mumbai

Updated: Sep 08, 2019 02:06 IST

The Bombay high court (HC) has upheld an arbitration award favouring the Israeli government against a business house in Nariman Point.

It has directed the business house to refund ₹1.17 crore, which the Israeli government had given as security deposit to use the office space owned by the firm between 2009 and 2012. The business house will also have to pay an interest of 8% per annum beginning from April 2013.

The business house had challenged the judgment passed in a commercial arbitration petition filed by Israel, in the HC.

The arbitrator had rejected the petition filed by the company to withhold the security deposit as well as its claim that the Israeli government owed the firm ₹11.58 crore for using its premise for five months after the expiry of the rental agreements in July 2012.

The arbitrator, advocate Vishal Kanade, had decreed that claims by the business house were filed belatedly and thus barred by the law of limitation. Hence, it was obliged to refund the security deposit.

Kanade also asked the business house to refund the security deposit with interest at 12% and pay arbitral fee of ₹38.75 lakh.

Challenging the arbitrator’s decision, the business house’s counsel, Haresh Jagtiani, informed the HC bench of justice RD Dhanuka that the Israeli government had deposited ₹1.17 crore as security deposit which was refundable after the expiry of the period in June 2012.

However, the premises were not vacated for five months, causing the business house losses worth ₹11.58 crore. Hence, to recover the losses, they had set aside the security deposit and claimed reimbursement of the remaining ₹10.41 crore in the arbitration process. Jagtiani also argued that the arbitration was invalid as the arbitrator was appointed by the HC and not the Supreme Court.

However, Dr Birendra Saraf, Israeli government’s counsel, argued that the arbitrator was appointed after both parties agreed on the appointment. After hearing both sides, the HC held that the arbitrator’s decision was right but lowered the rate of interest to 8% per annum, which the business house shall pay.