Techno Electric And Engineering Company Limited vs Mcleod Russel India Limited

The Court:-This arbitration petition is for interim measure.

Mr. Gupta, appears in person. He submits, he is Managing Director of petitioner. His company by and under loan agreement dated 28th September, 2018 extended to respondent financial accommodation by inter corporate deposit of Rs.100 crores, which was to be repaid on or before 31st March, 2019. To secure repayment of the loan together with interest and performance of the agreement, respondent agreed to execute mortgage or create simple mortgage in respect of premises at 4, Sunny Park, Kolkata-700019 and hand over original title deeds of four tea estates owned and possessed by it. In addition it executed demand promissory notes and post dated cheques for obtaining the loan. He demonstrates from bank statement of his company, disclosed at page 57, on 28th September, 2018 there was transfer made to respondent of Rs.100 crores. There has been default. He submits, there be interim measure to protect interest of his company, by appointing receiver over the secured properties.

Mr. Guha Sarkar appears and submits, he is Corporate Advisor to respondent. By Board resolution dated 27th March, 2019, he has been authorized to, inter alia, answer and oppose disputes, claims etc., in which his company is interested. He hands over certified true copy of the resolution.

He submits, this arbitration petition cannot be proceeded with at this time since the agreement is insufficiently stamped. He refers to article 6 in substituted by Indian Stamp (West Bengal Amendment) Act, 1977 (with effect from 01.12.1977) schedule 1A, which provides as follows:-

"Description of Instruments

Proper Stamp Duty

Agreement relating to Deposit of Title-deeds, Pawn or Pledge, that is to say, any instrument evidencing an agreement relating to-

(1) the deposit of title-deeds or instrument or constituting or being evidence of the title to any property whatever (other than a marketable security),

(2) the pawn or pledge of movable property, where such deposit, pawn or pledge has been made by way of security for the repayment of money advanced or to be advanced by way of loan or an existing or future debt-

(a) if such loan or debt is repayable on demand or more than three months from the date of the instrument evidencing the agreement;

Rupees ten for every Rs.1,000 or part thereof, of the amount of loan.

Half the duty payable under subclause (a)"

b) if such loan or debt is repayable not more than three months from the date of such instrument.

He relies on judgment dated 10th April, 2019 of Supreme Court in Civil Appeal 3631 of 2019 (Garware Wall Ropes Ltd. Vs. Coastal Marine Constructions & Engineering Ltd.) to submit, there must first be determination of stamp and penalty payable on the agreement before it can be acted upon pursuant to arbitration clause contained therein.

He submits further, this is a loan agreement. Of four tea estates, three have been sold leaving Rajmai Tea Estate. Said tea estate together with the Sunny Park property is more than sufficient security for repayment of the loan with interest. His company is going through some financial difficulties and verbal extension of time for repayment was allowed. His company intends to repay the loan with interest. His companywould want to file affidavit.

In Garware Wall Ropes Ltd.(supra) Supreme Court (inparagraph 45) said as follows:-

"45. One reasonable way of harmonising the provisions contained in Sections 33 and 34 of the Maharashtra Stamp Act, which is a general statute insofar as it relates to safeguarding revenue, and Section 11(13) of the 1996 Act, which applies specifically to speedy resolution of disputes by appointment of an arbitrator expeditiously, is by declaring that while proceeding with the Section 11 application, the High Court must impound the instrument which has not borne stamp duty and hand it over to the authority under the Maharashtra Stamp Act, who will then decide issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date on which the authority receives the instrument. As soon as stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the High Court, which will then proceed to expeditiously hear and dispose of the Section 11 application. This will also ensure that once a Section 11 application is allowed and an arbitrator is appointed, the arbitrator can then proceed to decide the dispute within the time frame provided by Section 29A of the 1996 Act."

Above direction was rendered on consideration of Maharashtra Stamp Act. Supreme Court thought fit to refer the matter to Stamp authority, pending adjudication on reference sought under arbitration agreement between parties.

On perusal of article 6 Court is not, at this stage, convinced same relates to a loan agreement. An instrument evidencing agreement relating to deposit of title deeds can be a loan agreement is a proposition that needs further consideration. It is nobody's case that loan agreement is itself evidence of title of any property. That, which Court is, prima facie, satisfied is, respondent having taken inter corporate deposit of Rs.100 crores admits to not have repaid. Petitioner is entitled to interim measure.

Respondent is restrained from dealing with in any manner said property and tea estate till disposal of this arbitration petition.

Respondent might file affidavit by 7th May, 2019, affidavit-in-reply by 13th May, 2019.

List on 14th May, 2019.