Bombay High Court
Ecopark Developers Llp vs Ajay Jogindernath Mehra And 4 Ors on 18 June, 2021
Author: B. P. Colabawalla
Bench: B. P. Colabawalla
carbpl.1246021..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 12460 OF 2021
Ecopark Developers LLP ..Petitioner/Orig.Claimant
Vs.
Ajay J. Mehra & Ors ..Respondents
Mr. Gaurav Joshi, Senior Counsel a/w Mr. Chirag Modi, Mr. Nikunj
Mehta, Parag Kabadi, Falguni Thakkar i/b DSK Legal, for the
Petitioner.
Dr. Birendra Saraf, Senior Counsel a/w Mr. Chirag Kamdar,
Jasmine Kachalia, Abinash Pradhan, Deepu Jojo, Viren Mandhle
i/b Wadia Ghandy & Co, for the Respondent.
CORAM:- B. P. COLABAWALLA,J.
DATE :- JUNE 18, 2021.
(THROUGH VIDEO CONFERENCING) P. C.:
1. The present Petition is fled under Section 37 of the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act") seeking to assail the order dated 19 th April, 2021 (for short the "impugned order") passed by the Arbitral Tribunal under Section 17 of the Arbitration Act. By the impugned order, the Tribunal dismissed the Petitioner's application dated 21st September, 2019 fled under Section 17 of the Arbitration Act and Aswale 1/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc allowed the Respondents' application dated 30th August, 2019 also fled under Section 17 of the Arbitration Act.
2 The disputes in the present arbitration arise out of a Development Agreement dated 19 th May, 2015 entered into between the Petitioner and the Respondents. The Respondents are co-owners of a piece and parcel of land bearing Survey No. 44/1, CTS No. 83 Village Vikhroli, District Mumbai Suburban admeasuring 4853.3 square meters situate, lying and being at LBS Marg, Vikhroli (W), Mumbai (for short the "said land") along with one structure comprising of ground plus two foors standing thereon. The said land is situated in the Industrial Zone. Along-
with the execution of the Development Agreement, the Respondents also executed an irrevocable Power of Attorney in favour of the partners of the Petitioner. As per Clause 3 and Clause 4(i) of the Development Agreement, the Petitioner paid the Respondents a sum of Rs. 9.63 Crores.
3 It is the case of the Petitioner that since access to the said land was insuffcient for the development, on 19 th May, 2015, the owner of the adjacent plot agreed to give a right of way. In Aswale 2/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc these circumstances, simultaneously with the execution of the Development Agreement, a Deed of Right of Way dated 19 th May, 2015 was executed between the owners of the adjacent plot, the Petitioner and the Respondents respectively, for a consideration of Rs. 1 Crore. The said consideration of Rs. 1 Crore has been paid by the Petitioner to the owners of the said adjacent plot. 4 According to the Petitioner, it thereafter took various steps in furtherance of the Development Agreement all the way up to March 2017. According to the Respondents, since the Petitioner did not undertake the development as per the terms of the Development Agreement, the Respondents terminated the Development Agreement on 30th May, 2019.
5 Since disputes arose between the parties in relation to the Development Agreement, the Respondents fled Commercial Arbitration Petition (L) No. 999 of 2019 under Section 9 of the Arbitration Act wherein a without prejudice statement on behalf of the Petitioner was recorded between the parties' advocates that the Petitioner will not take any steps in furtherance of the Development Agreement and the irrevocable Power of Attorney Aswale 3/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc and it will maintain status-quo in respect of the said land for a period of two weeks. This without prejudice arrangement continued till 19th September, 2019 wherein an order came to be passed directing the parties to maintain status-quo. Thereafter, on 24th September, 2019 with the consent of parties, the Arbitral Tribunal was constituted and the Section 9 Petitions fled by the Petitioner [Commercial Arbitration Petition (L) No. 1132 of 2019] as well as the Respondents [Commercial Arbitration Petition (L) No. 999 of 2019] were disposed of. Under this order, the Arbitral Tribunal was constituted and a direction was given that the aforesaid two Petitions be converted into applications under Section 17 of the Arbitration Act to be adjudicated by the Arbitral Tribunal. It further directed that the order of status-quo passed by this Court on 19 th September, 2019 shall continue to remain in operation till the disposal of the Section 17 applications (fled by the Petitioner and the Respondents) and for a period of two weeks thereafter.
6 The Arbitral Tribunal accordingly heard both the applications and by the impugned order, the Interim Application fled by the Petitioner was rejected and the Interim Application Aswale 4/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc fled by the Respondents was allowed in terms of prayer clauses
(a), (b) and (c) thereof. As a consequence thereof, the Tribunal directed the Petitioner to remove itself, their men, including security guards, machinery etc from the said land within a period of 21 days from the communication of the said order. Aggrieved by the impugned order passed by the Tribunal, the Petitioner has approached this Court under Section 37 of the Arbitration Act. 7 Mr. Joshi, the learned Senior Counsel appearing on behalf of the Petitioner, submitted that the impugned order is wholly perverse and contrary to the settled principles of law. He submitted that by the impugned order, the Arbitral Tribunal has granted a mandatory injunction dispossessing the Petitioner from the said land. He submitted that such an interlocutory mandatory injunction can only be granted in extremely special circumstances and not as a matter of course. He submitted that it can hardly be disputed that the Petitioner was in physical possession of the said land considering that the Petitioner's security was exclusively and at all times stationed on the said land since June 2017. He submitted that the Arbitral Tribunal failed to appreciate the conduct of the parties and the actual situation on the ground in Aswale 5/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc order to ascertain as to which party was in possession of the said land.
8 Mr. Joshi submitted that the relief of interlocutory mandatory injunction is granted generally to preserve or restore the status-quo of the last non-contested status which preceded the pending controversy until the fnal hearing, when full relief may be granted; or to compel the undoing of those acts that have been illegally done; or the restoration of that which was wrongfully taken from the party complaining. He submitted that in the absence of special circumstances a mandatory injunction will normally be not granted. To put it in a nutshell, Mr. Joshi submitted that it is now well established that an interim mandatory injunction is passed only in circumstances which are clear and justify a fnding that the status-quo has been altered by one of the parties to the litigation and the interest of justice demanded that status-quo ante be restored by way of an interim mandatory injunction. In support of this proposition, Mr. Joshi relied upon a decision of the Supreme Court in the case of (i) Samir Narain Bhojwani v/s aurora Properties and investments and Anr. [ (2018) 17 SCC 203]; and (ii) Metro Marins and Anr v/s Aswale 6/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc Bonus Watch Co (P) Ltd and Ors [(2004) 7 SCC 478]. 9 Mr. Joshi submitted that the facts of the present case clearly establish that the Petitioner was in possession of the said land much prior to the disputes arising between the parties and hence there was no question of the Tribunal granting an interlocutory mandatory injunction dispossessing the Petitioner from the said land. He submitted that on this ground alone the impugned order ought to be interfered with.
10 Mr. Joshi then submitted that the fndings given by the Tribunal that the Petitioner treated the subject project as unviable, is contrary to the Petitioner's conduct and in any event could not be decided at the interim stage. He submitted that this fnding is totally contrary to the pleadings of the Petitioner and contrary to the oral arguments canvassed and written submissions fled before the Tribunal at the time it heard the Section 17 applications. In other words, the aforesaid fnding of the Tribunal was totally baseless, erroneous and contrary to the record, was the submission. He submitted that these fndings are illegal, perverse and suffer from a serious error of law. He Aswale 7/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc submitted that the facts clearly establish that the Petitioner was ready and willing to perform the Development Agreement and has always been ready and willing to perform its obligations thereunder and which is clear from all the steps taken by the Petitioner for getting various permissions from the statutory authorities. He submitted that the Tribunal, by relying upon the statements in the Petitioner's advocate letter dated 12 th July, 2019, wrongly came to the conclusion that the project was unviable or that the Petitioner was unable to and/or not ready and willing to perform the terms of the Development Agreement. 11 Mr. Joshi lastly submitted that the impugned order ought to be set aside also because it completely ignores the relevant terms of the contract. Mr. Joshi submitted that under Clause 12 of the Development Agreement, the Respondents were obliged to issue a notice calling upon the Petitioner to rectify and remedy the breach and/or called upon it to perform its responsibilities under the Agreement. Once such a notice was given, the Petitioner was supposed to cure such a breach and/or perform such obligations within a period of 90 days. If the Petitioner failed to cure such breach and/or perform within the Aswale 8/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc aforesaid period of 90 days from receipt of the said notice, the Respondents had the right and/or were entitled to rectify the default and/or remedy the breach and/or step-in and perform the roles and responsibilities and obligations of the Petitioner at the cost of the Petitioner. Over and above this, Clause 12 provided that in the event that the Petitioner was a defaulting party, then the Respondents had a right to ascertain the market value of the said land by appointing a valuer from either of the fve valuers mentioned in the Clause and upon determining the market value, call upon the Petitioner, by way of a written notice, to purchase the rights of the Respondents at a valuation of 125% of the market value, within a period of 30 days from such notice . It was only if the Petitioner did not purchase the said land at 125% of the market value that the Respondents had a right to terminate the Development Agreement. To put it differently, Mr. Joshi submitted that the termination of the Development Agreement itself was illegal and if that be the case, there was no question of granting any relief to the Respondents and against the Petitioner, much less a drastic relief such as an interlocutory mandatory injunction. For all the aforesaid reasons, Mr. Joshi submitted that the impugned order is unsustainable and ought to be set aside by Aswale 9/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc me under Section 37 of the Arbitration Act.
12 On the other hand, Dr. Saraf, the learned Senior Counsel appearing on behalf of the Respondents, submitted that there is no merit in the arguments canvassed by Mr. Joshi on behalf of the Petitioner. He submitted that it is fallacious to contend that the Tribunal has granted any interlocutory mandatory injunction. Dr. Saraf submitted that the issue of granting a mandatory injunction would arise only if the Petitioner was in possession of the said land. Relying upon clause 2 (ii) and 2
(iii) of the Development Agreement, Mr. Joshi submitted that the Petitioner was only granted a license to enter upon the said land for the limited purpose of (a) soil testing; (b) construction of access; and (c) to undertake survey of the said land; and for no other purpose. He submitted that only upon obtaining the IOD and Commencement Certifcate (CC) for development of the said land that the Respondents were to handover quiet, vacant and peaceful possession of the same to the Petitioner. Dr. Saraf submitted that in the present case it is undisputed that the Petitioner has not obtained any IOD or CC till date. In fact, this was one of the reasons why the Respondents were constrained to terminate the Aswale 10/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc Development Agreement due to the inordinate delay in developing the said land. Dr. Saraf submitted that in addition to the aforesaid clauses, there is correspondence on record to show that the Petitioner was never in possession of the said land. In this regard, he brought to my attention an email dated 9 th May, 2017 addressed by the Petitioner to the Respondents wherein the Petitioner has stated that they propose to enter the construction site so that they can put their men and material on site and mobilize work for making the access road and carrying out related jobs before submitting the plan to the MCGM. In the said mail, the Respondents were requested to confrm the same and inform the security on site. In reply thereto, the Respondents on 30 th May, 2017 granted permission to the Petitioner to enter the said land only for the limited purposes mentioned in the sub-clause (ii) of clause 2 of the Development Agreement and for no other purpose. In other words, permission was granted for (i) soil testing, (ii) construction of access and (iii) to undertake survey of the said land. He submitted that this clearly shows that even the Petitioner understood that he was never in possession of the said land and the same was to be handed over to him only when the IOD and CC were issued. Over and above this, Dr. Saraf also brought to Aswale 11/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc my attention a hand written letter dated 21 st September, 2019 wherein pursuant to this Court's order, the Petitioner had removed 10 pumps from the said land on 20 th and 21st September, 2019 and that now the said land was fully cleared and had no accessories. Dr. Saraf submitted that all this clearly goes to show that the Petitioner was never in possession of the said land at any point of time. This being the case, the Tribunal cannot be faulted for directing the Petitioner to remove itself from the said land. 13 As far as the Petitioner's readiness and willingness to perform the Development Agreement is concerned, Dr. Saraf submitted that the Development Agreement was fnal and binding between the parties and there was no question of further negotiations or reworking the terms of the Development Agreement. He submitted that as per the milestone chart at Exhibit-B to the Development Agreement, the Petitioner was required to obtain all permissions and complete construction on the said property within 48 months from the date of fulfllment of the "conditions subsequent" as more particularly set out in Clause 5 of the Development Agreement. Despite this, till date the Petitioner has not even got the plans prepared for development, Aswale 12/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc let alone, obtaining any permission by way of IOD or CC to commence construction. He submitted that not only the correspondence exchanged between the parties but even the averments made in the application of the Petitioner (under Section 17) clearly and unequivocally show that according to the Petitioner, the project/development had become unviable in view of the changes in statutory provisions with regard to the payment of premium and providing additional amenity open space for change of user from Industrial Zone to Residential Zone. He submitted that the Petitioner had clearly expressed their non- acceptance to bear the additional premium necessary to obtain the necessary permissions which itself clearly establishes that the Petitioner was unwilling to perform its obligation under the Development Agreement. He submitted that under the Development Agreement and more particularly Clause 6(xxii) thereof, it was the duty of the developer to undertake the development of the said land in accordance with the approvals and the applicable law at the risk and cost entirely of the Petitioner. He submitted that the said clause further clearly provided that such cost shall include but is not limited to charges and / or fees, premium (by any name called), including towards obtainment Aswale 13/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc and / or deposits and / or fees, costs charges and/or expenses that may, at any time, be payable to such authorities for carrying out the work of constructing and / or completing the new buildings and / or for applying and / or obtaining CC and/or completion certifcate. By refusing and / or trying to negotiate with the Respondents the question of payment of premium for conversion of user of land from Industrial Zone to Residential Zone, and which premium worked out to approximately Rs. 5.5 to 6 Cores, the Petitioner clearly expressed and demonstrated their lack of readiness and willingness to perform the said obligation under the Development Agreement, was the submission of Dr. Saraf. 14 As far as wrongful termination is concerned, Dr Saraf frstly submitted that this is a point that is canvassed and argued for the frst time before this Court in Appeal and was never argued before the Arbitral Tribunal. He submitted that detailed submissions on behalf of the Petitioner have been recorded in the impugned order. Despite this, there is no mention in the arguments of the Petitioner that the termination was wrongful as it was contrary to the terms of the Development Agreement and more particularly clause 12 thereof. He submitted that by merely Aswale 14/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc showing a stray-line in the affdavit in rejoinder fled by the Petitioner in its Section 17 application that the termination of the Development Agreement is totally illegal, bad in law and in total derogation of the terms and conditions of the Development Agreement, does not carry the case of the Petitioner any further. He submitted that it would therefore be highly unfair to the Arbitral Tribunal if I was to consider the aforesaid argument (which was never canvassed before the Arbitral Tribunal) and on that pretext set aside the impugned order.
15 Without prejudice to the aforesaid contention, Dr. Saraf submitted that in any event termination of the Development Agreement was not contrary to Clause 12 thereof. In this regard, he took me through the said clause in great detail and pointed out that what was set out in the said clause was "without prejudice to other rights and remedies in law available to the non- defaulting party". It can hardly be disputed that in law when there is a breach, a party complaining of the breach is entitled to terminate the agreement. Whether the termination was justifed or otherwise, is something that the Court would decide. In the present case, considering that the Petitioner had repeatedly Aswale 15/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc defaulted in complying with its terms and obligations under the Development Agreement, the Respondents, fnally in May 2019, terminated the Development Agreement. He submitted that on a proper reading of Clause 12, it is incorrect on the part of the Petitioner to contend that the termination of the Development Agreement was contrary to the terms and conditions thereof. 16 Dr. Saraf lastly submitted that the impugned order is the detailed order recording all submissions of the parties and giving proper and cogent reasons for its fndings and conclusions. The view taken by the Tribunal is not only one which is correct but is certainly a plausible view. Nothing in the impugned order can be termed as perverse and/or patently illegal which would require interference in Appeal under Section 37 of the Arbitration Act. He, therefore, submitted that there was no merit in the above Petition and the same be dismissed with cost.
17 I have heard the learned counsel for the parties at length and have perused the papers and proceedings in the above Petition. The frst issue that was canvassed by Mr. Joshi was that the Tribunal was not justifed in granting an interlocutory mandatory injunction. In this regard it would be apposite to refer Aswale 16/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc to the reasons given by the Arbitral Tribunal. The Arbitral Tribunal, after hearing the arguments of the parties, came to the conclusion that merely because the Petitioner states that it had entered upon said land, does not mean that any right has been granted in favour of the Petitioner by the Respondents. The Tribunal records that on a request being made by the Petitioner for entering upon the said land, the Respondents have clearly stated that the said entry was being given for the limited purpose of widening the access way. The Tribunal noted that the terms of the Development Agreement are also reasonably clear that possession in its true sense would be given only after the Petitioner obtained the IOD and CC. Admittedly, the IOD and CC have not been obtained. The Tribunal was, therefore, of the view that the balance of convenience was in favour of the Respondents insofar as the question of possession is concerned. The Tribunal also came to the conclusion that looking to the facts and circumstances of the case, the balance of convenience was against the Petitioner for grant of any interim reliefs. On going through the reasoning of the Tribunal, I do not fnd anything that can be stated to be objectionable. The terms of the Development Agreement are explicit. Clause 2 (ii) and 2(iii) of the Aswale 17/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc Development Agreement read thus:-
CLAUSE 2
(ii) Simultaneously with the execution hereof, the Owner have given license to the Developer to enter upon the said Property only to the limited purpose of (i) soil testing, (ii) construction of access and (iii) to undertake survey of the said Land, in pursuance to the Agreement and for no other purpose.
(iii) Upon obtainment of the IOD and commencement certificate for the development of the said Land (by utilization of the Project FSI), the Owners shall hand over quiet, vacant and peaceful possession of the said Land to the Developer for the purpose of performance of its obligations under this Agreement."
(emphasis supplied) 18 These Clauses make it abundantly clear that the license was granted to the Petitioner to enter upon the said land only for the limited purpose mentioned therein and for no other purpose. Clause 2 (iii) in fact contemplates that the possession would be given only once the IOD and CC is obtained. In the facts of the present case, admittedly no IOD or CC is obtained. In these circumstances, I am in agreement with the fndings given by the Tribunal that the Petitioner was allowed to enter upon the land only for a limited purpose and possession of the said land was not given to the Petitioner. If this be the case, then, I do not fnd anything so drastically wrong in the impugned order under which the Petitioner is restrained from entering upon and/or remaining upon the said land or any part or portion thereof. It is in light of Aswale 18/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc this that the Tribunal directs the Petitioner to remove itself from the said land. I do not think that the Tribunal has committed any patent illegality or that the fndings in relation thereto are perverse so as to interfere with the same under Section 37 of the Arbitration Act.
19 As far as the two decisions relied upon by Mr. Joshi are concerned, namely, Samir Narain Bhojwani v/s Aurora Properties and Investments and Anr. [(2018) 17 SCC 203] and Metro Marins and Anr v/s Bonus Watch Co (P) Ltd and Ors [(2004) 7 SCC 478], I do not think there can be any dispute with the prepositions laid down therein. However, it is equally well settled that the ratio of a judgment has to be understood in the factual matrix before the Court. The factual situation in the case of Samir Narain Bhojwani (supra) was that Respondent 1-plaintiff was appointed by one Andheri Kamgar Nagar Cooperative Housing Society Ltd. (for short "the Society") under a Development Agreement dated 6-10- 1996 as a developer under the Slum Development/Rehabilitation Scheme to develop the suit property in question, being a plot of land situated at Versova Link Road, Taluka Andheri and bearing Survey No. 139, City Survey No. 1319 (Part) admeasuring 8892 sq Aswale 19/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc mts or thereabouts as per Indenture of Lease dated 31-3-1993 and 9402 sq mts as per city survey records. One part of the suit property was for constructing tenements free of charge for project-affected-persons and the balance property could be used to develop and sell the balance FSI. Respondent 1 then executed an Agreement for Sub-Development dated 22-9-1999 with Respondent 2-Defendant 1, transferring the benefts of the development rights in the suit property, with the consent of the aforementioned Society, to Respondent 2 after keeping aside 15,000 sq ft for itself i.e. Respondent No.1. Subsequently, Respondent 2 executed an Agreement for Development dated 10- 3-2003 with the appellant-Defendant 2, whereunder the appellant would be entitled to 55% of the total area available for free sale buildings and car parking in the suit property and Respondent 2 retained 45% of the total area available for construction of free sale buildings and car-parking by utilising FSI which may be available on the suit property as per the Slum Rehabilitation Scheme. This agreement was entered into without the consent of Respondent 1 and hence, all three parties executed a Tripartite Agreement dated 11-9-2009, referencing the previous agreements of 6-10-1996 and 22-9-1999 wherein Respondent 1 was entitled to Aswale 20/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc an area of 22,500 sq ft, an increase from its earlier agreed upon 15,000 sq ft, which would be allocated out of the 45% share due to Respondent 2. Disputes arose between the parties and several proceedings were fled enumerated in the judgment after which the Single Judge directed the appellant, by a mandatory order, to hand over keys and possession of 8 fats to Respondent No.1 along with 16 parking spaces, recording that he had moulded the reliefs originally sought by Respondent No.1 in the changed circumstances of the case and in order to shorten the litigation and do complete justice. This order of the learned Single Judge was upheld by the Division Bench of High court which was challenged before the Supreme Court. It was in this context that the Supreme Court has laid down the proposition set out therein in paragraph 24 on-wards and has then opined that in the factual scenario before it the mandatory order which was passed against the appellant was in excess of jurisdiction. The factual situation before me is totally different. In the facts of the present case, the Tribunal has come to a prima facie fnding that the Petitioner was never in possession of the said land. He was granted permission to enter upon it only for a limited purpose of (a) soil testing; (b) construction of access; and (c) to undertake survey of the said Aswale 21/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc land; and for no other purpose. In fact, as correctly submitted by Dr. Saraf, by their letter dated 21 st September, 2019, the Petitioners themselves informed the Respondents that they have removed their pumps from the said land and the same is now vacant with no accessories. All this material would prima facie go to show that the Petitioner was never in possession of the said land, and therefore, the directions passed by the Tribunal in this regard cannot be faulted. This being the case, the aforesaid decision is of no assistance to the Petitioner. 20 Similarly, even the judgment of the Supreme Court in the case of Metro Marins and Anr. (supra) is of no assistance to the Petitioner. The facts of this case would reveal that the Respondent has fled a suit for possession alleging the appellant to be a licensee and the period of licence having expired he was entitled to a decree for Khas possession of the suit property as also for certain other ancillary reliefs. In the said suit, he fled an interlocutory application, frstly praying for a judgment on admission and in the alternative, for an injunction directing the appellant to immediately hand over vacant and peaceful possession of the suit property to the Respondent-Plaintiff. The learned Single Judge declined the aforesaid reliefs. In Appeal, the Aswale 22/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc Appellate Bench came to the conclusion that prima facie the relationship between the parties is that of a licensor and a licensee and it also came to the conclusion that at one time the appellants were willing to voluntarily surrender possession but did not do so because the Respondent did not agree to repay the security amount. Accordingly, the Appellate Bench appointed an Interim Receiver to take symbolic possession of the suit property and put the Respondent/plaintiff in possession thereof subject to the fnal adjudication in the suit. It is in this background that in paragraph 9, the Supreme Court observed that an interim mandatory injunction can be granted only in exceptional cases coming within the exceptions noticed in the judgment of the Supreme Court in the case of Dorab Cawasji Warden v/s Coomi Sorab Warden (1992 SSC 117). The Supreme Court observed that once the possession of the appellant either directly or through his agent is admitted, then the fact that the appellant is not using the said property for commercial purpose, or not using the same for any benefcial purpose, or the appellant has to pay a huge amount by way of damages in the event of him losing the case, or the fact that the litigation between the parties is a luxury litigation, are all facts which are irrelevant for changing the status-quo with regard to Aswale 23/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc possession during the pendency of the suit. I fnd that the facts of this case are totally different from the factual matrix before me. The facts before me, prima facie, indicate that the Petitioner was never in possession. In fact, even the permission sought for by the Petitioner to enter upon the said land was for a limited purpose and only for such limited purpose permission was granted by the Respondent. This being the case, I fnd that the reliance placed on above decision is also of no assistance to the Petitioner. 21 The next argument that was canvassed by Mr. Joshi was regarding the readiness and willingness of the Petitioner to perform the Development Agreement. The fndings of the Tribunal in relation thereto can be found from paragraphs 25 to 27 of the impugned order. Though in the impugned order the Tribunal wrongly records that the Development Agreement was to be completed within a period of 48 months from the date of the Development Agreement, namely 19 th May, 2019, I fnd that the same makes little difference to the outcome of the case. The Tribunal clearly notices that several obligations that were to be performed by the Petitioner have taken time due to the fact that permissions/NOCs were to be obtained from Governmental or Aswale 24/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc statutory authorities. However, all this appears to be done by or around the year mid-2017. The Tribunal then records that thereafter there appears to be a clear reluctance on the part of the Petitioner to take the requisite steps to perform its obligation under the said Development Agreement. The Tribunal noticed that the Petitioner appears to have found that on account of change in the Governmental policy for conversion of user of the land from Industrial to Residential, the constructional area will reduce. This would obviously result in a reduction in the proportionate area that would come to the share of the Petitioner and therefore a reduction in its profts. The Tribunal further noticed that the Petitioner had additionally found that a premium of approximately 20% of the ready reckoner value of the land amounting to around Rs. 5.5. to 6 Crores has become payable, which the Petitioner had not anticipated at the time of entering into the said Development Agreement. On account of these changes, the Petitioner has clearly accepted and treated the terms of the said Development Agreement as they exist to be unviable as having become unfavourable to the Petitioner. 22 The Tribunal noticed that if the Petitioner seeks specifc performance, it must be ready and willing to perform the Aswale 25/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc terms and conditions of the Development Agreement as they exist. The Tribunal noticed that the Petitioner has set out various reasons, which the Respondents term as excuses, to justify non- performance of the terms of the Development Agreement. In this regard, the Tribunal takes note of the correspondence and in particular the Petitioner's advocate's letter dated 12 th July, 2019 and especially the contents of paragraphs 5, 6, 10, 12 (xi) and 13 which, according to the Respondents, indicate that there is a lack of readiness and willingness on the part of the Petitioner to perform the Development Agreement in its present form. The Tribunal also noticed that the parties have held meetings and the Petitioner has desired re-negotiation of the terms between them. However, as matters stand, there has been no variation to the terms of the said Development Agreement nor has any supplementary agreement been arrived at between the parties. The Tribunal therefore holds that prima facie the Petitioner is not ready and willing to perform the Development Agreement in its current form and hence not entitled to any equitable relief under Section 17 of the Arbitration Act.
23 After carefully going through these fndings, I can Aswale 26/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc hardly term them as perverse or suffering from any patent illegality. The Petitioner's advocate's letter dated 12 th July, 2019 can be found at page no. 423 of the paper book. On a holistic reading of this letter, I do not fnd that the interpretation given by the Tribunal in relation thereto can in any event be termed as perverse. In this letter, the advocate for the Petitioner alleged that the Respondents were initially attempting to foist these burdens and costs on the Petitioner by resorting to the clauses of the Development Agreement when in fact there are subsequent developments and that involve substantially large costs in terms of premium as well as reduction in development potential, which was not acceptable to the Petitioner. The letter further records that the new 2034 DCPR was due to be published and therefore the parties had mutually agreed to wait for the same in order to take advantage of any benefts offered, including exploiting any additional FSI that may become available under the same and thereafter proceed for development after reassessing and reworking the commercials under the changed scenario. The letter further states that on account of unpredictable circumstances enumerated therein, there is a huge increase in project cost (estimated 4 years ago) and the real estate market Aswale 27/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc has seen an unprecedented recession. The letter states that it was in these circumstances that the parties had mutually arrived at an acceptable solution to proceed with the Development and in this context, the Petitioner proposed certain offers to the Respondents and also indicated their revised offer under 33 (19) of the DCPR 2034 wherein the Petitioner offered to provide commercial area of 50,000 sq. ft. carpet area that was more than what was offered in the Development Agreement. In paragraph 12 (xi), the Petitioner's advocate clearly states that the Petitioner had always been ready and willing and are still ready and willing to proceed with the Development Agreement but under the changed scenario and circumstances require a reworking of the commercial terms and conditions as may be mutually agreeable to both parties. Thereafter, paragraph 13 of this letter clearly records that though the Petitioner is ready and willing to perform their obligations under the Development Agreement but the present circumstances created by the delays and lapses on the part of the Respondents, and which, for all practicable purposes, has derailed the entire project making it unviable in the present form. 24 After going through this letter (dated 12 th July, 2019), Aswale 28/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc and parts of which has been referred to by me, I do not fnd that the fndings of the Tribunal in relation to the lack of readiness and willingness of the Petitioner to perform the Development Agreement in its present form, can in any way be faulted or termed as perverse or patently illegal. In fact, there is a mail dated 21st October, 2016 even prior to this letter whereby due to the heavy premium to be paid for change of user, the Petitioner writes to the Respondents to fnd an amicable solution in relation thereto so that they could go ahead with the project. In other words, though the Development Agreement clearly stipulated that all premiums were to be paid by the Petitioner, they were not agreeable to do so and wanted to fnd another via media so that the burden on them could be reduced. In these circumstances, I do not fnd that Mr. Joshi, the learned Senior Counsel appearing on behalf of the Petitioner, is justifed in assailing the impugned order by contending that the fndings given by the Tribunal in regard to the lack of readiness and willingness of the Petitioner to perform the Development Agreement in its present form are either perverse or that it suffers from any patent illegality. Consequently, this argument of Mr. Joshi is also to be rejected. Aswale 29/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 :::
carbpl.1246021..doc 25 The last argument canvassed by Mr. Joshi was that the termination was itself bad as it was not consonance with Clause 12 of the Development Agreement. As far as this aspect is concerned, from the record, I am unable to fnd whether this argument was ever canvassed before the Arbitral Tribunal. This argument does not fnd place in the impugned order though detailed arguments of the Petitioner are duly recorded by the Arbitral Tribunal. According to the Petitioner, this is a very important argument. Despite this, and when they came across the impugned order, they have made no application to the Tribunal stating that the aforesaid argument was specifcally canvassed and not considered by the Tribunal. In fact, even in the Petition, nowhere is it stated that the aforesaid point was specifcally argued before the Tribunal and the same was not considered by it. I would therefore be fully justifed in not entertaining this argument at this stage as it would not be fair to the Tribunal to set aside its order on a point that was never canvassed before it.
26 Be that as it may, I have carefully gone through Clause 12 of the Development Agreement. For the sake of convenience the same is reproduced hereunder:-
Aswale 30/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 :::
carbpl.1246021..doc "12.DEFAULT
(i) If any Party (Defaulting Party) commits a breach of this Agreement or commits a default in performance of its roles, obligations and covenants under this Agreement, then in such a case without prejudice to the other rights and remedies, in law available to the other Party ("Non-
Defaulting Party"), the Non-Defaulting Party shall issue a notice ("Remedy Notice) to the Defaulting Party and call upon the Defaulting Party to rectify and remedy the breach and/or perform its roles, responsibilities and covenants,
(ii) In the event the Defaulting Party falls to rectify or remedy the breach and/or perform the roles, responsibilities and obligations of the Defaulting Party, at its own cost, within a period of 90(ninety) days from receipt of the Remedy Notice, then the Non-Defaulting Party shall have a right and be entitled (but shall not be obligated) to rectify the default and/or and remedy the breach and/or step-in and perform the roles, responsibilities and obligations of the Defaulting Party, at the costs of Defaulting Party. The Defaulting Party shall forthwith bear the estimated costs of performance by the Non-Defaulting Party along with interest thereon at the rate of 18% (eighteen percent) per annum, from the date of the expiry of the Remedy Notice till the actual repayment thereof ("Default Costs"). Till such payment of the Default Costs, the same shall constitute a charge on Premises of the Defaulting Party and the Non-Defaulting Party shall be entitled to recover the same from the proceeds of the Premises of the Defaulting Party.
(iii) Notwithstanding what is stated in sub-clause (ii) above, if the Defaulting Party is the Developer, without prejudice to the rights and remedies available in law, the Owners shall also have the following rights and remedies:
(a) The right to ascertain the market value of all right, titile and interest of the Owners in the said Property Aswale 31/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc including the Owners Premises ("Right of Owners").
The Owners shall appoint a valuer from either of big five valuers i.e. Knight Frank, Colier, JLL, CBRE and Cushman & Wakefield to determine the market value of the Right of Owners ("Market Value") within a period of 30(thirty) days from such appointment.
(b) Upon determination of the Market Value, the Owners shall call upon, by a written notice to the Developer to purchase the Right of the Owners at a valuation of 125% of the Market Value of the Right of the Owners, within a period of 30 (thirty) days from such notice to the Developer.
(c) In the event the Developer falls to pay and purchase the Right of the Owners at 125% of the Market Value within a period of 30(thirty) days of notice of the Owners thereof, the Owners shall have the right to terminate this Development Agreement and the Power of Attorney without any reference or recourse to the Defaulting Party. Upon such termination, the following acts shall be undertaken simultaneously:-
i. The Developer shall not longer be permitted to enter upon the said Land. The Owners shall continue to be in exclusive possession of the said Land;
ii. The Developer shall have no right, title or interest in the said Land and/or the Project FSI and/or the Developers Premises;
iii. In case the Developer has (i) dealt with the Developer's Premises (or any part thereof) in any manner (including Marketed the same) and/ or received any advance, loan, deposit or other consideration in respect of the Developer's Premises or any part thereof and/or created an encumbrance whatsoever with respect to the Aswale 32/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc Developer's FSI and/or the Developer's Premises (or any part thereof), then in such a case Developer shall at its own cost and expense, repay/refund the same and settle any and all claims to the Developer's FSI and/or Developer's Premises and/or the said Land and every part thereof and shall also cause the cancellation/surrender of all such rights, claims and/or liabilities in respect thereof to the satisfaction of the Owners.
iv. The Owners shall be entitled to deal with and/or dispose of and/or develop the said Land and all improvements as may have been made by the Developer thereto, in the manner it deems fit and proper;
v. The Owners shall be entitled to the Developer's Premises and shall be entitled to receive all the receivables from the Developers Premises. vi. The Monetary Consideration paid to the Owners till then by the Developer shall stand forfeited by the Owners, without any reference or recourse to the Developer."
(emphasis supplied) 27 Clause 12 (1) clearly stipulates that if any party (Defaulting Party) commits a breach of this Agreement or commits a default in performance of its roles, obligations and covenants under this Agreement, then in such a case, without prejudice to the other rights and remedies, in law available to the other Party ("Non-Defaulting Party"), the Non-Defaulting Party shall issue a notice ("Remedy Notice") to the Defaulting Party and call upon the Defaulting Party to rectify and remedy the breach Aswale 33/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc and/or perform its roles, responsibilities and covenants. On reading the aforesaid clause, prima facie, it does not appear that the non-defaulting party has to frst issue a notice before it can terminate the agreement. I say this because the clause clearly stipulates "......without prejudice to other rights and remedies, in law available to the other Party ("Non-Defaulting Party")......" .
Similarly, Clause 12 (iii) stipulates that notwithstanding what is stated in sub-clause (ii) above, if the Defaulting Party is the Developer, without prejudice to the rights and remedies available in law, the Owners shall also have additional rights and remedies more particularly set out in Clause 12 (iii). At least prima facie, these clauses do not mean that the Respondents could not terminate the agreement without frst issuing a remedy notice or without frst offering the said land to the developer for purchase at 125% of the market value. I, therefore, do not fnd, at least prima facie, that the termination is contrary to the terms of the Development Agreement. Having said this, I may hasten to add that this is only a prima facie fnding and shall not be binding on the Tribunal when it hears the matter fully and fnally. 28 In view of the foregoing discussion, I fnd no merit in the aforesaid Petition and it is accordingly dismissed. However, Aswale 34/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 ::: carbpl.1246021..doc there shall be no order as to costs.
29 At this stage, the learned counsel appearing on behalf of the Petitioner prays that the status-quo order that was passed earlier and continued till today, be continued for a period of four weeks from today. This request is vehemently opposed by Dr. Saraf, the learned Senior Counsel appearing on behalf of the Respondents.
30 Having heard both sides on this aspect, to enable the Petitioner to challenge this order before the Supreme Court, I am inclined to accept the request of the learned advocate appearing on behalf of the Petitioner. Under these circumstances, the status-quo order which was operating till today shall continue for a period of four weeks. 31 All parties to act on an authenticated copy of this order duly signed by the Personal Assistant/Private Secretary/Associate of this Court.
( B. P. COLABAWALLA, J. ) Aswale 35/35 ::: Uploaded on - 25/06/2021 ::: Downloaded on - 17/09/2021 00:58:52 :::