1 chs1360.10.sxw ssm IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION CHAMBER SUMMONS NO. 1360 OF 2010 IN SUIT NO. 1668 OF 2006 M/s. Radio Restaurant ...Plaintiffs. Vs. Jabbir Gulam Rasool Jamal & Anr. ...Defendants. And The Court Receiver, High Court, Bombay. ...Respondent. Mr. Chirag J. Shah i/by Mr. A.A. Jain for the Plaintiffs. Mr. Shailesh Shah, Sr. Advocate a/w Mr. P.K. Vyas for the Defendants. CORAM :- ANOOP V. MOHTA, J. DATE :- 14/16 SEPTEMBER 2011. P.C.:- As agreed by both the parties and after hearing, this Court by order dated 12 September 2006, has referred all the disputes and differences to the sole Arbitrator. The matter is pending before the learned Arbitral Tribunal since then. 2 This Court, in the Suit as a Notice of Motion was taken out by the Plaintiffs for appointment of Receiver, after considering the merits, by the same order, appointed the Court Receiver in the following 2 chs1360.10.sxw ssm terms. “3. Further the Court Receiver, High Court, Bombay shall stand appointed in respect of the suit business referred to in Suit No. 1668 of 2006 at Exhibit “A”. The Court Receiver shall appoint the Defendant as his agent to run the said business on payment of royalty but without security. The Court Receiver shall fix the royalty within a period of eight weeks from today. 4. The parties have agreed to make any further applications for ad-interim reliefs under Section 17 of the Arbitration and Conciliation Act, 1996 before the learned Arbitrator. 5. Till the Court Receiver takes possession, the parties shall maintain status-quo in respect of the suit business.” 3 The Court Receiver, based upon the order, took possession of the property and called both the parties and fixed the royalty. As both the Suits were disposed of, the original Defendants in the disposed of Suits, have taken out this Chamber Summons for appropriate order, as the challenge is raised to the royalty so fixed by the Receiver. The Arbitrator has no Jurisdiction to deal with the Court Receivers report and/or order- 3 chs1360.10.sxw ssm 4 The learned counsel appearing for the Original Plaintiffs has raised an objection that such Chamber Summons in the present facts and circumstances, basically when both the Suits were disposed of, is not maintainable in view of the specific provisions of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act). He has relied upon a Division Bench Judgment of this Court in Mr. Rehmat Ali Baig Vs. Minocher M. Deboo & Ors. 1 referring to Section 89 of the Code of Civil Procedure (for short, the CPC) and Section 32(2) of the Arbitration Act. The facts and circumstances of that case are totally different and distinguishable as there was no such issue with regard to the order passed by the Court appointing the Receiver and at the same stroke, the Arbitral Tribunal by granting liberty to the parties to move for an appropriate order under Section 17 of the Arbitration Act before the arbitral Tribunal. 5 Having once disposed of both the Suits and merely because the matter is pending before the Arbitral Tribunal that itself is not sufficient to accept the case of the Plaintiffs that such Chamber Summons is not maintainable for the simple reason that this Court while appointing the Arbitrator, has appointed the Court Receiver, 1 2009(6) ALL M.R. 35 4 chs1360.10.sxw ssm therefore, the provisions of the CPC read with the High Court Original Side Rules, need to be looked into by everyone including the Court Receiver, the parties and even the Arbitral Tribunal. 6 The Arbitral Tribunal has no jurisdiction and authority to interfere with the order and action taken by the Court Receiver in any aspect of the matter even by consent or without consent. Both these jurisdictions are specified and restricted and so also the power flowing from the laws. The Private Tribunal, even otherwise, under Arbitration Act, has no authority to interfere with the order or action taken by the Receiver though the Court has appointed the Tribunal to adjudicate the dispute between the parties. 7 Section 9 of the Arbitration Act, as contended, is also of no assistance to accept the contention so raised that this Chamber Summons is not maintainable for simple reason that this Court has appointed the Arbitral Tribunal, as well as, the Court Receiver by consent of the parties in pending Suits. The Court has not appointed the Receiver under Section 9 of the Arbitration Act. 8 In the present case, while passing the order of appointment of 5 chs1360.10.sxw ssm Receiver, the Court has in fact directed to appoint the Defendant as an agent to run the business on payment of royalty but without security. The Court has further directed the Receiver to fix the royalty within a period of six weeks from the date of the order. Therefore, this order even otherwise, cannot be interfered and/or disturbed by the Arbitrator though appointed by the Court. The liberty so granted to take out the application for ad-interim reliefs under Section 17 before the learned Arbitrator has nothing to do as the Court appointed the Receiver. There is no provision under the Arbitration Act, which permits the Arbitrator to interfere, at any stage, with the Court proceedings in any manner. 9 The concept of the Court Receiver appointed by the Court is well known, as contemplated under the CPC read with the High Court Original Side Rules. Therefore, any dispute/object with regard to the fixing of royalty and/or security and/or related aspect needs to be dealt firstly by the Receiver after giving opportunity to both the parties and in case of any dispute by raising an appropriate proceedings before the Court. In my view, the Chamber Summons as taken out needs to be adjudicated/decided by this Court in view of the order dated 12 September 2006 itself. Such Chamber Summons, therefore, 6 chs1360.10.sxw ssm is maintainable. 10 The Suit was filed by the firm. Plaintiff Nos. 2 and 3 are the partners of the firm. Plaintiff No.2 is also the owner of the immovable property with others. The Defendants are the heirs of the deceased partner. The partnership was between Plaintiff Nos. 2 and 3 and the deceased father of the Defendants. The first partnership deed was executed on 1 July 1970 and the last was on 10 July 1992. Plaintiff Nos. 2 and 3 together had 88% shares in the profits and losses. The deceased partner had 12% share. As per Clause 15 of the partnership deed, the firm was to continue even after the death of any of the partner with or without taking the heirs of the deceased partner as their partner. It appears that they decided not to continue the Defendants being heirs of the deceased partners as a partner of the firm. In addition to this, a conducting agreement was also executed which expired on 31 March 1992, by which the deceased partner was to conduct the business of the restaurant in the premises. He was entitled to receive initially 25% of the profits. 11 As there arose a dispute, the Suits were filed revolving around the above documents. The Plaintiffs sought the possession of the 7 chs1360.10.sxw ssm premises and also claimed compensation as per the particulars annexed with the Plaint. As noted, this Court by order dated 12 September 2006, by consent of the parties, appointed the Arbitrator and also the Court Receiver. The matter is still pending before the Arbitrator. The Court while appointing the Receiver further directed the Receiver to fix the royalty within a period of eight weeks from the date of the order. However, for some reason or other, the royalty could not be fixed within the stipulated time. The matter is pending before the Arbitrator, which is at the stage of framing of issues. There is a delay in every aspect. 12 The present Chamber Summons has been taken out to challenge the last direction/order issued by the Receiver directing the Applicant (Original Defendants) to make the payment of royalty based upon the first valuation report of Mr. Sudhir G. Nadkarni, dated 5 May 2007 thereby directed to pay `6,97,600/- per month royalty w.e.f. 12 October 2006 i.e. from the date of the possession is handed over to the Defendants by the order of the Court and further directed to make the payment accordingly every month. It is also directed to pay three months advance royalty of `20,92,800/- within five weeks from the date of the order. 8 chs1360.10.sxw ssm 13 When first valuation report dated 5 May 2007 placed before the earlier Receiver during the course of the hearing which was not accepted by him and no order was passed. By consent, second valuer was appointed. The second valuation report dated 4 March 2010 concluded that 12% of shares of profit comes to about `6,162/-, based upon the income from unaccounted profit and an ancillary benefit on lump sum basis as `72,000 p.a. and accordingly computed `9,000 p.m. towards the income of the restaurant. Second valuation report dated 4 April 2010 shows that the payable property valuation comes to `51,500/- p.m.. The new Receiver, who is now incharge however, accepted the first valuation report of 2007 and directed to pay `6,97,600/- p.m. as recorded. There is a clear more than 10 times difference in the amount in these two valuation reports. The approach of the valuer’s on valuation is also different. This itself, in my view, is a reason that a fresh valuation report should be called for by the Receiver. Such vast difference should not be the basis for awarding the royalty as fixed, specially when the earlier Receiver, after hearing both the parties, decided not to grant the royalty on the basis of the first report. 9 chs1360.10.sxw ssm The royalty must be fair and reasonable and not exorbitant- 14 Having once appointed the fresh valuer, it is necessary for the Receiver to consider both the valuation report before passing the order. Even otherwise, such 10 time difference in these reports itself in my view, cannot be the basis to select either of it to pass such order and/or to fix the royalty. The royalty order is unsustainable. It is also necessary to consider the income or the turnover prior to the date of dispute and also the valuation report based upon the same. 15 The learned counsel appearing for the Applicants-Original Defendants, however, fairly submitted that they are willing to make the payment of `60,000/- p.m. instead of `20,000/- but not `6,97,600/- per month as fixed. The learned counsel also made the statement, on instructions, that the Applicants-original Defendants will make the payment from the date of the Second Valuation Report i.e. from 4 April 2011. Therefore, pending the fresh valuation report and a fresh decision by the Receiver, in the ends of justice the Applicant to make the lump sum payment/charges @ `60,000/- p.m till the fresh decision on royalty by the Receiver. 10 chs1360.10.sxw ssm 16 Therefore, the following order- ORDER a) The Chamber Summons, as filed, is maintained in this Court. b) The Receiver to appoint a fresh valuer, preferably within a period of two weeks from the receipt of the copy of the order. The parties to take steps accordingly. c) The Applicant to pay `60,000/- p.m. from the date of the Second Valuation Report i.e. from 4 April 2010 subject to adjustment of `20,000/- already paid, if any. d) The Applicant to pay `60,000/- p.m. regularly till the fresh fixation of the royalty by the Receiver. e) Time to deposit the amount is granted for six weeks. f) The Chamber Summons is accordingly disposed of. There shall be no order as to costs. (ANOOP V. MOHTA, J.)