Bombay High Court
Companies Act vs Mumbai International Airport on 28 November, 2013
Author: G.S. Patel
Bench: S. C. Dharmadhikari, G.S.Patel
APP(L)365-13-F
agk
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL (L) NO. 365 OF 2013
IN
ARBITRATION PETITION (L) NO.902 OF 2013
Housing Development and
Infrastructure Limited,
a company incorporated under the
Companies Act, 1956, having its
registered office at 9-01, HDIL
Tower, Anant Kanekar Marg, Appellant
Bandra (East), Mumbai - 400 051 (Orig. Petitioner)
versus
1. Mumbai International Airport
Private Limited,
a private limited Company
incorporated under the
Companies Act, 1956, having its
registered office at Terminal 1B,
Chhatrapati Shivaji
International Airport, Santa
Cruz (East), Mumbai - 400 099
2. Airport Authority of India,
having its office at TS Complex,
Near Sahara Cargo, Sutar
Pakhadi Road, Andheri (East),
Mumbai - 400 099
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3. The State of Maharashtra,
through Urban Development
Department & Housing
Department, served through
Government Pleader, High
Court (Original Side), Bombay
4. The Collector, Mumbai
Suburban District, Bandra,
Mumbai
5. The MMRDA,
having its office at Bandra Kurla
Complex, Bandra (East),
Mumbai - 400 051ig
6. The Slum Rehabilitation
Authority, having its office at
Administrative Building, Anant
Kanekar Marg, Bandra (East), Respondents
Mumbai - 400 051 (Orig.Resps.Nos.1 to 6)
A PPEARANCES
FOR THE APPELLANTS Mr. Rohit Kapadia, Senior Advocate, a/w
Housing Development Mr. T. N. Subramaniam, Senior Advocate,
and Infrastructure Mr. Gaurav Joshi, Mr. Rajesh Shah,
Limited: "HDIL" Mr. Piyush Raheja and Mr. Chetan Yadav
i/b M/s Markand Gandhi & Co.
FOR RESP.NO.1 Mr. Janak Dwarkadas, Senior Advocate a/w
Mumbai International Mr. Virag V. Tulzapurkar, Senior Advocate,
Airport Private Dr. Birendra Saraf and Ms. Shoma Mitra
Limited: "MIAL" i/b M/s Wadia Ghandy & Co.
FOR RESP.NO.2 Mr. Satish Upadhyay
Airports Authority of i/b M/s. M. V. Kini & Co.
India: "AAI"
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FOR RESP.NOS.3 & 4 Mr. U. S. Upadhyay, AGP
State & Collector
FOR RESP.NO.6 Mr. Shailesh Shah, Senior Advocate a/w
The Slum Mr. G. D. Utangale and Mr. B. V. Phadnis
Rehabilitation i/b M/s. Utangale & Co.
Authority: "SRA"
CORAM : S. C. Dharmadhikari
& G.S.Patel, JJ.
ARGUMENTS HEARD : 26th September 2013, 3rd
ig October 2013 & 4th October
2013
JUDGEMENT RESERVED : 4th October 2013
JUDGEMENT PRONOUNCED : 28th November 2013
JUDGMENT :(Per G.S. Patel, J.)
1. This appeal is directed against an order dated 23rd August 2013 passed by a learned Single Judge of this Court dismissing the Appellants' petition under Section 9 of the Arbitration & Conciliation Act, 1996 ("the Arbitration Act"). By consent, we took up the matter for final disposal at the stage of admission. We heard learned Counsel for the appearing parties at considerable length.
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2. The Airports Authority of India ("AAI"), constituted under the Airport Authority of India Act, 1994, is responsible for the development, management, and maintenance of airports in India. It owns or controls about 1,980 acres of land in Mumbai. This is the land of Mumbai's Chhatrapati Shivaji International Airport ("CSIA"; "the Airport"). An estimated one-sixth of this land is encroached and is unavailable for CSIA operations and use. Some of the slums and shanties on this encroached land are in perilous proximity to the CSIA. In the past decade or so, and particularly with the entry of private airline operators, the demands on CSIA's facilities have surged. These facilities are now over-stretched, and the CSIA requires expansion, modernisation and upgrading. Any such expansion necessarily involves a relocation and resettlement of those who live in the slums on the airport land. This is not just a matter of eviction and bulldozing structures: this is, after all, a human problem, one of town planning and alternative housing.
Given the extent of encroachment, clearing this land for CSIA use is possibly the single largest slum re-development and rehabilitation project in the history of this country; certainly in the history of this city.
3. The 2nd Respondent, Mumbai International Airport Pvt Ltd, ("MIAL") is a joint venture company. The AAI holds 26% of MIAL's equity. The rest is divided between GVK Airport Holdings Pvt Ltd, Bid Services Division (Mauritius) Ltd and ACSA Global Ltd, and there is a shareholders' agreement of 4th April 2006 4 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F between these entities. MIAL was incorporated specifically to take over the operations, expansion and upgrading of CSIA. Also on 4th April 2006, AAI and MIAL entered into another agreement by which AAI granted MIAL exclusive rights for the operation, management and development of CSIA. Under this agreement, referred to as the "OMDA", MIAL was tasked with the "function of operating, maintaining, developing, designing, constructing, upgrading, modernising, financing and managing" CSIA; and MIAL had exclusive rights and authority in respect of these functions. Though wide, these are only some of AAI's functions;
others, such as customs, immigration, security, etc., remained with AAI. The OMDA is essentially a public-private partnership, where a public function (or set of public functions) to be performed by an authority constituted under a statute, the AAI, was permitted to be carried out by a private enterprise, MIAL.
4. To be effective, the OMDA required the execution of several further documents and agreements. We are not concerned with all of these. It is sufficient to note that among the other documents, deeds and agreements executed pursuant to the OMDA were two lease deeds, an agreement in respect of CNS/ATM facilities, a state support agreement with the Union of India and an escrow agreement. Other than a supplemental lease deed, which is dated 15th May 2009 and which added an additional 101,175 sq.mts. to MIAL's lease, all the other agreements were executed between 26th and 28th April 2006. The two agreements following the OMDA and 5 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F material for our purposes are (i) A State Support Agreement dated 27th April 2006 between the State Government and MIAL for providing MIAL with State Government support for the modernization and upgrading of the Airport; and (ii) an Agreement dated 12th December 2006 between MIAL and the 5th Respondent, the Mumbai Metropolitan Regional Development Agreement ("MMRDA") for freeing some of the AAI land of encroachments.
5. Modernizing, upgrading and expanding the existing facilities at CSIA demanded, most of all, the clearance of the slums and shanties on the airport land. This, in turn, required slum dwellers eligible under State Government policy to be relocated and resettled elsewhere. A total of 267 acres of airport land was to be cleared in this fashion. Though clearance of these slums and the deployment of the land they occupied to airport operation purposes were squarely within its mandate under the OMDA, MIAL sought an agency with the expertise and skills to achieve this.
6. Therefore, on 18th April 2007, MIAL invited expressions of interest from prospective bidders to undertake this slum clearance work. MIAL's invitation said that the work involved clearance of about 276 acres of land, on which there were some 60,000-70,000 tenements. On 25th June 2007/9th August 2007, AAI consented to MIAL appointing another agency to meet MIAL's slum clearance obligations under the OMDA. The Appellant (Original Petitioner), Housing Development & Infrastructure Ltd ("HDIL"), was one of 6 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F several parties who responded to MIAL's invitation. On 6th July 2007, HDIL issued a request for a proposal to bid.
7. HDIL's bid was accepted. It was awarded the Airport Slum Rehabilitation Project ("Project"). On 15th October 2007, a formal agreement was executed by MIAL and HDIL for this work ("the Slum Rehabilitation Contract"). MIAL issued a Letter of Intent ("LOI") dated 15th October 2007. That LOI inter alia required HDIL to submit a bank guarantee of Rs.25 crores and issue a Promissory Note for Rs.275 crores in favour of MIAL. The Slum Rehabilitation Contract and the LOI were followed, a year later, by a Deed of Confirmation dated 14th October 2008.
8. On 6th February 2013, MIAL terminated the Slum Rehabilitation Contract, claiming, inter alia, that in the intervening six years, HDIL had committed several breaches of its obligations under that contract. HDIL says this termination is wrongful. On 25th June 2013, HDIL invoked arbitration under the Slum Rehabilitation Contract, and it is pursuant to that arbitration invocation that HDIL sought, and, by the order under appeal, was refused, interim relief under S.9 of the Arbitration Act. In the six years between the execution of the Slum Rehabilitation Contract and its termination there were, of course, several other events that are material, and we will consider some of these presently; we have telescoped the time frame here only to indicate the broad trajectory of the Slum Rehabilitation Contract.
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9. Before the learned Single Judge, HDIL sought seven reliefs.
These are set out in the impugned order. None were granted. Before us, Mr. Rohit Kapadia, learned Senior Counsel for the Appellants, HDIL, submitted that the learned Single Judge was in error and that HDIL was entitled to reliefs in terms of all seven prayers, though, before us, the sixth prayer was not pressed. The first of these prayers is for an injunction restraining MIAL from acting in furtherance of its notices of termination and, specifically, from re-
tendering or re-awarding the slum clearance Project to anyone else. The second seeks a restraint against MIAL from dealing with a defined area of some 65.2 acres that forms part of the Slum Rehabilitation Contract. The third prayer seeks an order of maintenance of status quo against MIAL in respect of what is called "non-transfer assets" and also an injunction restraining MIAL from constructing "non-transferable assets" on the entire airport land. The fourth relief sought is another order of status quo, this one directed against all the Respondents in respect of the residential colonies component of the Slum Rehabilitation Contract, including the excess Floor Space Index ("FSI") thereon. The fifth relief seeks a restraint order against the Respondents from taking possession of the rehabilitation tenements constructed by HDIL and from rehabilitating any slum dwellers in those tenements. The sixth relief, in respect of the bank guarantee of Rs.25 crores, was not pressed. The last, seventh, relief is for another injunction restraining the 8 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F Respondents from revoking or cancelling the various permissions and sanctions already granted to HDIL; and, further, for a direction to the Respondents to grant such further permissions as may be necessary to enable HDIL to complete the construction of rehabilitation tenements.
10. Not unlike the airport land slums themselves, HDIL's slew of reliefs sprawls well beyond the confines of its Slum Rehabilitation Contract. They are not limited to the parties to the Slum Rehabilitation Contract. Reliefs are sought against Respondents other than MIAL, too, though these other Respondents are not parties to the Slum Rehabilitation Contract. Nor are the reliefs limited to the immediate property with which the Slum Rehabilitation Contract is concerned. Mr. Kapadia maintains that, though he does paint on a very wide canvas, this is both permissible and necessary. For, in his submission, the Slum Rehabilitation Contract, correctly read, is not a simple stand-alone agreement between MIAL and HDIL severable from the various other contracts and agreements that also deal with the encroached airport land. The Slum Rehabilitation Contract is but a part of a much larger and more complex web of inextricably intertwined contractual relationships between HDIL and all the Respondents. That some of these relationships are inferential is, he submits, as inevitable as it is irrelevant. If HDIL's rights and entitlements under the Slum Rehabilitation Contract are to have any meaning at all, and if its final 9 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F reliefs in arbitration are to be anything but illusory, HDIL must, in Mr. Kapadia's submission, receive the protection sought.
11. HDIL's case turns on two principal factors: first, the nature of Slum Rehabilitation Contract; and, second, an examination of how the parties' conduct during the time when that Contract was being operated. For both, we are required to make a prima-facie determination, not the closer scrutiny that HDIL's claim in arbitration, as and when it is made and assessed, will demand.
12. At the broadest level, this is how we understood the frame of Mr. Kapadia's submissions:
(a) The Slum Rehabilitation Contract is not a stand-alone, independent contract severable from the other contracts that related to the slum clearance Project.
Critical to the entire exercise of slum clearance was the fixing with finality of a slum rehabilitation policy for the occupants of the airport slum lands. Which of these occupants were eligible, under what conditions and to what rights were, Mr. Kapadia said, matters that could be decided by, and only by, the State Government and Respondents? This makes the State Support Agreement with the State Government an intrinsic part of Slum Rehabilitation Contract. So, too, the MIAL- MMRDA agreement, for this set out the obligations of 10 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F those parties in relation to the very same slum clearance project. Indeed, all the various agreements are inextricably interlinked and are not independent of each other. The various agreements are all part of the same, single slum clearance project. Therefore, HDIL is entitled to seek reliefs that travel beyond the Slum Rehabilitation Contract and are, too, directed at parties with whom HDIL may not have had a direct contractual relationship under that Contract.
(b) This intertwining is also borne out by the conduct of the parties from 2007 right up to the time of termination.
(c) Given the unity of purpose of the various agreements and contracts related to the slum clearance Project, and the fact that all the players involved saw this as a single project, it is, in Mr. Kapadia's submission, clear that HDIL's claim under the Slum Rehabilitation Contract is not in the nature of a development right so much as a claim for land. That is established by a concatenation of factors: that HDIL was chosen from a number of competing bidders because it had what Mr. Kapadia described as a "land bank", available real estate on which rehabilitation tenements could be constructed, and to which slum dwellers could be shifted. In return, 11 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F HDIL was to get not direct monetary payment but, instead, development rights also necessarily related to land. The entire exercise was about freeing land for Airport use and giving HDIL rights over land, each of these being uniquely identified. In the larger universe of AAI rights and dealings with the land of the airport, MIAL acquired substantial rights on a long lease. Some of those rights passed to HDIL.
(d) HDIL is therefore entitled to maintain its petition against Respondents other than MIAL on account of this intertwining of rights and obligations of several entities and agencies in respect of the same land. It is, therefore, not restricted to seeking reliefs only against MIAL or only in respect of the subject matter of the Slum Rehabilitation Contract.
(e) Once it is shown that the Slum Rehabilitation Contract is a contract or agreement for land, several consequences follow. The most important of these is that time is not of the essence, and the contractual stipulation that it is of the essence is inconsequential.
Time could only be of the essence if a specific notice to that effect was given by MIAL; that was not done. Therefore, any delays in performance or the achievement of contractual obligations remain 12 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F immaterial, and, consequently, the termination of the Slum Rehabilitation Contract by MIAL for delay in performance is prima-facie bad.
(f ) MIAL's termination is also vulnerable because of its election to affirm the Slum Rehabilitation Contract at the time of the alleged breach. There is, Mr. Kapadia submits, an equitable estoppel against MIAL. Apart from being incorrect, none of the alleged defaults by HDIL are recent, and historicity robs them of all relevance. MIAL cannot, at this stage, cite them as cause for termination. There is not only a waiver on MIAL's part but its specific representations made during the contract and its election to reaffirm the contract at the time of the alleged breaches and not to exercise its right to terminate it although it could then have done so entitle HDIL to invoke against MIAL the equitable doctrine of estoppel in pais: MIAL was prevented by its conduct from obtaining the enforcement of rights to the detriment of HDIL, which had relied and acted on that conduct.
(g) Further, the delays and defaults attributed to HDIL were occasioned not by anything it did, but by defaults on the part of the Respondents. A fixed slum rehabilitation policy was the substratum of the entire 13 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F exercise. Failing to evolve and fix with finality such a policy, or making frequent changes to an existing policy or policies, had the effect of undermining not only the project but also jeopardizing HDIL's prospects of fulfilling its contractual obligations. The record, Mr. Kapadia submits, shows that this is not a case of changes in any slum rehabilitation policy; no such policy was ever framed; and, without that policy being in place, the entire Slum Rehabilitation Contract was stymied. It was not a matter of shifting goal posts so much as not having a goal post at all. Alternatively, if a slum rehabilitation policy could be said to have existed, it was in constant flux, making performance impossible, for the Slum Rehabilitation Contract's success depended on a policy that was immutable.
(h) Viewed from any perspective, this was beyond HDIL's control and it is sufficient cause for HDIL to rely on the force majeure clauses of the Slum Rehabilitation Contract. State support, as also support from other agencies, was essential to the completion of the Project. There was a complete failure to provide any support. Indeed, the breaches are on the part of the Respondents and not HDIL; and all the grounds cited for termination are incorrect and wrongful. The so- called contractual defaults on which MIAL based its 14 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F termination of the Slum Rehabilitation Contract are, in Mr. Kapadia's submission, a futile attempt to defend the indefensible.
(i) Despite every obstacle and hindrance in its way, HDIL has completed a substantial part of its work under the Slum Rehabilitation Contract. It has spent enormous amounts of money in doing so and has made valuable assets over to agencies, free of cost. It cannot now be deprived of its expected and contractually assured returns. Equity and the balance of convenience favour HDIL; and the reliefs it seeks, albeit against third parties, are necessary if its arbitration is not to be rendered infructuous.
13. This is an intricately constructed argument. But there is, in this appeal, a more fundamental obstacle in HDIL's way. The learned Single Judge has in exercise of his discretion taken a particular view, and dismissed HDIL's claim for reliefs under Section 9 of the Arbitration Act. Before us, it is not enough for HDIL to show that some other view was possible. It must show that the discretion exercised by the learned Single Judge was arbitrary, capricious or perverse. We cannot, in appeal, substitute our view for that of the court below if the latter view was possible, plausible or permissible. Therefore, to succeed in appeal, HDIL must show that the learned Single Judge could not ever have reached the conclusion 15 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F he did. We must state straightaway that for all the assiduous construction and elegance of Mr. Kapadia's submissions, we are unable to conclude at this stage of a prima-facie assessment that the view taken by the court below was so entirely implausible as to warrant interference.
14. Mr. Dwarkadas, learned Senior Counsel for MIAL, maintained that HDIL's case was wholly untenable. This is how he placed his response:
(a) HDIL's petition, as laid, is not maintainable under Section 9 of the Arbitration Act. It seeks reliefs beyond the Slum Rehabilitation Contract and against Respondents who are not parties to that Contract.
HDIL's case rests on the supposition that the Slum Rehabilitation Contract is not an independent contract.
This is incorrect. While it is true that other Respondents also had a role to play in the Slum Rehabilitation Project, that does not make the Slum Rehabilitation Contract any wider than its express terms.
(b) According to Mr. Dwarkadas, HDIL's submissions proceed on a patent misreading and misconstruction of the Slum Rehabilitation Contract. The Slum Rehabilitation Contract sets out HDIL's various 16 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F obligations. HDIL defaulted in performance of many of these and there was an unconscionable delay in performance. It is clear from the record, Mr. Dwarkadas submits, that HDIL is not now and, at the relevant time, was not either ready or willing to perform its obligations under the Slum Rehabilitation Contract. He points out that as far back as in June 2011 MIAL gave HDIL a cure notice calling upon it to remedy its defaults. HDIL did not reply to this notice. It did not dispute its contents. It was not till late 2012 that HDIL, for the first time, claimed that MIAL was deemed to have waived its right to demand compliance from HDIL. This defence and answer was raised only when MIAL sought to invoke HDIL's bank guarantee.
(c) The Slum Rehabilitation Contract is not, Mr. Dwarkadas says, in any sense a contract for land, nor does it create any vested right in land in favour of HDIL. That is clear from the contract itself, for HDIL's entitlement to development rights is contingent upon the timely fulfilment of its contractual obligations. It is a contract that has two clearly defined components, namely, the clearance of slums and the construction of rehabilitation tenements for eligible slum dwellers. The fact that HDIL is conditionally entitled to certain reliefs in the nature of development 17 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F rights does not alter this position. HDIL acquires those development rights only if it fulfils contractually defined obligations. Indeed, the contract says that should HDIL fail to do so, it gets no rights at all. Therefore, the Slum Rehabilitation Contract cannot be said to be a contract for land.
(d) Time was always very much of the essence of the Slum Rehabilitation Contract. It says so, in so many words. It fixes various time-lines for the completion of specified items of work. Indeed the very nature of the Project itself suggests the timeliness was the sine-qua-non of the Slum Rehabilitation Contract because the expansion and modernisation of the Airport were not matters that could proceed at a leisurely space. These were urgent requirements in the general public interest and had to be completed on schedule. There is, therefore, in Mr. Dwarkadas's submission, no equity or interest in land created in favour of HDIL.
(e) The contract itself expressly forbids any waiver or modification except in the manner provided by the contract. Mr. Dwarkadas points out that HDIL's reliance on the force majeure clause is nothing but an express admission by HDIL that it is in breach of its contractual obligations.
18 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F (f ) The mere fact that HDIL spent some money under the contract is entirely irrelevant, particularly when one considers the innumerable and flagrant breaches committed by the HDIL. It not only failed to perform its obligations on the required dates but it also failed to perform those obligations that did not involve statutory authorities or the fixation of any slum rehabilitation eligibility policy.
(g) HDIL has made out no prima-facie case. The balance of convenience is against HDIL, and settled principles governing the grant of relief under Section 9 of the Arbitration Act militate against the grant to HDIL of all reliefs directed against third parties, and in respect of matters beyond the arbitration agreement. The reliefs sought by HDIL cannot be said to be in any way in aid of a final relief in the arbitration.
(h) Mr. Dwarkadas submits that, in any event, the view taken by the learned Single Judge is not an implausible, impermissible or impossible view. It is not open to an Appeal Court to substitute its discretion for that of the Court below. There is also nothing to show that unless reliefs are granted, HDIL will not be able to claim effective final relief in arbitration; after all, HDIL can always maintain a claim for damages. By granting the 19 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F reliefs sought, the entire Slum Clearance Project would be brought to a standstill for years to come. The larger public interest must, Mr. Dwarkadas submits, be borne in mind while addressing a claim under a contract of this type.
III
15. The foundation of Mr. Kapadia's submissions is that the Slum Rehabilitation Contract is not independent of or separate from the MIAL-MMRDA agreement and the contractual relationship between HDIL and the Slum Rehabilitation Authority ("SRA"), the 6th Respondent; therefore, HDIL's Petition for reliefs against those Respondents is maintainable. Mr. Kapadia bases this submission on (i) an analysis of the Slum Rehabilitation Contract and (ii) contemporaneous documents reflecting the conduct of parties. It seems not to be seriously disputed that HDIL was selected for the project because, apart from its professed expertise, skills and capabilities in large scale slum clearance projects, the key factor that distinguished it from competing bidders was that it had, or was in a position to acquire, a significant area as a "land bank". This land bank was to be used in the construction of tenements for the rehabilitation of eligible slum dwellers upon their relocation from the Airport land. According to HDIL, the Slum Rehabilitation Contract's terms govern the use of this land not only for the construction of the rehabilitation tenements but also their utilisation 20 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F by the Slum Rehabilitation Authority. The Slum Rehabilitation Contract contains a description of this land bank (called "the Developers' Land").1 This land was already available with HDIL. It subsequently acquired seven plots of land closer to the airport at a cost of some Rs.1700 crores. The land later acquired also formed part of the 'Developers' Land'. The Slum Rehabilitation Contract required HDIL to obtain permissions from the SRA (including Letters of Intent) for construction of rehabilitation tenements on this land; to construct the rehabilitation tenements; to form housing societies; relocate protected slum dwellers to those tenements and to transfer the lands in a stipulated manner. The Developers' Land was to be used only for these purposes, and the Slum Rehabilitation Contract imposed negative covenants on HDIL from encumbering this land or creating any third party rights on it. The construction work was to be monitored by MIAL through its Project Management Consultant, and this is a provision of the agreement between MIAL and MMRDA. Slum rehabilitation schemes for the Developers' Land were approved by the SRA. A significant portion of that land was conveyed to the SRA. Mr. Kapadia submits that this makes it clear that the HDIL-acquired lands were always a part of the Slum Rehabilitation Contract and HDIL is therefore entitled to reliefs in respect of that land. He was at pains to point out that contrary to the submissions made by the SRA, the rehabilitation tenements on the Developers' Land could not be used for any purpose than resettlement of the eligible slum dwellers on the 1 Annexure 3, read with Clause 1.1 (Definitions) of the Contract.
21 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F airport land. This, according to him, was clear from the terms of the Letters of Intent issued by the SRA as also the terms of the conveyances executed by HDIL in favour of the SRA in respect of these lands, and the conveyances themselves were in fulfilment of HDIL's obligations under the Slum Rehabilitation Contract.
16. Similarly, MMRDA's agreement dated 12th December 2006 with MIAL is not, in Mr. Kapadia's submission, independent of the Slum Rehabilitation Contract as the Respondents would have it. He drew our attention to Clause 3.1(v)(q) of the Slum Rehabilitation Contract. This provides that amounts due to MMRDA from MIAL under their 12th December 2006 agreement were to be reimbursed by HDIL, and that HDIL would assume all the obligations of MIAL under the 12th December 2006 agreement. Further, Mr. Kapadia submitted, even the statutory framework governing slum rehabilitation, specifically Development Control Regulation 33(10), brought about a direct relationship between HDIL and the SRA, and the latter could not possibly have sanctioned the rehabilitation scheme but for the Slum Rehabilitation Contract. Under that Development Control Regulation, HDIL received Transferable Development Rights ("TDR") in respect of the slum rehabilitation scheme sanctioned on the Developers' Land. In addition, HDIL was also entitled to receive rights in a portion of the airport land cleared of slums. HDIL contends that the TDR it got was not its full recompense, because that TDR's value was about Rs.2400 crores, while HDIL had actually spent over Rs.4000 crores. That, he 22 of 69 ::: Downloaded on - 23/12/2013 20:30:21 ::: APP(L)365-13-F submits, is the only reason that HDIL was granted additional rights in respect of a portion of the cleared airport land. HDIL therefore has interests in the form of development entitlements arising from the Developer's Land (i.e., the land bank used for rehabilitation tenements) as also a contractually defined portion of the cleared airport lands.
17. There is thus, in Mr. Kapadia's submission, such an intertwining of agreements, obligations and rights that it is simply not possible to segregate the Slum Rehabilitation Contract from the other agreements. The Slum Rehabilitation Contract was the "mother agreement": the conveyances of the developers' land to SRA, the issuance of Letters of Intent by SRA and the MIAL- MMRDA all flowed from, and only from, the Slum Rehabilitation Contract. Therefore, according to Mr. Kapadia, it matters not that Respondents Nos.2 to 6 are not signatories or parties to the Slum Rehabilitation Contract. The object of all the agreements was one, the clearance of slums on the airport lands. The other agreements are ancillary or subsidiary, but to be brought to fruition, each agreement depends on the performance of the others. There is a direct relationship between the parties to the Slum Rehabilitation Contract and others who are not signatories to it. The commonality of the subject matter makes all the agreements parts of one consolidated, composite transaction. HDIL is, therefore, not confined to seeking reliefs only against MIAL or only in respect of the subject matter of the Slum Rehabilitation Contract.
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18. In support of his submissions as to maintainability, Mr. Kapadia relies on the decision of the Supreme Court in Chloro Controls v Severn Trent Water Purification Inc & Ors,2 specifically to stress that the Slum Rehabilitation Contract was the mother agreement; that the project was a single composite one; and that the performance of each agreement depended on the performance of the others. In such a case, the Supreme Court held that the fact that a party was not a signatory to one or the other of a raft of agreements may not be of much significance. This, however, is an approach to be used in exceptional cases, and with great caution. In response, Mr. Dwarkadas points out that Chloro Controls is, however, a decision under Section 45 in Part II of the Arbitration Act, not one under Section 9. Mr. Kapadia contends that this is irrelevant, for Chloro Controls, particularly in paras 82 and 87 through 89, elucidates a general principle to be applied where there are multiple, overlapping agreements of the kind we see here. We believe this to be an incorrect reading of those paragraphs. We understand these paragraphs only to say that in a given factual matrix it is sometimes possible to consolidate a number of arbitral claims to avoid multiplicity and to ensure consistency of result. That is very different from saying that a party is entitled, as a matter of right, and in an action under Part I of the Arbitration Act, to drag into arbitration another party with whom he has no contractual privity. We do not read Chloro Controls as supporting any such view. There is a material distinction in the wording of Section 8 and 2 (2013) 1 SCC 641, paras 73-76 24 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F Section 45 of the Arbitration Act. Both sections deal with the power of a judicial authority to refer parties before it to arbitration. Mr. Kapadia's argument is that if, following Chloro Controls, strangers can be brought to arbitration under Section 45, there is no logical reason why this should not apply to Section 8, too; and once non- signatories to the arbitration agreement are included in the arbitration, then it must follow that as against those parties, a petition for reliefs under Section 9 is maintainable. We believe this argument to be fallacious. Not only are Sections 45 and 8 in different parts of the Arbitration Act, but they also deal with different types of arbitrations. Section 45 speaks of the request for reference to arbitration emanating from one of the parties "or any person claiming through or under him". Section 8 does not. Chloro Controls read these words in Section 45 to have wide amplitude. We do not believe that it sought to introduce these words into Section 8, which does not have them. Mr. Kapadia's reliance on the Delhi High Court decision in HLS Asia Ltd v Geopetrol,3 one that follows Chloro Controls, is also, we believe, similarly misplaced. That was a case where one party was authorised to act on behalf of a number of others who together formed a consortium. The argument that these others were not formally signatories to the arbitration agreement was repelled by the Delhi High Court. This is of no assistance to Mr. Kapadia as the other Respondents before us are not members of a consortium or any form of contractual fraternity, but are independent contracting agencies.
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19. Mr. Kapadia then submitted that, in any event, and without prejudice to his previous submissions, it is permissible for a party to seek reliefs under Section 9 of the Arbitration Act against third parties even if there is no arbitral claim against them. In support of this contention he relied on the decision of this Court in Girish Mulchand Mehta V/s. Harish Mehta.4 Mr. Kapadia took us through that decision as also the decisions in Mohd. Ishaq Bhatt V/s. Tarik Ahmed Sofi,5 Arun Kapoor V/s. Vikram Kapoor,6 and Embassy Properties Development Private Limited V/s. Jumbo World.7 In addition, he submitted that the Bombay High Court (Original Side) Rules under the Arbitration Act specifically contemplate that third parties can be joined in proceedings under that Act, for Rule 803-E speaks of a notice of the filing of an application being required to be given to persons likely to be affected.
20. We cannot agree with Mr. Kapadia's submissions in this regard. In Girish Mulchand Mehta, the Court said that the emphasis of Section 9 is not so much the identity of the parties to a proceeding under that section as the 'subject matter' of the arbitration agreement. It is, in a given case, entirely possible that a protective relief may be sought against a third party under Section 9 of the Arbitration Act, although no reliefs in arbitration may be claimed against that party. The object of Section 9 is inter alia the 4 2010 (1) Bombay C.R. 31, at para 12 5 2010 (3) Arbitration Law Reporter 107 ( J & K), para 9 6 95 (2002) Delhi Law Times 42 7 Unreported decision of a Division Bench of the Madras High Court, paras 54 to 57; Manupatra: MANU/TN/0920/2013 26 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F preservation of the subject matter of dispute. Girish Mulchand Mehta was a case where a relief was sought against a member of the cooperative society, and the Court held that relief can be granted against parties who are not signatories to the arbitration agreement if it be found that these parties claimed through or under one of the parties to the agreement. The question, therefore, is whether or not the subject matter of the Slum Rehabilitation Contract includes the lands conveyed to SRA. The SRA and MMRDA do not claim under or through MIAL vis-à-vis HDIL. SRA certainly has an independent contractual relationship with HDIL stemming from its conveyances and Letters of Intent. SRA has distinct, separate and independent rights in the Rehabilitation lands and tenements inter alia under registered Deeds of Conveyances. Obviously there are no arbitration clauses in these Conveyance Deeds.
21. Relying on Chloro Controls, Mr. Kapadia suggests that in any situation where there are multiple, over-lapping agreements, a party to what he calls the principal, mother or composite agreement may seek reliefs against parties to the other agreements but who are not signatories to his agreement, and also in respect of the property which is not the subject matter of his agreement. We do not believe that there is any such universal principle. It may often happen that there may be several distinct agreements required to be separately performed, yet all directed towards a common objective or purpose. That is not either conceptually or legally the same thing as a situation in which there is composite or mother agreement, the 27 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F performance of which depends on some other subsidiary or ancillary agreement. To illustrate, a contract between two parties for the setting up and commissioning of a power plant may entail the execution of a number of additional or ancillary agreements between one or other of the principal parties and several sub-contractors or other agencies. This would be a case of a single composite mother agreement and it is this kind of situation that Chloro Controls contemplates. We have already noted above the material distinction between Sections 45 and 8 of the Arbitration Act and that Chloro Controls was not, stricto sensu, concerned with an interpretation of Section 8. In the present case, the situation is very different. To put it briefly: HDIL was required to perform some of MIAL's obligations under the OMDA. Among those obligations were the clearance of the Airport slums and the rehabilitation of eligible slum dwellers. The construction of rehabilitation tenements and HDIL's contractual arrangements with SRA were referenced in the Slum Rehabilitation Contract between MIAL and HDIL, but they could hardly be said to be part of that single transaction. For, the conveyances are clearly severable, and it is entirely conceivable that HDIL could have obtained rehabilitation lands, constructed rehabilitation tenements on them, conveyed those to SRA and obtained TDR benefits without this in any way affecting the Slum Rehabilitation Contract. To put it another way, it is perhaps a matter of convenience or happenstance rather than contractual obligation that HDIL acquired these lands and conveyed them to SRA. It cannot be said that unless HDIL and HDIL alone acquired these 28 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F lands and conveyed them to SRA, the entire project of slum clearance would necessarily fail. SRA required rehabilitation tenements to be made available. Where and from whom those were obtained was immaterial. It is, therefore, not possible to hold that the rehabilitation or SRA lands are part of the subject matter of the Slum Rehabilitation Contract. This is the view taken by the learned Single Judge, and we believe that this is indeed both plausible and permissible.
22. As we understand it, the legal position that emerges from a conjoint reading of all Chloro Controls and Girish Mehta as also the other decisions cited by Mr. Kapadia is only this: that while a claim under Section 9 can only be made by a party to the Arbitration Agreement, it can be laid against third parties who claim under or through one of the contracting parties, or who have a direct interest in the property in question. The objective is the preservation and protection of the subject matter in dispute. What matters is the nature and identity of the subject matter in controversy and not the identity of the parties. For instance, where property has passed into the hands of third parties, it would be open to a party invoking Section 9 to seek an injunction against these third parties for the preservation of that property. This does not mean, however, that reliefs can be sought against third parties in respect of some other property which is not the subject matter of the dispute. We believe that Mr. Kapadia's submissions strain at the boundaries of both fact 29 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F and law in trying to corral together in one place a number of independent entities and distinct subject matters.
IV
23. The next submission advanced by Mr. Kapadia is that, correctly read, the Slum Rehabilitation Contract "provides valuable rights to HDIL in respect of immovable property belonging to AAI which has been leased to MIAL and also governs the manner in which HDIL is to use the lands procured by it for the slum rehabilitation project." It is, he submits, a contract for land, and HDIL's claims are in the nature of a claim for land. Mr. Kapadia bases this submission on a reading of the Slum Rehabilitation Contract. Specifically, he points out that the Slum Rehabilitation Contract provided for HDIL acquiring development rights in respect of released land;8 that the purpose of agreement was to grant to HDIL "developers' development rights with respect to developers portion";9 and right to utilize the developers' development potential including creating third party rights on it. The "Developer's Portion" was defined in the Slum Rehabilitation Contract.10 It meant 55% of the "Released Land", and the Released Land, in turn, meant pockets of land included in Phase 2 of the 8 Slum Rehabilitation Contract, Clause 1.1, Definitions of Developer's Land, Developer's Development Potential, Developer's Portion, Developer's Right in Developer's Portion, MIAL Portion, Released Land.
9Clause 2.3 10 Clause 1.1 30 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F Project, these lands being specifically identified in Annexure 4 to the Contract. The Developer's Portion was to be jointly earmarked in these identified pockets of Phase 2 land after rehabilitation of the slum dwellers in Phase 1(i), Phase 1(ii) and a portion of Phase 1(iii) for a minimum of 28,000 hutments. It was, subject to variation, about 65.2 acres. HDIL's contractual entitlement to the Developer's Portion is in addition to the TDR that accrued to HDIL in respect of the rehabilitation lands (i.e., the "Developer's Land"). Therefore, according to Mr. Kapadia, HDIL had a vested interest in land. That land was the entirety of the encumbered land as also rehabilitation land, and therefore, the Slum Rehabilitation Contract is an agreement for land. If accepted, he submits, this has a consequence vital to his case, viz., that time is not of the essence of the Slum Rehabilitation Contract, the specific terms to the contrary in the contract notwithstanding. If that be so, Mr. Kapadia says, then MIAL's termination citing delays by HDIL is bad, for those delays are irrelevant: time was never of the essence, and was never made of the essence by giving any notice, and HDIL cannot, therefore, be held to any scheduled date of completion, or pilloried for not meeting any particular deadline.
24. However, on a careful scrutiny of the Slum Rehabilitation Contract, we are not convinced that Mr. Kapadia is correct in his submissions. We believe that Mr. Dwarkadas is justified in contending that merely by virtue of a definition in the Slum Rehabilitation Contract, no interest in land is created in favour of 31 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F HDIL. The definition of "Developer's Portion" as also Clause 4 of the Slum Rehabilitation Contract along with the termination clause 11 make it clear that HDIL's entitlement to a share in some of the lands released from encroachment was contingent upon the successful performance of its obligations under the Slum Rehabilitation Contract and that these obligations had to be fulfilled within the time frame stipulated. Indeed Clause 4.1 of the Slum Rehabilitation Contract opens with the words "Upon completion of complete Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments". This is also evident from the definition of "Developer's Portion" itself, for the earmarking of pockets of the Released Land necessary to constitute the Developer's Portion could not be done till these three phases were completed. In other words, HDIL's entitlement, if any, did not crystallise upon the execution of the Slum Rehabilitation Contract.
If it did not fulfil its obligations it acquired no rights. This is quite distinct from a contract for land, in which, usually, a vested right in respect of identified land accrues or crystallised on execution of the contract itself. In this case, HDIL's claim is that this is a contract for two different tracts of land. One is the rehabilitation land ("Developer's Land") on which rehabilitation tenements were to be constructed. We have found, as has the court below, that this land is not the subject matter of the Slum Rehabilitation Contract. That leaves only the second tract, the so-called "Developer's Portion", an area of about 65.2 acres from part of the Phase 2 lands. HDIL had 11 Clause 25 32 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F no rights in the Developer's Portion on the execution of the Slum Rehabilitation Contract. Its acquisition of those rights depended on its fulfilment, in a time-bound manner, of certain defined contractual obligations. Unless those obligations were met, HDIL acquired no rights in the Developer's Portion. Therefore, the argument that the Slum Rehabilitation Contract is a contract for land depends entirely on HDIL being able to show that it has fully complied with those conditions precedent. At the cost of repetition, these conditions precedent are HDIL's successful completion of its Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments. HDIL has not met these conditions. It has not fulfilled these obligations. HDIL's recompense is expressly dependent on, and a factorial of, this completion schedule. Failing to meet this requirement resulted in HDIL losing its entitlement. HDIL cannot, therefore, be said to have any interest in the lands comprised in the Developer's Portion either.
25. For this reason, Mr. Kapadia's reliance on the decision of this court in Chheda Housing Development Corporation v Bibijan Shaikh Farid & Ors.,12 is of little significance. The agreement in that case was construed to be one that entailed development coupled with a right to sell a constructed portion, and hence capable of specific performance. It is difficult to see how this advances Mr. Kapadia's cause, particularly when we consider that the only reason for contending that the Slum Rehabilitation Contract is a contract of 12 2007 (3) All MR 780 33 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F land is to enable him to segue into the submission that time is never of the essence in any such contract, and therefore, HDIL cannot be said to be in default, despite its demonstrable delays. But to hold that time is not of the essence, we must first come to a finding that this is a contract for land.13 But once we have found that the Slum Rehabilitation Contract is not in any sense a contract for land, the sequitur that Mr. Kapadia invokes does not arise.
V
26. In actuality, Mr. Kapadia's submission conflates two distinct arguments. The first is that time is not of the essence because the Slum Rehabilitation Contract is a contract for land. Once we have rejected this argument, as we have done, and also held that it is impermissible to seek reliefs in respect of property that is not properly the subject matter of the arbitral dispute, it is, in our view, unnecessary to consider the next submission made by Mr. Kapadia. However, since this has been strenuously argued, and also occupies much of HDIL's written submissions, we are compelled to address it. This is the submission of an equitable estoppel. Here, Mr. Kapadia contends that quite apart from breaches by MIAL itself, wherever there was a delay on HDIL's part in meeting its scheduled contractual obligations, MIAL, instead of rescinding the contract chose to reaffirm it and required HDIL to continue performing the 13 Hence HDIL's reliance on Chand Rani v Kamal Rani, (1993) 1 SCC 519 and Hindustan Construction Contractors v State of Maharashtra (1977) 2 SCC 539 34 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F contract. This, he says, raises an equitable estoppel or an estoppel in pais against MIAL. He drew our attention to MIAL's termination letter dated 6th February 2013 to point out that all the breaches complained of in that letter were actually of many years prior, going as far back as in the year 2008. Mr. Kapadia relied on several distinct instances said to be breaches and said that in not one of these cases did MIAL rescind the Slum Rehabilitation Contract although it was entitled to do so, but, on the contrary till as late as 31st January 2013, continued to expect and even demand performance from HDIL. MIAL cannot rely on HDIL's alleged breaches due to delay to terminate the Slum Rehabilitation Contract. Indeed, the contractual clause requiring a waiver to be in writing as it has been waived.14 It is his submission that MIAL having elected to affirm the contract at the point in time when the breaches were alleged to have been committed, it cannot now use these breaches as grounds for termination. In this context, he relies upon the decision of the Court of Appeal, U.K. in its decision in Tele2 International Card Company S.A. V/s. Post Office Limited.15 The Appeal Court held that where a party has a right to terminate a contract and chooses or elects not to terminate it, but rather to affirm it, then it will be held to that decision. This is a question of fact: either there is a reaffirmation of the contract, or there is not. In Tele2, the contract required the appellants to provide something called a Parent Company Letter for each year. This was to be done seven days prior to the commencement of each calendar year. There was no dispute that 14 Clause 33 15 (2009) EWCA Civ 9 35 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F the appellants had not provided this letter for 2004, though it should have been done no later than by 24 December 2003. Despite this material breach, the respondent permitted the appellant to continue performing the contract. It did not insist on the letter being provided. The Appeal Court affirmed the finding of the trial court that this amounted to an election and that there was an estoppel in pais against the respondent.
27. There is no disputing this well-established principle. Indeed, such an election may be inferred even from conduct. But the communication of that election must be clear and unequivocal. In this case, we do not find any evidence of any such communication.
Nor do we see any unequivocal evidence of MIAL's election. There is, for instance, the matter of HDIL's default in regard to what is called "Performance Security" in the Slum Rehabilitation Contract.
HDIL had initially submitted a bank guarantee for Rs.25 crores and a demand promissory note for Rs.275 crores. These were to be replaced by an interest-free cash deposit of Rs.300 crores within one year. HDIL sought a time extension of 45 days. It never made this deposit. This failure is cited as one of the breaches entitling MIAL to terminate, and HDIL contends that it is here that an estoppel in pais arises against MIAL; and that this is so, too, for every other alleged default attributed to HDIL in MIAL's termination. Does the record show an unambiguous communication of that election? We do not think so.
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28. The principle of estoppel that Mr. Kapadia invokes, also the to be found in Section 115 of the Evidence Act, is fundamentally one in equity. It is part of the larger class of equitable doctrines against allowing a party to "approbate and reprobate", is very well-settled. 16 Is HDIL's invocation of that principle justified? That, surely, is a matter best left to HDIL to urge and justify in the arbitral proceedings it has invoked. This is equally true of Mr. Kapadia's submissions on Section 39 of the Contract Act. That section sets out the law relating to what is known as anticipatory breach of contract. We understood the submission to mean that, faced with HDIL's breaches at the time when they occurred, MIAL had the option of putting an end to the contract unless it signified, by words or conduct, its acquiescence in its continuance. Once MIAL so acquiesced, it could not terminate the contract on the ground of those breaches. In other words, once HDIL repudiated the contract, MIAL could accept that repudiation and sue for damages for breach of contract, irrespective of whether or not the time for performance had come; or it could disregard the repudiation by breach, refuse to accept it and then the contract would remain in full effect. Once MIAL accepted the breach, HDIL would stand discharged. These are questions of fact and must be proved. They should, for that reason, be left to the determination of the arbitral tribunal and it would, in our view, be imprudent to decide these at this prima-facie stage. We only note them for completeness, since they were urged. We expressly leave open all questions in this regard, including, in 16 Cauvery Coffee Traders, Mangalore v Hornor Resource (International) Co Ltd., (2011) 10 SCC 420 37 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F particular, whether the repudiation by HDIL was sufficiently unequivocal and whether MIAL's alleged acceptance of that repudiation was equally unambiguous, on the basis that "an unaccepted repudiation is a thing writ in water." 17 In arbitration, this submission on Section 39 may also have to be tested against HDIL's further submission of MIAL itself being in breach of its contractual obligations. Conceivably, that argument may be found to be self- defeating. If MIAL was in breach, as HDIL alleges, then HDIL had two choices: to accept MIAL's alleged wrongful repudiation as determining the contract, or to affirm the contract's continuance. It is to be decided whether, as a mixed question of facts and law, HDIL could claim a third choice, a via media, of simultaneously affirming the contract and yet claiming absolution from further performance unless and until MIAL performed its obligations. 18 If, on facts, it is established that HDIL accepted a breach by MIAL, two consequences would follow: first, that MIAL, too, would stand released from its obligations to perform; and, second, that HDIL's only remedy would then be in damages and not for specific performance. HDIL cannot have it both ways. If HDIL accepted MIAL's alleged breaches, then, its only remedy being in damages, no relief can be granted in an application under Section 9 of the Arbitration Act. If it claims not to have accepted those breaches, then it cannot cite them as reasons for discharge of its own contractual obligations and, again, can therefore obtain no equitable 17 Howard v Pickford Tool Co., (1951) 1 KB 417 at 421 18 See: Forcometal SARL v Mediterranean Shipping Co. S.A. The Simona, (1988) 2 All E. R. 742 (HL) 38 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F relief under Section 9. At least as far as the present appeal is concerned, this is a sort of self-goal by HDIL. We clarify that this is only a prima-facie view on the material now before us.
29. We must note however, and with some dismay, that the argument that MIAL made an election and thereby forfeited its right to terminate was taken for the first time in appeal before us. The court below did not have the advantage or privilege of Mr. Kapadia's submission on an estoppel in pais and it seems to us somewhat unjust that we be invited to overturn the learned Single Judge on an argument never taken before him.
30. Before the court below, the only argument pleaded and canvassed was that MIAL had waived certain rights, specifically those in relation to the Performance Security and interest-free cash deposit. Prima-facie this is not a submission that commends itself to us. Clause 33 of the Slum Rehabilitation Contract contains a specific provision that any waiver of the Contract would be effective only in writing. The other provisions of the Slum Rehabilitation Contract were to remain unaffected by any such waiver, and the fact of a waiver was not to be deemed to be a waiver of any subsequent action. Mr. Dwarkadas is justified in his submission that waiver, too, is contractual and is nothing but an agreement to release or not to assert a right.19 19 Mademsetty Satyanarayana v G Yelloji Rao, AIR 1965 SC 1404, para 11 39 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F
31. On 14th October 2008 HDIL and MIAL executed a Deed of Confirmation. Clause 4 of this Deed of Confirmation reaffirms the Slum Rehabilitation Agreement, except for an amendment in the scheduled date for submission of cash deposits. Were HDIL's arguments on waiver (or election) to have any force, they would be equally true in 2008 as they are in 2013; yet HDIL does not claim that there was any such waiver (or election) in 2008 at the time when the Deed of Confirmation was executed. Moreover, when, three years later, on 24th June 2011, MIAL issued a cure notice to HDIL asking it to comply with its various obligations, including furnishing of the cash deposit, there was simply no response from HDIL. Now HDIL claims that there was some sort of oral understanding that this cash deposit was to be made by HDIL only when MIAL fulfilled its obligations to AAI under the OMDA; met its obligations under other agreements; and caused the execution of a Tripartite Agreement between HDIL, MIAL and MMRDA. This is a remarkable argument. Even today HDIL does not say that it is willing to furnish the entire cash deposit. It insists that it is not required to furnish these deposits at all. In correspondence, HDIL says that MIAL's demand for a cash deposit is barred by limitation, i.e., that HDIL is forever exonerated from making this deposit, or, in other words, that without making this deposit, HDIL is yet entitled to all its rights under the Slum Rehabilitation Contract. How this does not amount to an unwritten modification of the Agreement, i.e., an impermissible modification, is beyond comprehension. Clause 8.2 of the Slum Rehabilitation Contract allows MIAL to 40 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F invoke the bank guarantee furnished by HDIL on the latter's failure to replace the bank guarantee and demand promissory note with a cash deposit. MIAL did invoke the bank guarantee by its letter of 24th June 2011. HDIL filed Arbitration Petition No.1317 of 2012 under Section 9. Even then, it did not argue that there was any election or that it was absolved from making any cash deposit. By its order dated 29th November 2012, this Court held that HDIL was prima facie in breach of its obligations to make that cash deposit and that MIAL's invocation of bank guarantee was justified. HDIL filed an Appeal, but withdrew it. It therefore accepted the decision of the learned Single Judge in that arbitration petition. It is far too late in the day for HDIL to contend that it is not liable to make any such payment or that there is any sort of election, waiver or abandonment by MIAL of its contractual rights.
32. There is, too, as Mr. Dwarkadas points out, a very real distinction between an election not to terminate and an election not to insist on the performance of contractual obligations at the particular time when the contract intended those obligations to be performed. The two cannot be equated. The latter does not deprive a party of its right to terminate the contract. At best, it may entitle the other party to contend that it stands absolved from the fulfilment of certain obligations by the contractually specified time or that it is entitled to an extension of time for the performance of those obligations. An election not to terminate, however, is something else entirely and amounts to saying that the continued 41 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F non-fulfilment of contractual obligations is irrelevant, or, in other words, that certain obligations stand excised from the contract. We find Mr. Dwarkadas's reliance on the decision of this court in Phoenix Mills Ltd v M. H. Dinshaw & Co. 20 wholly apposite: a party can only dispense with the performance of a promise by the other contracting party by a voluntary, conscious act that is affirmative. A mere omission to assert or insist on this or that contractual right is no dispensation within the meaning of Section 63 of the Contract Act.
33. On 24th June 2011, some 18 months before the termination on 6th February 2013, MIAL gave HDIL a cure notice under Clause 24 of the Slum Rehabilitation Contract. HDIL did not reply to this notice. It did not dispute its contents. It was not till after MIAL invoked the Bank Guarantee on 27th November 2012, i.e., almost 15 months after the cure notice, that HDIL for the first time raised the plea of waiver against MIAL.21 In our view, Mr. Dwarkadas is justified in contending that this entire plea of waiver is not only contrary to the express terms of the Contract but is an after-thought.
VI
34. HDIL also contends that MIAL is itself in breach of its obligations under the Slum Rehabilitation Contract, and these 20 AIR 1946 Bom 469 21 The force majeure clause was not, however, invoked at this time, but only much later.
42 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F breaches disentitle it from terminating the contract. According to HDIL, MIAL was to "obtain" a tripartite agreement between HDIL, MIAL and MMRDA or, at the very least, to get MMRDA to perform its obligations under the MIAL-MMRDA agreement of 12th December 2006. This MIAL failed to do, and this was a fundamental breach of a primary obligation. MMRDA's promised performance was fundamental to HDIL's entering into the Slum Rehabilitation Contract and MIAL ought, therefore, to have got MMRDA to ratify the Slum Rehabilitation Contract and fulfil its obligations under its agreement with MIAL. Mr. Kapadia drew attention to a letter dated 7th May 2008 from MIAL to MMRDA in this regard, and to the letter of 9th August 2012 from MMRDA to the Urban Development Department of the Government of Maharashtra. Mr. Kapadia says that this letter of 9th August 2012 shows MMRDA distancing itself from HDIL and refusing to honour its obligations under the MMRDA-MIAL agreement. It does not. In that letter, as Mr. Dwarkadas pointed out, MMRDA has only said that neither MIAL, nor HDIL with whom it had no contractual relationship, should demand of MMRDA actions and compliances that fell within the domain of the SRA. MMRDA does not question HDIL's appointment; it could not, for it had already granted its No Objection Certificate to HDIL's appointment. It only questions the demands being made of it. MMRDA's letter of 9th August 2012 is to the Principal Secretary of the Urban Development Department of the Government of Maharashtra. It references an earlier communication of exactly two years earlier, 9th August 2010, from 43 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F the Urban Development Department in which the latter asked the MMRDA to function as the Nodal Agency and to assume responsibilities that MMRDA later contended were beyond its statutory remit. Moreover, we also cannot accept Mr. Kapadia's submission that the Clause 3.1(q)(v) of the Slum Rehabilitation Contract required MIAL to cause a tripartite agreement to be executed between these three parties. That clause does reference the MMRDA-MIAL agreement but only says that MIAL and HDIL shall consult with MMRDA to decide the "future scope and role of MMRDA in the Slum Rehabilitation Project". It is difficult to see how this can at all be said to be a contractual breach by MIAL of its obligations under the Slum Rehabilitation Contract.
35. HDIL then attributes several other breaches to MIAL. We find no substance in these allegations either. However, one of these allegations is worth noting, not only because of its curious framing but because it has, conceivably, the effect of hoisting HDIL by its own petard. HDIL claims that MIAL provided no support. It did not invoke the State Support Agreement although aware that the project was delayed because of the State Government's failure to "finalize an eviction policy and to issue Annexure II". Now Annexure "N" to the petition is a listing by HDIL of the various changes in the slum eligibility policy from April 2008 to June 2012. We must read this, as Mr. Dwarkadas says, with HDIL's reply dated 1st February 2013 to MIAL's demand dated 30th January 2013 for liquidated damages. In its reply, HDIL says many things, two of 44 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F which are of consequence: first, that "HDIL is not in a position to carry out its obligations under clause 7 on account of circumstances beyond their control"; and, second, that "the Government of Maharashtra has till date not decided the eligible criteria for the slum dwellers encroaching airport land". The only ground put forward by HDIL in this letter for its inability to perform its obligations is because the policy, though one existed, had not been "finalized", i.e., there were changes to this policy. This can only mean that this is not a matter of there being no policy at all, a sort of policy vacuum in regard to the airport slums as Mr. Kapadia contends, but rather a matter of policy shifts. It follows that a slum rehabilitation policy was known and defined at the time when the Slum Rehabilitation Contract was executed, but that there were certain changes in that policy subsequently. This is not the same as saying that there was no policy at all. HDIL's bid was accepted because it represented itself as having some degree of past success, borne out of specialised skills and expertise, in handling precisely such situations. A look at Annexure "N", tabulated by HDIL, immediately shows that the so-called policy changes of which HDIL complains are not all limited or restricted to the airport project at all, but are state-wide changes. Indeed, some are changes that are ex-facie unrelated to eligibility.22 These changes would have an impact on any slum rehabilitation project anywhere, and given its representations as to it capabilities in such matters, HDIL could hardly be heard to complain or to say that it could not perform its 22 Items 5 and 6, for instance, which relate to sand-mining.
45 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F obligations under the Slum Rehabilitation Contract because of these changes. Indeed, HDIL's express statement that it is unable to fulfil its contractual obligations seems to us to very much put paid to any case of externalities rendering performance impossible. Even more telling is HDIL's unequivocal assertion that it is "not in a position to carry out its obligations" under the Slum Rehabilitation Contract.
This seems to us to be the clearest possible statement by HDIL that it was neither ready nor willing to fulfil its contractual obligations.
What HDIL really seems to be saying is that it is now, some six or seven years on, willing to perform only some version of the Slum Rehabilitation Contract that it finds suitable, not the Slum Rehabilitation Contract as it stands. This is no evidence of readiness and willingness at all; indeed, it is evidence to the contrary. Absent both an averment and proof that it is ready and willing to perform the contract as it exists, HDIL cannot claim specific performance; 23 and if it cannot claim specific performance, it is surely not entitled to the equitable protective reliefs it now seeks under Section 9.
VII
36. Claiming breaches by MIAL and what it describes as a "total failure of support" by the other agencies, HDIL then invokes the force majeure clause of the Slum Rehabilitation Contract. 24 This is a clause very much of the usual kind found in many contracts. It sets 23 Bharat Barrel & Drum Manufacturing Co Pvt Ltd v Hindustan Petroleum Corporation Ltd & Ors., AIR 1989 Bom 170.
24Clause 26 46 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F out various circumstances, each of which may constitute a casus fortuitus sufficient to free parties from the contract. Mr. Kapadia relies on one of these: a change in law or policy of any government that suspends or render performance impossible; 25 and it is his case that the changes in the slum rehabilitation policy constitute just such a change in law or policy. However, as we have seen, there is insufficient evidence that the changes in the slum rehabilitation policy, such as they were, rendered performance of the contract impossible or suspended the contract. They might have made it more onerous perhaps than HDIL had initially bargained for, but that is all. Mr. Kapadia claims that the Government's decision not to apply the existing policy till a new policy was framed was just such a change and it suspended the contract. In other words, according to Mr. Kapadia, HDIL was entitled to defer indefinitely performance of all its obligations pending a final, written-in-stone, slum rehabilitation policy by the government. This is clearly incorrect.
HDIL had other contractual obligations that were unaffected by any such policy change; it could not avoid the performance of those on such a ground.
37. Moreover, the Slum Rehabilitation Contract sets out a procedure for invoking the force majeure clause.26 Notice must be given of such an event no later than 15 days from its occurrence. It must be described in detail. The dates of commencement of the event and the estimated cessation of the event must be set out. The 25 Clause 26.1(v) 26 Clause 26.3 47 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F manner in which the event affects the claiming party's obligations must also be specified. Performance can only be suspended when notice of the event is delivered. Only then is time extended, and only for the duration of the event. HDIL did none of this. It claimed force majeure for the first time only in its letter of 1st February 2013 in reply to MIAL's demand for liquidated damages on 30th January 2013, just a few days before termination, and it claims that this is sufficient compliance with the contractual requirements, and that, in any event, MIAL was not prejudiced by the want of such notice. We disagree. HDIL claims that Annexure "N", its tabulation of policy changes, shows a constant state of policy flux for a period of four years. So when exactly, according to HDIL, did this force majeure change-of-policy begin? We are not told. Which of the 10 "changes in policy" listed in Annexure "N" constitutes such a force majeure event? Is each one such an occurrence? The first of these "policy changes" listed is of 16th April 2008. The ninth is of 6th January 2012. The Slum Rehabilitation Contract allows for a termination of the contract if the force majeure event continues for over 365 days.27 On HDIL's showing, it could have exercised this right in April 2009, on 6th January 2013 and at several times in between. It did not. That can only mean that HDIL itself never saw these so-called changes in policy as force majeure events at the time they occurred. The reason it did not do so is evident. Indeed, it is in the very next sub-clause, 26.5(b). This says that if there is a termination citing a force majeure event (lasting over 365 days) and 27 Clause 26.5(a) 48 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F certain specified work is not completed by that time,28 then HDIL loses all entitlement to development rights in the "Developer's Portion", and "any other compensation or costs from MIAL"; and, if the minimum works specified are completed, then HDIL gets only development rights in those pockets of the Developers' Portion that have been fully cleared and not elsewhere. It could not have served HDIL's purpose to invoke the force majeure clause at any time earlier.
38. What is the kind of policy change clause 26.1(v) contemplates, in the context of the Slum Rehabilitation Contract? It might be, for instance, one that does away with all eligibility and simply permits the razing of all slums with no requirement of rehabilitation. Or it may be to permit in-situ rehabilitation. Either would oust the Slum Rehabilitation Contract completely and suspend it or render its performance impossible. That is not the kind of policy change that even HDIL describes. It is, in fact, common ground that the only policy changes, if any, were not to reduce the numbers of those eligible, but, if at all, to increase them, perhaps by, say, moving forward the datum line or altering certain criteria. This would not in any way suspend the Slum Rehabilitation Contract or render it impossible of performance. It would not reduce HDIL's scope of work. At best, HDIL would be required to do further work, for which it could then lay a claim for additional recompense. What HDIL seems to be saying is that unless the numbers of eligible 28 Namely, the successful completion of Phase 1(i), 1(ii) and 28,000 hutments in Phase (1)(iii) as specified in Clause 4.2(a).
49 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F persons were absolutely frozen in 2007, it could do no work at all even six years later, not even for those items that were independent of any eligibility policy (and there were several such items, including plane table surveys, construction of tenements, etc). That these slum eligibility policies are always fluid and are constantly adjusted to allow for changes over time is well known. HDIL claimed to be able to deal with such complex slum rehabilitation projects; and the Slum Rehabilitation Contract itself notes that it specifically warranted that it had the requisite skills, experience and financial ability to complete the project. 29 HDIL could hardly be heard to complain about something that it knew, or at any rate must reasonably be deemed to have known, would be subject to change.
Mr. Kapadia's reliance on the decision of a learned Single Judge of the Calcutta High Court in Peerless Drive Insurance v Union of India & Ors.30 seems to us clearly distinguishable on facts and of very little assistance to HDIL. In that case, there was not the kind of situation we see here, where HDIL has declined or perhaps even refused to perform even those obligations that are, even on its own showing, unrelatable to any force majeure events. HDIL's pecksniffian invocation of the force majeure clause at such a late stage, only after MIAL raised a demand for liquidated damages, is a singularly uncompelling argument of desperation.
VIII 29 Clause 13(e) 30 (1994) CWN 769 50 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F
39. HDIL's scope of work under the Slum Rehabilitation Contract is clearly defined.31 It was required to complete the ongoing "plane table survey" and to complete it in a timely manner. 32 This is a well-established graphical method of surveying using a plane table and an alidade to map the topography of a site, including elevations and distances. This exercise does not involve any statutory permissions, and it is not even HDIL's case that it was in any way or at any time prevented from conducting and completing this task. It was only on completion of this survey and its submission to the authorities could the process of assessing eligibility begin. Indeed, Clause 3.1(c), which deals with eviction and rehabilitation of slum dwellers, makes it clear that the total number of eligible slum dwellers could be determined with finality only on the outcome of the plane table survey read with the extant State Government policy as to a cut-off date. HDIL admits that this survey is only partially complete, covering only 25,000 slum dwellers on 157 acres out of the contractual requirement of 276 acres. That is only a little over 50% of the work under this crucial item. On 20th October 2012, the Collector of Mumbai wrote to MMRDA in regard to this survey. This letter is relied on by HDIL inter alia to show that it was not shirking its contractual responsibilities and that, despite all its efforts, it was being thwarted by statutory authorities. Far from showing HDIL's compliance, this letter indicates that till as late as October 2012, some five years after the Slum Rehabilitation Contract was signed, HDIL had started the survey only in respect of 31 Clause 3 32 Clause 3.1(a) 51 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F about 50% of the area required to be surveyed. By this time, the period for completion of the project (48 months) had passed, and, prima-facie, it seems that even at this very late stage, HDIL had not completed the preliminary or first steps of a Plane Table Survey for about half the land in question. We believe it is far too late in the day for HDIL to rely on this letter to show that the authorities were being obstructive. If they were, this could not have been news to HDIL. Yet it seems to have done nothing to compel those authorities to act. It has not at any time initiated any proceedings to this end.33 Similarly, it was HDIL's responsibility to: carry out eviction and rehabilitation in accordance with the terms of the Slum Rehabilitation Contract;34 demolish hutments;35 erect temporary transit camps;36 obtain all approvals and sanctioned plans; 37 construct rehabilitation buildings38 and social infrastructure;39 and, importantly, to bear all costs and expenses relating to the entirety of the project.40
40. The project completion period was 48 months (by 14th October 2011) with provision for a six month extension. 41 Clause 7 33 Significantly, not even after the cure notice of 24th June 2011 or the invocation of the bank guarantee on 27th November 2011.
34Clause 3.1(c) 35 Clause 3.1(d) 36 Clause 3.1(g) 37 Clause 3.1(h) 38 Clause 3.1(i) 39 Clause 3.1(j) 40 Clause 3.1(q) 41 Clause 7.1 52 of 69 ::: Downloaded on - 23/12/2013 20:30:22 ::: APP(L)365-13-F sets out the scheduled completion of the project's various phases.
Phase 1 covered about 158 acres and was itself divided into three sub-phases. Each had specified dates for commencement and completion, computed in relation to the defined contractual "Commencement Date". Every sub-phase of Phase 1 and the entirety of Phase 2 specifically made time the essence of this contract. When, on 30th January 2013, MIAL demanded liquidated damages from HDIL, there was already a delay in completion of every phase of the Project. Phase 1(i) was to be completed by 15th April 2009; it was delayed by 44 months. Phase 1(ii), scheduled for completion on 15th October 2009, was delayed by 38 months. Phase 1(iii) was late by 26 months, and ought to have been completed by 15th October 2010. Phase 2 was delayed by 14 months beyond its completion date of 15th October 2011. Cumulatively, this amounted to a delay of 122 months. HDIL's only answer to this, on 1st February 2013, was, as we have seen, to invoke for the first time the force majeure clause and to then claim that it was not able to carry out its obligations under the Slum Rehabilitation Contract. In our view, this wholly defeats any semblance of a prima-facie case in HDIL's favour. It rather seems to us that apart from the sound of aircraft landing and taking off, the only other significant noise at the CSIA was of HDIL's deadlines rumbling past.
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41. One of the most important clauses in the Slum Rehabilitation Contract relates to "Performance Security". On 15th October 2007, HDIL submitted an unconditional Bank Guarantee for Rs.25 Crores and a Demand Promissory Note of the same date for Rs.275 Crores Only. These were to serve initially as security for the performance of the HDIL's obligations under the Contract. The Contract required the Bank Guarantee and the Demand Promissory Note to be replaced by an interest-free cash deposit in the aggregate amount of Rs.300 Crores.42 This was the Performance Security under the Contract and was refundable to HDIL subject to permissible set offs and deductions. Clause 8.2 provided that MIAL could invoke, draw down, appropriate or adjust this Performance Security at its sole discretion for non-performance by HDIL. That non-performance was stated to include (i) breach or failure by HCIL to comply with the obligations under Slum Rehabilitation Contract and amounting to material breach, and (ii) a failure by HDIL to replace the Bank Guarantee and the Demand Promissory Note with a cash deposit. Clause 8.3 said that if the Performance Security was at any time invoked, drawn down, appropriated or adjusted, HDIL would ensure that it was topped up so that its value was always maintained at Rs.300 crores. Any such invocation, drawing down, appropriation or adjustment was not to absolve HDIL of its contractual obligations. At HDIL's request, time for replacement of the Bank Guarantee and the Promissory Note was extended by 45 days to 30th November 2008. This deposit has never been made. It is 42 Clause 8.1 54 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F difficult to see how this obligation of HDIL, like the obligation to complete the plane table survey is in any way related to a change in policy, or, indeed, a force majeure event. HDIL's only defence to this is of waiver and equitable estoppel. We have already considered these submissions and found no substance in them. It is not possible to accept that HDIL, although in breach of this obligation, is still entitled to claim reliefs in equity. By its letter dated 24th June 2011, MIAL invoked the Bank Guarantee. HDIL challenged this invocation by filing a petition in this Court under Section 9 of the Arbitration Act. That petition was dismissed on 29th November 2012, and the issuing Bank was directed to release the amount of the Bank Guarantee in favour of MIAL. The learned Single Judge hearing that Petition came to a prima facie conclusion that HDIL was in breach of its obligations. HDIL filed an Appeal. That Appeal was dismissed as not pressed on 10th December 2012. It is not open, in our view, for HCIL to re-agitate substantially the same issue once again in this roundabout fashion.
42. The Slum Rehabilitation Contract also contained a provision for liquidated damages.43 In the event of any delay in any of other vacant and peaceful occupation of any pocket of land, HDIL was to pay liquidated damages computed at Rs.15 lakhs per acre per month within 15 days of a demand being made, this liability being capped at Rs. 1 crore per acre. Delay in payment of liquidated damages for more than 180 days entitled MIAL to terminate the Agreement. The 43 Clause 17 55 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F Slum Rehabilitation Contract also listed several distinct events said to constitute an event of default.44 This included, inter alia, a failure by HDIL to replace the bank guarantee and demand promissory note with the interest free cash deposit of Rs.300 crores; delay beyond six months in completion in accordance with Clause 7 of any phase; and a failure by HDIL to pay liquidated damages in accordance with Clause 17. These were in addition to the usual events of default such as HDIL's failure to comply with the terms of the Slum Rehabilitation Contract, misrepresentation or fraud, or HDIL being barred, disqualified or prevented from undertaking the Slum Rehabilitation Project. The termination clause required MIAL to give to HDIL a cure notice upon occurrence of a defined event of default complained of was not cured. HDIL had 30 days to cure the breach, failure which MIAL had a right to terminate. 45 We have already noted that if HDIL did not complete the minimum work under various phase set out in Clauses 22.2, it would lose its entitlement to the rights in the Developer's Portion.
43. HDIL's obligations under the Slum Rehabilitation Contract were, thus, many. MIAL claims that it was compelled to terminate the Contract on account of HDIL's several breaches. Apart from those already noted (its failure to complete the Plain Table Survey;
its non non-adherence to the specified time-lines; its failure to furnish the interest free cash deposit as a Performance Security; among others) there are also other significant defaults by HDIL. For 44 Clause 24 45 Clause 25 56 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F instance, HDIL was required to provide copies of approvals, sanctions and letters of intent from SRA to MIAL within 15 days of HDIL receiving these. SRA issued letters of intent dated 26th May 2008 and 27th September 2010. HDIL never supplied copies of these to MIAL. Similarly, although HDIL's entitlement to create third party rights in the Developer's Portion was conditional upon its completion of specified works,46 it nonetheless purported to hypothecate the receivables in respect of this project in favour of a Bank. Further, despite a valid demand, HDIL never paid MIAL's claim for liquidated damages. Clause 42.2 gave MIAL a right of first refusal to purchase any TDR accrued to HDIL under the Slum Rehabilitation Contract. HDIL sold or otherwise utilized TDR of a value of Rs.2,442 crores but never offered this to MIAL.
44. On 6th February 2013, MIAL sent two letters to HDIL. The first of these was in response to HDIL's letter of 1st February 2013.47 The second was MIAL's letter of termination. In this second letter, MIAL tabulated what, according to MIAL, were HDIL's defaults. Seven such defaults were listed. HDIL's answer to this today is, first, its argument of an estoppel in pais against MIAL or, at any rate, of waiver; and, second, of force majeure. We have already considered and rejected all these submissions. What remains is simply this: that HDIL has no answer at all to any of these listed defaults. Items 1, 2, 5, 6 and 7 of MIAL's letter, i.e., five of the seven cited defaults, are wholly unrelated to any policy change or force 46 Clause 4.4.1; Clause 4.2(a);
47In this, HDIL, for the first time, invoked the force majeure clause.
57 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F majeure event. They are entirely about financial matters, HDIL being required to make various payments and failing to do so. The upshot of HDIL's argument on waiver can only be that it is, for that reason, completely and for all time exonerated from making these payments; or, at any rate, it is contractually entitled now to make these payments whenever HDIL deems it convenient, perhaps never. Mr. Dwarkadas is correct when he says that this not only amounts to an invitation to the court to rewrite the terms of the contract but is so untenable an argument that it only needs to be stated to be rejected.
X
45. Mr. Kapadia quarrels with the finding of the learned Single Judge on his interpretation of Section 9 of the Arbitration Act. In paragraph 18 of his order, the learned Single Judge analysed that section and, in particular, sub-sections (ii)(c), (ii)(d) and (ii)(e). He concluded that Sections 9(ii)(d) and (e) would have to be read ejusdem generis with the first part of Section 9(ii)(c). It would not, in our view, have been necessary to discuss this at all, and, ordinarily, we would have much preferred not to express any view on the matter, but for the fact that the submission was energetically pursued in appeal both in oral and written submissions. We are, therefore, compelled to take up the issue and record our observations.
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46. Section 9 of the Arbitration Act reads thus:
9. Interim measures etc. by Court.
A party may, before, or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court--
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.
(emphasis supplied) 59 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F
47. We are concerned here with the first part of Section 9(ii)(c), emphasized above. In our view, the focus of this part of Section 9(ii)
(c) is on, and only on, the subject matter of the dispute in arbitration.
The words "as to which" also refer to this, viz., the subject matter of dispute. They do not confine themselves to property in the possession of any particular signatory to an arbitration agreement.
But the property must be the subject matter of the arbitral dispute, and none other. Though the words "in the possession of any party"
cover a wide spectrum and would include non-signatories as well, these words, in a distinct phrase, are in relation to immovable property. An order permitting a person to enter upon the land or building in the possession of any party must be for one or more of the purposes specified, viz., the detention, preservation or inspection of any property or for obtaining full information or evidence. On a plain reading of the section, it is impossible to accept the argument that the section is elastic enough to include properties or things that are not the subject matter of the arbitral dispute. Such an argument would be illogical. After all, reliefs under Section 9 are in aid of final reliefs, and if there can be no arbitration in respect of a particular property, then no protective reliefs can be granted in respect of that property either.
48. Mr. Kapadia's complaint, however, is that clause (ii)(d), which provides for an interim injunction or the appointment of a receiver, and the residuary clause (ii)(e) cannot possibly be read ejusdem generis. This would suggest that the first part of clause (ii)(c) 60 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F is the genus, of which clauses (ii)(d) and (ii)(e) are the species.
Perhaps Mr. Kapadia is right, and this finding may not be entirely correct. But the alternative is not, as Mr. Kapadia suggests, that clauses (ii)(d) and (ii)(e) open the field even wider to allow Section 9 an all-encompassing embrace. That would perhaps militate against the very foundation and purpose of Section 9. Conceivably, it might be more accurate to say that in reading clauses (ii)(d) and (ii)(e) we must adopt the principle of noscitur a sociis; those clauses are not species of a genus, but are certainly known by the company they keep, and are to be understood in a cognate sense, the latter, more general clauses (ii)(d) and (ii)(e) taking their colour from the former, less general, first part of clause (ii)(c). The noscitur a sociis principle demands that the general be restricted in sense analogous to the less general.48 Of course, it is equally well-settled that in interpreting a statute, a court invokes one or other of several permissible principles only where there is some uncertainty or ambiguity in the plain language of the statute.49 The ambiguity here is one introduced by Mr. Kapadia's own submission in that it attempts to stretch the contours of Section 9 well beyond the self-evident, for if his argument is to be accepted, then a party is entitled to get interim reliefs under Section 9 that are not in aid of any final arbitral relief, 48 M. K. Ranganathan v Government of Madras, (1955) 2 SCR 374; Leelabai Gajanan Pansare v Oriental Insurance Co Ltd, (2008) 9 SCC 720; Ahmedabad (P) Primary Teachers Association v Administrative Officer, (2004) 1 SCC 755; The State of Bombay and Others v. The Hospital Mazdoor Sabha and Others; AIR 1960 SC 610, (1960) 2 SCR 866 49 Kehar Singh and Others v. State (Delhi Admn.) AIR 1988 SC 1883; State of H.P. v. Pawan Kumar (2005) 4 SCC 350; State of Rajasthan v. Babu Ram (2007) 6 SCC 55.
61 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F claim or subject matter. Prima-facie we do not believe that clauses
(ii)(d) and (ii)(e) cannot be robbed of all context in this manner. The noscitur a sociis principle is but one of contextual interpretation. In Prabhudas Damodar Kotecha v Manharbala Jeram Damodar & Anr.,50 the Supreme Court restated the law in this regard, citing the UK Court of Appeals opinion that "a word or phrase in an enactment must always be construed in the light of the surrounding text. ... words and particularly general words, cannot be read in isolation;
their colour and their content are derived from their context." 51 In Prabhudas Kotecha, the Supreme Court held that although the rule has been widely applied, it is still a mere rule of construction; where wider words have intentionally been used by the legislature "in order to make the scope of the defined word correspondingly wider", the rule of noscitur a sociis cannot prevail. It is, in the present case, difficult to see how the legislative intent could have been to broaden the scope of clauses (ii)(d) and (ii)(e) in the manner Mr. Kapadia suggests --
to cover a property or thing that is not the subject-matter of arbitral proceedings -- for that would surely imperil the very purpose of Section 9. After all, as Mr. Dwarkadas points out, in a dispute between two parties to an arbitration agreement, no relief can be sought against properties that fall outside the arbitral dispute: that which cannot be done in a final arbitral award certainly cannot be done in an interim order of court under Section 9. The latter is 50 Civil Appeals Nos.6726-6727 of 2013, decided on 13th August 2013 51 Attorney-General v Prince Ernest Augustus of Hanover, [1957] AC 436, per Viscount Simonds 62 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F always only in aid of the former.52 There seems to us no manner of doubt that this is what the court below intended. The most that might be said of this particular finding is that it is, perhaps, infelicitous. For, although the two concepts of ejusdem generis and noscitur a sociis are distinct, in this case, unfortunately for HDIL, the result is much the same: not quite cavilling, but still a distinction without a material difference. We rest our discussion here, making it clear that these observations are not to be seen as binding precedent, and we have entered them in this judgment only at HDIL's instance, and on its insistence.
XI
49. In the judgment under Appeal, the Court below has specifically dealt with each of these contentions, except, of course, the submission as regards election by MIAL and an equitable estoppel or estoppel in pais, this not having been argued or pleaded before the learned Single Judge. The other submissions advanced by HDIL were carefully and exhaustively considered by the learned 52 Hemant D. Shah & Ors v Chittranjan D. Shah & Ors., unreported decision dated 5th September 2006 of this Court in Appeal No.658 of 2006. We do not see how the decision of the Supreme Court in Firm Ashok Traders v Gurumukh Das Saluja, (2004) 3 SCC 155, is of any assistance to Mr. Kapadia in this regard. This decision only says that a court has the same powers under Section 9 to make specified orders as it has for the purpose of and in relation to any proceedings before it. All that this says is that a court is not bound to stay its hands because interim reliefs can as well be sought before the arbitral tribunal. The decision does not say that a court can, under Section 9, pass orders in respect of property that lie outside the arbitral disputes.
63 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F Single Judge, who has, inter alia, noted the defaults by HDIL and rejected HDIL's contentions on waiver, force majeure and defaults by MIAL. We do not find that the view taken by the learned Single Judge to be so thoroughly implausible as might warrant interference in appeal. It is, in our view, impossible to hold, viewed from any perspective, that HDIL has made out a prima facie case.
50. There remains the question of balance of convenience. We cannot blind ourselves to the true focus of this contract: a public utility project of enormous consequence to the entire city of Mumbai. HDIL's claims seem to us to be little more than monetary, or, at any rate ones that can be monetized. It is not possible to hold that the public interest demands that the entire Slum Rehabilitation Project and clearance of slums on airport lands, and, consequentially, the modernization and expansion of CSIA should be held up almost indefinitely while HDIL pursues its claim in arbitration. Let us consider, for a moment, what this is likely to entail. There will first be the issue of appointment of an Arbitral Tribunal. Once constituted, HDIL will need sufficient time, very likely several weeks, if not months, to file and submit its statement of claim. We will assume for the present purposes that only MIAL is made a party-respondent. MIAL will undoubtedly require equally sufficient time to respond to the claim statement. If HDIL seeks to join other entities or agencies to its claim, then there may well be preliminary objections to be decided and certainly further time required for filing responses. Documents will need to be filed. There 64 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F will be the process of discovery and inspection. Perhaps there might even be a trial and, if there is, it is likely to be an extremely long- drawn affair indeed. HDIL would have us believe that it serves the public interest to put on hold the entire Slum Rehabilitation Project and modernization and expansion of the CSIA for the next several years while this arbitration runs its course. We cannot see how this could conceivably be said to subserve any public interest at all. Addressing the question of balance of convenience HDIL says that it has not made any profit. It claims that it has spent Rs.4,000 crores but recovered only Rs.2,442 crores, leaving it out of pocket by about Rs.1,500 crores. This surely cannot tilt the balance of convenience in HDIL's favour. Even more peculiar is HDIL's claim that a refusal to grant relief would cause irretrievable harm and grave injury to the HDIL which cannot be compensated in monetary terms. Au contraire: we do not see why not. Indeed, it seems to us eminently likely that HDIL's only claim can be for damages. An award in damages, should HDIL succeed, serves its purposes entirely -- it is, after all, in this contract solely in order to make a profit. We are not prepared to accept the proposition that the financial interests of a private party should be permitted to block almost indefinitely a public utility project that is in the interest of the entire city. Yet that is what HDIL submits we must do. The balance of convenience principle requires us to weigh the likely loss to HDIL if reliefs are refused against the likely loss or damage not only to the 65 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F Respondents53 but also others who may be affected.54 In our view, in the case of a public utility project such as this one, the larger public interest is a determinative factor in assessing the balance of convenience.
51. An application under Section 9 of the Arbitration Act requires the Applicant-Petitioner to make out a strong prima-facie case and also to show that the balance of convenience is in its favour, and that it would suffer irreparable loss and injury if the reliefs it seeks were to be refused.55 The same principles that govern courts in the matter of grant of interim relief apply proprio vigore to petitions under Section 9 of the Arbitration Act.56 The reliefs that HDIL seeks cannot in any way said to be in aid of its final reliefs. HDIL has not been able to show even prima-facie that it was not in breach of its obligations under the Slum Rehabilitation Contract or that it was at all times ready and willing to perform those obligations.
53Hindustan Embroidery Mills Pvt Ltd v K. Ravindra & Co, (1974) 76 BLR 146, para 6; followed in Lupin Ltd v Johnson & Johnson, (2012) 114 6 BLR 3816 54 See: Margaret Almeida v Bombay Catholic Co-operative Housing Society Limited, (2013) 6 SCC 538, where the Supreme Court held that an injunction was likely to affect a large number of persons including those not before the court.
55Kashimath Samsthan & Anr. v Srimad Sudhindra Thirta Swamy, AIR 2010 SC 296, para 13.
56Adhunik Steels Ltd v Orissa Manganese & Minerals Pvt Ltd, (2007) 7 SCC 125; Nimbus Communications Ltd v Board of Control for Cricket in India & Anr., 2012 (5) Bom CR 114 66 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F
52. In this appeal, as in the court below, both HDIL and MIAL have filed written submissions. HDIL's written submissions run into over 50 pages. The arguments took several days, as they did, too, before the learned Single Judge. We were compelled to address each of the submissions advanced on account of this although we believe that the issue at hand is actually very narrow: simply whether, prima-facie, HDIL is entitled to seek reliefs not only as against non- contracting parties but also in respect of properties that are not the subject matter of arbitral disputes. We clarify, therefore, that our views expressed in this judgment are on a prima-facie assessment of the record. We do not intend to foreclose the decision of the arbitral panel, either on facts or on law, and we leave open all contentions of all parties in arbitration. What effect, if any, these observations have is for the arbitral panel to decide.
53. We see no reason to interfere with the decision of the learned Single Judge. Being entirely without merit, the appeal fails and is accordingly dismissed.
XII
54. We would not ordinarily be of a mind to impose costs in such a case. However, it seems to us apparent that a project of manifest public importance has not only been delayed but is now sought to be indefinitely postponed thanks only to the pursuit by a private party of its narrow monetary and profit motives. HDIL's petition and its 67 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F appeal have come at a very high public cost. Far too much time and money, and time equating to money, has already been squandered. It is in that view of the matter that we believe that we must award costs against HDIL. We do so not only to emphasize how little merit we find in HDIL's claim, albeit on a prima-facie evaluation, but also to make it plain that at least in matters like these the era of the avuncular indulgence that litigants have come to expect, and even demand, of courts has now passed. We are acutely aware of the considerable litigation costs incurred both here and in the court below. Some of these costs have been paid out of public funds. We believe that corporations and industry must realize that when they undertake projects of public utility, they carry a responsibility that travels beyond the limited confines of their corporate structures, balance sheets and bottom-lines. These corporate entities engaged in public projects have an obligation to the public. While they are not expected to perform acts of charity or to function at a loss, they are also not to expect that we will permit the sacrifice of the larger public good at the altar of private gain. It seems to us obvious that, given the material on record, in both the petition and in this appeal, HDIL was merely trying its luck at litigation, fully expecting that it might, at the very worst, incur some legal fees, but little else; a matter of, in the language of the corporate world, "very little downside". That thinking must be extirpated. When a litigation of this stripe fails, it must be visited with consequences. Therefore:
HDIL is directed to pay to MIAL costs of Rs.5 lakhs; and to
68 of 69 ::: Downloaded on - 23/12/2013 20:30:23 ::: APP(L)365-13-F MMRDA and SRA costs quantified at Rs.2.5 lakhs each. These costs shall be paid within a period of four weeks from today.
55. At this stage, counsel for HDIL asks that MIAL's statement, made through its counsel, that it will not act further on its termination, be continued for some time to enable HDIL to approach the Supreme Court. MIAL's counsel states that MIAL will stay its hands for another four weeks. This statement is accepted as an undertaking to this court. We make it clear that we have not granted any stay of our order imposing costs.
56. The appeal is disposed of in these terms.
(G.S. Patel, J.) (S.C. Dharmadhikari, J.)
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