Punjab-Haryana High Court
Bharam Parkash And Others vs M/S Parkwood Infrastructure Pvt Ltd And ... on 1 February, 2012
Author: Jaswant Singh
Bench: Jaswant Singh
FAO No.560 of 2012 #1#
IN THE HIGH COURT FOR THE STATES OF PUNJAB AND
HARYANA AT CHANDIGARH
FAO No.560 of 2012
Date of Decision: 1.2.2012
Bharam Parkash and others
....Appellants
Versus
M/s Parkwood Infrastructure Pvt Ltd and others
....Respondents
CORAM: HON'BLE MR. JUSTICE JASWANT SINGH Present: Mr. Akshay Bhan, Advocate for the appellants.
Mr. Sanjay Vij, Advocate for the respondent-Caveator. JASWANT SINGH, J Appellants have filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short "1996 Act") for setting aside the impugned judgment dated 22.11.2011 passed by the learned Additional District Judge, Gurgaon vide which petition filed by the petitioner/respondent No.1 here under Section 9 of 1996 Act has been allowed and ad interim injunction has been granted against the present appellants to the effect that they shall not alienate the land in dispute nor will create any third party rights or any other encumbrance till an arbitrator is appointed by this Court.
Brief facts of the case as culled out from the impugned judgment are that a collaboration agreement dated 8.10.2007 is entered into between certain land owners including the father of the present appellants and of proforma respondent Nos.2 & 3, namely, Shri Chand FAO No.560 of 2012 #2# (since deceased) on one hand (Owners) and M/s Deputy Gothwal Construction Pvt Ltd, a Company incorporated under the Companies Act, 1956 through its Managing Director Sh. Vikram Singh (Developer) on the other hand for developing the land described in the Schedule as a residential Complex or any other use as desired by the developer after obtaining requisite licence/approval from the Director, Town and Country Planning, Haryana or any competent authority regarding the total land measuring 115 kanal 9 marlas in Village Mewka Tehsil and District Gurgaon as depicted in Schedule-A of the said collaboration agreement.
It transpires that thereafter an agreement to sell dated 23.4.2010 regarding the land measuring 49 kanal 11 marla (6.20 acres) for a sale consideration of Rs.18,89,09,375/- (Rs. Eighteen Crores, Eighty Nine lacs, Nine thousand, three hundred seventy five) i.e at the rate of Rs.3,05,00,000/- per acre is entered into between the owners as well as developer on one hand and respondent No.1-M/s Parkwood Infrastructure Pvt Ltd (vendee) on the other hand and in case of any dispute or question arising under the said agreement, an Arbitration Clause No.19 was incorporated therein. Due to some differences or disputes, the sale deed could not be materialized and as such the vendee filed a petition under Section 9 of the 1996 Act for ad interim injunction against the present appellant and proforma respondent Nos.2 & 3 and the same was granted by the learned Additional District Judge, Gurgaon vide its impugned judgment dated 22.11.2011 and in these FAO No.560 of 2012 #3# circumstances, the present appeal has been filed by the present appellants.
Learned counsel for the appellants has argued that the impugned judgment passed by the learned Additional District Judge is wholly erroneous and unsustainable in the eyes of law as there was no agreement to sell executed by late Shri Chand and in fact the agreement is forged and fabricated. As a matter of record, Shri Chand had never signed the alleged agreement to sell dated 23.4.2010 and as such there is no valid arbitration clause between the parties. It is further argued that in view of Section 41 (h) of the Specific Relief Act, 1963 (for short "Act of 1963"), petition under Section 9 of 1996 Act is not maintainable. Learned counsel cites Boozallen and Hamilton Inc v. SBI Home Finance Limited and Others, (2011) 5 Supreme Court Cases 532, Indowind Energy Ltd v. Wescare (I) Ltd & Anr passed on 27.4.2010 in Civil Appeal No.3874 of 2010, N. Srinivasa v. M/s Kattukaran Machine Tools Ltd, AIR 2009 Supreme Court 2217, Shree Subhlaxmi Fabrics Pvt Ltd v. Chand Mal Baradia and others, AIR 2005 Supreme Court 2161, Firm Ashok Traders and another v. Gurumukh Das Saluja and others, (2004) 3 Supreme Court Cases 155, After hearing learned counsel for the appellants and perusing the paper book, this Court does not find any merit in the present appeal and the same deserves dismissal.
Before proceeding further, it is necessary to reproduce the FAO No.560 of 2012 #4# relevant part of the directions issued by the learned Additional District Judge, Gurgaon while passing the impugned judgment dated 22.11.2011 in paragraph 12, which reads as under:
" (i) The respondents shall not alienate the land in dispute nor will they create any third party rights or any other encumbrance till an arbitrator is appointed by the Hon'ble Punjab & Haryana High Court and the arbitrator then gets seized of the matter. If the petition filed before the Hon'ble Punjab & Haryana High Court is dismissed, the present order shall automatically cease to have effect.
(ii) The above injunction shall operate subject to the petitioner company depositing the balance sale consideration as per the agreement to sell with Shri Chand within a period of six weeks from today in a nationalized bank in an FDR fetching the maximum rate of interest initially for a period of six months. The FDR shall be renewed till the decision of the arbitrator. The original FDRs shall remain with the petitioner company and they shall be liable to produce the same as and when directed by the respective court or Arbitrator as the case may be.
(iii) In case the amount is not deposited within a period of six weeks, the injunction granted by this court shall automatically stand vacated. "
A perusal of aforesaid directions clearly reveals that the learned Additional District Judge has restrained the appellants from alienating the land in dispute or creating any third party rights or encumbrance till an Arbitrator is appointed by this court and the Arbitrator then gets seized of the matter. A further perusal of paragraph FAO No.560 of 2012 #5# 6 of the impugned judgment clearly reveals that respondent No.1-M/s Parkwood had already filed a petition under Section 11 of the Act before Hon'ble the Chief Justice, High Court of Punjab and Haryana and a copy of the petition purported to have been filed on 7.11.2011 was placed on record before the learned Additional District Judge, Gurgaon. In these circumstances, it was urged by M/s Parkwood before the learned Addl. District Judge, Gurgaon that the present appellants were going to alienate the land in dispute and were in process of creating third party rights and thus circumstances necessitated to invoke the jurisdiction for interim injunction under Section 9 of the Act.
It is not in dispute that a collaboration agreement dated 8.10.2007 (Annexure A.2) was entered into between the parties rather the same was admitted in paragraph No.5 of the reply filed by the present appellants. It is also not in dispute that approvals were granted by the Director, Town and Country Planning on the basis of said collaboration agreement and letter of intent (L.O.I) dated 2.3.2009 and 30.3.2010 were issued for development and construction of a group housing scheme. and those approvals were on record before the learned ADJ, Gurgaon and the same are also reflected in the agreement to sell dated 23.4.2010 and the relevant part reads as under:
"AND WHEREAS the Haryana Government, Town and Country Planning Department, granted Letter of intent bearing Memo No.LC-1686-JD(BS)/2009/992, dated 2.3.09 and Memo No.LC-1686-5DP-V/2010/4079 dated FAO No.560 of 2012 #6# 30.3.2010 in respect of the Entire Land for the development and construction of a residential Group Housing Scheme."
A perusal of agreement to sell dated 23.4.2010 (A.1), prima facie shows that Shri Chand received an amount of Rs.40 lacs vide Cheque No.825396 dated 23.4.2010 as reflected in Clause 1 of the agreement to sell and relevant entry reads as under:
"Name Amount Cheque No. Date
Shri Sri Chand 40,00,000/- 825397 23.4.2010"
Further, a perusal of Clause 19 of the agreement to sell reveals that the parties have agreed to refer the matter to the Arbitrator in case of any difference or disputes arises out of the said agreement and the said clause reads as under:
" That in the event of any question or dispute arising under in connection with incidental to and/or interpretation or scope of this Agreement or relating hereto, the same shall be referred to any Arbitrator mutually acceptable to both the parties and the decision of the Arbitrator shall be final and conclusive. The provisions of the Arbitration and Conciliation Act, 1996 and the Statutory modifications, amendments and/or re- enactment thereof from time to time shall apply to such arbitration. The parties shall bear and pay their own costs, charges and expenses of the proceedings for the Arbitrator. The place of Arbitration shall be at New Delhi. "
In view of the above, it is thus apparent that the said Siri Chand was a party to the agreement to sell dated 23.4.2010 and had FAO No.560 of 2012 #7# received an amount of Rs.40 lac and further that the agreement to sell did contain a clause for reference to any dispute between the parties to the Arbitrator. It is also apparent that a petition under Section 11 of the Act for reference of the dispute to an Arbitrator between the parties has also been made. In such a scenario, the directions passed by the learned Addl. District Judge by invoking the jurisdiction under Section 9 of the Act directing the appellants not to alienate the land in dispute or create 3rd party right or any other encumbrances till the appointment of an Arbitrator cannot, in any manner, be faulted, more so when the interests of other side/appellant has been further protected by directing M/s Parkwood to deposit the balance sale consideration within a time frame in an FDR fetching maximum rate of interest in a Nationalized Bank. To be fair to the counsel for the appellant, it is apposite to deal with the judgments cited by him.
The judgment in Boozallen's case (supra) is not applicable to the facts of the present case as in that case , scope of Section 8 of the Act was under consideration and has no relevancy with regard to the grant of interim injunction under the provisions of Section 9 of the Act, which is clear from a bare reading of paragraph 1, 19 & 20 of the judgment, which reads as under:
"1. The scope of Section 8 of the Arbitration and Conciliation Act, 1996 ("the Act", for short) arises for consideration in this appeal by special leave.
19. Where a suit is filed by one of the parties to an arbitration agreement against the other parties to the FAO No.560 of 2012 #8# arbitration agreement, and if the defendants file an application under Section 8 stating that the parties should be referred to arbitration, the court (judicial authority) will have to decide:
(i) whether there is an arbitration agreement among the parties;
(ii) whether all the parties to the suit are parties to the arbitration agreement;
(iii) whether the disputes which are the subject matter of the suit fall within the scope of arbitration agreement;
(iv) whether the defendant had applied under Section 8 of the Act before submitting his first statement on the substance of the dispute; and
(v) whether the reliefs sought in the suit are those that can be adjudicated and granted in an arbitration.
20. On the contentions urged the following questions arise for our consideration:
(i) Whether the subject-matter of the suit fell within the scope of the arbitration agreement contained in Clause (16) of the deposit agreement?
(ii) Whether the appellant had submitted his first statement on the substance of the dispute before filing the application under Section 8 of the Act?
(iii) Whether the application under Section 8 was liable to be rejected as it was filed nearly 20 months after entering appearance in the suit?
(iv) Whether the subject-matter of the suit is "arbitrable", that is, capable of being adjudicated by a private forum (Arbitral Tribunal); and whether the High Court ought to have referred the parties to the suit to arbitration under Section 8 of the Act?"
The judgment cited in Indowind Energy's case (supra) is not applicable to the facts of the present case as in that case, the controversy was in respect of appointment of an Arbitrator by the learned Chief Justice of Madras High Court under Section 11(6) of the Act on a petition filed by Wescare-respondent No.1 therein vide order dated 1.8.2008 and that was challenged by the appellant and the same was set aside qua the appellant but affirmed in so far as other FAO No.560 of 2012 #9# respondents i.e Subuthi and in that case also, the subject matter under Section 9 of the Act was not even under consideration.
Judgment of N. Srinivasa's case (supra) does not support the case of the appellant rather it goes against them. In that case, an agreement for sale of a plot was entered into on 21.12.2005 between the appellant N Srinivasa and the respondent with an arbitration clause in case of any dispute between the parties. Due to some differences, sale deed could not be materialized and as such the appellant was apprehending that respondent is trying to sell the plot in dispute to third party on a higher price. Consequently, a petition under Section 9 of the Act was filed before the Civil Court with an application for interim injunction. Learned Civil Court vide order dated 23.9.2006 allowed the application for interim injunction and ordered to maintain the status quo. An appeal was preferred by the respondent in the High Court and the same was allowed. Ultimately the matter was taken to Hon'ble Supreme Court by the appellant against the decision of the High Court and while allowing the appeal of the appellant, the Hon'ble Supreme Court observed as under:
"We do not find any ground as to why the order directing the status quo in the matter of transferring, alienating or creating any third party interest passed by the Additional City Civil Judge, Bangalore shall not be maintained till the award is passed by the Arbitrator. That apart, the survivability of the Arbitration clause in the agreement was also questioned by the respondent in their objection to the application for injunction but since that question FAO No.560 of 2012 #10# has also been kept open for the decision of the Arbitrator by the High Court as well, we have no hesitation in our mind to hold that since the said question shall also be decided by the Arbitrator while deciding the disputes between the parties, there is no ground why the order of status quo granted by the trial Court shall not be maintained till the award is passed by the Arbitrator."
The judgment in Shree Subhlaxmi Fabrics's case (supra) is also not applicable to the facts of the present case as in that case the controversy was regarding the grant of injunction restraining the Arbitrator from proceeding with the matter in an arbitration case pending between the parties and the provisions of Section 4,5,7 & 16 of the Act were under consideration and there was no controversy at all regarding the scope of Section 9 of the Act.
The judgment in Firm Ashok Traders's case (supra) is also not helpful to the appellants rather it goes against them. In that case, a dispute inter se arose between the partners of a registered partnership firm and one group filed a civil suit but the same was held to be not maintainable in view of provisions of Section 69 (3) of the Indian Partnership Act, 1932. Thereafter, arbitration clause was invoked for appointment of an arbitrator to adjudicate the dispute between the parties. It transpires that an application under Section 9 of the Act was filed for appointment of a receiver to take charge of the entire business of the firm and another incidental injunction was also prayed but learned Addl. District Judge dismissed the application. An FAO No.560 of 2012 #11# appeal was preferred by the respondent before the High Court and the same was allowed. Ultimately, the matter went to Hon'ble Supreme Court and the Hon'ble Supreme Court affirmed the order of High Court for appointment of a receiver on the partnership business but with certain modifications.
In view of the aforesaid discussion, I find no ground to invoke the jurisdiction of this Court under Section 37 of the Arbitration and Conciliation Act.
Dismissed.
February 01,2012 ( JASWANT SINGH ) manoj JUDGE