Wednesday, May 4, 2011

Resolve Infocity dispute through arbitration: HC

Ahmedabad: The dispute of termination of lease rights to Gandhinagar’s Infocity will now be decided through arbitration talks and not by the court of law, as the Gujarat high court (HC) has dismissed an appeal by the lease holder — Creative Infocity Ltd (CIL). 
   In the very first project by the state government to promote the IT industry in Gujarat, the American company CIL was granted 32-year lease rights of 116-acre plot near the capital for development of the area as IT hub in 2000-01. In a joint venture with the CIL through Infotics IT Inc., Gujarat Informatics Ltd (GIL) signed Concession Agreement for development.
   In 2008, the GIL dashed off notices of termination of the Concession Agreement and the Master Lease Agreement alleging various breaches like commercial exploitation of more than 39-acre land, violation of land use plan and violation of construction schedule. The government accused the CIL of not sharing revenue with the GIL as per agreement, outright sale of Infocity property, nonpayment of project development expenses and failure to appoint independent engineer or auditor.
   The CIL approached the HC against issuance of notices, but later withdrew its petitions. The CIL later approached a civil court in Gandhinagar, where the GIL took objection to the civil suit and contended that the issue should be resolved through arbitration. The CIL opposed resolution through arbitration and sought the court to decide the issue. But the court ordered the case to be resolved through arbitration talks, as one of the clauses in the Master Lease Agreement among the CIL and GIL provides for this method.
   The CIL moved the HC by filing a writ petition against the order to solve the dispute by arbitration, but a single-judge bench in 2009 refused to interfere in the lower court’s order. The CIL challenged the HC order before a division bench, but the bench headed by chief justice has also upheld the order of the single-judge bench and that of the Gandhinagar court.
   After the pronouncement of the order last week, the CIL requested the court to stay its order for some time so that it could approach the higher forum. However, the high court division bench refused to stay the judgment.

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