (fifteen) years of an
amount which will be 50% of the total cost of the luxury
train (i.e. cost of the coach shell and the interior fittings
and furnishings – (minus) the capital subsidy available in
relation to the luxury train project, as per the applicable
tourism policy of the Central and State Governments.
The provision of unsecured loan by CNK (the petitioner)
to the JVC for a period of 15 years being 50% of the total
cost of the luxury train as in Article 8.
The repayments of the unsecured loans was treated
as an advance lease charges adjustable/amortized in 15
years.
OMP No.609/2011 Page 7 of 52
Article – 9 dealt with the Technical Operation and
maintenance of the luxury train on Indian Railways and
the same were the responsibility of IRCTC. The JVC
was to use booking engine of IRCTC. The JVC was to
acquire the entire peripheral software for integrated front
and back end office management from CNK. The JVC
was responsible for obtaining necessary clearance and
permission.
All internal facilities, itinerary was to be decided by
the Joint Venture Company as per Article 10.
The income from the sale of packages and other
services was to be the revenue of the Joint Venture
Company as per Article 11.
The JVC was responsible for the tour packages and
JVC through itself or through SLA market, promote train
based tour packages to ensure luxury train potential fully
realized and the luxury train is positioned as a premium
luxury train. The JVC was responsible for all hospitality
services. (Page 39)A current account of the Joint Venture Company was
to be operated and was to be maintained with joint
signature of both parties of JVC as per Article 134.
The JVC was responsible for mobilizing funds as per
Article – 14.
The JVC was to have nine Directors on its board,
three Directors from IRCTC, three Directors from CNK
and three independent Directors, one each to be appointed
by IRCTC and CNK and third independent Director to
be jointly by IRCTC and CNK. Article – 15.3 provided
that the Chairman shall be the nominee of the IRCTC.
Article – 16 pertains to the meetings of the Board of
JVC. The quorum at BOD meetings, adjourned meetings
and Article – 16.5 (page 42) clearly stated that in case ofOMP No.609/2011 Page 8 of 52
equality of votes at the BOD meetings, the Chairman
SHALL NOT have a casting or second vote.
Article – 17 pertains to the management of the JVC. As
per Article 17.2 the management of the JVC was to be
supervised by the Director Finance nominated by IRCTC
and the Director Operations nominated by CNK. As per
Article 17.6 certain agreement were was required to be
executed by and between the company and IRCTC or
CNK as the case may be. None of these agreements have
been executed save and accept the agreement at Article
– 17.6 (B), the agreement for providing on board services
has been executed by the JVC with MAPPLE since
IRCTC not having the international exposure and
experience in providing Five Star super luxury fine dining
opted to outsource the onboard services of the luxury train
to MAPPLE who are also the on board service providers
to the Golden Chariot.
Article – 20 : The parties to the JVC were to make a
detailed project report finalized itineraries higher and
recruit staff make process for selling products and
systems for collection of revenue and disbursement of the
same.
As per Clause 24.2 provided the lock in period for
holding shares was 15 years from the date of
commencement of lease.
As per clause 24.3 if there was a shareholder’s
default then either of the party could sell the shares to the
other at the preretirement provisions as provided under
Article 24.3.”
8. As provided under the JV Agreement and MoU, the service
agreement dated 05.03.2010 between the JV Company (RIRTL) and
Ninth Dimension Hotel and Resorts Pvt. Ltd. (hereinafter referred to as
OMP No.609/2011 Page 9 of 52
“MAPPLE Hotels”) was also executed for providing hospitality
services on board and their respective roles and responsibilities were
mentioned in the said agreement.
9. After completion of other formalities, the commercial
operation of the Maharaja Express was flagged off by the Minister of
Railways on 20.03.2010 at Kolkata station. It is the admitted position
that upto April 2011, the said train, i.e., the Maharaja Express, 34
journeys were completed out of 4 journeys in the inaugural runs till
31.03.2010 and 30 journeys between April, 2010 to April, 2011.
10. In between, i.e., in November, 2010, the respondent
forwarded the draft of lease agreement for lease of the Luxury Tourist
Train to the petitioner who in the month of March/April, 2011 pointed
out that the said draft of the lease was inconsistent with the
arrangement between the parties including the terms of MoU and the
JV Agreement. The petitioner submits that the respondent somewhere
January 2011 forwarded a copy of the draft MoU proposed to be
executed between the respondent and the Indian Railways which
according to the petitioner was inconsistent with the terms of the JV
Agreement.
11. The petitioner in para 14 of the petition has also given the
OMP No.609/2011 Page 10 of 52
detail of other inconsistencies pointed out to the respondent with the
terms of the JV Agreement and also protested and objected to the said
MoU which would, if executed, completely negate the terms of JV
Agreement which was executed in the month of December 2008 and
the MoU executed between the petitioner and the respondent in July,
2008.
12. The case of the petitioner is that the parties, i.e., the
petitioner and the respondent, came together to form the JV Company
which was set up specifically for the purpose of acquiring, furnishing,
maintaining, managing and operating Luxury Tourist Train with a view
to market and sell holiday packages. The terms were recorded in the
MoU of July, 2008 and the JV Agreement and pursuant to the same,
the petitioner had invested a sum of more than Rs.45 crores in the said
JV company.
It is submitted by the petitioner that the said MoU and JV
Agreement were executed after the specific permission given by the
Ministry of Railways, Government of India, which permitted the JV
company to own and operate the Luxury Tourist Train during the
period of 15 years as specified in the JV Agreement. The said
agreement also recorded that the JV Company will manage, on board
OMP No.609/2011 Page 11 of 52
and off board services and in view of that the petitioner initially
invested Rs.22.25 crores on the basis of the representation of the
respondent and the Indian Railways. The petitioner submits that the
entire arrangement between them was with the full consent and
approval of the Indian Railways/Ministry of Railways. But, when the
petitioner received the letter somewhere in January 2011 enclosing the
Draft MoU between the respondent and the Indian Railways to change
the entire meaning, modify and vary the terms of the arrangement
entered between the petitioner and the respondent and the petitioner’s
role and position was sought to be diluted in the said Draft MoU, the
petitioner has rightly raised the objections by letter dated 13.06.2011
with copy to Indian Railways who had full knowledge about the MoU
as well as JV Agreement between the petitioner and the respondent
and also having permitted the parties for the same. Therefore, the
petitioner says that under no circumstances the Indian Railways now
could seek to change the terms by executing an inter-se agreement
between the Ministry of Railways and respondent which would seek to
dilute the position of the petitioner.
13. It is alleged by the petitioner that now the respondent by
letter dated 21.06.2011 addressed to the JV Company, i.e., RIRTL,
OMP No.609/2011 Page 12 of 52
claimed that the lease agreement and the haulage charges were payable
by the JV Company. The petitioner submits that it was done in order
to divert the attention of the petitioner from Draft MoU as the payment
of haulage charges was an obligation on the respondent. The
respondent and Indian Railways are now seeking to amend the terms
of the JV Agreement by seeking to introduce a new policy.
14. In nutshell, according to the petitioner, the respondent after
the gap of long time is seeking to change various terms by proposing
the said document, the detail of which is given in para 21 of the
petition. The petitioner states that the petitioner has paid advance
loan of Rs.4 crores for payment of haulage charges for the period April
to July, 2011.
15. There are many other grievances raised that the petitioner
did not receive the bank statements of the JV Company for more than
two and half years. The petitioner also set out the detail in which more
than Rs.30.69 crores upto March 2010 have been paid by the
petitioner towards the expenses and advance loan in the form of
providing off board services, loans and expenses etc. and they have
also incurred expenses towards off board services and loans amounting
to Rs.16.92 crores from April 2010 to March 2011. The subsequent
OMP No.609/2011 Page 13 of 52
letters dated 11.07.2011, 04.08.2011, 05.08.2011 and 06.08.2011
were exchanged between the parties.
16. It is not in dispute that after the end of last season, the
respondent on 18.04.2011 took the said train to the India Railways
workshop for annual repairs and maintenance.
17. Learned Senior Counsel appearing on behalf of the
petitioner has referred to few letters during the hearing of the petition,
particularly the letter dated 04.08.2011 whereby the respondent
referred to its earlier letters dated 07.07.2011 and called upon the
petitioner to withdraw its protest relating to the execution of the MoU
of June, 2011 between the Indian Railways and the respondent.
Another letter dated 06.08.2011was also referred wherein the
suggestion was made by the respondent that the work on the train
should be completed as early as possible.
18. However, learned Senior Counsel states that vide letter
dated 12.08.2011 the respondent terminated the lease arrangement
pursuant to the JV Agreement on various grounds mentioned in the
said letters. Thereafter, the petition has been filed by the petitioner
seeking relief of stay of operation of termination letter and another
prayer is made that till end of this season i.e. April, 2012 , the
OMP No.609/2011 Page 14 of 52
arrangement which was continued, be maintained subject to any terms
and conditions granted by the Court.
19. The petitioner submits that the act of termination by letter
dated 12.08.2011 by the respondent would put the huge investment
made by the petitioner into jeopardy and the goodwill and reputation
would also be spoiled in the eyes of their travellers who are from
overseas countries and the reputation of the Indian Government is also
at stake. Therefore, it was stated that the letter of termination dated
12.08.2011 is arbitrary, illegal and void on various ground stated in the
petition, thus, the interim order is sought.
20. The petitioner submits that the petitioner has been
marketing the bookings internationally and within India. The season of
this train is between the months of September to April. The train is
mainly booked by foreign tourists and the bookings are made much in
advance. The JV company has received and his holding approximately
400 bookings for the current year upto December 2011. The said
bookings have been made by various international travel companies.
The said foreign tourists make their bookings either directly or
indirectly through a travel agent after considering the services offered
by the JV Company as stated on their website and the 100 of workers
OMP No.609/2011 Page 15 of 52
employed by the JV Company, who are connected with the train,
would be jobless. All these factors show that at this stage the running
of the train cannot be stopped without assigning any reason
irrespective of the fact that the lease deed is not signed and JV stands
terminated.
21. Article 30 of the JV Agreement provides the clause of
dispute resolution by mutual negotiations otherwise, in the event of
disputes remaining unresolved, the same are to be referred to the
arbitration.
22. Lastly, the petitioner submits that the petitioner is entitled
to specific performance of the JV Agreement which has no termination
clause. It is also stated by the petitioner that though there is no formal
lease agreement for the train executed between the respondent and JV
Company but as per conduct of the parties and documents executed
earlier and correspondence exchanged between the parties, the said
lease is effective and subsisting by implication. The petitioner submits
that as per Article 6 of the JV Agreement, it was provided that the
lease will be for a period of 15 years from the date of first commercial
run and the first commercial run took place on 06.03.2010. The lease
rent was also paid in advance for the period of 15 years. Therefore,
OMP No.609/2011 Page 16 of 52
the prayer made in the petition is liable to be granted, otherwise, the
petitioner would suffer grave harm and irretrievable injury. On the
question of arrangement of seasons between September, 2011 to April,
2012, it is averred that the first batch of advance international
bookings have been made for the “Maharaja Express” which is to run
from 14.09.2011.
23. The last contention of the learned Senior Counsel for the
petitioner is that there is no dispute that there are various claims of the
respondent against the petitioner and JV Company and similarly the
petitioner has various claims against the respondent company. But at
this stage, some interim measures have to be made by the Court.
Insofar as the merit of the case is concerned, it is stated that claims and
counter-claims have to be determined by the arbitral tribunal.
Therefore, due to peculiar circumstances of the case and the fact that
the said function of providing services to the foreign tourists who have
already booked for the another season of the train cannot be put to
prejudice due to the stalled relationships between the parties to the
agreement, therefore, some arrangement has to be made by the Court
so that the interest of the petitioner is not harmed in the eyes of their
customers.
OMP No.609/2011 Page 17 of 52
24. Mr Ashok Desai, the learned Senior Counsel for the
petitioner, has also made a submission as to the possible interim
arrangement which can be done at this stage including the appointment
of the receiver and running the train under his supervision and
depositing the part of the booking amount in the separate account but,
the train may be allowed to run as per the earlier arrangement for this
season and the petitioner would have no objection if one or two
representatives of all concerned parties may also be allowed to act as
observers in addition to above for the purpose of smooth running of the
train. He has also agreed not to make further bookings for the next
season, subject to any order if passed as per its own merit by the
Arbitral Tribunal. He further states that the petitioner has no objection
if any retired Judge of this Court or from Supreme Court be appointed
as an arbitrator and time schedule be fixed so that the dispute between
the parties be determined within the period of 3 to 6 months. All this
arrangements have been suggested by Mr. Desai as without prejudice
to the rights and contentions and claims to be raised by the parties
before the arbitral tribunal.
25. The respondent has strongly contested the matter, inter alia,
on the following grounds:
OMP No.609/2011 Page 18 of 52
a. The petition is not maintainable as the same was filed
on the basis of two letters on 12.08.2011 (termination
letter) issued by the respondent by which the
respondent for the reasons stated in the said letters
terminated the Joint Venture Agreement entered
between the petitioner and the respondent on
10.12.2008.
b. The Joint Venture Agreement is void as the consent of
the respondent was obtained by fraud and
misrepresentation and cannot be given effect to and is
also unenforceable and therefore, the petition would
not be maintainable.
c. The petitioner in the matter in fact is seeking the stay
the operation of one letter dated 12.08.2011 issued by
the respondent to Joint Venture Company. The said
Joint Venture Company is not a party to the
proceedings and also not party to any arbitration
agreement. Therefore, granting of any relief would be
amounting to grant of a mandatory injunction and in
any event, if losses are suffered by the petitioner it
OMP No.609/2011 Page 19 of 52
could be compensated in terms of money as thecontract has been terminated between the parties on
account of various breaches committed by the
petitioner of the Joint Venture Agreement. In fact, the
train was never operated in the manner as
contemplated in the Joint Venture Agreement by the
Joint Venture Company. Nor the petitioner had
agreed to pass on the booking revenues to the Joint
Venture Company and instead raised inflated debit
notes.
26. It is stated by the respondent that by seeking the relief on
the basis of the Joint Venture Agreement, the petitioner is trying to get
a lease in favour of the Joint Venture Company, a third party who is
not even a party to the present case and the agreement. The lease was
never executed in favour of the said company. The rights of the
petitioner cannot be beyond than what has been laid down in the
Articles of Association of the Joint Venture Company. The relation
between the Joint Venture Company and the respondent has already
come to an end and has been terminated. Therefore, now the petitioner
is attempting to create a right for use of the train which was never in
OMP No.609/2011 Page 20 of 52
the possession of the petitioner and the petitioner is not entitled to use
the same in future as the respondent is the owner of the train. Thus, it
is not open to the petitioner to claim any relief in relation to the train
which is subject matter of the train withdrawal letters which were
issued by the respondent to the Joint Venture Company being the
owner of the train. It was also stated that earlier the Joint Venture
Company was allowed to run the train on an ad-hoc arrangement,
otherwise no terms and conditions of any lease arrangement were
finalized, therefore, now the respondent is not inclined to continue
with the said arrangement for the reasons stated in the said letter.
27. Mr. G.E.Vahanvati, the learned Attorney General of India,
appearing on behalf of the respondent has referred to Articles 5 and 6
of the Joint Venture Agreement and argued that the respondent was
merely to give the train on lease to the Joint Venture Company which
was conditional subject to the terms and conditions being agreed upon
between the respondent and the Joint Venture Company as well as
payment of lease rental and after adjustment of the advance lease
rental, haulage charges of the Railways etc. The said conditions are not
fulfilled. Further as the terms and conditions of the lease were not
finalized nor was the lease agreement executed between the parties,
OMP No.609/2011 Page 21 of 52
the dispute relating to train involving the Joint Venture Company
cannot be resolved by the arbitration.
28. It is also argued by learned Attorney General that the
petitioner has suppressed the material fact from this court when it is
stated that the Joint Venture Company was incorporated after entering
into the Joint Venture Agreement, though the said Joint Agreement
Company was incorporated on 27.11.2008 prior to the date of Joint
Venture Agreement dated 10.12.2008. The said Joint Venture
Company was in fact in existence on the date of agreement. He argued
that on this ground itself no relief should be granted as sought.
29. The learned Attorney General has argued that the petitioner
had retained all revenues which is more than 18 crores in respect of
bookings made by the journeys of the train already operated upto
April, 2011. Even the revenue from the month of September, 2011, till
April, 2012 has not been transferred to the Joint Venture Company.
The petitioner had issued inflated bills towards “off board services” for
the train totaling to Rs.21,36,98,595/- and unilaterally sought to adjust
all the booking revenues which had been retained illegally by the
petitioner against its own inflated bills/debit notes raised on Joint
Venture Company and suo moto appropriated/adjusted the entire
OMP No.609/2011 Page 22 of 52
booking revenue of Rs.18.87 crores by keeping Rs.4.95 crores as
commission and adjusting the balance of Rs.13,83,72,184/- in respect
of the inflated and unauthorized bills/debit notes raised by the
petitioner.
30. On the other hand, the respondent has not received any
amount from the petitioner. Therefore, the respondent is no longer
willing to permit the Joint Venture Company to use or operate the train
for the reasons stated in the Train Withdrawal Letter. The question of
use of train by the Joint Venture Company cannot be the subject matter
of the present proceedings. In fact, the petitioner is trying to directly
or indirectly take over the complete control of the operations of the
train, though the petitioner was never authorized to use the train. Mr
Vahanvati, the learned Attorney General, has also argued that the
petitioner has charged the Joint Venture Company commission at the
rate of 30% on the total booking revenues of Joint Venture Company.
The said rate of 30% is very higher.
31. Therefore, by the discontinuation of the permission granted
for a limited period to Joint Venture Company to use the train, the
petitioner will not suffer any losses. It is argued that the basic roles of
the petitioner defined in the Joint Venture Agreement was to hand “off
OMP No.609/2011 Page 23 of 52
board services”. As per Article 9 of the Joint Venture Agreement, the
Joint Venture Company was to enter into service agreements with the
petitioner for off board services and with the respondent for on board
services. The agreement of the Mapple with the Joint Venture
Company has no significance and cannot be subject matter of the
proceedings as the petitioner and the respondent are not the parties of
the said agreement.
32. It is argued that the respondent has not denied that as per
Clause E of the MoU, the haulage charges were the liability of the
respondent. The respondent was to pay the amount of haulage charges
to the Ministry of Railways and the said amount was to be reimbursed
to the respondent at actual but there was breach on the otherside.
33. The respondent has also given the detail of various defaults
made by the petitioner in paras 47 to 51 of its reply. In para 53 of the
reply, the respondent has also given the detail of the two financial
projections and proposal from the petitioner which is reproduced as
under:
Projected Projections given
Financials as per by C& K on
C&K Bid dated 24.11.2011
16.04.2008
1 Max Occupancy 905 (yr 5 onward) 65% (yr 5 onward)
OMP No.609/2011 Page 24 of 52
2 Max Prices 2150 2500
(USD/pax/day)
3 5 years cumulative P/L 36 Cr (profit) -72 Cr (Loss)
4 Haulage Charge (Lakhs/ 5.3 Lakhs 6.0 Lakhs
day)
5 On Board+Off Board USD 146/head/day USD 320/head/day
6 Agent Commission 20% 30%
34. It is also argued by the respondent that the investments
made by the respondent are far greater than the petitioner. In para 70
of the reply it was referred by Mr. Vahanwati in support of his
submission wherein the respondent has given the details about the
investments made by the respondent, inter alia, in the following
manner:
“(i) It was because of the respondent that the Ministry of
Tourism gave a grant of Rs.12.37 crores to the
respondent [under its scheme for PSU projects and
distinct from PPP/private sector projects] which was also
spent in the development of the train.
(ii) No doubt a sum of Rs.18,50,00,000 [Rs.4.2 crores
has been returned] was given by RIRTL [not the
petitioner, since the Petitioner is charging interest for that
amount on the joint venture company] to the respondent,
but then about Rs.10.97 crores of that amount had to be
paid to the Railways for haulage charges, Rs.3.33 crores
was paid towards use of the train for the limited period,
Rs.0.65 crores was spent towards the office space
rentals of RIRTL and the balance of Rs.3.5 crores wasOMP No.609/2011 Page 25 of 52
only left after accounting the moneys with the
respondent. Infact, the haulage charge amount is more
than what has been adjusted [as Rs.1.54 crore more is to
be paid to the railways] besides the license fee being
0.5% of the total revenues also has to be adjusted being
the revenue share of respondent as per the bid of the
petitioner.
The respondent was to collect from RORTL and pass
n the haulage charges to the Railways. Earlier RIRTL
had paid around Rs.2.55 crores to the Railways and the
respondent had paid about Rs.6.5 crores out of its own
pocket. After the adjustment of the amounts, now the
respondent has paid a further amount of Rs.4.46 crores
and Rs.1.54 crores to the Railways for use of the train by
RIRTL.
(iii) Interestingly, while the amount had been advanced to
the respondent by the RIRTL, the petitioner is claiming to
have acquired an interest on the train operation on the
basis of this amount. Remedy, if any, in respect of non-
payment of monies owed by RIRTL to the petitioner,
cannot be against the respondent.
(iv) RIRTL did not pay the advance lease rental for 15
years as alleged. Only a part thereof was paid and those
amounts have been adjusted against costs incurred for
actual usage of the train by RIRTL in the manner
mentioned above.
(v) After adjustments, as mentioned above, a balance of
Rs.3.5 crores was left with the respondent against the so-
called “advance rentals”. These amounts cannot, without
prejudice to the other contentions of the respondent, be
sufficient to cover operational expenses of the train any
more, let alone until December, 2011. Infact, the actual
haulage charge levied by the Ministry of Railways is
much more than what has been adjusted besides the
license fee being 0.5% of the total revenues also has to beOMP No.609/2011 Page 26 of 52
adjusted being the revenue share of the respondent as
per the bid of the petitioner, as such, this amount of
Rs.3.5 crores would get reduced further.”
35. It is the further contention of the respondent that in the
operation of the train till 19.04.2011, the respondent has only got the
rental of the train amounting to Rs.3.3 crores out of total revenue of
Rs.31.65 crores. The said money is either lying with the petitioner or
the Joint Venture Company. The petitioner, on the other hand, has
made substantial profits in terms of the commission from the booking
amounting to Rs.5.15 crores and would also be making substantial
profits out of the off board services, the detail of which is mentioned in
the debit notes. The petitioner has also claimed interest on the said
amount loaned to the Joint Venture Company amounting to
Rs.1,56,15,154/-.
36. In nutshell, it is argued that the petitioner operated the train
and has not paid the haulage charges to the respondent for payment to
the Railways, a substantial portion of the amount of Rs.18.55 crores
given to the respondent had to be adjusted towards haulage charges
and rental and thus, leaving such a small amount with the respondent
that any further operation of the train would result in liabilities of the
haulage charges. In view of the above said facts and circumstances,
OMP No.609/2011 Page 27 of 52
the learned Attorney General has made submissions that the petitioner
is not entitled for any interim relief sought by it.
37. The learned Attorney General has also referred to the case
of Bharat Catering Corporation vs. Indian Railway Catering and
Tourism Corporation; 164 (2009) DLT 530 (DB) in support of his
submissions. Para 17 of the said judgment is reproduced as under:
“17. Apart from merits, even otherwise, in our view, the
scope and ambit of Section 9 do not envisage the
restoration of a contract which has been terminated. The
learned Single Judge, in our view, rightly held that if the
petitioner is aggrieved by the letter of termination of the
contract and is advised to challenge the validity thereof,
the petitioner can always invoke the arbitration clause to
claim damages, if any, suffered by the petitioner. It is not
open to this Court to restore the contract under Section 9,
which is meant only for the sole purpose of preserving and
maintaining the property in dispute and cannot be used to
enforce specific performance of a contract as such. A bare
glance at the said Section will suffice to show that
pending arbitration proceedings, the Court and the
Arbitral Tribunal have been vested with the power to
ensure that the subject matter of the arbitration is not
alienated or frittered away. The provisions of Section 9,
for the sake of convenience, are FAO(OS) 226/2009 Page
No. 15 of 20 extracted below:-
“9. Interim measures, etc. by Court.- A party may, before
or during arbitral proceedings or at any time after the
making of the arbitral award but before it is enforced in
accordance with section 36, apply to a court-
OMP No.609/2011 Page 28 of 52
(i) for the appointment of a guardian for a minor or a
person of unsound mind for the purposes of arbitral
proceedings; or
(ii) for an interim measure of protection in respect of any
of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods
which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any
property or thing which is the subject-matter of the
dispute in arbitration, or as to which any question may
arise therein and authorising for any of the aforesaid
purposes any person to enter upon any land or building in
the possession of any party, or authorising any samples to
be taken or any observation to be made, or experiment to
be tried, which may be necessary or expedient for the
purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the court to be just and convenient, and the
Court shall have the same power for making orders as it
has for the purpose of, and in relation to, any proceedings
before it.”
38. The respondent is not agreeable with the suggestions given
by Mr Desai to allow the Joint Venture Company or the petitioner to
run the train as per earlier arrangement or on the terms by him. It is
argued that in case the suggestions of the petitioner are accepted, it
will amount to writing a fresh contract which is not permissible in law
OMP No.609/2011 Page 29 of 52
and simultaneously he gave his own proposal without prejudice to the
rights of the respondent in order to avoid any complication to be
suffered by the tourists who have already made the booking till the
date of this season. The respondent has made the following
suggestions in order to honor the bookings as stated by the petitioner
without prejudice to the rights and contentions of the parties:
a) The train has to be run by the owner/ respondent. All the facility
material including crockery, furnishings etc which are in custody
of the petitioner should be handover to respondent for executing
this facility arrangement.
b) All revenues arising therefrom without any deductions earned
either by the petitioner or respondent may be deposited in the
separate account from which expenditure will be funded.
c) All the bookings may be allowed to the transferred to the
respondents for honouring.
d) All the on board or off board expenses and railway payments
may be allowed to be charged to this account. In this way, the
amount will be sufficient to cover the expenses and there will be
no need for further loans.
e) The existing service providers may be retained.
OMP No.609/2011 Page 30 of 52
As per the respondent, the arrangement can be acceded to
only at the above terms in order to avoid any hardship and harassment
to the tourists.
39. As far as termination of the Joint Venture Agreement is
concerned, it is agreed that it would be subject to outcome of arbitral
proceedings that may be initiated by the petitioner and all objections,
claims and contentions of both sides be kept open before the arbitral
proceedings.
40. Let me now first deal with the first prayer made by the
petitioner i.e. seeking stay of the operation of the respondent letter
dated 12.08.2011 whereby the Joint Venture Agreement dated
10.12.2008 was terminated by the respondent on various reasons. No
doubt, the petitioner has challenged the validity of termination as per
details given in the petition. So the question in the present petition has
arisen as to whether any of the parties had violated the conditions
mentioned in the Joint Venture Agreement between the parties. It is to
be examined as to whether at this stage, when the agreement has been
terminated/ rescinded by the respondent right or wrongly on account of
purported fraud, can this Court go into the contentions of the parties
and conclude that the said termination is invalid?
OMP No.609/2011 Page 31 of 52
41. It is a settled law that the court while granting the interim
measures under section 9 cannot arrive at the conclusive finding as to
the fact that the agreement is validly terminated or it is invalid as it is
for the arbitral tribunal to decide whether the termination was valid or
invalid. As held by the Supreme Court and various Court that in case
the party, who is seeking the interim order, has made out a prima facie
case is entitled to take action for termination of agreement. Its validity
at this stage of interim measure is only for the limited purpose as to
whether any prima facie case is made or not. And in case no interim
order is made, the party would suffer loss and injury which cannot be
compensated by damages.
Therefore, in view of the settled law on the point involved,
I am of the considered view that the scope of Section 9 does not allow
the Court in the facts and circumstances of the present case, as
mentioned above, to restore the Joint Venture Agreement which has
been terminated/ rescinded by way the said fraud as alleged by the
respondent in its letter dated 12.08.2011, doing this would mean
nullifying the said termination. I feel that only remedy lies to challenge
the validity by invoking the arbitration clause and claim damages, if
any. However, at this stage of interim injunction as prayed in the
OMP No.609/2011 Page 32 of 52
second relief the said termination is to be examined for the limited
purpose as to whether the petitioner has made out a prima facie case to
pass such orders. Thus, the first prayer of the petition is disallowed.
42. Now coming to the first contention raised by the
respondent that the petition is not maintainable as the Joint Venture
Company is not a party to the Joint Venture Agreement and, therefore,
cannot be included within the ambit of arbitration.
43. It is not in dispute that the Articles of Association are an
agreement between the shareholders and the Joint Venture Company.
The definition of the party includes the petitioner as well as the
respondent. Since the Articles of Association is an agreement amongst
the shareholders and the company itself, therefore, the petitioner and
respondent are included therein The Memorandum and Articles have
been signed by the respondent.
44. The JV Company has a separate arbitration agreement
between the petitioner and the respondent and Article 200 of the
Articles of Association of the JV Company contains an arbitration
clause. The Arbitration Clause, i.e., Article 200, of dispute resolution
reads as under:
“200. Reference to an Arbitrator
OMP No.609/2011 Page 33 of 52
IRCTC and C&K will endeavour to resolve by mutual
negotiation any dispute, differences, controversy or
claims arising out of or in relation to, this Agreement,
including the scope, validity, existence and the
interpretation thereof, the activities performed hereunder,
or for the breach thereof, arising between them in
connection with this Agreement.
(a) Any and all disputes differences, controversy or
claims arising out of or in relation to, this Agreement,
including the scope, validity, existence and the
interpretation thereof, the activities performed hereunder,
or for the breach thereof, which cannot be satisfactorily
resolved by mutual negotiation within ninety (90) days of
issue of a notice by a party, shall be finally settled by
arbitration, in accordance with the rules of Arbitration of
Indian council of Arbitration (ICA) under….”
It is also pertinent to mention that the Articles of
Association in the clause defines:
a. “The Company” or “this Company” means Royale
Indian Rail Tours Limited.
b. “Party” means IRCTC or C&K as the case may be.
c. “Parties” in relation to this Company would include Cox
and Kings (India) Limited and IRCTC.
45. However, the petitioner and Joint Venture Company have
filed two separate applications under Order 1 Rule 10 CPC for
impleadment as respondent No.2. Mr Sandeep Sethi, the learned
Senior Advocate, with Mr Abhimanyu Mahajan, Advocate, appeared
OMP No.609/2011 Page 34 of 52
in the matter on behalf of Joint Venture Company. Mr. Sethi says thatin view of above, any arrangement or suggestion if made by this Court,
his client would abide the same. He further says that he is prepared to
go for arbitration for the dispute arose between the parties.
46. Therefore, prima facie it cannot be said that there is no
arbitration between the Joint Venture Company and the parties in the
present petition. The only shareholders and persons in management of
the Joint Venture Company are the petitioner and the respondent.
47. The Board of Directors of the said Joint Venture Company
constitutes 3 nominees of the petitioner, 3 nominees of the respondent
and 3 independent nominees. In the application it is stated that the
consent to file the present application was given by 5 Directors out of
9 Directors of the Joint Venture Company. The copy of the Resolution
approved by 5 Directors along with Articles of Association of the Joint
Venture Company was annexed along with the application.
48. Section 9 of the Arbitration and Conciliation Act, 1996
reads as under:
“S. 9. Interim measures etc. by court. – A party may,
before or during arbitral proceedings or at any time after
the making of the arbitral award but before it is enforced
in accordance with section 36, apply to a court:
OMP No.609/2011 Page 35 of 52
(i) for the appointment of a guardian for a minor or person
of unsound mind for the purposes of arbitral proceedings:
or
(ii) for an interim measure of protection in respect of any
of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods
which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration:
(c) the detention, preservation or inspection of any
property or thing which is the subject-matter of the
dispute in arbitration, or as to which any question may
arise therein and authorising for any of the aforesaid
purposes any person to enter upon any land or building in
the possession of any party, or authorising any samples to
be taken or any observation to be made, or experiment to
be tried, which may be necessary or expedient for the
purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the court to be just and convenient,and the
Court shall have the same power for making orders as it
has for the purpose of, and in relation to, any proceedings
before it.”
A plain reading shows that the Court has jurisdiction to
pass orders until the Award is submitted for enforcement under Section
36 of the Act.
49. Therefore, under Section 9 of the Arbitration and
OMP No.609/2011 Page 36 of 52
Conciliation Act, the Court has a jurisdiction to preserve the subject
matter of the dispute in many forms depending upon the facts of each
case and as per orders sought for. The Court is to decide by the order
in the facts and circumstances of each case for purpose of passing such
protection/presentation.
50. The proceedings in a court, as distinct from those before an
arbitrator, are also between parties to an agreement/transaction only.
Still, the practice of issuing interim orders/directions qua third parties
exists.
51. It is also to be noted and an arguable case as to whether the
JV Company is completely a third party as the said JV Company is the
offshoot of the petitioner and the respondent. It is to be seen that the
petitioner and respondents joined hands for some purpose of running
the train jointly which was performed by the JV company being owned
together by the petitioner and respondent at the ratio of 50 : 50. It is
also a matter of fact that for the previous season the respondent itself
has itself allowed the JV Company to run the train on its behalf.
Moreover, the articles of association also show close connectivity,
participation and nexus of the petitioner and respondent in the JV
Company by providing the arbitration clause under Article 200.
OMP No.609/2011 Page 37 of 52
Therefore, at the prima facie stage, it cannot be said that the said JV
company is to be treated an outsider to the dispute rather it is
intricately connected with the parties.
52. In similar circumstances, the Bombay High Court in the
judgment of Heritage Lifestyle & Developers Pvt. Ltd. v. Amarvilla
Co-operative Housing Society Lt., 2011(3) MhLJ 865, in para 14
observed as under:
“Admittedly, there is an arbitration clause between the
parties, and there exist a arbitrable dispute as raised. The
Scheme of Section 9 has been elaborated by the Apex
Court in various judgments. It is now made clear that all
the provisions of the Code of Civil Procedure which are
necessary for passing an appropriate order under Section
9 needs to be taken note of which includes Section 9A,
Order 37, Order 38, Order 39, Rules 1 and 2, Order 40 of
CPC. Therefore, while passing any order under Section
9, apart from the facts and circumstances, the Court needs
to consider all desired facets which are otherwise
available for passing ad interim, interim and/or even
mandatory order. There is no bar and if case is made out,
I see there is no reason that the Court under Section 9,
cannot pass such order, even against the person who is
not the party to the agreement but specially when such
third person is claiming protection or right through the
party who is consenting party to the arbitration
agreement.”
53. In V.B. Rangaraj vs. V.B. Gopalakrishnan; (1992) 1 SCC
160, it has been held that articles of association of a company are a
contract binding upon the company and its shareholders. Therefore, in
OMP No.609/2011 Page 38 of 52
the present case, the company itself is a party to the arbitration clause.
Under Order 1 Rule 10(2), the Court has power to strike out or add
parties at any stage of the proceedings either upon or without the
application of either party and on such terms, as may appear to the
Court to be just, order to add parties. Since the petitioner and
respondent in the present case are co-shareholders of the Joint Venture
Company, I feel that there is no harm if the Joint Venture Company be
also added as respondent No.2. Therefore, the applications filed by
the petitioner as well as the proposed respondent No.2 are allowed.
The Joint Venture Company is impleaded as respondent No.2. The
amended memo of parties as already filed is taken on record.
54. The next objection of the respondent that the Joint Venture
Agreement was pre-existing on the date of the Joint Venture
Agreement is without any substance since the subscribers to the
Memorandum of Association of the Joint Venture Company are both,
the petitioner and the respondent. It is not in dispute that the Joint
Venture Company was incorporated on 24.11.2008, whereas the
Memorandum of Understanding between the petitioner and the
respondent containing the arbitration clause was executed on
10.07.2008. Admittedly the Joint Venture Company was incorporated
OMP No.609/2011 Page 39 of 52
for the purpose of same transaction.
55. Further submission of the respondent is that since a lease
has not been executed between the Joint Venture Company and the
respondent, there is no obligation on the respondent to provide the
train to the Joint Venture Company. It is also argued that earlier the
Joint Venture Company was allowed on the basis of ad-hoc
arrangement. Admittedly, the lease is not executed between the
parties and at the same time Joint Venture Agreement is terminated,
the respondent, therefore, is not inclined to continue with the said
arrangement any more in the absence of lease-deed.
56. This submission of the respondent is devoid of merit as by
doing the interim measures this Court is not attempting to rewrite the
agreement or to confer any leasehold rights in favour of the petitioner
or JV company but rather in the larger public interest which is going to
effected by virtue of sudden stopping of the train, booking of which are
already undertaken by the petitioner, there is no harm in continuing the
said arrangement for some more period of time and more so when the
parties have already earlier operated the said arrangement without the
execution of the said lease deed. Accordingly, the said continuation of
the arrangement which was previously operated upon does not confer
OMP No.609/2011 Page 40 of 52
any further rights in favour of any of parties as this court is aware that
it is claim to be adjudicated upon by the arbitral tribunal.
57. In the case of Old World Hospitality Pvt. Ltd. vs. India
Habitat Centre; 73(1997) DLT 378, this Court observed as under:
(48) The argument on behalf of the defendant is that
there has been no concluded contract. But a perusal of
the Memorandum dated 5.4.1994 and the ‘Draft
Agreement’ would show that the contract is ‘symbiotic’
containing not only reciprocal obligations, complete
duties and responsibilities and parties had agreed and
come to a complete understanding about the operations
by the plaintiff. The further argument is that there has
been no consent by the defendant. Section 2-H of the
Contract Act states an agreement enforceable in law is
a contract. Section 13 of the Contract Act defines
consent “Two or more persons are said to consent
when they agreed upon the same thing in the same
sense”. It is axiomatic that a contract is complete as a
contract as soon as the parties have reached an
agreement as to what to each of the essential terms is
or with certainty be ascertained. It is an elementary
principle:
“IDCERTUM Est Quod Certum Reddi POTAST; Sed
Id Magis Certum Est Quod De Semet Ipso Est Certum
– that is certain which can be made certain, but that is
most certain which is certain on the face of it. Nobody
can dispute the proposition that a fair agreement to
negotiate has no legal content. But that is not the
position here, for a considerable length of time the
parties had acted on the terms and conditions and
nowhere it is stated by the defendant that the plaintiffOMP No.609/2011 Page 41 of 52
acted beyond the terms of the agreement except staling
that the bargain is not beneficial to the defendant. That
is a different aspect which will be dealt with in the
course of this judgment.”
58. Another reason which persuades this Court to continue
such arrangement is that the booking for this season commenced from
8th May, 2011. The respondent cannot deny the fact that they were not
aware about the said bookings already made as the respondents were
in continuous communication with the petitioner since November
2010. Had the respondent got any intention to discontinue the Joint
Venture Agreement in view of dispute arose between the parties in
November, 2010 with regard to draft MoU to be executed between the
respondent and Railways which according to the petitioner were
inconsistent and against its interest to the MoU and Joint Venture
Agreement between the parties, the agreement ought to have been
terminated prior to the date of booking or with reasonable notice to the
petitioner so as to not to indulge into further bookings of the said train.
Rather it appears from the record that the respondent uptil 6 th August,
2011 were suggesting the petitioner that the work on the train should
be completed as soon as possible. In view of the said conduct of the
parties and present situation, this Court is of the opinion if some
OMP No.609/2011 Page 42 of 52
interim arrangement is not made, there may be some serious
repercussions as it is not merely the question of goodwill and
reputation of the petitioner is at stake but the respondent also.
Supreme Court in the case of Mahabir Auto Stores vs. Indian Oil
Corporation, reported in (1990) 3 SCC 772, to some extent of similar
situation in para 20 to 21 has held that in a situation between the
parties procedure should be followed which will be reasonable, fair
and just and that is the process which normally be accepted. Paras 20
and 21 are reproduced as under:
“20. Having regard to the nature of the transaction, we are
of the opinion that it would be appropriate to state that in
cases where the instrumentality of the state enters the
contractual field, it should be governed by the incidence
of the contract. It is true that it may not be necessary to
give reasons but, in our opinion, in the field of this nature
fairness must be there to the parties concerned, and
having regard to the large number or the long period and
the nature of the dealings between the parties, the
appellant should have been taken into confidence.
Equality and fairness at least demands this much from an
instrumentality of the State dealing with a right of the
State not to treat the contract as subsisting. We must,
however, evolve such process which will work.
21. Therefore, we direct that the case of the respondent
be put to the appellants, and let the respondent authorities
consider afresh the submissions made by the appellant
firm, namely, that the existing arrangement amounts to aOMP No.609/2011 Page 43 of 52
contract by which the distributorship was continued in
case of the appellant firm without any formal contract and
further that the new policy of the Government introduced
in December, 1982 would not cover the appellant firm
and as such the appellant should continue. It will be
sufficient, having regard to the nature of the claims, for
the respondent authority to consider this aspect after
taking the appellant firm into confidence on this aspect.
Nothing further need be stated or required to be done and
we give no ‘directions as to whether reasons should be
recorded or hereinafter should be given. In the facts and
circumstances, it is not necessary to give oral hearing or
record the reasons as such for the decision. The decision
should be based on fair play, equity and consideration by
an institution like IOC. It must act fairly.”
59. The petitioner has provided the booking summary for the
period of September 2011 to April 2012. The advance booking was
started for this season from 2nd week of May, 2011. Upto December,
2011 the total booking between September, 2011 and December, 2011
is 448 passengers which include 416 confirmed bookings, 22 time limit
booking and 10 Fam booking and upto April, 2012, 53 are confirmed
booking and 45 is of time limit booking.
60. In this light of above, let me now examine as to whether the
petitioner has made out a case of relief of mandatory injunction.
Admittedly, after completion of all formalities, the commercial
operation of the “Maharaja Express” was flagged off on 20.03.2010.
OMP No.609/2011 Page 44 of 52
Upto April, 2011 the said train made 34 journeys. The season of this
train is between September to April. The train is mainly booked by
foreign tourists and such bookings are made much in advance. This
train was awarded runner up in the Special Train Operators Category
at the Conde Nast Traveller Readers’ Travel Awards. There were
following 10 competing trains:
“1. Hiram Bingham, Peru
2. RIRTL’s Maharajas’ Express
3. Orient Express
4. Rocky Mountaineer, Canada
5. The Blue Train, South Africa
6. The Old Patagonian Express
7. Palace on Wheels
8. Deccan Odyssey
9. Rocos Rail, South Africa
10. Royal Canadian.”
61. Thus, there is no force in the submission of the respondent
that in order to preserve and restore the status quo, this Court cannot
have the power to grant a mandatory injunction if the case of greater
risk of injustice is made out for temporary period in order to preserve
the status quo ante in the absence of executed lease-deed between the
Joint Venture Company and respondent. The respondent’s main
grievance against the petitioner and Joint Venture Company is related
to non-payment of monies and inflated bills raised by the petitioner and
OMP No.609/2011 Page 45 of 52
the amounts payable as per agreements. It is also not in dispute that
the parties concerned have their respective claims and contentions
against each other and the said disputes have to be determined by the
Arbitral Tribunal. The claims of damages if suffered by the parties on
account of breach and also to be determined when the arbitration
clause is invoked. I agree with the submission of the respondent that a
mandatory injunction cannot be passed normally but it is settled law
that in cases involving the particular status which existed prior to the
institution of the case or continuation of enjoyment of the property
prior to the approaching of the court, the court can preserve the satus
quo ante which may be in the form of mandatory injunction in order to
enable the party to continue to enjoy the status for a period be it
limited or otherwise subject to the satisfaction of the principles of
grant of injunction. In Dorab Cawasji Warden vs. Coomi Sorab
Warden; (1990) 2 SCC 117, the Apex Court, while holding that
interlocutory mandatory injunction are usually granted to preserve the
last uncontested status quo until the final hearing, in para held as
under:
“16. The relief of interlocutory mandatory injunctions are
thus granted generally to preserve or restore the status
quo of the last non-contested status which preceded theOMP No.609/2011 Page 46 of 52
pending controversy until the final hearing when full relief
may be granted or to compel the undoing of those acts
that have been illegally done or the restoration of that
which was wrongfully taken from the party complaining.
But since the granting of such an injunction to a party
who fails or would fail to establish his right at the trial
may cause great injustice or irreparable harm to the party
against whom it was granted or alternatively not granting
of it to a party who succeeds or would succeed may
equally cause great injustice or irreparable harm, courts
have evolved certain guidelines. Generally stated these
guidelines are:
(1) The plaintiff has a strong case for trail. That is, it shall
be of a higher standard than a prima facie case that is
normally required for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury
which normally cannot be compensated in terms of
money.
(3) The balance of convenience is in favour of the one
seeking such relief.”
62. Therefore, after having considered the overall facts and
surrounding circumstances of the matter and in order to strike the
balance between the parties, I am of the view that it is fit case to
appoint a receiver as a matter of interim measure, though this court is
aware of the fact that normally the court should be slow in appointing
a receiver in interim but in the present due to exceptional
circumstances, where the parties are reluctant to go into cooperation
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mode on their own, the said requirement is necessitated else the
irreparable loss shall ensue to the petitioner and to the public at large
by discontinuation of the running of the train, bookings of which are
already made. I hereby appoint Shri Sudhir Nandrajog, Senior Counsel
of this Court, (Mobile No. 9810121790) as a receiver in the matter.
63. The present petition is thus disposed of with the following
directions:
a) For the period commencing from 14th September 2011 uptil 31st
December 2011 which is the major period for which the
bookings are effected by the petitioner and their agents in
overseas countries, the train namely “Maharaja Express” Train
shall continue to run for the said period under the supervision of
the learned receiver as per the arrangement which was
continuing at the earlier season.
b) The petitioner shall deposit 50% of the total receipt of the sum
against the bookings made upto 31.12.2011 without any
deduction within four days in separate account to be opened in
the Nationalized Bank in the name of the respondent. The
petitioner shall not withdraw any amount from the said account
without the prior permission of the court or the arbitral tribunal.
OMP No.609/2011 Page 48 of 52
The said account will be maintained by the Receiver who will
sign the cheques and make the payment to the respondent as per
the direction (f) issued by this Court.
c) The petitioner shall also deposit 50 % of the amount in the
separate account maintained for the future bookings to be
conducted by it uptill the December 2011 in the said account as
stated in (b).
d) The petitioner and the Joint Venture Company shall maintain the
proper and true accounts pertaining to booking amounts,
expenses incurred or to be incurred in future by them. The
statement of accounts shall be filed before the Receiver every
fortnightly for the purposes of the records.
e) Subject to agreeing to the aforementioned directions, the
respondent shall, after repair if any or maintenance, allow to run
the train as per previous manner. The JV Company is also
allowed to make the furnishing and other arrangements
consequent upon the receiving the permission of the said train
from respondent from 9th September 2011 onwards.
f) The respondent/ Indian railways would be entitled to recover the
haulage charges, on board expenses (only for the current
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period), operational and maintenance/ repairing expenses
against the train which is going to run for the said interim period
and the same can be paid by the Receiver after due
consideration of the same from the deposit made in the separate
account. If any shortfall is occurred, the respondent shall
maintain the accounts and give the detail to the Receiver. The
said amount shall be subject to the discussion and adjustment of
the final award to be passed by the Arbitral Tribunal.
g) As regards the remaining 50% booking amount retained by the
petitioner, the same shall be subject to the maintenance of the
accounts of the petitioner and JV Company which shall be filed
before learned Receiver. The said booking amount shall also be
adjusted towards the expenses incurred or to be incurred in
running the said train. Any shortfall of revenue beyond the said
50% amount shall form the subject matter of the claim before
the Arbitral tribunal.
h) Parties are granted liberty to approach the Court or the
Arbitrator (if appointed) for modification of order in case the
circumstances do arise.
i) Authorized representatives of all concerned parties are allowed
OMP No.609/2011 Page 50 of 52
to co-operate with the Receiver in order to smooth running of
train in question and can have joint meeting, if necessary. If the
presence of Receiver is required at the site, he may exercise his
discretion in this regard.
j) The petitioner or any of his agents shall make not any further
bookings for the next season which is, September, 2012 to
April, 2013.
k) The above said arrangement shall be treated as tentative in
nature.
64. The Fee of the Receiver at the initial stage is fixed at
Rs.50,000/- upto the first meeting. Thereafter, he shall be paid
Rs.30,000/- per visit/meeting which shall be paid by the petitioner only
subject to the final adjustment.
65. Parties are free to take the necessary steps to resolve their
respective disputes by appointment of Arbitral Tribunal. Arbitral
Tribunal shall decide their disputes without the influence of the order
passed in the matter. All rights and contentions of both sides before
the Arbitral Tribunal will be kept open.
66. The order passed in the present petition shall have no
bearing when the disputes are decided on merit. The present
OMP No.609/2011 Page 51 of 52
arrangement is made subject to outcome of arbitral proceedings.
67. The petition and all pending applications and contempt
petition are accordingly disposed of without any further orders. No
costs.
68. Copy of the order be given under the signature of the Court
Master to the parties as well as to the Receiver.
MANMOHAN SINGH, J.
SEPTEMBER 06, 2011
jk
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