IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE A.K.BASHEER & THE HONOURABLE MR. JUSTICE P.Q.BARKATH ALI WEDNESDAY, THE 17TH MARCH 2010 / 26TH PHALGUNA 1931 Arb.A.No. 34 of 2008() ------------------------------- AGAINST THE ORDER DATED 27/09/2008 IN IA.5908 & 6486/2008 IN OPARB.1110/2008 of II ADDL.DISTRICT COURT,ERNAKULAM .................... APPELLANT (S): RESPONDENT -------------------- M/S.BHARATHAKSHEMAM EDUCATIONAL TRUST, REP.BY ITS MANAGING TRUSTEE,MR.P.M.THOMAS,AGED 57, S/O.LATE P.T.MANUEL,HAVING OFFICE AT ROUND SOUTH, MANGALODAYAM BUILDING, ROOM NO. 25/2218, THRISSUR-1. BY ADV. SRI.VARGHESE C.KURIAKOSE SRI.PRAVEEN K. JOY RESPONDENT(S): ------------------------ 1. TATA TELE SERVICES LTD.,A COMPANY INCORPORATED UNDER THE COMPANIES ACT,1956,REP.BY ITS ADDL.MANAGER,LEGAL BOBBY JOSEPHY,AGED 33, S/O.K.V.JOSEPH AND HAVING ITS REGD.OFF.AT TOWER 1, 10TH FLOOR,JEEVAN BHARATHI,NO.124,CANGUGHT CIRCUS, N.DELHI-01,HAVING ITS CIRCLE OFFICE AT SL PLAZA 2. WIRELESS IT INFO SERVICES LTD.,A WHOLLY OWNED SUBSIDIARY OF TATA TELE SERVICES LTD.,REP. BY ITS KERALA CIRCLE MANAGER INFRASTRUCTURE, SUDEVAN.V.D,AGED 37,S/O.DASAN,REGD.OFFICE AT 5TH FLOOR,MLK ESTATE,FATCH MAIDAN ROAD,HYDERABAD-01 HAVING ITS CIRCLE OFFICE AT SL PLAZA COMPLEX ADV. SRI.A.M.SHAFFIQUE, SENIOR ADVOCATE FOR R2 SRI.A.K.JAYASANKAR NAMBIAR FOR R2 SRI.E.K.NANDAKUMAR FOR R2 THIS ARBITRATION APPEALS HAVING COME UP FOR ADMISSION ON 17/03/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: A.K.BASHEER & P.Q.BARKATH ALI, JJ. --------------------------- Arbitration Appeal No. 34 OF 2008 --------------------------- Dated this the 17th day of March, 2010 J U D G M E N T ~~~~~~~~~~~ Basheer, J. In this appeal filed under Section 37(a) of the Arbitration and Conciliation Act, 1996, the order passed by the District Court, Ernakulam in a proceeding under Section 9 of the Act is under challenge. 2. By the impugned order, the appellant/Educational Trust, who was the respondent in the Original Petition before the court below, has been restrained from interfering with the functioning of the telecommunication system installed on the tower erected on the terrace of its building and from preventing the personnel of the respondents from having access to the tower and also the shelter (generator room) at the basement of the said building; and from doing any maintenance and repair works on the tower and the generator “till culmination of the arbitration proceedings.” The appellant has been further Arbitration Appeal.No.34/2008 2 directed to remove the lock put by it at the entry point to the building premises so as to enable the respondents to have free access to the tower and the generator room. 3. In the nature of the order that we propose to pass, we do not deem it necessary to advert to or deal with the various contentions raised by the parties in the case elaborately. However, we deem it appropriate to refer to the essential facts which led to this litigation. 4. It is the admitted position that the appellant and respondent No.1 had entered into a 'Leave And Licence Agreement' on 21st October, 2005, whereunder the appellant has granted permission to respondent No.1 “to install, deinstall and maintain” certain equipments upon the terrace portion of the licensor's (appellant) building in a specified area and also on the basement. 5. It appears that respondent No.1 entered into a 'Business Transfer Agreement' with respondent No.2 at New Arbitration Appeal.No.34/2008 3 Delhi on 8th November, 2007, under which respondent No.1, who styled itself as the seller agreed to “transfer, sell and or assign” the business which was being carried on by respondent No.1 at the premise of the appellant. Pursuant to the above agreement, respondent No.1 issued Ext.A1 letter to the appellant intimating about the transfer of business. 6. The appellant took exception to the above action taken by respondent No.1 and informed it that the 'Leave and Licence Agreement' (Ext.A3) stood terminated as per clause 9 of the agreement. Respondent No.1 was further informed that the equipments erected on the terrace and at the basement be removed immediately. It was further informed that the security deposit would be refunded to respondent No.1 as soon as the equipments were removed. It was further made clear that in the absence of any privity of contract between the appellant and respondent No.2, the latter had no right to enter into the premises of the appellant. Respondent No.1 was cautioned that any attempt on the part of the respondent No.1 to commit trespass would result in appropriate criminal action. Arbitration Appeal.No.34/2008 4 7. Apparently provoked by the above response from the appellant, the respondents filed the original petition under Section 9 of the Act seeking appropriate reliefs. Two interlocutory applications were filed by the respondents praying, inter alia, for issue of an order of interim prohibitory injunction restraining the appellant, their men and agents from interfering with the functioning of the telecommunication system installed on the tower erected on the terrace of the building and also the generator room at the basement of the said building. The prayer in the other interlocutory application was to permit the respondents to break open the lock put on the grills in front of the generator room and to enable them to refuel the generator. The further prayer was to afford adequate police protection to gain access to the tower. 8. The appellant stoutly resisted the prayers made in the two applications and contended inter alia that the reliefs sought for were wholly untenable. The primary contention was that the Leave And Licence Agreement between the appellant and respondent No.1 stood automatically terminated because of the Arbitration Appeal.No.34/2008 5 illegal and unauthorised transfer of business made by respondent No.1 in favour of respondent No.2. Since respondent No.1 had already transferred its business rights in favour of respondent No.2, the reliefs sought for in the two applications could not be granted. It was further contended that there was no privity of contract between the appellant and respondent No.2 and therefore, no relief could be granted in favour of respondent No.2 as against the appellant. The other contention was that the provisions of the Act could not be invoked in the absence of any arbitration clause governing the parties. 9. As mentioned earlier, we do not propose to deal extensively with the contentions raised by the parties at this stage. 10. The court below, after considering the rival contentions of the parties, came to the conclusion that it was a fit case in which interim measure had to be taken in favour of the respondents as otherwise irreparable injury would be caused to them. The court held that respondent No.2 had attained the Arbitration Appeal.No.34/2008 6 status of successor-in-interest to the business of respondent No.1 by virtue of Ext.A7. In other words, the court held that respondent No.2 is “truly the successor-in-interest of the 1st respondent and thus it continues to be the licensee”. Thus the court below concluded that prima facie there was no violation of any of the clauses contained in Ext.A3 agreement and that the respondents were therefore entitled to the reliefs sought for. 11. While dealing with the case, the court below noticed that the respondents had already issued Ext.A11 notice dated 29.8.2008 informing the appellant that they intended to initiate arbitration proceedings invoking clause 15 of Ext.A3 agreement in order to resolve the dispute that had arisen. Name of the arbitrator was also indicated in Ext.A11 communication. The appellant was therefore, requested to inform as to whether it agreed for appointment of the arbitrator named in the notice. 12. The court below noticed that the respondents had already taken steps to set in motion the arbitration proceedings. This impression of the court below is apparent from the Arbitration Appeal.No.34/2008 7 impugned order itself, because in the concluding paragraph of the impugned order it has been made clear by the court below that the order of interim prohibitory injunction and other directions would remain in force “till the culmination of the arbitration proceedings.” The court below further directed that the respondents “shall initiate steps to get an arbitrator appointed as expeditiously as possible.” It was made clear that the order of injunction was to remain in force for a period of one year from the date of the order. Thus it is clear from the order itself that the court below wanted the respondents to take immediate steps to get an arbitrator appointed pursuant to Ext.A11 communication sent by them to the appellant. 13. However it is conceded by the learned counsel for the respondents that no further steps had been taken in this regard for the reason that this Court had passed an interim order of stay of all further proceedings pursuant to the impugned order. 14. It is true that while admitting the appeal, this Court had ordered thus: Arbitration Appeal.No.34/2008 8 “In the meanwhile, there will be a stay of all further proceedings pursuant to the order under appeal. However, it is made clear that the appellant shall not obstruct the respondents from maintaining the system. In order to avoid any confusion with regard to the implementation of this order, we make it clear that it will be open to the respondents to request the appellant regarding maintenance of the system including the generator and, on such request, permission will be granted to the respondents to attend to the repair, maintenance, refueling of the generator etc. forthwith.” 15. But to a query as to why the respondents did not take any further steps to proceed with the arbitration as proposed by them in Ext.A11, learned counsel submitted that the interim order interdicted them from doing so. It is further submitted by the learned counsel that the appellant had not responded to Ext.A11 notice. According to the learned counsel, the conduct of the appellant indicated that it was aware of appointment of an arbitrator. Arbitration Appeal.No.34/2008 9 16. But, it is contended by the learned counsel for the appellant that arbitration clause has no relevance in the matter, especially, after the admitted transfer of business interest by respondent No.1 in favour of respondent No.2. In Ext.A2 communication itself, the appellant had informed the respondents that Ext.A3 agreement stood terminated. 17. Yet again, we do not propose to deal with the above contentions raised by the parties since in our view this is a larger issue which has to be dealt with by an appropriate forum. The question whether or not the dispute, if any, is arbitrable has to be decided in appropriate proceedings. The court below while passing the impugned order obviously did not want the stalemate to continue for ever. Therefore, it was made clear that the order of injunction shall remain in force for only one year. It was also directed in the order itself that the respondent shall take immediate steps to get an arbitrator appointed and that the arrangement made in the order would remain in force till the culmination of the arbitration proceedings. Arbitration Appeal.No.34/2008 10 18. Having regard to the entire aspects of the matter and having considered the various contentions raised by the learned counsel on either side, we are of the view that the entire issue has to be thrashed out by the parties before the appropriate forum. In any view of the matter, the impugned order cannot be allowed to perpetuate the stalemate. 19. Therefore, the appeal is disposed of making it clear that the interim order shall remain in force only for a further period of six weeks from today. It will be open to the parties to take recourse to the remedies available to them in terms of the clauses, if any, contained in the agreement. 20. Learned counsel for the respondents submits that immediate steps will be taken to get an arbitrator appointed in terms of clause 15 of the agreement. It will be open to the respondents to take recourse to such action, if so, advised. 21. It is made clear that the interim order dated 16th October, 2008 passed by this Court shall remain in force for a Arbitration Appeal.No.34/2008 11 further period of six weeks from today. It is further made clear that all the contentions of the parties are left open. We hasten to add that we have not decided any question on its merit in this appeal. The appeal is disposed of in the above terms. (A.K.BASHEER, JUDGE) (P.Q.BARKATH ALI, JUDGE) ps