Arbp412.09 1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO. 412 OF 2009
Spectrum Estates Private Ltd.,
A Private Limited Company incorporated
under the provisions of the Companies
Act 1956 and carrying on business at
35, Interlink Industrial Estate,
Caves Road, Jogeshwari (East),
Mumbai-400 080. ig ...Petitioner.
Vs.
Charkop Gagan Vihar CHS Limited,
A Co-operative Housing Society
Incorporated under the provisions of
the Maharashtra Co-operative Societies
Act and having their address at, A/1,
R.D.P.-7, Plot No.A/2, R.S.C.-52 &
Plot No. A/1, R.S.C.-59, MHADA Lay-out,
Charkop-Kandivli (West),
Mumbai-400 067 and having
address for communication at Shri Anil G. Jadhav,
the Administrator Charkop Gagan Vihar
C.H.S. Ltd., C/o. P.H. Patil, Building
No. 6, Room No.26, Near Police Colony,
Mahim (West),
Mumbai-400 016. ...Respondent.
Mr. Milind Sathe, Sr. Counsel with Mr. Mukul Taly with Mr. Sheikh Yusuf Ali
i/by M/s. Mohmedbhai & Co. for the Petitioner.
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Mr. Arif Bookwala, Sr. Counsel with Mr. Kiran Gandhi i/by M/s. Little & Co.
for the Respondent.
CORAM :- ANOOP V. MOHTA, J.
DATED :- 2ND MARCH, 2010.
JUDGMENT:-
1 The Petitioner has invoked Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, the Arbitration Act) for interim relief/
protection in view of the Memorandum of Understanding (MoU)/
Agreement dated 1st March, 2008.
2 The basic events are as under:-
In the year 2002, Mr. S.C. Pandey as the Chief Promoter of Gagan
Vihar CHS (proposed) applied to MHADA (Maharashtra Housing and
Development Authority) for allotment of land for the Co-operative Housing
Society of Central Government Employees.
3 On 06/12/2007, MHADA by its letter of allotment bearing No.8512
and dated 06/12/2007 allotted land bearing No. RSC-52, RSC-59 and
RDP-7 admeasuring in the aggregate 4179.69 sq. mts. Situate at Charkop,
Kandivli Mumbai in favour of the Gagan Vihar C.H.S. (proposed).
4 On 06/12/2007, the essential condition of the letter of allotment was
that an amount of Rs.3,13,69,015/- towards cost of land be paid to
MHADA within 30 days from the date of receipt of the letter of allotment.
The said letter of allotment also stipulated that in the event of the allottee
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not being able to pay the land cost to MHADA within 30 days a further
extension of 90 days would be given on the written request of the allottee
and on payment of interest at 13.5% p.a.. The said allotment also
stipulated that on the expiration of the extended period of 90 days the
allotment would stand cancelled.
5 On 30/12/2007, the Chief Promoter and other members approached
Developers as such a huge amount need to be paid within the stipulated
time. At a meeting of the members held on 30/12/2007, the Offers were
scrutinized and the proposal of the Petitioner was accepted.
6 On 02/01/2008, the MoU dated 02/01/2008 was executed by the
Chief Promoter of the Respondent in favour of the Petitioner.
7 On 04/01/2008, the Petitioner paid the consideration of Rs.
1,00,00,000/- (Rupees One Crore only) to MHADA within the stipulated
time.
8 On 17/01/2008, the Respondent Society was registered.
9 On 02/02/2008, the 1st General Body Meeting of the Respondent
Society was held and the resolution to grant development rights to the
Respondent Society was unanimously passed.
10 On 01/03/2008, the Development Agreement was executed between
the Respondent Society and the Petitioners for the development of the said
land and the Power of Attorney was also granted to the Developers. Both
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the documents are duly registered.
11 On 11/08/2008, letter from the Petitioner to the MHADA requesting
them to take steps to give possession of the said land.
12 On 03/10/2008, letter from the Petitioners to MHADA explaining the
cause for delay in taking possession of the said land.
13 On 16/10/2008, letter from the Petitioners to the Respondents being
the 2nd reminder. This letter makes a detailed reference to the
consideration paid by the Petitioner in consideration of the Agreement
dated 1st March, 2008 and the irrevocable power of attorney in
consideration thereof.
14 On 17/11/2008, the Petitioner received a letter from the
Administrator along with the identical letters from the members denying
the knowledge of registered Agreement dated 01/03/2008.
15 On 24/11/2008, a letter from the Petitioner to the Administrator of
the Respondent Society being a reply to the letter dated 17/11/2008. On or
about 2nd Week of December, 2008, the copies of the resolution passed on
29th November, 2008, was received by the Petitioners from some members.
16 On 18/12/2008, a letter from the Petitioner to the Administrator of
the Respondent Society invoking the Arbitration Clause.
17 On 20/01/2009, a reply letter from the Advocate for the Respondent
addressed to the Advocate for the Petitioner.
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18 On 22/01/2009, further letter dated 22/01/2009 addressed by the
Advocate for the Petitioner to the Advocate for the Respondent.
19 In the month of June, 2009, the Petitioner has learnt that the
Respondent is taking steps to appoint a developer in respect of the
property.
20 This Court on 19th June, 2009, after considering the averments made
in paragraph 14 and as the case was made out, granted ad-interim relief in
terms of prayer (a) and also directed to the parties to maintain status-quo
while admitting the matter.
21 Heard the parties finally. The learned counsel appearing for the
Respondent has contended that there is no agreement and arbitration
clause which entitled the Petitioner to invoke the provisions of Arbitration
Act as done in the present case. The strong reliance was placed on Nasir
Hussain Films Pvt. Ltd Vs. Saregama India Ltd. & Anr. Appeal No. 457
th
of 2007 in Arbitration Petition No. 81 of 2007, dated 7
April, 2008
And Oberoi Construction Pvt. Ltd. Vs. Worli Shivshahi Co.op. Hsg.
Society Ltd., 2008(5) Bom.C.R. 855. and thereby contended that before
passing any order under Section 9 of the Arbitration Act, the Court must
consider the existence of agreement, as well as, Arbitrable dispute.
22 It is settled that existence of Arbitration Agreement/ clause read with
Arbitrable dispute are must before passing any order under Section 9 of the
Arbitration Act.
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23 I have already observed in Perma Container (UK) Line Ltd. Vs.
Perma Container Line (India) Pvt. Ltd. & Ors., MANU/MH/1045/2009,
after considering above Judgments cited by the learned counsel appearing
for the Respondent and by following the Supreme Court Judgment in
National Insurance Company Limited Vs. Boghara Polyfab Pvt. Ltd.
2009 (4) Bom. C.R. 891, that the Court before passing any order under
Section 9, need to consider and observe prima facie the existence of
agreement/Arbitration Clause and Arbitrable issue, as relied by the learned
senior counsel appearing for the Petitioner, and passed interim order/
injunction under Section 9 by observing as under:-
“31 It is observed in Adhunik Steels Ltd. V/s. Orissa
Manganese and Minerals (P) Ltd. In (2007) 7 S.C.C. 125),
referring to the Siskina (1979) AC 210,
“The right to obtain an interlocutory injunction is
merely ancillary and incidental to the pre-existing cause of
action. It is granted to preserve the status quo pending the
ascertainment by the court of the rights of the parties and the
grant to the plaintiff of the relief to which his cause of actionentitles him, which may or may not include a final
injunction.”
“16. Recently, in Fourie V. Le Roux, (2007) 1 W.L.R. 320,
the house of Lords speaking through Lord Scott of Foscote
stated:
“An interlocutory injunction, like any other interim
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Arbp412.09 7the institution and progress of some proceedings for
substantive relief.”
45 It is observed in Kishorsinh Ratansinh Jadeja v.
Maruti Corp. & Ors., JT 2009 (5) SC 180 as under :
“12 In addition to the above, Mr.Ranjit Kumar also
referred to the decision of this Court in Mandali Ranganna &
ors v. T. Ramachandra [2008 (11) SCC 1] wherein an
additional principle was sought to be enunciated relating to
grant of injunction by way of an equitable relief. This Court heldthat in addition to the three basic principles, a Court while
granting injunction must also take into consideration theconduct of the parties. …..”
46 The Apex Court in Adhunik Steels Ltd. (Supra) has
observed:-
“It is true that Section 9 of the Act speaks of the Court by way of
an interim measure passing an order for protection, for thepreservation, interim custody or sale of any goods, which are
the subject-matter of the arbitration agreement and such
interim measure of protection as may appear to the court to be
just and convenient.”
“Moreover, when a party is given a right to approach an
ordinary court of the country without providing a special
procedure or a special set of rules in that behalf, the ordinary
rules followed by that court would govern the exercise of power
conferred by the Act. On that basis also, it is not possible tokeep out the concept of balance of convenience, prima facie case,
irreparable injury and the concept of just and convenient while
passing interim measures under Section 9 of the Act.”
24 In view of above fact, there remained no dispute that the parties
have acted upon the said agreement/ clauses of agreement/ MOU, that
itself sufficient to consider that the Petitioner has right/ entitled to specific
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performance of the agreement as the interest has also been created in the
land (Chheda Housing Development Corporation Vs. Bibijan Shaikh
Farid & Ors. 2007 (3), Mh.L.J. 403, and as the Petitioner based upon the
agreement, acted and made the payment initially of Rs.1 Crore to the
MHADA on 04/01/2008 and the balance of Rs.1,93,98,827/-, thereafter.
On 2nd February, 2008, the Respondent Society unanimously passed the
resolution confirming the grant of development rights in favour of the
Petitioner with Arbitration Clause 13 of the agreement. The Respondent
also executed and delivered an irrevocable power of attorney dated 1st
March, 2008 in favour of the Petitioner for necessary acts arising out of the
said agreement. The said power of attorney was also registered. The
averments made in Para 14 of the Petition are not substantially denied,
except now raising the plea that the signatures on the General Body
Resolution are dishonest, fraudulent with intention to create valid and
binding resolution and the agreement. The issue with regard to the
fabrication of the document and/or of forged signature is a matter of
detailed trial and inquiry before the Arbitral Tribunal. The existence of
document, in view of above, itself is not in dispute and also the Arbitration
Clause. The challenge by reply, is to the validity and/or execution of those
documents.
25 Therefore, to say there exists no agreement or valid agreement or
Arbitration clause, in view of above itself is unacceptable. Under what
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circumstance those documents were executed by the authorized or
unauthorized person or by misrepresentation or by playing fraud, that itself
cannot be the reason to overlook, at this stage, under Section 9, that there
exists no agreement/ MOU/ Arbitration Clause between the parties. In my
view, there exists Arbitration Agreement and Arbitrable dispute.
26 The learned senior counsel appearing for the Petitioner has also
relied on 2010(1) Bom. C.R. 360, Godrej Industries Ltd. Vs. Jer Rutton
Kavasmaneck (Alias Jer Jaswahar Thadani) & Ors.. In that matter also
validity of the MOU, having Arbitration Clause was challenged. In that
case also the submission was that MOU is not enforceable and not binding
agreement. I have already held in para 27, 28 as under:-
“27. The Petitioner, therefore, in my view, has made out a
sufficient case under Section 9 of the Act read with Order
40,Rules 1 and 2 and/or Order 39, Rules 1 and 2 of the Code of
Civil Procedure (C.P.C.) for appropriate order and/or interim
measure as sought, unless and until the case of respondents 4
and 5 is accepted and/or decided finally in their favour throughthe Arbitral Tribunal which the parties are free to appoint/
constitute as per the MOU.
28. There is no power under Section 9 of the Act to decide
and declare such MOU null and void finally. The Arbitral
Tribunal may do so. Therefore, unless it is declared so, inview of the agreed and signed MOU and the respective
clauses referred above, that itself, in my view, sufficient to
maintain the interim order already granted and/or pass such
interim measure/protection as prayed.”
27 In the present case, therefore, without observing anything on merits
of the matter with regard to the rival submissions so raised on the
documents about its validity, at this stage, as prima faice the case is made
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out and as the balance of convenience lies in favour of Petitioner and to
avoid further complications and to protect/ secure the property, pending
the Arbitration, I am inclined to confirm the interim order passed on 19th
June, 2009. However, a liberty is granted to the parties to take appropriate
plea and defence before arbitral tribuanl. All points are kept open. This
order shall be in operation till the constitution of Tribunal and four weeks
thereafter.
28 The Petition is allowed in terms of prayer clause (a). No costs.
(ANOOP V. MOHTA, J.)
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