Madras High Court
Order vs Kuttukaran Machine Tools Limited). An ... on 7 January, 2010
Author: G.Rajasuria
Bench: G.Rajasuria
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 07.01.2010 CORAM THE HON'BLE MR. JUSTICE G.RAJASURIA Application No.6011 of 2009 and O.A.No.1045 of 2009 ORDER
Heard both sides.
2. A 'resume' of facts, absolutely necessary for the disposal of these applications would run thus:
The applicant TCG Software Parks Pvt.Ltd (hereinafter referred to as the Developer) filed O.A.No.1045 of 2009 seeking the following relief:
"to pass an order of injunction restraining the respondent from in any manner interfering with, intermeddling with or obstructing or disturbing or interfering with the possession of the applicants of Phase II of the said property more particularly described in Exhibit hereto or any part thereof as shown on the plan annexed as Exhibit hereto and dealing with, disposing of, alienating or encumbering Phase II and III of the said property more particularly described in exhibit hereto or any part thereof and inducting any person or party in possession or enjoyment of Phase III of the said property more particularly described in exhibit hereto or any part thereof as shown on the plan annexed as exhibit hereto in any manner whatsoever".
3. The respondent W.S.Electrical Ltd. (hereinafter referred to as the land owner) filed the counter refuting and remonstrating, denying and gainsaying the averments/allegations in the affidavit accompanying this application. My learned Predecessor passed interim order of status quo.
4. The land owner filed Application No.6011 of 2009 seeking the following prayer:
- to pass an order vacating the order of status quo granted by the order dated 09.10.2009 in O.A.No.1045 of 2009"
5. The tour d' horizon of the learned senior counsel for the Developer would run thus:
a. As per the agreement dated 24.12.2007, three phases of effecting constructions are contemplated in a vast extent of land, which belong to the respondent/land owner. The first phase was completed and the portion to be allotted in favour of the land owner was also effected.
b. The second phase was also commenced at the instance of the Developer. While so, global recession crept in, attracting clause 32 of the agreement, which according to the Developer is force majeure and it had its own effect in India also.
c. The constructions are meant for leasing out the constructed portions to the IT companies/entrepreneurs and not for any other purpose. While so, due to the global recession, the prospective tenants are not coming forward to take up the portions to be constructed and in such a case, if after availing bank loans, if the Developer proceeds with the project, certainly, it would end in a fiasco and that would lead to lot of discomfitures also for both sides.
d. Even in respect of the first phase, which was completed, the business undertaken by the tenants in the IT fields are facing difficulties and in such a case, no new tenants are offering to take up the rental areas to be built up.
e. Communications were sent by the builder to the land owner explaining the position and requesting them to wait for change of weather. Whereas the response was in the negative and not positive. Hence, the builder was constrained to invoke the Arbitration clause as contained in para 31 of the Agreement. Whereupon the respondents also agreed for appointment of an Arbitrator and ultimately the Arbitrator has been appointed.
f. In the meanwhile, at the instance of the land owner, several persons visited the spot and took photograph of it and also conducted themselves in such a manner that it gave an impression to the Developer that they are going to step into the shoes of the present Developer at the instance of the land owner and thereby deprive the present Developer of its right to continue with the project.
Accordingly, he prays for injunction as set out supra.
6. By way of torpedoing and pulverising the arguments as put forth on the side of the Developer, the learned counsel for the land owner has set forth and put forth his arguments, which would tersely and briefly, pithily and precisely run thus:
1. The very prayer in the O.A.No.1045 of 2009 is untenable for the reason that the possession of the land is not with the Developer and both Corpus possessionis and animus possidendi are with the land owner in respect of the land found specified in the agreement and in such a case, the question of injuncting the land owner from entering into the said land on the alleged ground as though the Developer is in the possession of the property, does not arise.
2. The force majeure clause cannot be invoked in this case as by no stretch of imagination, the alleged global recession could be treated as force majeure.
3. The construction of the three phases contemplated in the agreement are independent of one another and they are not inter-linked or entwined, inter-woven or inter-connected with one another.
4. Already the first phase was over and in accordance with the agreement the entitlement of the land owner was given to them by the Developer.
5. It is also clear from the clauses in the agreement, more specifically, clause 1 (s), which is extracted here under for ready reference, "WSE Entitlement" shall mean a total of (i) 525,000 sq.ft of the rentable area for all the complexes in all the three completed phases of Development out of total Rentable area of 25,82,525 sq.fts (2.6 million sq.ft (approx) for all the complexes, and (ii) proportionate share in the other structures (if capable of being divided) and undivided proportionate share in the Other Structures (if not capable of being divided) (iii) the proportionate undivided share of the said land, in each case, to remain with and belong to WSE; the WSE Entitlement for each phase is as under:
* In respect of Phase I:
Delivery of (i) Floors 1 and 2 admeasuring 83,086 sq.ft. (approximately) of the rentable area, and (ii) such portion of the Other Structures and undivided share of the said land, in each case, as is pro rated between the share of WSE as mentioned in (i) above (of this sub-clause) and the total Rentable area for Phase I;
* In respect of Phase II:
Delivery of (i) floors 5 and 6 admeasuring 92,432 sq.ft.(approximately) of the Rentable area, and (ii) such portion of the Other Structures and undivided share of the said land, in each case, as is pro rated between the sahre of WSE as mentioned in (i) above (of this sub-clause) and the total rentable area for Phase II.
* In respect of Phase III:
Delivery of (i) 349,482 sq.ft.(approximately) of the Rentable area, and (ii) such portion of the Other Structures and undivided share of the said land, in each case, as is pro rated between the share of WSE as mentioned in (i) above (of this sub-clause) and the total rentable area for Phase III (in this regard it is agreed that the parties will put in best efforts to ensure that out of the WSE Entitlement for Phase III, 100,000 sq.ft., approximately, will, at the option of WSE, be delivered out of the first constructed rentable space in building/tower in respect of phase III);
The Rentable area of 5,25,000 sq.ft to which WSE is entitled has been arrived at based on the present maximum permissible of 3.375 of FSI for the entire extent of the said land (translating to total rentable area of 25,82,525 sq.fts (2.6 million sq.ft approx). In the event, prior to the completion of the Development of the said land, if the FSI for the said land is increased and TSP obtains approvals for increase in FSI, any increase in Rentable area arising out of such increase in FSI shall be shared between WSE and TSP pro rate, in a manner such that the proportion for Rentable area allocation to WSE and TSP remains unchanged. Provided however, that if due to change in the extent applicable laws, TSP is unable to Develop the Rentable area that is proposed to be developed in respect of Phase III, the total WSE Entitlement in respect of the Development of the said land shall be proportionately reduced, and for this purpose, the reduction in the total WSE Entitlement shall be adjusted against the WSE Entitlement shall be adjusted against the WSE Entitlement in respect of Phase III."
that each phase is independent of the other. Simply because those three phases are cumulatively contemplated in one and the same agreement, it cannot be taken that they are inter-twined. After completion of the first and second phase only, the question of the Developer undertaking the third phase would arise, as otherwise, the Developer is not at all entitled to lay claim for developing the land relating to the third phase.
6. Vast stretch of land of the Developer is lying without fetching income and if injunction is granted as prayed for that would cause irreparable damage to the land owner.
Accordingly, he prays for the dismissal of the injunction application.
7. The points for consideration are as to:
1. Whether the applicants are entitled to get an injunction restraining the respondent from in any manner interfering with, intermeddling with or obstructing or disturbing or interfering with the possession of the applicants of Phase II of the said property more particularly described in Exhibit hereto or any part thereof as shown on the plan annexed as Exhibit hereto and dealing with, disposing of, alienating or encumbering Phase II and III of the said property more particularly described in exhibit hereto or any part thereof and inducting any person or party in possession or enjoyment of Phase III of the said property more particularly described in exhibit hereto or any part thereof as shown on the plan annexed as exhibit hereto in any manner whatsoever or not?
2. Whether the status quo order passed by this court on 09.10.2009 in O.A.No.1045 of 2009 could be vacated as prayed for by the respondent?
Point Nos.1 and 2:
8. Indubitably and indisputably, there emerged an agreement dated 24.12.2007 between the Developer and the land owner. The first phase as contemplated in the agreement was over, and as of now, there is no dispute over it. However, after laying foundation for the second phase and effecting certain developments thereon, there emerged some dispute between the Developer and the land owner. According to the Developer, if by availing huge bank loans, the second phase is proceeded with, certainly, it would not fetch any good result and whereas the land owner would state that it is premature to jump to the conclusion that if Phase II is completed there won't be any prospective tenants coming forward to occupy the rental areas.
9. According to the learned senior counsel for the Developer, the said global recession is having its own effect in India also and the worst affected industry is the IT industry and if the project is proceeded with, there won't be any prospective tenant to occupy it. However, the land owner would deny the same.
10. At this juncture, I would like to point out that this court while dealing with this matter under Section 9 of the Arbitration and Conciliation Act, 1996 should necessarily take into consideration the same principles as envisaged under Order 39 Rule 1 and 2 of CPC as well as the provisions of Sections 36 to 39 of the Specific Relief Act,1963.
11. The learned counsel for the land owner placing reliance on the decision reported in AIR 2000 SC 2563 = (2007)7 SCC 125 (Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt.Ltd.) would develop his argument that even this court while exercising its jurisdiction under Section 9 and considering the feasibility of granting interim injunction should necessarily adhere to the provisions of CPC as well as the Specific Relief Act. An excerpt from the precedent would run thus:
"9. ...............Neither this section nor the Act elsewhere has provided the conditions for grant of such interim protection leaving it to the court to exercise the jurisdiction vested in it as a court to adjudge whether any protective measure is called for. In that context, neither the provisions of the Code of Civil Procedure nor the provisions of the Specific Relief Act can be kept out while the court considers the question whether on the facts of a case, any order by way of interim measure of protection should be granted. So, the court had necessarily to consider the balance of convenience, the question whether at least a triable issue arises if not the establishment of a prima facie case by the applicant before it and the other well-known restrictions on the grant of interim orders, like the principle that a contract of personal service would not be specifically enforced or that no injunction would be granted in certain circumstances as envisaged by Section 14 and Section 41 of the Specific Relief Act. Thus, it was contended that grant of an injunction by way of interim measure to permit Adhunik Steels to carry on the mining operations pending the arbitration proceedings notwithstanding the termination of the contract by OMM Private Limited was not permissible in law.
10. 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 the preservation, 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. The grant of an interim prohibitory injunction or an interim mandatory injunction are governed by well-known rules and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was dehors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the section itself brings in the concept of just and convenient while speaking of passing any interim measure of protection. The concluding words of the section, and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision. 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 to keep 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.
14. In Nepa Ltd. v. Manoj Kumar Agrawal1 a learned Judge of the Madhya Pradesh High Court has suggested that when moved under Section 9 of the Act for interim protection, the provisions of the Specific Relief Act cannot be made applicable since in taking interim measures under Section 9 of the Act, the court does not decide on the merits of the case or the rights of parties and considers only the question of existence of an arbitration clause and the necessity of taking interim measures for issuing necessary directions or orders. When the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration. For, the grant of that interim injunction has necessarily to be based on the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. Under Section 28 of the Act of 1996, even the Arbitral Tribunal is enjoined to decide the dispute submitted to it, in accordance with the substantive law for the time being in force in India, if it is not an international commercial arbitration. So, it cannot certainly be inferred that Section 9 keeps out the substantive law relating to interim reliefs.
18. .................. Similarly, whether the attempted termination could be restrained leaving the consequences thereof vague would also be a question that might have to be considered in the context of well-settled principles for the grant of an injunction. Therefore, on the whole, we feel that it would not be correct to say that the power under Section 9 of the Act is totally independent of the well-known principles governing the grant of an interim injunction that generally govern the courts in this connection. So viewed, we have necessarily to see whether the High Court was justified in refusing the interim injunction on the facts and in the circumstances of the case."
A mere perusal of it would leave no doubt in the mind of the court that there is considerable force in the submission made by the learned counsel for the land owner that the provisions of CPC as well as the Specific Relief Act concerning the grant of injunction also should be applied by the court while exercising its discretion under Section 9 of the Arbitration and Conciliation Act, 1996.
12. The learned Senior counsel for the Developer also cited the decision reported in (2009)5 SCC 182 (N.Srinivasa vs. Kuttukaran Machine Tools Limited). An excerpt from it would run thus:
"30. From a bare perusal of the findings of the High Court reversing the order of the trial court and rejecting the application for injunction, it would be evident that the appellant had failed to make out a prima facie case for grant of an order of injunction in his favour. But in view of our discussions made hereinabove, we are of the view that the Additional City Civil Judge, Bangalore was fully justified in directing the parties to maintain status quo as to the nature and character of the property in dispute till the award is passed by the sole arbitrator as we have already held that if the order of status quo is not granted and the respondent is permitted to sell the property in dispute to a third party, complications will arise and the third-party interest will be created, for which the award if any, passed in favour of the appellant ultimately, would become nugatory."
There could be no quarrel or doubt about the proposition as found exemplified and enunciated in the precedents of the Hon'ble Apex Court and in appropriate cases, necessarily under Section 9 of the Arbitration and Conciliation Act, relief should be granted to the extent warranted by circumstances.
13. The learned counsel for the land owner would submit that this court has to see prima facie as to whether the force majeure clause as contained in the agreement is applicable or not.
14. I would like to extract here under the force majeure clause in the agreement.
"32. Force Majeure 32.1. If for any cause beyond the control of the party in question (including by way of example, but not by way of limitation, strikes, lockouts, fires, floods riots, acts of God or the public enemy or acts of the Sovereign Power, subsequent legislation of the State/Central Government/Local Authority, Injunction or order of any Court/Trial, omissions or occurrences not attributable to any extent to the fault or neglect of the party in question or preventable by the exercise of reasonable care or planning on the part of such party or due to change in law or due to a change in a declared policy of the governmental agencies (from whom approvals, sanctions or permissions are required whereby giving of the approvals, sanctions and permissions are suspended or withheld) either party hereto is prevented delayed or restricted from performing its obligations here under, the Party in question shall be excused in performance of its obligations under this agreement; however, the performance of such obligations shall be resumed as soon as practicable such disability is removed and such party shall use all reasonable efforts to remove such cause or conditions preventing, delaying or restricting its performance and to resume such performance as soon as possible. Any obligation to pay money shall in no event be excused but shall be suspended only until the cessation of any cause of prevention from or delay in the performance of such obligation. Notwithstanding anything contained in this Agreement, TSP agrees that any time taken in procuring any Approvals) that are required to be procured under this Agreement shall not be construed as or included within the meaning of force majeure.
32.2. The Party which, pursuant to paragraph 32.1 above is prevented, delayed or restricted from performing an obligation hereunder shall immediately, but in any case within 30 days notify the other Party and state the circumstances thereof. If such obligation cannot be fulfilled within three months after such notification, the parties shall agree to negotiate a reasonable settlement of the particular failure of performance."
Drawing the attention of this court to the wordings in the said clause, the learned counsel for the land owner would submit that by no stretch of imagination and even by phantasmagorical thoughts, it could be stated that the alleged global recession is something which is contemplated within the force majeure cluase. He would also cite the decision of the Orissa High Court reported in AIR 1969 Orissa 152 (Md.Serajuddin vs. State of Orissa). An excerpt from it would run thus:
"31. Moreover, the defendant-appellant cannot seek shelter under Clause 5 of Part IX of the lease on the ground that the setting up of the Plant was beyond his control. Under the said clause the State Government was constituted the sole Judge to decide if the failure to fulfil any of the terms and conditions of the lease arose from "force-majeure". Therefore the performance of the express terms of the lease by the lessee would not be excused until and unless the Government did not construe the visiting circumstances as "force-majeure". Mr.Justice McCardie in Lebeaupin v. Crispin, (1920) 2 KB 714 gave an account of what is meant by "force-majeure". Their Lordships of the Supreme Court in M/s.Dhanrajmal Gobindram v. M/s.Shamji Kalidas and Co., AIR 1961 SC 1285 have been pleased to refer with approval to Mr.Justice MacCardie's account of what is meant by "force-majeure". We find, therefrom that the expression "force-majeure" is not a mere French version of the Latin expression "vis major" and that strikes, breakdown of machinery and such things which, though normally not included in "vis-major", are included in "force-majeure". Mr.Justice Bailache in Matsoukis v.Priestman & Co., 1915-1 KB 681 preferred to give a restricted meaning to "force-majeure". In his opinion, "force-majeure" could include strikes, break-down of machineries, but not bad weather, foot-ball match or funerals. ............................"
Placing reliance on the said excerpt of the judgment of the Hon'ble Orissa Court, the learned counsel for the land owner would submit that the said global recession cannot be termed as one coming within the parameters of the term force majeure.
15. Whereas the learned senior counsel for the Developer would submit that whatever might be the jurisprudential definition of the term "vis major" and "force majeure", here the clause 32 of the Agreement, contemplated certain terms and conditions and it has to be seen as to whether global recession also would come within the parameters of it. According to him the global recession is also the one covered by the said Clause 32 of the agreement.
16. At this juncture, I would like to point out that the Orissa High Court in the cited judgment elaborately dealt with the scope of the term force majeure but what I would like to observe here is that there is considerable force in the submission made by the learned senior counsel for the Developer that irrespective of jurisprudential definition of the term force majeure, the wordings in clause 32.1, should be considered here.
17. Keeping the aforesaid approach in mind, I would like to analyse the wordings in that clause 32.1. I would like to place reliance on the following terms, viz., or occurrences not attributable to any extent to the fault or neglect of the party in question or preventable by the exercise of reasonable care or planning on the part of such party or due to change in law or due to a change in a declared policy of the governmental agencies".
18. I recollect and call up the two well known propositions of Interpretation, viz., Noscitur a sociis and ejusdem generis rule. Certain excerpts from the Maxwell on The Interpretation of Statutes would run thus:
"Noscitur a sociis Where two or more words which are susceptible of analogous meaning are coupled together, noscuntur a sociis. They are understood to be used in their cognate sense. They take, as it were, their colour from each other, the meaning of the more general being restricted to a sense analogous to that of the less general. (One application of this general principle is the ejusdem generis rule, which is discussed in the next section of this chapter).
The ejusdem generis rule.
- In the abstract, general words, like all others, receive their full and natural meaning, and the courts will not impose on them limitations not called for by the sense or objects of the enactment. Thus Section 3 of the Civil Procedure Act, 1833, which limited the time for suing "upon any bond or other specialty" comprehended, under the last expression, every kind of specialty including a statute.
But the general words which follows particular and specific words of the same nature as itself takes its meaning from them and is presumed to be restricted to the same genus as those words. For "according to a well established rule in the construction of statutes, general terms following particular ones apply only to such persons or things as are ejusdem generis with those comprehended in the language of the Legislature. In other words, the general expression is to be read as comprehending only things of the same kind as that designated by the preceding particular expressions, unless there is something to show that a wider sense was intended, as where there is a provision specifically excepting certain classes clearly not within the suggested genus".
19. Over and above those concepts, I would like to call-up the following maxim also:
Ex antecedentibus et consequentibus fit optima interpretatio : A passage should be interpreted by reference to its context.
20. In order to have a clear understanding of the said words, certainly, the court has to see the wordings appearing before and after the disputed words or clauses. If there is any doubt in understanding a particular word in a clause, the allied clauses should also be considered inconsonance and concinnity and that too in parametria with the doubtful word and the doubtful clause/word should be interpreted accordingly.
21. It is also a well settled proposition that words having wider amplitude would stand restricted in meaning in consonance with the words having lesser amplitude. As such, it has to be seen as to whether the alleged global recession is one which could come within parameters of the words "occurrences not attributable to any extent to the fault or neglect of the party in question or preventable by the exercise of reasonable care or planning on the part of such party or due to change in law or due to a change in a declared policy of the governmental agencies".
22. I am fully aware of the fact that at present, this court is not finally deciding the lis. In adherance to the precedents of the Hon'ble Supreme Court cited supra, I have to find out as to whether, there is any prima facie case.
23. In my considered opinion, the project is on a higher scale, so to say on an elephantine level.
24. If there is a contract for construction of a building between the owner of the plot and the builder, and certainly, if global recession is cited as a reason for deferring construction, I would have no hesitation in simply rejecting the contention that there is no prima facie case at all. But, here a mere perusal of the voluminous agreement would clearly exemplify and demonstrate, convey and display that both parties wanted to progress on a large scale. In fact, the Developer, according to the learned counsel for it, is a reputed company carrying on business in making such construction and earning profit; the land owner also according to its Advocate is a reputed company, which forms part of large industrial group; wherefore, it is a contract, which emerged between two industrial groups and they want to flourish and progress together. In such a case, under the guise of considering the prima facie case, I do not incline to simply give a finding as requested by the learned counsel for the land owner that there is no prima facie case at all in favour of the Developer concerning its plea of global recession. While holding so, I record a word of caution that it is open for the arbitrator to independently consider the plea of the land owner that there is no prima facie case at all in favour of the Developer, if he decides so. However, for the purpose of granting injunction alone, this prima facie case, is being considered and it is for the Arbitrator to go in depth at the time of arbitration and give a finding in one way or the other.
25. The next question lies for consideration is as to whether, the balance of convenience is in favour of the applicant, so to say, the Developer.
26. The learned counsel for the land owner would put forth and set forth that since the Developer developed certain phobic thinking about the prospective utility of the project, in view of the alleged global recession, there is no rhyme or reason on the part of the Developer to leech on the endeavour to carry on with phase II and Phase III and according to him, each phase is independent of the other.
27. Whereas by way of countering the arguments as put forth on the side of the land owner, the learned senior counsel for the Developer by placing reliance on clause 1 (s), which has already been extracted supra, would develop his argument that 20% of the rental area should be allotted to the land owner and the remaining would be with the Developer; but after completing the I phase, what was allotted in favour of the land owner was more than 20% ratio; the Developer would not have undertaken this venture had it not been for it to have stake over all the three phases; the Developer already invested money for developing the entire land area and to that effect, it also invested money and in such a case, partially, for Phase I alone land cannot be carved out; the entire land forms an integral part of the whole agreement and one cannot apportion Phase I alone from the other two phases. Accordingly, he prays for granting injunction as prayed for.
28. I cannot for the purpose of granting injunction agree with the contentions of either the learned senior counsel for the Developer or the learned counsel for the land owner, but a balance has to be struck between the two, in order to put the order of this court on an even keel. So far, the first Phase is concerned, there is no dispute as of now and simply because, the Developer alleges that in excess of 20% ratio, the rental area was allotted, it cannot be a ground for compelling this court to take a view that the three Phases cannot be treated independently. No doubt, that agreement contemplated development of three phases. But once dispute has arisen, this court has to necessarily consider the balance of convenience. If for argument sake, if it is taken that under the I phase, over and above 20% ratio of rental area was allotted in favour of the land owner and if at all as per law, the Developer can get it adjusted in the second phase and that too, if the arbitrator decides so in its favour relating to the construction of the project relating to Phase II, the Developer could get the alleged excess adjusted in the II Phase. In regard to Phase III, I would like to agree in toto with the learned counsel for the land owner that if at all Phases I and II are completed properly in accordance with the agreement, the question of venturing to take up Phase III would arise.
29. The learned counsel for the land owner by drawing the attention of this court to clause 2.2 of the agreement, which is extracted here under "The Development of the said land excluding the gifted land (as defined in clause 2.5 herein) shall be carried out in three phases, (each phase having one or more complex(es). In respect of Phase III, while TSP can apply for all the approvals, permits and consents required for the Development of Phase III, the actual Development of Phase III can commence only after Delivery by TSP to WSE of WSE Entitlement in Phase I and Phase II. WSE shall authorize TSP, through appropriate power of attorney ("POA") for each Phase, for obtaining all approvals, including but not limited to approvals for EIA, Building permits, etc from various authorities for that Phase and TSP shall make all application to procure the aforesaid approvals for such phase within a period of 6 months from the date of grant of the POA by WSE"
would develop his argument that it has been explicitly made clear that before completing Phase II, the question of taking out Phase III would not arise and the area where in Phase III should be developed cannot be kept idle to the detriment of the land owner.
30. At this juncture, the learned senior counsel for the Developer by inviting the attention of this court to clause 10.6, of the agreement, which is extracted here under:
"10.6 It has not entered into any agreement for sale, lease, mortgage, license, transfer or any commitment of any nature whatsoever with any person for creating any right or encumbrance of any nature in respect of the said land or any part thereof nor has it entered into any agreement for sale of the complex(es) or any part thereof proposed to be constructed thereon nor shall WSE hereafter enter into any agreement and/or commitment with any other person entitling such person to execute development of the said land or for sale of the said land or the complex(es), or any part thereof, built thereon, except as provided elsewhere in this Agreement."
(emphasis supplied) would develop his argument that during the currency of this agreement, there shall not be any alienation or encumberance or transfer or entrustment of the work to any other person and accordingly, he would submit that injunction could be granted in respect of the remaining two phases, i.e. Phases II and III also and it need not be restricted to part of it.
31. Whereas the learned counsel for the land owner would invite the attention to the wordings " except as provided elsewhere in this agreement" (referred to supra) and submit that once there is breach of contract, the question of pressing into service or invoking clause 10.6 does not arise.
32. Ex facie and prima facie, I could see that clause 10.6 blindly cannot be followed by this court when the parties already got locked up in dispute. If things go on smoothly and despite that if the land owner attempts to transfer then this clause could be pressed into service automatically, however that is not the case here. Indubitably, the parties are at logger heads and they cannot see eye to eye and they have gone for arbitration and this court has to see the balance of convenience and not barely clause 10.6 of the agreement. In view of the fact that the Developer had already invested some amount in digging foundation moat and also laying foundation and presumably bringing up the construction upto the plinth area, I am of the considered view that necessarily, injunction has to granted so as to protect the interest of the Developer with regard to Phase II is concerned. If any third party enters upon the land and starts constructing over the plinth area, which was put up by the Developer, certainly that would lead to complication. It has also been stated on the Developer's side that a sum of Rs.8.83 crores was deposited with CMDA in respect of Phase II and over and above that, for laying the said foundation and plinth area, they have spent Rs.14 crores.
33. At this juncture, the learned counsel for the land owner citing clause 16-A of the agreement, which is extracted here under for ready reference:
"16A. Curing/Bank Guarantee and Expiry of Rights:
Notwithstanding anything to the contrary contained herein, if WSE Entitlement in Phase I and /or Phase II is not delivered by TSP on or before the date mentioned in Clause 8.1 hereinabove, TSP will be obliged to cure the defect within a period not exceeding six months from the date mentioned in Clause 8.1 subject however to TSP providing to WSE, a Bank Guarantee or such other comfort that WSE may be satisfied with, for the value of WSE Entitlement in Phase I and /or Phase II (as the case may be). The value of the WSE Entitlement in Phase I and/or Phase II (as the case may be) shall be the arithmetic average of the fair market value, arrived at by the two independent valuers for such phase, each being appointed by TCG and WSE respectively. If even after the expiry of such curing period, the WSE Entitlement in Phase I and /or Phase II (as the case may be) has not been delivered then:
(i) WSE will be entitled to encash the Bank Guarantee and
(ii) TSP's right to develop Phase III shall cease"
would submit that even in ordinary circumstances, if there is any delay, it is for the Developer to provide relief to the land owner. No doubt, clause 16-A contemplates such a measure. But, here, as has been highlighted surpa by the learned senior counsel for the Developer, owing to alleged recession alone, the Developer could not carry on with the project and in such a case, the question of providing succour would not arise; however, I would like to reserve this matter to be dealt with before the Arbitrator under Section 17 of the Arbitration and Conciliation Act, 1996, if either of the parties chooses to do so. At this juncture, since this court is concerned only with the prima facie case and the balance of convenience for granting of injunction, imposing any additional condition in respect of the grant of injunction would be onerous and it would amount to deciding on merits some of the clauses in the agreement also as such.
34. It is also an admitted fact that the land owner is in receipt of a sum of Rupees One crore and seventy five lakhs as security and it is with them, in respect of which the learned counsel for the land owner would submit that comparing the loss to the land owner, the said security amount is only a pittance. Be that as it may, all these matters have to be placed before the Arbitrator and he has to take a decision on that. It is also an admitted fact that as of now, the contract was not terminated for which the learned counsel for the land owner would explain and expound that before the land owner takes a decision, after the expiry of the period concerned stipulated in the agreement, the Developer holus bolus approached this court and it is always open for the land owner to exercise its discretion and even now, it is not too late.
35. The learned senior counsel for the Developer would submit that once this court comes to the conclusion that in respect of Phase II, injunction has to be granted in view of the dispute has arisen, then as a sequela, in respect of Phase III, no exception could be carved out, which I would like to disagree and cannot countenance such an argument for the reason that the counsel for the land owner appositely and appropriately, correctly and convincingly has pointed out that each Phase can be considered independently and that too while this court considering the balance of convenience. Wherefore, when the Developer developed some doubt about the feasibility of proceeding further with Phase II itself, the question of himself laying claim over Phase III would not arise and in such a case, I would like to refrain from granting injunction in respect of Phase III and the injunction is restricted only with regard to Phase II as under, in a modified manner from the one prayed for.
36. Injunction is hereby granted that the land owner shall not entrust the work of Phase II specified in the agreement to any third party for the purpose of developing it till pending disposal of the arbitration proceedings. To the risk of repetition, without being tautologous, I would like to point out that it is open for either of the parties to invoke Section 17 of the Arbitration and Conciliation Act, 1996 irrespective of the rejection of the prayers of the applications and also the non granting of other reliefs in favour of either of the parties.
37. Both these points are answered accordingly and the applications are closed.
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