SHAKTI NATH Vs. ALPHA TIGER CYPRUS INVESTMENT NO.3 LTD.
LAWS(SC)-2020-2-62
SUPREME COURT OF INDIA
Decided on February 18,2020

Shakti Nath Appellant
VERSUS
Alpha Tiger Cyprus Investment No.3 Ltd. Respondents

JUDGEMENT

- (1.)Leave Granted. The present Appeal has been filed to challenge an award passed in an ICC arbitration with its seat in New Delhi. The Appellant has challenged the judgment dated 08.05.2017 passed under Section 37 of the Arbitration and Conciliation Act, 1996 ("Act"), whereby a division bench of the Delhi High Court rejected the Appeal.
(2.)The factual background in which the present Appeal has been filed is as follows : -
2.1. The Appellant-Promoters entered into a Shareholders Agreement ("SHA") and a Share Subscription and Purchase Agreement ("SSPA") with Respondents No.1 and 2 both dated 21.03.2008 to acquire 50% shareholding in Respondent No. 3 for the development of a Special Economic Zone for Information Technology and Information Technology Enabled Services. The project was to be developed on a plot of land admeasuring approx. 45,202 sq. mts. in NOIDA ("Project Land") which was allotted to one M/s Sarv Mangal Real Tech Pvt. Ltd. ("M/s Sarv Mangal"). The Project Land was sub-leased by M/s Sarv Mangal to Respondent No. 3.

2.2. The SHA and SSPA were terminated. The parties entered into a Restated Shareholders Agreement ("RSHA") and a Restated Share Subscription and Purchase Agreement ("RSSPA") both dated 02.07.2009. As per Clause 3.3 and 3.4 of the RSSPA, Respondents No. 1 and 2 were required to contribute Rs.45 crore to purchase and subscribe the shares in Respondent No.3, which was brought in by 17.12.2009.

2.3. The Appellants terminated both the agreements on 17.12.2009. The Respondents No. 1 and 2 invoked arbitration, and submitted the Request for Arbitration to the ICC Court under the RSHA and RSSPA.

2.4. The Tribunal vide its award (2:1) dated 20.01.2015 allowed the claim of Respondents No. 1 and 2, and awarded the following : -

a) payment of Rs.45,00,27,747/- together with Simple Interest @ 18% p.a. from 31.10.2011 to the date of the award;

b) payment of Simple Interest @ 15% p.a. on all sums awarded to the claimants in the award, till the date of payment;

c) the Appellants were not entitled to repayment of lease rental paid to NOIDA from Respondents No. 1 and 2, and the Respondent-Claimants were under no obligation to share future lease rental;

d) the Appellant-Promoters were directed to pay costs of the arbitration comprising of:

i. fees and expenses of the arbitral tribunal and the ICC administrative expenses fixed by the ICC Court for the total amount of USD 900,000;

ii. Rs.2,39,08,082/- towards the legal fees of the Respondent-Claimants;

iii. costs of the hearing venue in the amount of Rs.6,57,635/-;

iv. a sum of Rs.1,274,931/- in respect of other costs and expenses of the Respondent - Claimants.

2.5. The Appellants filed objections under S. 34 of the 1996 Act before the Delhi High Court. The learned Single Judge vide Order dated 09.02.2017 rejected the challenge on merits, and held that it was an undisputed fact that Respondents No. 1 and 2 had brought in a sum of Rs.45,00,27,747/- for the project. The Appellants had terminated the RSHA and RSPA soon after the funds were brought in by Respondents No. 1 and 2. The Court found the findings of the arbitral tribunal to be consistent with the terms of the agreement.

2.6. Aggrieved, the Appellants preferred an Appeal under S. 37 of the Act before the Division Bench of the Delhi High Court. The Division Bench vide judgment and order dated 08.05.2017 rejected the Appeal as being devoid of any merit.

(3.)The Appellants have challenged the Order passed under S. 37 of the 1996 Act by way of the present Special Leave Petition.
3.1. This Court vide interim Order dated 15.09.2017 directed the Appellants to deposit an amount of Rs.20,00,00,000/- (rupees twenty crore) in the Registry of this Court, which was directed to be invested in a short-term fixed deposit account with a nationalised bank. The Appellants were injuncted from alienating the Project Land, so that in the ultimate eventuality, if the award was sustained by this Court, it could be realised from the sale of the Project Land.

3.2. By a subsequent Order dated 01.05.2018, Respondent No.1 was permitted to withdraw an amount of Rs.10 crore unconditionally, from the amount lying deposited in this Court.

3.3. By a further Order dated 14.11.2019, the Senior Counsel for the Appellants requested for time to find a suitable buyer for the Project Land. It was made clear that the sale would be under the auspices of a public authority or a court officer, and the entire sale consideration would be deposited in the Registry of this Court.

It was further directed that the balance amount of Rs.10 crore along with the accrued interest, which was lying been deposited in the Registry of this Court, would be released to Respondent No.1. The counsel for the Appellants made a request to join NOIDA as a party to the present proceedings since the Project Land was leased out by NOIDA. Consequently, Notice was issued to implead NOIDA in the proceedings.

3.4. The Appellants filed an affidavit dated 05.12.2019 stating that the Project Land was free from any and all encumbrances, and was not subject to any pre-existing mortgage or charge.

It was further submitted that the Appellants were able to identify a party which was interested to acquire the sub-lease of the Project Land, viz. M/s. Good Living Infrastructure Pvt. Ltd. ("Bhutani group"). The Bhutani group had submitted their Expression of Interest to acquire the sub-lease of the Project Land from NOIDA by acquisition of shares of Respondent No. 3 for a total consideration of Rs.99,44,55,000/-. The Bhutani group was willing to deposit the sale consideration in the Registry of this Court, after deducting the dues payable to NOIDA. A copy of the Expression of Interest dated 26.11.2019 was placed on the record of this Court.

The Appellants further submitted that the balance amount would be raised by mortgaging the property situated at Industrial Plots No. 4 and 5, Block A, Sector 16, NOIDA, owned by Appellant No. 4, which is being used as the Corporate Office.

The CEO of M/s Good Living Infrastructure Pvt. Ltd. who was present in Court confirmed that his Company stands by the offer of Rs 99,44,55,000/- made by him before the Court. M/s Good Living Infrastructure Pvt. Ltd. was directed to file a Board Resolution along with an affidavit to confirm the offer before the next date of hearing.

3.5. M/s Good Living Infrastructure Pvt. Ltd. through its CEO/ Additional Director, duly authorized by a Board Resolution dated 20.12.2019, filed an Affidavit dated 06.01.2020 before this Court to place on record its Interest to acquire the sub-lease of the property bearing Plot No.001B situated Sector 140A in NODIA district Guatam Budh Nagar, U.P. admeasuring 45,202.50 sq. mts. held by M/s IT Infrastructure Park Ltd. (Respondent No.3) for a consideration of Rs. 99,44,55,000/-. This would be effectuated by acquisition of shares of Respondent No.3 which holds the aforesaid property under a sub-lease executed between NOIDA­the Lessor, M/s Sarv Mangal Real Tech Pvt. Ltd.­the Lessee, and Respondent No.3­the sub-lessee under Sub Lease dated 21.10.2009. In the said Affidavit, Bhutani Group stated that it is aware of the pending litigation before this Court, and is willing to deposit the entire sale consideration with the Registry of this Court, including the dues payable to NOIDA.

3.6. With respect to the dues of NODIA, we requested the Counsel for NOIDA to ascertain whether penal interest on land rent and interest could be waived.

3.7. During the course of hearing on 22.1.2020, the dues payable to NOIDA were crystallised as follows :-

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