1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. ARBITRATION PETITION NO.582 OF 2009 Discovery Properties & Hotels Pvt.Ltd. .... Petitioner vs City and Industrial Development Corporation of Maharashtra Ltd.(CIDCO) & ors. .... Respondents Mr.A. A. Kumbhakoni, with Mr. A. M. Kulkarni for the petitioner. Mr.Hiroo Advani with Mr.Dinesh Pednekar i/b. M/s.Advani & Co.for the respondents. CORAM: ANOOP V. MOHTA, J. DATE : 8th October, 2009 ORAL JUDGMENT: 1 The petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the Act) and prayed as under: “(a) Pending the proposed Arbitration proceedings and making and implementation of the Award, the Respondents, its servants, agents, assigns and successors in office be restrained by an Order and Injunction of this Hon’ble Court from in any manner terminating/determining the LOA dated 10th December 2007 and/or forfeiting the EMD amount of Rs.2.5 crores along with 25% of the amount of the agreed total lease premium to be paid by the petitioner. (b) In the alternative to prayer clause (a); the Respondent, 2 its servants, agents, assigns and successors in office be restrained by an Order and Injunction of this Hon’ble Court from in any manner terminating/determining the LOA dated 10th December 2007 and/or forfeiting the EMD amount of Rs.2.5 crores along with 25% of the amount of the agreed total lease premium to be paid by the petitioner pending the hearing and disposal of the petitioner’s application under Sec.11(6) of the Arbitration and Conciliation Act, 1996 and till any such further order or direction of the learned Arbitrator so appointed.” 2 The basic events are as under: In 2007, respondent issued a Bid Document for lease of a plot bearing No. 16, Sector No.2, admeasuring 11,360 sq.mtrs. of Kharghar for Five Star Hotel. On 12.10.2007, the petitioner deposited Rs.2.5 crores as earnest money towards the submission of its bid. On 15.10.2007, the petitioner submitted bid. On 10.12.2007, the respondent accepted petitioner’s bid and awarded lease vide a Letter of Acceptance (LOA). 3 On 16.01.2008, the petitioner made the payment of Rs.4 crores first installment of the lease rent. On 14.03.2008, the petitioner made balance payment of Rs.1.5 crores and Rs.33,64,10,480/- towards full and final payment of first instalment under LOA. The petitioner requested for an extension of time for further payments under second instalment under LOA. On 27.03.2008, the respondent granted extension of 8 months for payment of second instalment of lease rent. On 04.09.2008, the petitioner requested for further extension for 3 payment of second instalment under LOA. On 18.09.2008, the respondent granted extension till 14.02.2009. 4 On 14.01.2009, the petitioner requested further extension for payment of second instalment under LOA. On 23.01.2009, the respondent granted extension till 14.06.2009. 5 On 12.03.2009, the petitioner invoked the Arbitration Clause 44 in LOA; appointed MD of the respondent as an Arbitrator. The clause no.44 is as under: “44 Interpretation of general terms and conditions fort disposal of plots of land.- In case of dispute as regards interpretation of the General terms and conditions of disposal of plots of land and of the invitation of offer or any thing therefrom, the final decision rests with Managing Director of CIDCO and will be binding on all parties as the award of Arbitrator.” 6 On 08.04.2009, the petitioner sent reminder to respondent and Arbitrator regarding arbitration. On 17.04.2009, the respondent addresses letter to petitioner regarding payments but remained silent as to the arbitration. 7 The basic submission/objection is to the maintainability of Section 9 Petition as, according to the respondent, clause 44 as referred above is not arbitration clause. Admittedly, the petition under Section 11 of the Act is pending. Therefore, at this stage, I am not inclined to decide the issue with regard to the arbitration clause and/or the maintainability of Section 9 Petition as alleged finally. 8 Prima facie, clause 4 of LOA, which is reproduced as under, itself makes position very clear that to grant or not to grant extension is within the power of the Managing Director of the respondent. It is not the case that they cannot grant extension, but it is subject to the condition so prescribed. 4 “4 Grant of Extension of time for making payment of first installment and second installment Normally no extension of time for payment of lease premium is permissible. The Managing Director may, in deserving case, extend either of the forgoing periods on the payment of interest by you at the rate to be approved by the CIDCO by a general or specific order., Upon your request, the Managing Director may grant extension of time of two months for payment of first instalment which shall not exceed three months from the date of receipt of this letter and for the payment of second instalment such extension is grantable for 16 months. Provided that the period of both the instalments of the premium shall not exceed 18 months. The allottee should apply for extension in the time limit before the specified date. Extension is grantable upon payment of interest at the rate as may be prescribed by the Corporation from time to time. The present rate of interest (simple interest) is as under: A Upto 3 months 12% B Beyond 3 months 16% The above rates are subject to change without notice.” 9 In the present case, as recorded above, therefore, admittedly there are defaults in making payment of instalments inspite of extensions. The submission, therefore, now as averred and as prayed for passing an order against the respondents to extend time, in my view, is not permissible. 10 The concept of offer and acceptance of offer and issuance of LOA/contract order is well within the purview and helm of the contract of the parties. Whether there are non-compliance and/or compliance of the respective obligations or no and/or whether it is difficult for the petitioner to comply with those conditions mentioned in the LOA, just cannot be gone into at this stage of the proceedings in a petition under section 9 of the Act. In the present case, as referred above, in view of clear clause 4 itself, it is difficult to interpret and provide any observation in favour of the petitioner and/or against the respondents. 5 11 The contractual breaches and/or reasons for non-compliance, if apparent and that resulted into the delay in making the payment, that also means there are admitted delay in the payment of instalments. Therefore, at this prima facie stage, I see there is no case made out to pass any order as prayed in favour of the petitioner in view of the above contractual terms itself. 12 The plain reading of clause 44 shows that the decision of the Officer will be treated as Arbitral Award. That itself cannot be stated to be an agreement for arbitration or an arbitration clause. There is no other clause to support the case of the petitioner that this is the arbitration clause. In my view, prima facie, this clause is not the arbitration clause as contemplated under Section 7 of the Act. 13 The submission that the petition under Section 11 is pending and till the decision of the said application and as there is an arbitration clause, the interim protection as sought be granted in view of the provisions of Section 9 of the Act, in view of above, is not acceptable. 14 In the result, the petition is dismissed on all counts. No costs. 15 However, the liberty is granted to the petitioner to apply for extension of time within one week from today and the respondents may consider the same in accordance with law. (ANOOP V. MOHTA, J.)