2023 (7) TMI 158 - HC - Companies Law

Court orders release of title deeds for joint custody pending arbitration. Dismisses applications, upholds petitioner's property retention.

The court directed the release of title deeds to the petitioner and respondents for joint custody, pending arbitration proceedings. Applications by Mr. ... Alleged illegal termination in respect of the Collaboration Agreement executed between the petitioner and the respondents - joint custody of the title deeds - HELD THAT:- The land/project in question has been excluded from the definition of “Demerged Undertaking” and the same has been directed to be retained by the petitioner herein (Demerged Company). As far as the “Capital Towers Economic Benefit Agreement” dated June, 2017 is concerned, a duly signed copy thereof has not been placed on record. Morover, a perusal of the same reveals that it contemplates that MGF Developments Limited would became a “contributor” in respect of the project pertaining to construction and development of the land in question, and in lieu thereof, it would be entitled to a share of the economic benefit arising out of the “Developer Project Share”. The said agreement also contains an arbitration clause. If at all the said agreement creates any rights in favour of MGF and/or warrants that MGF should have joint custody of the title documents in respect of the land in question, it is open for MGF to initiate appropriate proceedings seeking the same - Likewise, if at all, the “Letter Agreement” confers any right upon MGF, it is open to MGF to assert those rights in appropriate proceedings and seek appropriate order/s. In the present proceedings, there is no warrant to accede to the prayer/s sought in IA No. 7896/2023. In the circumstances, as jointly prayed by the petitioner and the respondents, the custody of the title deeds/documents are directed to be placed in the joint custody of the petitioner and the respondents. Application disposed of with the direction that the title deeds of the land in question, which are presently lying with the Registrar General of this court, be released to the petitioner and the respondents, who shall retain joint custody thereof. Issues Involved:1. Legality of the termination notice dated 02.03.2010.2. Custody and access to the title deeds of the project land.3. Impact of the Scheme of Demerger on the rights to the title deeds.4. Validity and implications of the 'Capital Towers Economic Benefit Agreement' and 'Letter Agreement'.Summary:Issue 1: Legality of the termination notice dated 02.03.2010The petitioner filed O.M.P. 135/2010 under Section 9 of the Arbitration & Conciliation Act, 1996, challenging the termination notice dated 02.03.2010 issued by the respondent concerning the Collaboration Agreement dated 21.08.2006. The court initially directed the respondents to maintain the status quo regarding the title and possession of the project land.Issue 2: Custody and access to the title deeds of the project landThe title deeds were deposited in a bank locker jointly operated by representatives of both parties. Due to the departure of Mr. Rakshit Jain, the petitioner faced difficulties accessing the locker. The court directed the appointment of a Local Commissioner to retrieve and secure the title deeds, which were then handed over to the Registrar General of the court. The court later directed that the title deeds be placed in the joint custody of the petitioner and the respondents, rejecting the request for joint custody by MGF Developments Limited.Issue 3: Impact of the Scheme of Demerger on the rights to the title deedsThe Scheme of Demerger, approved by the NCLT, involved the petitioner company (Emaar MGF Land Limited, now Emaar India Limited) and MGF Developments Limited. The court noted that the land in question was excluded from the 'Demerged Undertaking' and retained by the petitioner. The court emphasized that MGF Developments Limited is not a party to the ongoing arbitration and has not taken steps to implead itself in the proceedings. Therefore, MGF's claims to the title deeds were not adjudicated in this petition.Issue 4: Validity and implications of the 'Capital Towers Economic Benefit Agreement' and 'Letter Agreement'The court observed that the 'Capital Towers Economic Benefit Agreement' and the 'Letter Agreement' were not duly signed and thus did not establish enforceable rights for MGF Developments Limited. The court allowed MGF to initiate independent proceedings to assert any rights arising from these agreements.Conclusion:The court directed that the title deeds be released to the petitioner and the respondents for joint custody, subject to further orders in the pending arbitration proceedings. The applications by Mr. Rakshit Jain and MGF Developments Limited were dismissed, and the court clarified that MGF could pursue appropriate proceedings to assert its rights.