JUDGMENT
K. Ramamoorthy, J.
1. Suit No. 1808/95 is filed by East India Hotels Limited for the appointment of the arbitrator. Suit No. 622A/95 is filed by Jyoti Private Limited for appointment of the arbitrator.
2. I do not want to deal with an detail the contentions of the parties because the parties have agreed for the appointment of an arbitrator with a difference, Mr. H. L. Tikku, learned counsel appearing in suit No. 1808/95 stated that the arbitration proceedings should be distinct and separate in respect of the two suits while Mr. Rajiv Nayyar, learned counsel for the respondent, submitted that the same arbitrator can deal with the subject matter of the two suits.
3. The petitioner in suit No. 1808/95 relies upon the agreement called ‘Loan Agreement’ dated 8th of August 1980 in and by which Jyoti Private Limited had agreed to pay certain amounts to the petitioner. The petitioner in Suit No. 622A/95 relies upon ‘Hotel Operation Agreement’ between Jyoti Private Limited and East India Hotels Ltd., in and by which East India Hotels Ltd., agreed to carry on the hotel business in the premises of Jyoti Private Limited.
4. Mr. H. L. Tikku submitted that Jyoti Private Limited under the loan agreement owes East India Hotels Ltd., nearly Rs. 1,75,00,000.00 (Rupees one crore and seventy five lakhs) and under the agreement the premises of Jyoti Private Limited had created a charge in favour of East India Hotels Ltd., with reference to the premises Mr. Rajiv Nayyar, learned counsel for Jyoti Private Limited submitted that East India Hotels Ltd., agreed to pay a minimum of Rs. 15 to 20 lakhs a month and there are other moneys due from East India Hotels Ltd. to Jyoti Private Limited which would be in the region of Rs. 3.50 crores.
5. I shall first take up the question of appointment of arbitrator before dealing with the interim orders prayed for by East India Hotels Ltd., Mr. H. L. Tikku submitted that when the rights of parties flowing under the two agreements are distinct and separate and it is not permissible in law to appoint a single arbitrator to deal with the claims of the parties in the agreements. Mr. Rajiv Nayyar contended that the parties are the same and Jyoti Private Limited can always make a counter claim or set off against East India Hotels Ltd., and, therefore, there is nothing in law prohibiting a single arbitrator adjudicating on the disputes between the same parties.
6. I am not able to appreciate the contention of Mr. H. L. Tikku and in law there is absolutely no prohibition in a single arbitrator dealing with the rights of parties. Under the circumstances, as in the present case, therefore, I appoint the Hon’ble Mr. Justice G. C. Jain (Retd.) as the arbitrator. He shall adjudicate on all the disputes between the parties under the Loan Agreement and as well as the Hotel Operation Agreement and all the claims and counter claims of the parties. He shall publish the award within four months from the date of entering upon the reference. The Arbitrator shall be at liberty to fix his remuneration and other charges for conducting the arbitration proceedings.
IAs. 7955/95 & 9753/95
7. The East India Hotels Ltd. prayed for injunction restraining Jyoti Private Limited from alienating or parting with possession of the Hotel premises pending the disposal of the arbitration proceedings. Mr. H. L. Tikku vehemently contended that once Jyoti Private Limited is permitted to have any arrangement with third parties to run the business the property value will get diminished and the charge created in the loan agreement will become useless and in the event of the arbitrator awarding an amount in favour of East India Hotels Ltd., it will not be in a position to recover any amount from Jyoti Private Limited.
8. Mr. Rajiv Nayyar, per contra, contended that from a perusal of the balance sheet produced by Jyoti Private Limited it will be seen that the property value if the building owned by Jyoti Private Limited will be several crores and the movable properties of Jyoti Private Limited themselves are of substantial value running to a few crores and even in the unlikely event of East India Hotels Ltd., succeeding in the arbitration proceedings, there will be no difficulty for it to enforce the charge and recover the amount from Jyoti Private Limited. He further submitted that great injustice will be done and Jyoti Private Limited will be put to irreparable loss and hardship if it is injuncted from conducting the business by having collaboration agreement with third parties having regard to the prevailing conditions in Kashmir.
9. I heard the learned counsel for the parties for a considerable length of time on this aspect of the matter because it was really a matter of great concern for both parties. I have taken into consideration the value of the properties held by Jyoti Private Limited and the broad facts of the case adumbrated by the parties in the pleadings and I am not able to pursuade myself to accede to the request made by Mr. H. L. Tikku that the charge created in the loan agreement is in any way affected if injunction is not granted. Suppose instead of initiating arbitration proceedings East India Hotels Ltd. seeks to enforce the charge as per the terms of the loan agreement, in law a charge holder a mortgagee cannot seek to restrain the mortgagor from alienating the hypothec a or what is generally called the equity of redemption. By this application, East India Hotels Ltd., seeks to achieve more that what the agreement itself gives to it. That cannot be permitted. That weighed with me in refusing the relief of injunction. The plaintiff has not established, prima facie, strong case for injunction. Mr. Rajiv Nayyar submitted that the defendant may enter into collaboration agreement with third parties for running the business and a huge building cannot be kept idle for a long time and the defendant may loose his customers and the defendant would be put to irreparable loss and hardship if the business is not kept running. He further submitted that plaintiff is not put to prejudice when it has got a charge over the property for the amount alleged to be due and defendant is also making a claim against the plaintiff to the tune of nearly Rs. 3.25 crores. He further submitted that what the applicant says is to be accepted then the petitioner should give security for the amount claimed by the respondent. The argument is what is sauce for the goose for the gander. The risk of doing injustice to the defendant, according to me, will be greater if injunction is granted.
10. Accordingly, IA. 7955/95 is dismissed and IA. 9753/95 for vacating the injunction is allowed. There shall be no order as to costs.
11. Both the suits and IAs are disposed of.