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TMI Blog2024 (11) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the parties, appeals were taken up for final disposal. The learned counsel for the parties agree that both these appeals can be disposed of by a common judgment and order as they arise from same dispute between the parties. 3. Arbitration Appeal No.96 of 2024 is directed against judgment and order dated 20 September 2024 in Civil Miscellaneous Application No.582 of 2024 filed by M/s. Atria Construction ("M/s. AC") (Respondent No.1) and Arbitration Appeal No.97 of 2024 is directed against judgment and order dated 20 September 2024 in Civil Miscellaneous Application No.544 of 2024 filed by Well build Merchants Private Limited ("WMPL") (Appellant). 4. The subject matter of these appeals is the construction of a housing complex known as "Rajgruhi Residency" comprising a building with four Towers (Wings "A", "B", "C" and "D") on the subject land described in paragraph 2 of the impugned judgments and orders. 5. WMPL owns the subject plot. Initially, M/s AC was engaged as a contractor for the construction of Towers "A" and "B." M/s AC completed the construction of Towers "A" and "B" by spending Rs. 46 crores. 6. WMPL entered into Articles of Agreement dated 19 Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the District Court erred seriously in declining interim reliefs to WMPL or granting interim reliefs to M/s AC. 11. Mr Kamat, relying upon Sushil Kumar Agarwal vs. Meenakshi Sadhu and Others 2019 2 SCC 241, submitted that the learned District Judge's approach was perverse, and the impugned orders warrant interference. He submitted that the learned District Judge failed to investigate or decide whether the termination was prima facie valid. In that sense, the learned District Judge failed to decide on the prima facie case. He submitted that this was a serious error warranting interference with the impugned orders. 12. Mr Kamat submitted that the Learned District Judge failed to appreciate that the claims of M/s AC were entirely frivolous and that, in any event, such claims would only be monetary. Therefore, no interim relief could have been granted favouring M/s AC, and in any event, the denial of interim reliefs to WMPL, who is admittedly the owner of the subject property and the constructions, is vitiated by illegality and perversity. 13. Mr Kamat submitted that there was ample evidence on record about breaches by M/s AC. Some documents established that apartments were sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This amount and an additional amount put in by M/s AC for the project were not repaid by WMPL. Agreements were entered into not just for repayment of the amount but also to create an interest in the immovable property. He submitted that this is evident from the proper construction of the agreements. Mr Godbole submitted that the agreements entitled M/s AC to consume not only the existing FSI but also additional FSI, which shall become available for construction on the subject property. He submitted that M/s AC had been empowered to sell constructed tenements in Towers "C" and "D" and receive appropriate sale proceeds. 20. Mr Godbole submitted that WMPL breached the terms and conditions of the agreements and began illegally obstructing the construction of Towers "C" and "D." He submitted that the construction constituted RERA projects, and grave and irreparable prejudice would occur not only to M/s AC but also to purchasers of the apartments if any injunction is granted or if WMPL is permitted to obstruct construction activity. 21. Mr Godbole submitted that the learned District Judge rightly granted the injunction favouring M/s AC because otherwise, M/s AC would be declared a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the appointment of Mr Justice D. G. Karnik (Retired), a former judge of this Court, as a Sole Arbitrator. They have also agreed that the seat and venue of the arbitration shall be in Pune. 29. This Arbitration Agreement is taken on record. A statement of disclosure under Section 12(1) of the Arbitration and Conciliation Act, 1996 is also received from Mr. Justice D. G. Karnik, indicating that there are no circumstances likely to give rise to any justifiable doubt or affect the ability of the learned Arbitrator to enter upon reference in this matter. 30. Accordingly, with the consent of the parties as communicated by their learned counsel and based on the written Arbitration Agreement dated 18 November 2024 placed by the learned counsel on record, Mr Justice D. G. Karnik, a retired judge of this Court, is appointed as an arbitrator to resolve the disputes between the parties. 31. M/s. WMPL, along with the brief notes/submissions submitted by their advocates, have enclosed an affidavit/undertaking on behalf of the WMPL. The offer now made in the affidavit/undertaking filed along with the brief notes/submissions on behalf of the appellants was never made during the arguments. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercised with great circumspection. 35. The rival contentions will have to be evaluated by applying the above principles. 36. The contention that the learned District Judge has not at all adverted to the aspects of prima facie case, balance of convenience and irreparable loss and prejudice is incorrect. A finding has been given on all three aspects against WMPL. However, the prima facie case element could have been more adequately considered, given the contentions about the agreements not being specifically enforceable. But, it is not as if this aspect is entirely ignored or that the trial court was unaware of the same as alleged by Mr Kamat. 37. WMPL contends that the agreement between the parties create no right, title or interest in the subject property or even the constructions. Therefore, there was no question refusing WMPL any injunction or granting M/s. AC any injunction. The argument was that in absence of any right or interest in immovable property, specific performance at the behest of M/s AC was out of question. If no specific performance was possible, no injunction could have been granted favouring M/s AC and no injunction could have been refused to WMPL, admittedly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween the parties. 43. In any event, the decision in Sushil Kumar Agarwal (supra) is relevant in the context of prima facie case. However, even if we proceed on the premise that the petitioner has prima facie established that the agreements in question are not specifically enforceable, still, because the construction of Towers "A", "B" and "D" is almost fully complete and even the construction of Tower "C" is complete upto the 6th floor, the issues of balance of convenience and irreparable loss and prejudice will have to be answered in favour of M/s AC. Besides, as noted earlier, the interest of purchasers and the fact that this is a RERA project requiring strict adherence to a time schedule also cannot be ignored. Unless the requirements of prima facie case, balance of inconvenience and irreparable loss and prejudice coexist, there is no question of grant of any interlocutory relief. 44. Admittedly, M/s. AC has completed constructing Towers "A" and "B" at its own cost and effort. Similarly, construction up to the 6th floor of Tower "C" and a substantial portion of Tower "D" is also complete. The construction now in progress concerns the 7th to 20th floors of Tower "C". 45. Tower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of balance of convenience and irreparable loss. M/s AC is actually carrying out the construction. Their men and machinery are at the site. They have established their financial worth by completing the constructions of Tower A and B and a substantial portion of Tower D. Because WMPL could not pay for the construction of Tower A and B, agreements were entered from which now disputes have arisen. 51. The affidavit-cum-undertaking which was sought to be included alongwith the notes/submissions without even seeking any leave from the Court inspires no confidence whatsoever. Not even a statement was made about such undertaking. Therefore, based on such undertaking which is not backed by any material to suggest that WMPL has the necessary wherewithal and finance, we do not think that it would be appropriate to leave the purchasers in lurch or to stop the construction in the fond hope that WMPL will take it over and complete the same. 52. Mr. Kamat referred to M/s. AC and partners breaching the District Court's status quo order dated 20 April 2024. He submitted that despite this status quo, M/s. AC attempted to sell apartments and even accepted a cheque dated 16 May 2024 from a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Deepesh Dave for the sale of apartments by defying a status quo order. He pointed out that M/s AC did not even dispute Deepesh Dave's affidavit and the material produced along with it. 59. The material on record suggests that M/s AC was involved in cash transactions. To that extent, Mr Kamat's submission is merited. However, based on this prima facie finding, no case is made to grant an injunction restraining the construction or completion of the project. Some terms need to be imposed on M/s AC in this regard. 60. WMPL had alleged that the market rate in the area is Rs. 9500/-per sq. ft. Therefore, we inquired whether M/s. AC would be willing to give an undertaking not to sell the apartments at a rate below Rs. 9500/-per sq. ft. Mr Godbole, initially pointed to the agreement clauses that refer to the rate of Rs 8000 per square feet. But, later, on instructions, he stated that M/s. AC would not sell any apartments at a rate below Rs. 9500/-per sq. ft. He further stated that M/s AC would, without prejudice file an undertaking to this effect. Leave was accordingly granted to file such undertaking. 61. M/s. AC has furnished an undertaking to this Court which reads as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , consistent with the undertaking quoted above, shall not agree to sell any apartments at a rate of less than Rs. 9500/- per sq. ft. The undertaking given on behalf of M/s AC is now accepted as an undertaking to this Court. 64. However, no case is made to restrain the execution of agreements regarding 17 apartments. These were transactions entered into much earlier, but no formal agreements were executed. Such execution had to be deferred on account of status quo orders and statements. Therefore, at this stage, there is no point in imposing any restrictions regarding these 17 allotments or agreements. The position of the remaining purchasers is not much different from that of these 17 allottees. 65. M/s AC will, however, not claim any equities regarding sale of apartments. This position must be made clear to the 17 allottees by informing them about the pendency of disputes and legal/arbitration proceedings. 66. Regarding the challenges to the order by which the learned District Judge has granted interim relief to M/s. AC, at least prima facie, the reliefs are broad-based to some extent. While WMPL cannot be allowed to take the law into its hands and physically obstruct the const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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