Madras High Court
B.Vijay Venkatasamy vs M/S. Jain Housing And Constructions Ltd on 29 August, 2013
Author: C.T.Selvam
Bench: C.T.Selvam
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.08.2013 CORAM THE HONOURABLE MR. JUSTICE C.T.SELVAM C.M.A.No.1103 of 2013 and M.P.Nos.1,2 of 2013 1.B.Vijay Venkatasamy 2.B.Lakshmit Narayan 3.Sri Balaji Venkatasamy 4.Minor L. Anvitha rep by father and guardian B.Lakshmi Narayan ... appellants/respondents vs M/s. Jain Housing and Constructions Ltd rep by its General Manager S.Palaniappan ... Respondent/petitioner Civil Miscellaneous Appeal filed under section 37 of the Arbitration and Conciliation Act, 1996 against the order in Arbitration Original Petition No.513/2011 on the file of the Principal District Judge, Coimbatore, dated 12.12.2012. For Appellants : Mrs.Chitra Sampath, Senior Counsel for Mr.T.S.Baskaran For Respondents : Mr.V.Kuberan for M/s. Rank Associates J U D G M E N T
This Civil Miscellaneous Appeal challenges the order passed by the Principal District Judge, Coimbatore in Arbitration Original Petition No.513/2011 on 12.12.2012.
2. The respondent M/s. Jain Housing and Constructions Ltd is a builder. The appellants 1 and 2 are brothers while the appellants 3 and 4 are their son and daughter respectively.
3. An extent of 0.96-1/2 acres in S.F.No.413/2 Singanallur village, Coimbatore South taluk belongs to the appellants. The appellants entered into an agreement with the respondent for joint venture and development of the property on 02.03.2006. The respondent was to construct a residential complex of which they were entitled to 62% of the undivided share and the appellants to 38%. The cost of construction of 38% share of the appellants was to be treated as the cost of the 62% undivided share of land. The appellants had received a sum of Rs.50,00,000/- from the respondent as refundable security deposit. The agreement envisaged completion of the project within 18 months from the date of obtaining approval of the Coimbatore Municipal Corporation/DTCP/LPA. Towards enabling the respondent dealing with the property the appellants executed a General Power of Attorney on 28.02.2006 and Specific power of attorney on 02.03.2006. Clause 8 of the agreement provided that respondent would be liable to pay damages at Rs.5/- per square feet per month till completion and handing over of the possession of the apartment in the event of delay in completion of construction.
4. Alleging that the appellants did not co-operate with the respondent towards obtaining No Objection Certificate ("NOC") and necessary approvals, the respondent had informed the appellants of their having to wait since the property was to be developed along with the adjacent property and on joint approval. The respondent, informing that the appellants terminated the agreement and revoked the powers of attorney and that it had spent several lakhs of rupees for obtaining sanction and approval from the competent authorities, that the appellants were making hurried attempts to encumber and alienate the property and contending that the joint venture agreement provided for arbitration and the respondent had under letter dated 16.11.2011 suggested the name of the arbitrator, in response where to, the appellants have filed a caveat petition, the respondent moved Arbitration Original Petition No.513/2011 seeking injunction restraining the appellants from alienating or encumbering the property.
5. The appellants had contended that it was the sole responsibility of the respondent to obtain necessary NOC and approvals. The respondent has obtained NOC from the concerned authorities on 01.08.2008 but had not taken any steps to commence the project. The respondent had submitted the plan only in 2010-2011, after lapse of more than five years, after obtaining NOC. The appellants never had agreed for joint development of their property along with that of the adjacent owners. The respondent besides having caused enormous delay was guilty of laches and breach of terms of the contract and was liable to pay compensation. On discussion, the respondent agreed to commence the project by January 2009. Time was extended and the respondent had agreed to commence the project by June 2011. Despite their having made to wait for more than six years, the respondent had not evinced any interest in commencing the project and hence the appellants have terminated the agreement and revoked the power of attorney. So informing, the appellants contended that the respondent was not entitled to any equitable relief.
6. On consideration of the rival submissions, the court below has passed an order of injunction on the reasoning that the agreement dated 02.03.2006, provide for payment of damages by the respondent in the event of delay in completion of project. The respondent had under letter dated 19.10.2011 informed that they would complete the construction within 18 months from the date of approval but the appellants under letter dated 31.10.2011 had stopped them from pursuing the project, informing that the joint venture agreement stands terminated and they also had cancelled the powers of attorney executed in favour of the respondent. It further reasoned that the approval for construction had been obtained on 16.06.2011, the project could be completed within 18 months from the date of approval but the appellants have terminated the project and revoked the power of attorney on 31.10.2011. In passing an order of injunction the court below relied on decision of the Apex court in J.G. Engineers (P) Ltd v. Union of India (2011) 5 SCC 758 to hold that the question as to which party committed breach/delay and whether the contract validly stood terminated were issues to be decided only by an adjudicatory forum and found that as per the agreement the respondent have moved court for appointment of arbitrator and on consideration of such position found the requirement of manifest intention on the part of the respondent to take recourse to the arbitral proceedings stipulated in Sundaram Finance Ltd v. NEPC India Ltd, 1999 2 SCC 479 met by the respondent.
7. Learned Senior counsel appearing for the appellants submitted that nothing had been done over a period of two years from the date of agreement. Under communication dated 04.08.2008, the respondent informed of having obtained NOC from Tahsildar. For the first time under communication dated 25.08.2008, the appellants had complained of inordinate delay in carrying out preliminary work, despite their repeated reminders. Under reply dated 04.09.2008, the respondent, for the first time, contended that obtaining NOC was always the responsibility of the land owners and they had been following up with the Tahsildar in the instant case and kept the appellants posted. The respondent also contended that the Tahsildar was refusing to issue NOC and even the appellants could not obtain the same despite effort. The respondent undertook to commence the project by January 2009 informing that if they fail to do so they would agree for mutual termination of the agreement. They also informed that such was the agreement arrived at a previous meeting on 24.07.2008. Under communication dated 25.09.2008, the respondent falsely alleged that the appellants were aware of the plans relating to the property, which had been approved and accepted by them and it was a composite plan relating also to the adjacent property owned by the appellants relatives.
8. Learned Senior counsel submitted that it was pertinent to note that no such composite plan was produced before court. Under communication dated 25.10.2008 and 05.11.2008, the appellants had denied such imputations. Under communication dated 17.11.2008, the respondent, while being falsely insistent of their contention as regards joint development with the adjacent owners, had informed that taking into consideration the delay that had been occasioned, they gone ahead with the approval process for the property of appellants alone, in keeping with the appellants wish. Under communication dated 22.01.2009, the respondent had promised to start construction of the project within the next three months. Under communication dated 13.10.2011, the appellants had expressed their anguish and awareness that there was no likelihood of the respondent making a start on the project in the near future as they had learnt that they were entangled in legal wrangles with adjacent property owners. Under communication dated 19.10.2011, the respondent again while falsely contending that obtaining of NOC was the responsibility of the appellants had admitted to the litigation with the adjacent property owners by stating that they sincerely would solve the litigation relating to the adjacent property and would commence construction at the earliest. Though under such communication the respondent reiterated their contention that the adjacent property has been reconstituted with the appellants property with an intention to develop a multistoreyed building, exploiting more aesthetics and achieving maximum floor space it again was informed that if the appellants so wished, the appellants property independently could be developed. The admission that they were embroiled in litigation with the adjacent property owners would show that the respondent was not able or willing to perform their contract. Therefore, they would not be entitled to any discretionary relief. The communication of the respondent dated 16.11.2011 to the effect that the property of the appellants was reconstituted along with the adjacent property into a single property for the benefit of all concerned would show that respondents was in breach the terms of agreement. Submitting that the respondent would not be entitled to discretionary relief of injunction unless it was able to show that its position stood substantially altered and damages also would not be sufficient recompense, learned Senior counsel contended that it was wrongful for the respondent to enter upon a project for joint development of the appellants as also the adjacent property, a position not envisaged in the agreement dated 02.03.2006 and thereafter enjoy an order of injunction. Learned Senior counsel placed reliance on the decision of this court in O.S.A. Nos.313 and 314 of 2008 dated 05.11.2009.
9. Learned counsel for the respondent contending that the order of injunction passed by the court below was a well considered one, submitted that it was necessary to protect the property to make it available for development. The reputation of the builder/respondent and the inconvenience that would be caused if no order of injunction was passed were material considerations. Though the agreement was of the year 2006, until 2008 no NOC had been obtained. The appellants had not terminated the agreement till 30.10.2011. Therefore, it was apparent that the appellants had condoned the delay in implementation of the project. Though the respondent had no documentary proof that the appellants had consented to joint development of their property as also that of the adjacent owners, the consent of the appellants to such an arrangement would and could be gather from their conduct. Learned counsel would contend that the respondent had been put in possession of the property and documents of title were in joint custody, a position which learned Senior counsel for appellants disputes. Learned counsel submits that approval for construction had been obtained on 16.06.2011 and same is valid for a period of three years. Between 2006-2011, there had been consensus and the respondent had all along worked towards bringing to fruition the agreement. Having had the advantage of the expertise and tireless efforts of the respondent, the appellants were seeking to take undue advantage by revoking the agreement and taking the benefit of the joint development plan. The respondent had exhibited sincerity in seeking remedy through arbitration proceedings by moving petition under Section 11 in O.P.No.148/12 before this court and the same is pending. The property in present state should be available until the arbitrator decides the issue. The increase in value of land over the years as also the excess floor space obtained through joint development of both the appellants and the adjacent properties were beneficial to both sides. He would seek dismissal of the appeal. Learned counsel for respondent submits that the decision relied upon by the appellants arose in a case where the contract for development was a contigent one and it had been made apparent that the contigency could not be met.
10. Having moved M.P.No.2 of 2013, a request was made on behalf of the appellants and the matter stood posted under the caption 'for being mentioned' on 26.08.2013. On such date M.P.No.2/2013 seeking receipt of additional documents was pressed in the presence of counsel for respondent. We have allowed such petition. The documents filed there through reiterate the stand of the appellants that their aim only was to develop their property as distinct from joint development of such property as also the adjacent property.
11. In decision in O.S.A.Nos.313 and 314 of 2008 dated 05.11.2009, this court had informed that though the appellant before it had established that they actually had advanced money and had entered into an agreement as also made out a prima facie case for relief of injunction, the balance of convenience was not in favour of grant of injunction for the reason that a contigent agreement stood entered into and the contigency envisaged had not been met. Learned Senior counsel for appellants has relied upon such decision also to impress upon us that though in such case the appellant had parted with a huge sum of Rs.8 crores, the view of the learned Single Judge that such sum may be compensated was accepted. Like in such case, the agreement in the present case was not one of specific performance of contract for sale of property but it only was an agreement for transfer cum development of property. We find applicable the judgment relied upon by learned Senior counsel for appellants. As in such case, the instant case is one where the parties had envisaged joint development of property. The respondent had, without concurrence of the appellants, sought to effect joint development both of the appellants as also the adjacent property leading to delay in obtaining requisite approvals. That the respondent is caught in legal wrangling with the adjacent property owner makes only worse the situation. It is apparent that as on date, the respondent is not in a position to carry forward the joint development agreement. Therefore, the balance of convenience lies in favour of the appellants. It has been stated, across the bar, by learned Senior counsel for appellants that they were willing to repay the sum of Rs.50,00,000/- to the respondent. We would think that the appellants would do so. Should the respondent considers itself entitled to more recompense it would always be open for them to move such actions as advised. In such view of the matter, there could be no irreparable injury to the respondent in the absence of an order of injunction.
12. We may state that reliance placed by the lower court in judgments in J.G. Engineers (P) Ltd v. Union of India (2011) 5 SCC 758 and Sundaram Finance Ltd v. NEPC India Ltd, 1999 2 SCC 479, are misplaced. In placing reliance on judgment first informed the lower court has totally missed the important aspect of balance of convenience. Similarly in placing reliance on judgment second informed, the court below has failed to see that merely because the respondent has made manifest its intention and sought recourse to arbitration proceedings by moving O.P.No.148/2012 before this court, it would not be entitled to discretionary relief of injunction unless it is able to establish that it is capable of avoiding the inconvenience caused to the other side by its conduct.
13. For the aforesaid reasons, this appeal succeeds. Accordingly, the order passed by the Principal District Judge, Coimbatore, in Arbitration Original Petition No.513/2011 dated 12.12.2012 is set aside. No costs. Connected miscellaneous petition is closed.
To The Principal District Judge Coimbatore