EIH LIMITED Vs. JYOTI PRIVATE LIMITED

JUDGEMENT

(1.) This petition under Section 41(B) has been filed seeking injunction restraining the respondents from dealing with and/or parting with possession of the property in Oberoi Palace, Bhulewad Road, Srinagar, Kashmir and to direct the respondent to furnish security in the sum of Rs.68,94,509.00 being the admitted amount. The relevant facts giving an occasion to file this petition are being briefly stated as under :

(2.) The petition Eastern India Hotels Limited entered into a loan agreement dated 8th August, 1980 whereunder the respondent confirmed and acknowledged having received the loan of Rs.30 lacs carrying interest at the rate of 12% per annum from the petitioner by representing itself to be the owner of land and building including all superstructure built up thereon, popularly known as Oberoi Palace Hotel, Srinagar.

(3.) Earlier, the Oberoi Palace Hotel was leased in favour of Shri Rai Bahadur M.S.Oberoi, Chairman of the petitioner Company by virtue of lease deed dated 17th June, 1954 and the lease deed was subsequently mutually terminated in November, 1975. The cost of the extensive renovations, improvements and additions to the building and superstructures, hotel equipments, furnitures, carpets etc. was mutually arrived at Rs.30 lacs. This amount was transferred by the petitioner to the respondent for a total consideration of Rs.30 lacs and by mutual agreement it was treated as a loan from the petitioner to the respondent carrying interest at the rate of 12% per annum w.e.f. December 1, 1975. The petitioner Company also entered into a "Hotel Operation Agreement" on 24th November, 1975. The loan agreement dated 8th August, 1980 was executed. The respondent agreed and undertook to repay the loan in 10 equal instalments starting from financial year 1990-91. Though the repayment of the loan was to be made half year from financial year 1991 with interest at half yearly rates, the respondent failed to make the payment of the loan instalments and accrued interest. Dispute arose between the parties and the matter was referred to arbitration and an interim order dated 4th August, 1995 was also passed restraining the defendants from in any manner transferring and/or alienating and/or charging its properties until further orders. An IA No.7955/95 was also filed for vacation of the said stay. Suit No.1808A/95 and S.No.622A/95 alongwith applications were decided by Justice K.Ramamoorthy by common order dated 20th February, 1996. Justice G.C.Jain (Retd.) was appointed, the Sole Arbitrator. Learned Single Judge dismissed IA 7955/95 and allowed the respondent's IA9753/95 by vacating the injunction with the following observations: