SC upholds plea of bias against the purchaser

By Staff
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Google Oneindia News

New Delhi, Mar 19 (UNI) The Supreme Court has upheld the Bombay High Court judgment upholding the plea of bias raised by the seller against the purchaser in the deal for sale of Centaur Hotel, Juhu, Mumbai for Rs. 349.06 crores as part of the policy of the disinvestment of the government.

Hotel Corporation of India under the control of Central government had transferred the hotel to M/s Tulip Hospitality Services Ltd. which agreed to sell the hotel to M/s Siddhivinayak Realities Pvt. Ltd. through a Master Asset Purchase Agreement(MAPA) Dated March 31, 2005.

Under the agreement parties agreed to make an Escrow arrangment to secure the payment to be made by the Siddhivinayak Realities to M/s Tulip Hospitalities. Accordingly advocates of respective parties namely Anand Bhatt and Mr Suresh Talwar were appointed joint Escrow agents. Tulip deposited various documents with the agents.

Escrow agents were also told to transfer 22 lakh shares held by Respondent no. 3 belonging to Tulip Hospitalities to the appellants Siddhivinayak.

Appellants paid Rs. 75 crores to Tulip Hospitalities, respondent no. 1 and after appearance of news item in press ' Centre refers city Centaur Deals to CBI' Anand Bhatt, Escrow agent of the appellants wrote a letter dated July 21,2005 that since cloud has been cast on the title of the seller hence till the CBI gave clean chit to the respondents further transaction cannot be carried out.

Escrow agent for the respondent no. 1 Suresh Talwar also brought to the notice of the appellants agreement entered into by his clients with M/s Nirmal Lifestyles for constructing a shopping mall and supermarket in the hotel complex.

A bench comprising Justices A R Lakshmanan and Altamas Kabir in judgment dated March 15 ruled,"The disinclination by the appellants to complete the transaction in terms of MAPA is directly connected with the issue of default which is required to be decided by the joint Escrow Agents.Since the letter has been authored by Shri Anand Bhatt there is little doubt that he will be subjected to extensive cross examination with regard to the same. He can not therefore, be called upon to decide the dispute in which he himself becomes a party in violation of the well known maxim that a person can not be a judge in his own cause." The court further added," It is only on such considerations that the submissions made on behalf of the respondents have to be accepted even though we are not inclined to fully accept the views expressed by the Tribunal and the high court on the question of bias." The judges concluded by directing ," We, however make it clear that if the learned arbitrator finds that there has been a default in working out MAPA by either parties to the agreement, the parties will be entitled to enforce the consequencies arising out of the Escrow arrangment irrespective of the award of ld.

Arbitrator on all other aspects of the disputes between the parties." UNI AKS/SC RP RK2023

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