HINDUSTAN ANTIBIOTICS LIMITED Vs. HINDUSTAN MAX GB LIMITED

JUDGEMENT

(1.) This is an appeal under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the said Act'), filed by the original respondent, M/s Hindustan Antibiotics Ltd., against the orders of the learned Single Judge dated 12/01/2001 and 19th February, 2001. By the order dated 12/01/2001, the learned Single Judge in the presence of Caveator/appellant(hereinafter referred to as 'HAL') adjourned the matter to 24/01/2001 and directed that status quo be maintained in the meanwhile. By the subsequent Order dated 19th February, 2001 while continuing the order of status quo, the case was adjourned by the learned Single Judge to 20/03/2001 and the request of the appellant for an early hearing of the case was not entertained while noticing the plea raised by the respondent/petitioner(hereinafter referred to as 'Max GB') that the appellant-HAL was in contempt and could not be heard unless and until it purged the contempt.

(2.) The facts of the case in brief according to the appellant are as follows: (a) The HAL markets and manufactures antibiotics and other life saving drugs and the respondent is in the business of manufacturing and marketing intermediates and bulk drugs in the field of Betalactam antibiotics and also markets Penicillin G in India. (b) On 6.9.1995 by an agreement (hereinafter referred to as 'Joint Venture Agreement'), 50-50 joint venture between HAL and the Max GB was formed and the respondent Company, i.e., Max GB was formed. (c) Max GB entered into five other agreements including the Right to Use Agreement with HAL for user of the facilities. Consequently HAL granted Hindustan Max GB the Right to Use the facilities and consequently certain Fermentors were given on lease to Max GB for manufacture of Penicillin G. Apart from the aforesaid Fermentors given on lease to Max GB for manufacture of Penicillin G, HAL also had 5 Fermentors which are used for manufacture of Streptomycin. (d) Pursuant to a decision taken on 19/09/1995, the HAL and Max GB agreed to negotiate the lease rent for the use of manufacture of 5 Streptomycin Fermentors but since the lease rent @ Rs. 64.00 lacs per annum, offered by the Max GB was found by the HAL to be much lower than that available for a "similar arrangement", i.e., Rs. 6.53 crores per annum, fresh tenders were floated for leasing out those five Fermentors for manufacture of Streptomycin. After the advertisement was published for leasing of the Streptomycin Fermentors was issued, the respondent revised its offer from Rs. 64.00 lacs per annum to Rs. 310.00 lacs per annum. (e) On 8th of November, 1997 after the opening of the tenders for Streptomycin Fermentors, the Sub Committee of the Board of Directors of HAL could not reach any agreement with the respondent in respect of the said Fermentors. (f) On 31st of March, 1997, the BIFR declared HAL as "sick" industrial Company and appointed IDBI as the Operating Agency under Section 17(3) of the Sick Industrial Companies (Special Provisions) Act, 1985(hereinafter referred to as the 'SICA'). (g) HAL communicated to the respondent-Max GB that as on 9th of October, 1998 a sum of Rs. 14.13 crores was due from the respondent-Max GB to HAL/appellant which fact was not denied by the respondent-Max GB. (h) On 14th of December, 1998 an offer made by the RPG Life Sciences Ltd. for leasing Streptomycin Fermentors owned by HAL, was accepted. The BIFR consequently approved the leasing of the Streptomycin Fermentors of HAL to RPG Life Sciences Ltd. as a part of the scheme which may be sanctioned by BIPR under Section 18(4) read with Section 19(3) of the SICA. HAL in July 1999 informed the respondent about sharing of the common fermentation facilities pursuant to the Meeting of HAL, RPG Life Sciences Ltd. and the respondent-Max GB on 19.7.1999.

(3.) On disputes having arisen on the HAL'S claim of arrears of lease rental and other dues amounting to Rs. 3629.60 lacs and Max GB's claim of Rs. 1.48 crores said to be recoverable by the Max GB from the HAL, the Arbitration Clause was invoked by the HAL and the respective Arbitrators were appointed by both the appellant and the respondent. The appointment of the Arbitrator was the subject-matter of A.A.280/2000 under Section 11 (6) (b) of the said Act and the said dispute relating to appointment of the Presiding Arbitrator pursuant to the appointment of the two respective Arbitrators by the appellant-HAL and the respondent-Max GB has concluded. Consequently Transfer Petition No. 10/2001 which in the meanwhile had been filed by HAL in the Hon'ble Supreme Court for transfer of A.A.280/2000 filed under Sec. 11 of the said Act was dismissed by the Hon'ble Supreme Court as infructuous.