1 ARBP.981.10.sxw JPP IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 981 OF 2010 WITH ARBITRATION PETITION NO. 983 OF 2010 Euphoria Hotels Pvt. Ltd. ... Petitioners. V/s. Eco-Nirman Pvt. Ltd. and Anr. ... Respondents. Mr. M.M. Vashi i/b. M/s. M.P. Vashi & Associates for the Petitiioners. Mr. Virag Tulzapurkar, Mr. Vishal Kanade, Ms. Zenobia B. Mistry i/b. Solomon & Co. for Respondent No.1 Mr. Jharna i/b. AKS Legal Consultants for Respondent 2. CORAM : R.Y. GANOO, J. DATED : 3rd AUGUST 2010. P.C. :- These two Petitions involve common point and hence they are being disposed of by a common order. 2. On consideration of the entire record it is noticed that on the land more particularly described in the agreements entered into between the Petitioners on the one hand and 2 ARBP.981.10.sxw Respondent No.1, there are certain premises which are termed as hotel premises and are governed by the proceedings as Arbitration Petition No.981 of 2010 and agreement between the Petitioners on one hand and Respondent No.1 being agreement dated 3rd August 2007, there are other premises which are being referred to as commercial premises and to that extent Petitioners and Respondent No.1 are governed by terms of agreement dated 27th June 2008 alongwith an Addendum. 3. The Petitioners had executed the aforesaid agreements about these two properties in the nature of lease and Respondent No.1 in both the cases were required to observe terms and conditions of the said lease. One such condition was to pay compensation as set out in the documents executed by and between the parties. 4. The Petitioners had borrowed monies from a bank known as Economic Development Corporation situated at Goa. At a later point of time that liability was taken over by Respondent No.2 in each of the case and as of today, the Petitioners are 3 ARBP.981.10.sxw liable to pay certain amount by way of loan to Respondent No. 2. In order to see that the liability of the Petitioners gets reduced on a monthly basis, a tripartite agreement was entered into by and between the Petitioners , Respondent no.1 and Respondent No.2. By that agreement, every month Respondent No.1 was to deposit with Respondent No.2 monies equal to lease rent payable by Respondent No.1 and upon such payment of the said lease rent, the loan liability of the Petitioners was to proportionately come down. These tripartite agreements are dated 2nd July 2008 and 29th August 2008 respectively. 5. It has been the case of the Petitioners that Respondent No.1 have failed to discharge their liabilities under the respective lease agreements inasmuch as Respondent No.1 have not deposited monthly lease rents as and when due and that has resulted in committing a default in respect of the main document executed between the Petitioners on one hand and Respondent No.1 as also tripartite agreements. Learned Counsel for the Petitioners had pointed out that on account of such default, there has been default on the part of 4 ARBP.981.10.sxw the Petitioners consequently as regards payment of loan installments to Respondent No.2 because the Petitioners depended upon performance of Defendant No.1 as regards paying monthly lease rents from time to time as agreed between the parties as per tripartite agreements. These petitions are filed by the Petitioners under Section 9 of the Arbitration and Conciliation Act, 1996 hereinafter referred to as the said Act on the basis of Arbitration clause available in the respective tripartite agreement. 6. According to the learned Counsel for the Petitioners on account of default in payment of the compensation as per the agreement, a dispute has arisen in terms of the tripartite agreements and as such interim reliefs sought in the present Petition are required to be granted otherwise the Petitioners would suffer prejudice and that Respondent No.2 would proceed against the Petitioners for no fault of theirs. It is submitted that the tripartite agreements were arrived at solely to see that the Petitioners interest is adequately protected on account of conduct of Respondent No.1 by payment of monthly dues from time to time. Learned Counsel 5 ARBP.981.10.sxw for the Petitioners submitted that Respondent No.1 had conceded that all the terms and conditions set out in the lease agreements are fulfilled and there has been no difficulty to Respondent No.1 in performing their business and pay monthly compensation. According to the Petitioners in view of default on part of Respondent No.1 the interest of the Petitioners is required to be protected by passing orders as prayed for in this Petition. 7. Learned Counsel for Respondent No.1 had submitted that Respondent No.1 are not in default as regards monthly payment. According to him, the Petitioners have not complied with the terms of respective lease agreements. He had further submitted that if there is a default as far as the lease agreement is concerned, it will have no bearing on the tripartite agreement. According to him, a tripartite agreement was nothing but an arrangement as and between the parties to see that the compensation is paid from time to time on monthly basis and Respondent No.1 was authorized to pay Respondent no.2 monthly amount as and by way of arrangement. He submitted that if at all there has been a 6 ARBP.981.10.sxw default on the part of Respondent No.1 in the matter of payment of monthly compensation that may provide a cause of action to the Petitioners under the main agreements and not under the tripartite agreements as the terms of the tripartite agreements by themselves provide no cause of action in favour of the Petitioners qua the Respondent No.1. According to him, parties are governed by the main agreements between the Petitioners and Respondents. According to him, the Petitioners cannot enforce terms of main agreements by filing these Petitions. 8. I have considered the rival submissions. The main agreements are entered into between the Petitioners and Respondent no.1. Respondent No.2 is not a party thereto. It is noticed that the Petitioners felt proper to authorise Respondent No.1 to pay monthly dues directly to Respondent No.1 thinking that if such payment is made from time to time, their loan liability would come down without any further act on behalf of the Petitioners. As a result of this, the two tripartite agreements came entered into. The clauses of the tripartite agreement indicate that the bank i.e. Respondent No.2 agreed 7 ARBP.981.10.sxw to give financial assistance to the Petitioners and it was also agreed that the monthly compensation would be paid by Respondent No.1 to the Bank and that would be accepted by the Bank. Merely because Respondent No.2 agreed to receive from Respondent No.1 the monthly dues and acquit the Petitioners from said liability from time to time, the tripartite agreements do not authorize the Petitioners to raise disputes concerning main agreements and seek reliefs which can be otherwise claimed in terms of main agreement if at all such disputes exist. 9. As contended by the Petitioners if at all Defendant No.1 have committed default in the matter of payment of monthly dues that may provide a cause of action to the Petitioners under the two main agreement and not under tripartite agreement. This is being stated on the basis of terms of the main agreements and the tripartite agreements. It is clarified that this Court has not gone into merits of the allegations levelled by the Petitioners against Respondent No.1 as regards non-fulfillment of terms of main agreements. 8 ARBP.981.10.sxw 10. If at all there is a failure on the part of Respondent No.1 that would be of the main agreements. Hence, the Arbitration Petitions filed on the strength of tripartite agreements do not provide any cause of action for the Petitioners for the purposes of seeking relief as set out in the respective Petitions and that the said Petitions cannot be granted. 11. It is clarified that at this juncture this Court has not gone into the question whether Respondent No.1 are in default or otherwise. No views are expressed on merits of that aspect of the matter. For the reasons mentioned aforesaid, both the Petitions are dismissed. There shall be no order as to costs. (R.Y. GANOO, J.)