Ecopark Developers Llp vs Ajay Jogindernath Mehra And 4 Ors
2021 Latest Caselaw 8038 Bom

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             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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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,

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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



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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

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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),



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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.

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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:-

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                                               "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

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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

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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

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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,

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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. )




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