ORDER : Leave granted. 2. These appeals arise out of two interim orders one dated 11.09.2014 and the other dated 20.04.2015 passed by the High Court of Calcutta in GA No. 2877 and APOT No. 502 of 2014 in CS No. 393 of 2013 whereby the High Court of Calcutta has directed the appellant herein to pay to respondent No. 2-Cimmco Limited, rent at the rate prevalent on the date of the expiry of the lease period in 2007 till date with interest on the due amount @ 12% and to continue to pay the said rent as and when it falls due. 3. The appeal in which the above two orders came to be passed was filed by the appellant-Union of India against an interim order passed by a Single Judge of that Court dated 26.03.2014 as modified on 09.04.2014 whereby the appellant-Railways was directed to deposit in a no lien account user charges/rent at the rate last paid by the Railways in 2007 from the date of expiry of the primary lease period till 31.03.2014. The said interim order was in turn passed in a civil suit filed by respondent No. 1 in this appeal against respondent No.2-Cimmco Limited inter alia for a decree for recovery of Rs. 12,34,21,126/- and for recovery of 687 BOXN type wagons described in the schedule in the plaint and for an injunction restraining the defendant from using or permitting use of the said wagons. Facts giving rise to the filing of the suit and the appeals afore-mentioned may be summarised as under: A tender for supply of 4000 railway wagons was floated by the Indian Railways on 27.07.1995 on what was described as Build, Own, Lease and Transfer (BOLT) basis from eligible manufacturers and suppliers. Several bids were received by the Railways in response including one from respondent No.2-Cimmco Limited which bids were then evaluated culminating in the issue of a letter of intent dated 18.03.1986 in favour of Cimmco Limited for supply on BOLT basis, 1200 number of wagons out of which 1000 were to be VU-BOXN type while the remaining 200 were meant to be BCNA type wagons. 4.
4. On receipt of letter of the intent afore-mentioned Cimmco Limited appears to have entered into a Principal Lease Agreement on 21.02.1997 with Industrial Development Bank of India (IDBI) wherein IDBI was to own the wagons to be manufactured by Cimmco Limited with the help of the loan/financial help extended by the former until the re-payment of the outstanding loan amount. The Respondent-Cimmco Limited was however under the agreement permitted to sub-lease the wagons with the prior approval of IDBI. 5. It was in exercise of the right to sub-lease the wagons that Cimmco Limited executed a sub-lease relating to 687 wagons out of a total of 1200 with the Government of India on 28.05.1997. A similar sub-lease agreement qua another 200 wagons is said to have been executed between the railways and Cimmco Limited in which Cimmco Limited claims to have taken financial help/loan for the manufacture of the wagons from SBI Leasing Group. 6. The case of the plaintiff-respondent No.1-company is that it has on 24.09.2009 purchased 687 sub-leased wagons covered under the sub-lease agreement dated 28.05.1997 from the IDBI. The plaintiff claims that there is in addition an assignment of rights under the lease agreement in its favour. According to Mr. Kapil Sibal, learned counsel for the plaintiff-respondent No.1 the remaining 200 wagons manufactured with the help of loan borrowed by Cimmco Limited from State Bank of India Leasing Group have also been purchased by the plaintiff Titagarh Capital Private Limited from SBI Leasing Group with an assignment of the rights held by the said financial institution under the Principal Lease agreement executed between SBI and Cimmco. The Railways however do not appear to be acknowledging the right of the so-called assignee, transferee to maintain a suit against them qua either 687 wagons allegedly purchased from IDBI or the remaining 200 wagons allegedly purchased from SBI Leasing Group. 7. Be that as it may on the basis of the transfer of 687 wagons made in its favour by IDBI, the plaintiff-respondent No. 1 herein filed O.S. No. 393 of 2013 in which the plaintiff-respondent not only claimed recovery of a sum of Rs. 12,34,21,127/- towards lease rent of 687 wagons purchased by it for the period post expiry of the initial lease period of 10 years under the Principal Lease Agreement against Cimmco Limited but also prayed for recovery of the said 687 wagons.
12,34,21,127/- towards lease rent of 687 wagons purchased by it for the period post expiry of the initial lease period of 10 years under the Principal Lease Agreement against Cimmco Limited but also prayed for recovery of the said 687 wagons. In addition a prayer for permanent prohibitory injunction restraining Cimmco Limited from making use of the said wagons was also made no matter the railways were not impleaded as parties to the suit initially. They were however subsequently added as party defendant No. 2 to the suit in which the plaintiff filed an interim application for directions. A Single Judge of the High Court of Calcutta by an order on 26.03.2014 directed the railways to deposit in a no lien account rent at the rate last paid from the date of expiry of the lease period till 31.03.2014. 8. Aggrieved by the said order, railways preferred an appeal before the Division Bench of the High Court in which the High Court has as noticed earlier passed two interim orders one dated 11.09.2014 and the other dated 20.04.2015. By the former order, the High Court has directed the appellant-railways to pay to respondent No.2 Cimmco Limited rent as per the agreement executed between Cimmco Limited and railways at the rate prevalent in the year 2009 for the period up to the date of the said order with interest @ 12% p.a. and to continue to pay rent as and when the same is due. Railways appears to have approached the High Court for vacation of the said order which request was declined followed by the High Court passing an order dated 20.04.2014 by which the High Court directed the railways to comply with the direction regarding payment. That is precisely how the present appeals filed by the railways challenging the two orders mentioned above have been preferred before this Court. 9. When the appeal initially came up for hearing before us on 05.08.2015 and was argued at some length, learned counsel for the parties were asked whether they were agreeable to having the disputes between the parties referred for adjudication by an agreed Arbitrator. Mr.
9. When the appeal initially came up for hearing before us on 05.08.2015 and was argued at some length, learned counsel for the parties were asked whether they were agreeable to having the disputes between the parties referred for adjudication by an agreed Arbitrator. Mr. P.S. Patwalia, learned ASG appearing for the Railways responded affirmatively to the question and submitted that his client would have no objection to all disputes raised in the suit and all other disputes concerning the agreement executed between railways and Cimmco Limited being referred for adjudication to a sole Arbitrator to be nominated by this Court. Learned counsel for the respondent however sought some time to take instructions in the matter and to get back to the court. When the matter came up for hearing on two dates of hearing thereafter the same was adjourned to enable the parties to formulate the reference to arbitration. 10. We have today heard learned counsel for the parties at some length. The dispute between the parties relates primarily to 687 railway wagons referred to in the earlier part of this order. Mr. Kapil Sibal, learned senior counsel for the plaintiff however submits that although the suit pertains only to 687 wagons the plaintiff would have no objection to the inclusion of all claims and counter claims in relation to an additional 200 wagons supplied by Cimmco Limited to Indian Railways being included in the reference to ensure that all disputes concerning the supply of wagons by Cimmco Limited to the railways qua which supply the plaintiff respondent No. 1 claims to have purchased the rights in the wagons and secured an assignment from the Financiers/owners viz. IDBI and SBI Leasing Group come within the scope. He urged that there are at present no proceedings pending between the parties regarding the remaining 200 wagons manufactured by Cimmco Limited with the help of financial assistance extended by SBI Leasing Group except a reference made to three departmental Arbitrators in regard to a certain claim made by Cimmco Limited against railways towards variation of rent payable to Cimmco Limited on account of corporate tax variation and supply of wheels from Cimmco Limited to railways. The said proceedings are according to learned counsel for the parties at an advance stage of making and publication of an award. Mr.
The said proceedings are according to learned counsel for the parties at an advance stage of making and publication of an award. Mr. Kapil Sibal urged that instead of a reference relating to 687 wagons only, it would be more appropriate if the reference includes all disputes concerning the remaining 200 wagons also taking the total to 887 wagons that the plaintiff respondent No. 1 claims to have purchased from the owners. Mr. Patwalia fairly conceded that while the letter of intent issued in favour of the Cimmco related to as many as 1200 wagons covered by four different sub-lease agreements only, two of those agreements one relating to 687 wagons and the other relating to 200 wagons alone are relevant for the present inasmuch as the plaintiff-respondent No. 1 Titagarh Capital Private Limited claims to have purchased the rights of owners IDBI and SBI Leasing Group qua 687 and 200 wagons only. He urged that without prejudice to the Railways right to contest the claims that the plaintiff may make qua the 887 wagons (687+200) allegedly purchased by it, the reference could include the 200 wagons these are outside the scope of the suit. In the circumstances, therefore, we have no difficulty in accepting Mr. Sibal's submission that the proposed reference to the Arbitrator ought to include not just 687 wagons which are the subject matter of the suit pending before the High Court of Calcutta but a total of 887 wagons qua which the plaintiff Titagarh Capital Private Limited claims to have become the owner on the basis of the assignment and the purchases made from the IDBI and the SBI Leasing Group. 11. Having said that we wish to make it clear that we consider it unnecessary to go into the claims and the counter claims or the contentions which the parties propose to urge in support of their respective cases before the Arbitrator.
11. Having said that we wish to make it clear that we consider it unnecessary to go into the claims and the counter claims or the contentions which the parties propose to urge in support of their respective cases before the Arbitrator. We may all the same briefly mention that while according to the plaintiff-Titagarh Capital Private Limited and even Cimmco Limited who is a party to these proceedings and shall remain so even to the reference, the ownership in the wagons vests in Titagarh Capital Private Limited on account of alleged transfer in their favour by the owners IDBI and SBI, according to the Railways the right to purchase the wagons was at all times available to the railways on the conclusion of initial ten years on payment of 1% of the cost of acquisition. According to the railways, the arrangement between IDBI and SBI Leasing Group on the one hand and plaintiff-Titagarh Capital Private Limited on the other regarding sale purchase or assignment of the rights is not recognised by the railways no matter learned counsel appearing for the plaintiff- respondent asserts that the transfers are valid and even recognised at different stages by the railways. Be that as it may it is not necessary for us to go into the merits of these contentions and many others that may be open to the parties in the proceedings before the Arbitrator. All that we need to point out is that Titagarh Capital Private Limited and Cimmco Limited may have claims against the railways just as railways may have counter claims including a claim to retain/purchase the wagons on payment of stipulated amount under the agreement. All such claims and counter claims touching the manufacture, supply, use ownership, transfer and assignment of the wagons and all issues relating to the rights and liabilities arising out of such user or the right to purchase the wagons and all other incidental rights claims and questions whatsoever will remain open to be adjudicated upon by the sole Arbitrator. So also the right to claim return of the wagons by the plaintiff or the alleged vendors shall be open to be examined by the Arbitrator in accordance with law. Having said that and keeping in view the agreement of the parties we see no reason why disputes afore-mentioned should not be referred to a sole Arbitrator nominated by this Court.
Having said that and keeping in view the agreement of the parties we see no reason why disputes afore-mentioned should not be referred to a sole Arbitrator nominated by this Court. In the result we make the following Order: (1) Orders dated 11.09.2014 and 26.03.2014 shall stand set-aside. (2) All disputes raised in the suit and all the disputes concerning 687 including 200 wagons which the plaintiff Titagarh Capital Private Limited/Cimmco Limited claims to have purchased and all claims and counter claims which the parties have against each other relating to the 887 wagons referred to above shall stand referred to the sole Arbitration of Hon'ble Mr. Justice S.S. Nijjar, Former Judge of this Court. (3) The Arbitrator shall be free to examine and if necessary add IDBI and SBI Leasing Group as parties to the proceedings should the Arbitrator be of the view that the presence of those two parties is necessary for a proper, final and effective adjudication of the disputes concerning the subject matter. (4) This reference order shall not be understood to include any dispute upon which the Arbitrators already nominated by the Railways and Cimmco Limited have pronounced or may pronounce. In other words such of the disputes as stand concluded by the said Arbitral Tribunal shall stand excluded from this reference. The parties concerned shall however have their remedies open to them against the award made by the Arbitrator in the said earlier reference. (5) Mr. Sibal, learned counsel for the plaintiff is permitted to withdraw the suit filed by the plaintiff-company leaving the parties free to file their claims and counter claims before the sole Arbitrator. (6) The appeal pending before the High Court against the interim orders passed by the Single Judge shall stand disposed of as infructuous. (7) The Arbitrator shall be entitled to fix his fee/remuneration and direct its deposit in such manner and in such ratio as he may direct. (8) The parties are directed to appear before the Arbitrator on 05.10.2015. (9) We hope and trust that the Arbitrator is able to take out time from his busy schedule to dispose of the matter as early as possible and preferably within a period of one year.