2018 (8) TMI 1238 - SC - Indian Laws

Enforcement of Development & Tripartite Agreements Upheld; Arbitration Rejected; High Court Judgment Set Aside

Samir Narain Bhojwani Versus M/s. Aurora Properties and Investments and Anr.

Samir Narain Bhojwani Versus M/s. Aurora Properties and Investments and Anr. - TMI Issues Involved:1. Validity and binding nature of the Development Agreement and Tripartite Agreement.2. Specific performance of the Development Agreement and Tripartite Agreement.3. Interim reliefs and appointment of a Court Receiver.4. Application of arbitration clauses.5. Granting of mandatory interlocutory injunction.6. Moulding of relief at an interlocutory stage.Issue-wise Detailed Analysis:1. Validity and Binding Nature of the Development Agreement and Tripartite Agreement:The Supreme Court considered the agreements dated 22nd September 1999 and 11th September 2009. The agreements were deemed valid, subsisting, and binding between the parties involved. This was essential to establish the foundation for the specific performance sought by respondent No.1.2. Specific Performance of the Development Agreement and Tripartite Agreement:Respondent No.1 sought specific performance of the agreements, including the handing over of 22,500 sq. ft. constructed area and proportionate car parking spaces. The Single Judge and Division Bench upheld the specific performance claim, directing the appellant to hand over 8 flats and 16 parking spaces to respondent No.1. However, the Supreme Court found that the appellant could not be bound by the settlement agreement and consent terms entered into between respondent Nos.1 and 2, as the appellant was not a party to those agreements.3. Interim Reliefs and Appointment of a Court Receiver:Respondent No.1 sought interim reliefs to restrain the appellant and respondent No.2 from creating third-party rights in the suit property and to appoint a Court Receiver. An ad-interim consent order was passed on 3rd December 2012, restraining the defendants from selling or creating third-party rights in respect of certain flats and parking spaces. The Supreme Court revived this ad-interim order, which would continue until the final disposal of the suit.4. Application of Arbitration Clauses:The appellant sought to refer the suit to arbitration under the Arbitration and Conciliation Act, 1996. The High Court rejected this application, stating that the Tripartite Agreement did not contain an arbitration clause, and mere reference to previous agreements with arbitration clauses did not suffice. The Supreme Court upheld this view, noting that the appellant was bound only by the agreement dated 10th March 2003, which was subject to separate arbitration proceedings.5. Granting of Mandatory Interlocutory Injunction:The Single Judge granted a mandatory interlocutory injunction directing the appellant to hand over 8 flats and 16 parking spaces to respondent No.1. The Supreme Court found this to be an error, as such a drastic order at an interlocutory stage was not justified. The Court emphasized that mandatory injunctions at an interlocutory stage should be granted only to restore the status quo and not to establish a new set of circumstances.6. Moulding of Relief at an Interlocutory Stage:The High Court applied the principle of moulding relief to grant the mandatory injunction. The Supreme Court held that this principle should be applied at the final stage of the suit, not at an interlocutory stage. The Court noted that the High Court was swayed by the consent agreement between respondent Nos.1 and 2, to which the appellant was not a party. The appellant could not be bound by the settlement agreement and consent terms between the other respondents.Conclusion:The Supreme Court set aside the High Court's judgment and order, finding that the High Court exceeded its jurisdiction in granting the mandatory interlocutory injunction. The Court revived the ad-interim order dated 3rd December 2012, which would continue until the final disposal of the suit. The observations made in the judgment were limited to the interlocutory matter and would not influence the substantive proceedings pending between the parties. The appeal was allowed, and no costs were awarded.