Mumbai: In a judgement that might clear the way for the land development in Tulip Star property, the Bombay High Court has set aside an arbitration award which had held that the agreement between Siddhivinayak Realties and V Hotels stood terminated. Siddhivinayak Realties is a joint venture between Oberoi Realty and DB Realty founders Shahid Balwa and Vinod Goenka, while V Hotels is currently the owners of the Tulip Star property, formerly known as Centaur Hotel, in suburban Juhu.
The court was of the view that the arbitration award was contrary to the contract agreed between the parties and deserved to be set aside. In 2005, Siddhivinayak Realties had agreed to purchase the hotel from Ajit Kerkar and the Tulip Group (V Hotels) for around Rs 300 crore and had paid Rs 73 crore to Tulip along with Rs 2 crore in an escrow account. However, V Hotels later decided against going ahead with the deal for some reasons but Siddhivinayak was keen to complete the transaction. Following the differences between the two parties, the matter was referred to an arbitrator.
The arbitrator had accepted the argument of V Hotels and held that the agreement between Siddhivinayak Realties and V Hotels stood terminated. The arbitration award, passed on July 13, 2011, also asked V Hotels and other respondents, including Tulip Star hotels and promoter of Tulip hospitality services Ajit Kerkar, to refund Rs 73 crore to Siddhivinayak Realties in 90 days. Siddhivinayak then challenged the arbitration award in the High Court which has set aside the award.
"In my view, the award of the learned arbitrator is not based only on the interpretation of the terms of contract and/or provisions of Contract Act, but dehors the terms of contract and is contrary to Section 39 and 56 of the Contract Act," Justice Dhanuka said. "Arbitrator has to decide in accordance with the provisions of contract entered into between the parties and in accordance with substantive law," the judge further noted. The impugned award, however, is contrary to the provisions of Master Asset Purchase Agreement (MAPA) between the parties and the Contract Act, the High Court order said.
"It ignores the material piece of evidence laid by parties, is patently illegal and thus warrants interference of this court under Section 34 of the Arbitration Act," the order said. Earlier, the property, known as Centaur Hotel was acquired by Kerkar and the Tulip Group from Hotel Corporation of India, during the privatisation drive undertaken by the erstwhile BJP-led government at the Centre.
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