The Royal Western Turf Club Limited (RWITC) has been directed by an Arbitral Tribunal to pay Rs 82.77 lakh to Eighteen Degrees North (EDN), with which it had entered into a contract in 2015 for starting a speciality restaurant and running its permit room at the Turf Club House, Pune.
The tribunal headed by retired chief justice of the Bombay High Court, Mohit Shah, on December 22, directed the RWITC to pay Rs 10 lakh as cost of this arbitration proceedings. The tribunal has also asked the Turf Club to pay interest at the rate of 10 per cent from December 22 till the date of actual payment.
The amount has to be paid to EDN within three months.
RWITC had floated tender in May 2015 for providing catering services for its Turf Club House, Pune, which included a permit room and a Speciality Restaurant. The tender was awarded to EDN in June 2015 and it was asked to commence work from July 1, 2015.
According to EDN’s counsels, Aashutosh Srivastava and Savivek Srivastava, it started paying conducting fees to RWITC as per arrangement agreed between them even before the signing of the formal contract.
However, on April 20, 2016, EDN terminated the arrangement on the ground that RWITC had failed to obtain necessary licenses for the speciality restaurant and had discontinued its arrangement with EDN to run the permit room.
RWITC accepted the letter and their arrangement came to an end on April 30, 2016.
RWITC claimed that EDN owes it Rs 1.15 crore whereas the latter claimed that the turf club owed it Rs 1.93 crore with 16 per cent interest.
Following the dispute, EDN had approached the National Company Law Tribunal under the Insolvency and Bankruptcy Code. RWITC challenged this proceedings before Bombay HC.
Following an order of the HC, the Arbitral Tribunal was constituted in November 2019.
RWITC’s counsel Deven Dwarkadas said that after termination of the contract there were various third party claims and conducting fees payable towards catering contract amounting to Rs 1.15 crore which the EDN was liable to pay. It then revised the cost to Rs 72,99,130.
The tribunal held that it was the Claimant Club which was required to obtain the necessary building permission from the Pune Cantonment Board. “In view of the failure of the club to procure the requisite building permission, the Respondent (EDN) could not take necessary steps for starting of the speciality restaurant,” observed the tribunal in its 106-page order.
EDN also contended that it suffered loss as RWITC did not allow it to operate the permit room from March 31, 2016. As EDN had hired seven permanent staff and 75 contract labourers, it was constrained to pay their salaries for the same.
RWITC contended that it did not have contractual obligation to pay for any loss incurred by EDN.
However, the tribunal noted that since the operations of the permit room was taken away by the Club from the EDN, it was “entitled to get compensation for the loss of profit”.
Upholding claim of EDN, the tribunal observed: “The claims of Claimant RWITC are dismissed.”
