TMI Blog2019 (10) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... n this light, respondent is not right in its contention that the petitioners knew the Schedule as per which the payments were to be made and there was thus no necessity to notify the petitioners for balance payments. The respondent cannot even contend that there was a breach or a default in the installments payable by 30th November, 2018 and 31st December, 2018. Once the parties have, by their conduct, adopted a methodology different from the one in the special payment plan, respondent cannot be heard to say that the Schedule of the installment plan should have been adhered to. There is no quarrel with the proposition that Section 9 has been enacted to give urgent interlocutory reliefs to the parties and delay is a significant factor in considering the grant of such a relief. However, the telling facts of the present cases are such that the petitioners cannot be ousted only on the ground of delay and laches, if any. The respondent had received substantial part of the sale consideration from the petitioners at a time when they needed the money for their huge investments and have without putting them to even a demand notice or a reminder, cancelled the allotments. The affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndirectly in the Apartments which are a subject matter of dispute between the parties. 2. Since similar questions/issues arise for adjudication in these petitions, they are being disposed of by a common judgment. 3. Some brief facts necessary to adjudicate these petitions are that the respondent is a part of the Krrish Group of Developers, engaged in promoting and developing Real Estate projects in Delhi-NCR. OMP(I) (Comm.) 285/2019 has been filed on behalf of the HUF through its Karta, Shri M.K. Jain; OMP(I) (Comm.) 280/2019 has been filed by Ms. Neeru Jain, wife of Shri M.K. Jain; OMP(I) (Comm.) 281/2019, OMP(I) (Comm.) 282/2019 and OMP(I) (Comm.) 286/2019 are filed by Shri M.K. Jain in his personal capacity and OMP(I) (Comm.) 284/2019 has been filed by Rishabh Jain, son of Shri M.K. Jain. Shri M.K. Jain is the General Power of Attorney holder of the other petitioners. 4. A detailed chart of the Apartment numbers, with dates and amounts of payments and other relevant details in respect of the seven petitions is scanned and placed hereunder: 5. The Apartments involved in the present petitions are a part of a project called Provence Estate, located at Gwal Pahari, Distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made did not match the written plan. 10. It is the case of the petitioners that the respondent having taken payment of about 70% of the total consideration amount have failed to honour their commitment and wrongfully issued cancellation letters on 29.03.2019 with the corrigendum dated 30.03.2019 (03.04.2019 in OMP(I)(COMM.) 281/2019). 11. The petitioners responded to the cancellation letter on 08.04.2019 (on 20.04.2019 in OMP(I)(COMM.) 281/2019). The stand of the petitioners in the reply was that having accepted substantial part of sale consideration, respondent neither sent any demand notice nor a reminder seeking payment of the outstanding dues. Validity of the payment schedule appended to the agreement was also questioned. The petitioners blamed the respondent for not having offered possession in time and also expressed their readiness and willingness to make payment of the balance price. A request was made to the respondent to withdraw the cancellation letter. 12. Replies sent by the petitioners were responded to by the respondent in which, the respondent allegedly admitted that the agreement is predated as also the fact that no written reminder was sent. Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ana Rules. b. Respondent has failed to offer possession by 31st December, 2018 i.e. the outer limit fixed in their commitment to the RERA Authority and thus the petitioners were justified in not making further payments thereof. Clause 9.2 of the Model Agreement has been relied upon in support of this proposition. c. The respondent received 70% of the total sale consideration in respect of 5 Apartments and 57% and 60% in two cases. In some cases money was received even before signing the Apartment Buyer's Agreement. In most cases, August, 2018 was the outer limit till which substantial payments had been made, although going by the payment Schedule, so heavily being relied upon by the respondent, this amount had to be paid till 31st October, 2018. This clearly shows that the payment schedule in the Agreement was only a standardized document, inapplicable to the present transactions. The respondent having waived and relinquished its right to receive payments under the Special Payment Plan, by accepting a different path, cannot blow hot and cold and terminate the Agreement on the basis of default in payment as per the laid down Schedule. d. The petitioners have performed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract and thus whether petitioners are entitled to specific relief, is within the domain of the Arbitral Tribunal as and when the same is constituted. g. The documents placed on record itself show that the transactions of alleged sale to third parties are sham. Buyers are none other than the Directors/Employees of the Respondent. Allotment letters are of the same dates as cancellation letters which is unheard of in the field of buying and selling properties. Mr. Katyal is shown to have been granted loan for buying one of the Apartment in one day. This is totally unbelievable as no Bank works with such efficiency. The documents are thus forged/fabricated to defeat the rights of the petitioners and have been fabricated overnight after the petitions were filed. 17. Before replying to the contentions of the petitioners on merits, Mr. Sethi, learned senior counsel for respondent, submits that the prayers in the petitions are twofold: (a) for staying the operation of the cancellation letters and (b) restraining the respondent from creating third party rights in the property in question. Learned senior counsel submits that prayer (a) cannot be granted in a petition under Section 9 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 13 RERA, itself postulates that the Agreement shall come into effect only upon the parties signing the Agreement, which has admittedly not happened in the present cases. e. If the argument of the petitioners is that the Agreement between the parties is in violation of RERA, then in any case, the said Agreement being contrary to law is void and cannot be enforced by the petitioners in a Court of Law. The argument of the petitioners that the model Form under the Rules provided for a thirty days' notice by the Developer, prior to the termination of the Agreement to sell is fallacious. The petitioners are seeking to re-write the terms of the Agreement between the parties which cannot be done. In fact, the Agreement between the parties herein has a contrary term which entitles the respondent to terminate forthwith on default of the payments. There is no clause providing for sending demand notice in the agreement governing the parties. f. The contention that the parties would be governed by the prescribed Form of Agreement cannot be sustained for another reason. Clause 20 of the prescribed Form specifically states that the Agreement to sell will come into force only whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been relied upon by the petitioners. Reliance is placed on the case of A.K. Laxmipathy vs. Rai Saheb Pannalal H. Lahoti Charitable Trust, reported as (2010) 1 SCC 287, where the Apex Court held that when the party breaches a stipulation of timeline of payment, it is not entitled to the specific performance, as the time was of essence. The judgment relied upon by the petitioners in the case of Balasaheb (supra) is distinguishable as in that case the question was of sale of agricultural land which is different from the realities of an Urban land. This very distinction has been recognized by the Apex Court in Sardamani (supra). Secondly, in Balasaheb (supra) no evidence was led to prove that time was of essence and there was no express stipulation, as is in the present case. The judgment of N. Srinivasa (supra) does not apply to the present case as no alienation had taken place in that case, a position that is unrebutted in the present case. In Ritu Mercantile Pvt. Ltd. vs. Leelawati, reported as, this Court has held that escalation of prices of the suit property is in itself determinative of whether time is of the essence of the transactions or not. The affidavit filed by the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018. b. The petitioners are not pressing relief (a) as the same would be a subject matter of adjudication before the Arbitral Tribunal, as and when the Arbitration is invoked. However, they are entitled to an interim relief, as prayed for in prayer (b). c. The submission of the respondent that payments were to be made as per the Special Payment Plan, appended in the agreement, is completely misconceived. The amounts received by the respondent are not in accordance with the plan, as neither the amount nor the timeline matches upto the schedule made in the plan. d. The argument that no notice was required is in the teeth of the cancellation notice itself. In the said notice, it is mentioned by the respondent itself that many reminders were sent to the petitioners, allegedly by the respondent. Even assuming that there was no agreement requiring the notice of demand to be sent, it was only prudent and reasonable and in keeping with the principles of natural justice that having received major part of the considerations, respondent should have called upon the petitioners to pay the outstanding amount in the first instance, rather than cancelling the entire transaction. e. RE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd entry is of 4,89,27,060/- and on 30.03.2019, there is another entry of 3,25,00,000/-. There is no document showing the transfer from the company. The respondent has not placed on record any application by Mr. Katyal, seeking allotment of the apartment. The document at page 13 of the affidavit of respondent is dated 10.06.2019 and is with respect to the apartment bearing No. D-1002. The petitions were filed on 30.08.2019 and the endorsement of receipt of this letter bears a date of 02.09.2019. g. Assuming for the sake of argument, though not admitting, that allotment letters or even the Apartment Buyers' Agreement, have been executed in favour of third parties, with respect to the apartments in the present petitions, interim relief can still be granted by this Court by restraining the respondent from executing the Sale Deeds, as the Agreement to sell does not confer title. This Court can further restrain the respondent from handing over possession of the apartments to any third parties, till the disputes between the parties are referred to arbitration and the petitioners take recourse to an application under Section 17 of the Act. 20. I have heard the learned Senior cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Singh vs. NCT of Delhi 2002 (8) AD (Del) 617. These questions are therefore, being left open for adjudication by the Arbitral Tribunal, as and when constituted. However, in order to decide whether the petitioner fulfils the parameters for grant of interim injunction, certain facts are necessary to be examined in order to form a prima facie view. It is important to note at this stage that the facts of the case as well as the disputes in controversy between the parties are being examined by this Court only with a view to determine whether the petitioners are entitled to a relief under Section 9 of the Act. 24. Law on the principles that have to be followed while deciding a petition under Section 9 of the Act is well settled. Although the provisions of CPC do not strictly apply to the Arbitration Act, but nevertheless the principles underlying Order XXXVIII Rule 5 CPC and Order XXXIX Rule 1 and 2 CPC are to be kept in mind while passing orders under Section 9 of the Act. This has been clearly held by the Apex Court in the case of Indian Telephone Industries vs. Siemens Public Communication, reported as (2002) 5 SCC 510. 25. This Court in the case of Modi Rubber Limited vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e grant of interim injunctions and other orders of interim protection or the appointment of a Receiver. 27. The High Court of Bombay in the case of Nimbus Communications Ltd. vs. BCCI, reported as (2013) 1 MHLJ 39, held as under:- 22. .The Division Bench noted that the power being of a drastic nature, a direction to secure the amount claimed in the arbitration petition should not be issued merely on the merits of the claim, unless a denial of the order would result in grave injustice to the party seeking a protective order. The obstructive conduct of the party against whom such a direction is sought was regarded as being a material consideration. However, the view of the Division Bench of this Court that the exercise of power under section 9(ii)(b) is not controlled by the provisions of the Code of Civil Procedure 1908 cannot stand in view of the decision of the Supreme Court in Adhunik Steels. 23. In a recent judgment of a learned Single Judge of the Delhi High Court in Steel Authority of India Ltd. v. AMCIPTY Ltd., O.M.P. 417/2011 decided on 1 September, 2011, the judgment of the Division Bench of this Court in National Shipping Company was relied upon. The Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection in respect of preservation, interim custody of', the subject matter of the arbitration agreement and to secure the amount in dispute in arbitration , but also goes on to say 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. The power of the Court to suo moto pass orders in terms of Section 9 of the Act is therefore, preserved. Section 94 read with Section 151 C.P.C. also invests the Court with inherent power to pass interlocutory orders as may appear to the Court to be just and convenient to prevent the ends of justice from being defeated. (See Vareed Jacob v. Sosamma Geevarghese, AIR 2004 SC 3992.) In the interest of justice, and to bring the parties to an even keel, as we were seized of the appeal. We had the jurisdiction to pass the order dated 12.01.2009 as jurisdiction to pass the order dated 12.01.2009 as corrected on 6.2.2009. We, therefore, reject this submission as well. 29. Having traversed through some of the judgments, the guiding principle that emerges for exercise of power under Section 9, is that when the parties are governed by an Arbitration Agreement and intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction. The second point is that in cases in which there can be no dispute about the use of the term 'mandatory' to describe the injunction, the same question of substance will determine whether the case is 'normal' and therefore within the guideline or 'exceptional' and therefore requiring special treatment. If it appears to the court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel a 'high degree of assurance' about the plaintiff's chances of establishing his right, there cannot be any rational basis for withholding the injunction. 31. The Apex Court in Dorab Cawasji Warden Vs. Coomi Sorab Warden and Ors. (1990) 2 SCC 117, while dealing with power to grant interlocutory mandatory injunction has observed as under:- The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale consideration respectively in different cases and significantly on dates, different from those in the Schedule. Thus, it prima facie appears that the parties had orally entered into a different understanding, giving a go-bye to the Special Payment Plan. Neither party adhered to the 10% advance payment at the time of booking and nor were the subsequent two installments paid as per the Special Payment Plan. Seen in this light, respondent is not right in its contention that the petitioners knew the Schedule as per which the payments were to be made and there was thus no necessity to notify the petitioners for balance payments. The respondent, in my view, cannot even contend that there was a breach or a default in the installments payable by 30th November, 2018 and 31st December, 2018. Once the parties have, by their conduct, adopted a methodology different from the one in the special payment plan, respondent cannot be heard to say that the Schedule of the installment plan should have been adhered to. 34. Prima facie, I also find merit in the contention of the petitioners that notice ought to have been given by the respondent before cancelling the allotment. Respondent is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... injunction in favour of the petitioners. It is pointed out that a bare look at some of the documents would show that these are not genuine transactions. Attention of the Court has been drawn to the allotment letter dated 29.03.2019, which is at page 7 of the affidavit filed. The allotment is in the name of Mr. Amit Katyal, who is the Managing Director of the respondent itself. Likewise, the other allotment letters also give an impression that the allottees are none other than the sister concerns of the respondent. 37. I have carefully gone through the documents annexed to the affidavit. Prima facie, it does appear that the transactions are not genuine. It is a little strange that the allotment of the petitioners is cancelled on 29.03.2019 and on the same day, one allotment is made in favour of Mr. Amit Katyal. In fact, Mr. Amit Katyal is none other than the Managing Director and a major shareholder of the respondent Company itself. The loan in favour of Mr. Katyal is also sanctioned on 29.03.2019 itself. The ledger entries in the account of Mr. Katyal with respect to the same Apartment are also suspicious. The first credit entry in the account is dated 16.03.2019 on which day, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent itself shows from the allotment letters appended thereto, that the Apartments have been resold at a much higher price and, prima facie, the impression is that the cancellation was done only with the purpose to sell the Apartments at higher prices. It does seem a little strange that when parties have entered into a sale purchase agreement and have exchanged substantial amount of sale consideration, the other party would cancel the allotment without even giving an opportunity to the purchaser to make good, the balance outstanding payment. 41. In any case, in my view this contention of respondent is even factually not correct. Parties were exchanging letters till May, 2019 and the money received by respondent was sought to be refunded by the respondent in July, 2019. The petitions were filed in August, 2019 and in my view are not barred by delay and laches. 42. Learned counsel for the petitioner has rightly relied upon the judgment of the Apex Court in N. Srinivasa (supra) where the Apex Court was considering an order by the High Court whereby it had vacated a status quo order granted by the Trial Court under Section 9 of the Act to secure the property from being alienat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes arising out of or in relation to the terms of this Agreement including the interpretation and validity of the terms thereof and the respective rights and obligations of the Parties shall be settled amicably by mutual discussion failing which the same shall be settled through arbitration. The arbitration shall be governed by the Arbitration and Conciliation Act, 1996 or any statutory amendments/modifications thereto for the time being in force. The arbitration proceedings shall be held at an appropriate location in New Delhi by a Sole Arbitrator who shall be appointed by the Managing Director of the Seller and whose decision shall be final and binding upon the Parties. The Purchaser(s) hereby confirms that he shall have no objection to this appointment of the Sole Arbitrator by the Managing Director of the Seller, even if the person so appointed, as a Sole Arbitrator, is an employee or advocate of the Seller or is otherwise connected to the Seller and the Purchaser(s) confirms that notwithstanding such relationship/connection, the Purchaser(s) shall have no doubts as to the independence or impartiality of the said Sole Arbitrator. The Courts at Delhi alone shall have the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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