CAROL INFO SERVICES LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) This is a petition filed under Section 34 of the Arbitration & Conciliation Act, 1996 challenging the award made by the learned Arbitrator (Justice Shri V.P. Tipnis, Retd.) dated 23-2-2008.

(2.) The facts which are relevant and material are, the Petitioner is a company incorporated under the provisions of the Companies Act and the Respondent is the State of Maharashtra. The Respondent/State of Maharashtra owns a hospital known as "New Gokuldas Tejpal Hospital" at Mumbai. The Respondent also owns the land near the said Hospital situated at L.T. Marg, Mumbai. In the year 1975, the State Government entered into a contract for construction of a building on this land and a building called "Hospital Building" was constructed on the land. The Government, it appears, decided to establish a Super Speciality Hospital in that building. On or about, 29th May, 1999 the Respondent floated a tender for commissioning of the said New Gokuldas Tejpal Hospital as a State of Art Super Speciality Hospital by way of formation of joint venture company in collaboration with a private sector partner. In response to the tender, the claimant/Petitioner submitted its offer, which was accepted on 18-5-2000. A written agreement between the Petitioner and the Respondent was entered into on 10-5-2001. The agreement provided that the value of the project would be Rs. 64.85 crores. The Claimant/Petitioner was to have 51% share capital amounting to Rs. 33,07 crores and the Respondent was to have 49% share capital amounting to Rs. 31.78 crores. The joint venture company was to have nine Directors, five of whom where to be nominated by the Claimant and the remaining four were to be nominated by the Respondent. The Chairman of the joint venture company was to be nominated by the claimant. As per the agreement, the Respondent was to be the owner of the hospital, building and the land under it. However, it was to be given on lease to the joint venture company. The lease was to be for a period of 30 years. The Respondent was to receive annual rent of Rs. 1 crore from the joint venture company with an increase of 8; after every five years for the building and the land.

(3.) On 8-8-2001, the Memorandum and Articles of Association of the joint venture company were formulated. The claimant and the Respondent agreed to subscribe 25500 and 24500 shares respectively. On 20th August, 2001, a Certificate of incorporation of the joint venture company was issued. The Board of Directors of the joint venture company was constituted and the meeting of the Board of Directors to place on 8-9-2001. The Government/Respondent also executed a lease agreement in favour of the joint venture company on 14-3-2002. It appears that, thereafter, problems started cropping up. As a result of which by a letter dated 12-9-2003 the Respondent purported to terminate the contract. Thereafter, steps were taken to get the arbitrator appointed as per the arbitration clause in the agreement between the parties. Hon'ble Shri V.P. Tipnis (Retd.) was appointed as a sole arbitrator and the disputes between the parties were referred to him for adjudication.