Bombay High Court
Vardhaman Builders vs Narendra Balasaheb Ghatge on 19 December, 2023
Digitally signed
by LAXMIKANT
LAXMIKANT
2023:BHC-OS:15019
GOPAL
GOPAL CHANDAN
CHANDAN Date:
2023.12.20
10:00:28 +0530 1 COMAP-92.23 .doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL APPEAL NO.92 OF 2023 (NOB)
IN
COMM. ARBITRATION PETITION (L) NO.12018 OF 2023
Vardhaman Builders : Appellant/Petitioner.
Vs.
Narendra Balasaheb Ghatge & ors. : Respondents.
WITH
INTERIM APPLICATION NO.3363 OF 2023
IN
COMMERCIAL APPEAL NO.92 OF 2023
Vardhaman Builders : Applicant
(Orig.Appellant/Petitioner)
In the matter between
Vardhaman Builders : Appellant/Petitioner.
Vs.
Narendra Balasaheb Ghatge & ors. : Respondents.
-----
Mr. Kevic Setalvad, Senior Advocate a/w Mr. Jehan Lalkaka,
Ms.Rashna Khan, and Mr. Simon Mascarenhas i/by Mulla & Mulla
and Craigie Blunt and Caroe for the Appellant/Applicant.
Mr. Suneel Mogre a/w Mr. Chinmaya Acharya i/by Mr. Kevin
Pereira for Respondent Nos.1 and 2.
Mr. Mayur Khandeparkar a/w Mr.Rohan Savant, Mr.Viraj Jadhav,
Ms. Disha Jain, Adv. Jasvinder Choudhary and Mr. Gaurav Lele
i/by Mr. Ashwin Sawlani for Respondent No.3.
-----
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CORAM : DEVENDRA KUMAR UPADHYAYA, CJ. &
ARIF S. DOCTOR, J.
DATE : 19th DECEMBER, 2023
P.C. :
1 The captioned Commercial Appeal is not on board.
With the consent of the learned counsel for the parties, the
Appeal is taken on board and heard finally.
2 The Appeal impugns an order dated 11th July 2023 by
which the Commercial Arbitration Petition filed by the Appellant
under Section 9 of the Arbitration and Conciliation Act, 1996
("the Arbitration Act") came to be dismissed.
3 Before adverting to the rival contentions, it is useful
to set out the following facts which will give a context to the
challenge before us, viz.
i. The Appellant had initiated arbitration proceedings
against Respondent Nos. 1 and 2 (the Respondent
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Owners) and had sought specific performance qua a
Plot of land admeasuring about 1580.28 sq.mt. CTS
323, Borivali ("the said property") of which
Respondent No. 1 and 2 were the owners. By an
Award dated 22nd November 2011 the Arbitral Tribunal
was pleased to reject the Appellant's prayer for
specific performance as also the prayer for damages.
ii. The Arbitral Award was subsequently set aside by an
order dated 8th February 2017 passed in Arbitration
Petition No. 286 of 2012 filed by the Appellant under
Section 34 of the Arbitration Act. The Respondent
Owners filed Arbitration Appeal No. 257 of 2017
("Arbitration Appeal) under Section 37 of the
Arbitration Act impugning the order dated 8 th
February 2017. The Arbitration Appeal also came to
be dismissed by an order dated 24th November 2017.
iii. It was thus that the Appellant on 28th February 2018
filed an Application under Section 11 of the Arbitration
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Act for appointment of a new Arbitrator in view of the
dismissal of the Appeal (Commercial Arbitration
Application 78 of 2018).
iv. Thereafter by an order dated 6th April 2018, the
Hon'ble Supreme Court remanded the Appeal, (being
Arbitration Appeal No. 257 of 2017) back to this
Hon'ble Court for consideration on merits and also
expedited the hearing of the said Appeal. The
Appellant thereafter on 12th April 2018 withdrew
Arbitration Application No.78 of 2018.
v. On 25th June 2018 a Development Agreement came to
be executed between Respondent Owners on the one
hand and Respondent No.3 (Respondent Developer)
on the other in respect of the said property. It is the
Appellant's contention that the Appellant became
aware of this Development Agreement for the first
time only in April 2023 on noticing that the said
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property had been boarded up with large metal
construction sheets and the structures standing
thereon being demolished.
vi. It was thus that the Appellant on 17th April 2023, filed
Interim Application No.1686 of 2023 in the Arbitration
Appeal inter alia seeking injunctive relief against the
Respondent Owners from dealing with and/or
dispossessing the said property. It is the Appellant's
case that it was only on filing of the Affidavit in Reply
by Respondent Owners that they, for the first time,
became aware of the Development Agreement
entered into between the Respondent Owners and the
Respondent Developer.
vii. On 24th April 2023 a Division Bench of this Court
granted the Appellant leave to withdraw the Interim
Application and file a Petition under Section 9 of the
Arbitration Act before the Learned Single Judge. It
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was thus that the captioned Commercial Arbitration
Petition came to be filed by the Appellant on 27 th April
2023. The Appellant thereafter on 20 th June 2023
invoked arbitration against the Respondent Owners
and Respondent Developer. The Respondent Owners
and the Respondent Developer refused to participate
in the fresh arbitral proceedings inter alia on the
ground that the Arbitration Appeal was pending and
contended that pending determination thereof, the
Appellant was not entitled to invoke the arbitration
again.
viii. The Appellant thereafter on 5th July 2023 filed the
second Application (Commercial Arbitration
Application 165 of 2023) under Section 11 of the
Arbitration Act for Constitution of an Arbitral Tribunal.
The captioned Commercial Arbitration Petition was
heard on 11th July 2023 when the Impugned Order
dismissing the Interim relief was passed.
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Submissions of Mr. Setalvad, on behalf of the Appellant
4 At the outset, Mr. Setalvad, Learned Senior Counsel,
appearing on behalf of the Appellant submitted that by the
Impugned Order, not only had the Learned Single Judge
dismissed the Interim Application on factually and legally
untenable grounds, but had also effectively prevented the
Appellant from proceeding with the Section 11 Petition against
the Respondent Developer. He thus submitted that the Appellant
was rendered remediless.
5 Mr. Setalvad then in dealing with his first contention
i.e. that the Interim Application was dismissed on factually and
legally untenable grounds submitted that the Learned Single
Judge had gravely erred in placing reliance upon the judgement
of in the case of Dirk India Pvt. Ltd. vs. Maharashtra State
Electricity Generation Company1 to deny relief to the
Appellant on the basis that the Appellant was the unsuccessful
party in Arbitration. He pointed out that the Impugned Order
1 2013 7 Bom CR 493
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suffered from inherent contradictions as the Learned Single
Judge had on the one hand denied relief to the Appellant on the
ground that the Appellant was the unsuccessful party in
Arbitration and thus in terms of the law laid down in Dirk India
Pvt. Ltd. (supra) denied relief to the Appellant, while on the
other hand, the Learned Single Judge had specifically recorded
that the parties were at the pre arbitral stage. Basis this he
submitted that the Impugned Order was required to be set aside
and the matter to be remanded back for consideration of the
Interim Application afresh on merits.
6 Mr. Setalvad then invited our attention to paragraph
22 of the Impugned Order and pointed out that the Learned
Single Judge had factually erred by recording therein that the
Appellant had not invoked arbitration. He pointed out that it was
specifically brought to the knowledge of the Learned Single
Judge that the Appellant had invoked arbitration to which the
Respondents had even replied. He pointed out that it was in fact,
not even the case of either the Respondent Owners or the
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Respondent Developer that the Appellant had not invoked
arbitration. He submitted that the Learned Single Judge had thus
proceeded on a completely erroneous basis/assumption that the
Appellant had not invoked arbitration, and that the parties were
at the post award stage, basis which relief was denied to the
Appellant.
7 He then, highlighted the conduct of the Respondents
and pointed out that the Respondents had on the one hand
resisted arbitration on the ground that the Arbitration Appeal
was pending, while on the other hand they were rapidly
proceeding with development on the said property which would
effectively defeat the Appellant's claim. He pointed out that the
effect of denial of interim relief was that the Respondent
Developer would build upon the said property and thereby
effectively defeat the rights of the Appellant under the
Memorandum of Understandings entered into with the
Respondent Owners.
8 Mr. Setalvad then submitted that it was only in April
2023 i.e., when the Appellant first became aware of the
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Development Agreement entered into between the Respondent
Owners and the Respondent Developer that occasion to apply for
interim measures of protection first arose. He pointed out that
the Development Agreement had been entered into by the
Respondent Owners with the Respondent Developer without at
any time informing this Court of the same. Basis such conduct,
he submitted that it was imperative that the Appellant be
granted interim reliefs as prayed, failing which the Respondents
would succeed in making capital of their mala fide conduct.
9 Mr. Setalvad pointed out that the Learned Single
Judge had erred in holding that the Appellant was merely
seeking a restraint order against a third party (Respondent
Developer) under Section 9 of the Arbitration Act. He submitted
that it was well settled that under Section 9 interim measures of
protection could infact be granted against a third party i.e., non-
signatory to an arbitration agreement. In support of his
contention, he placed reliance upon the judgments of this
Hon'ble Court in the case of Girish Mulchand Mehta Vs.
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Mahesh Mehta2 and Housing Development and
Infrastructure Limited Vs. Mumbai International Airport
Pvt. Ltd.3
10 He then to buttress his contention that in the present
case the Appellant was entitled to interim measures of protection
against the Respondent Developer invited our attention to
clauses 1(d), 1(e), 3A, 6 and 18 of the Development Agreement
and pointed out therefrom that the rights of the Respondent
Developer were entirely dependent upon the outcome of the
Arbitration Appeal. It was thus he submitted that the finding of
the Learned Single Judge that the Appellant was merely seeking
a restraint order against a third party who had entered into an
Agreement with the Respondent Owners was plainly incorrect.
11 Mr. Setalvad then submitted that Court as
contemplated in Section 43(4) of the Arbitration Act must
necessarily mean the Court which finally decides the lis between
2 2010 2 Mh LJ 657
3 2013 SCC Online Bom 1513
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the Parties and not the Court passing orders under Section 34 of
the Arbitration Act. He submitted that if "the Court" under
Section 43(4) was not the Court which finally decides the matter
the same would lead to absurd consequences. He submitted that
this issue was now no longer res integra. In support of his
contention, he placed reliance upon a judgement of this Court in
the case of Siddhivinayak Realities Vs. V Hotels Limited 4
and a judgement of the Punjab and Haryana High Court in the
case of State of Uttar Pradesh Vs. Firm M/s Pearl Hosiery
Mills Ludhiana5 .
12 Mr. Setalvad then without prejudice to his aforesaid
contention, submitted that even on first principles, an Appeal is
merely a continuation of the original proceedings. He thus
submitted that it would be absurd to suggest that the exclusion
period under Section 43(4) would come to an end on the date
the competent Court passes an order under Section 34 of the
Arbitration Act and not the date on which any appeal/challenge
4 MANU/MH/1163/2021
5 ILR 1975 (2) PH 77
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from such order is finally disposed of. In support of his
contention he placed reliance upon the following judgments
Laxmi Narayan Guin Vs. Niranjan Modak6, Rafiquennessa
Vs. Lal Bahadur Chetri7, Amarjit Kaur Vs. Pritam
Singh8and Dayawati Vs. Inderjit9. Basis this, he submitted
that there was no delay on the part of the Appellant and present
arbitration proceedings were in no manner delayed, much less
beyond limitation since the Appellant became aware of the
Development Agreement only in April 2023 and the Arbitration
Appeal was still pending.
13 Mr. Setalvad then submitted that in light of the
observations made in the Impugned Order the Appellant could
not move the Section 11 Application since the observations
made by the Learned Single Judge in the Impugned Order that
the Respondent Developer cannot be brought within the purview
of the arbitration proceedings would come in the way of the
Appellant proceeding to arbitration. Placing reliance upon the
6 1985 1 SCC 270
7 1964 6 SCR 876
8 1974 2 SCC 363
9 1966 3 SCR 275
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judgement of the Hon'ble Supreme Court in the case of Arcelor
Mittal Nippon Steel India Ltd Vs. Essar Bulk Terminal
Ltd.10 he pointed out that once the Arbitral Tribunal is
constituted, the Court cannot grant interim relief under Section
9, and it is only for the Arbitrator to consider such interim relief
in an Application filed under Section 17 of the Arbitration Act. He
thus submitted that the Impugned Order had effectively
rendered the Appellant remediless since the Learned Single
Judge had on the one hand denied relief to the Appellant under
Section 9 of the Arbitration Act and on the other, held that the
Respondent Developer could not be brought within the purview
of arbitration. Thus, he submitted that the very arbitration
invoked by the Appellant had been defeated by the Impugned
Order as the same would equally bind the Arbitral Tribunal in any
application taken out under Section 17.
14 Mr. Setalvad then placed reliance upon the judgement
of the Hon'ble Supreme Court in the case of Cox and Kings Ltd
10 2022 1 SCC 712
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Vs. SAP India Pvt Ltd11 and pointed out that the same
specifically held that it was the Arbitral Tribunal that should
decide whether a non-signatory party is indeed a party to the
arbitration agreement and/or required to be joined as a party to
the arbitration. In the present case he pointed out that the
Respondent Developer was deemed to be a party to the
Agreement given the plain terms of the said Development
Agreement.
15 Mr. Setalvad, in the aforesaid backdrop of facts,
submitted that the balance of convenience was entirely in favour
of the Appellant. He submitted that commencement certificate
had been granted to the Respondent Developer on 8th December
2023 and that the Respondent Developer was taking active steps
to commence the re-development. He however pointed out that
at present, no excavation work had commenced. He therefore
submitted that if an injunction was not granted at this stage, the
Respondent Developer would proceed to construct a building and
thereafter create third party interest therein. He submitted that
11 2023 SCC Online SC 1634
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if an injunction was not granted and the Appellant ultimately
succeeded in the arbitration, the Appellant would have to take
steps to remove the flat purchasers and demolish the building.
He further submitted that the Respondent Owners and the
Respondent Developer had entered into the Development
Agreement with open eyes and made the same subject to the
pending Arbitration Appeal. He thus submitted that neither of
them could therefore claim any equity basis steps taken under
the Development Agreement. Insofar as the tenants of the
building, which was standing on the said property, he submitted
that they would also not in any manner be prejudiced by any
such order of injunction since under the Development
Agreement, the tenants were to be provided with either
alternate accommodation or paid monetary consideration in lieu
of their tenancy rights. He pointed out that the Development
Agreement did not contemplate re-housing the tenants in the
newly proposed building.
16 Basis the above, he submitted that the Appellant had
made out a strong prima facie case and balance of convenience
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was entirely in favour of the Appellant. He thus submitted that it
was just and equitable to allow the present Appeal and injunct
the Respondents from carrying out any construction work on the
property. In support of his contention, he placed reliance upon
the judgement of this Hon'ble Court in the case of Raigad CHS
Vs. Suman Eknath Gaike12.
Submissions of Mr. Khandeparkar, on behalf of
Respondent-Developer.
17 Per contra, Mr. Khandeparkar, Learned Counsel
appearing on behalf of the Respondent Developer submitted that
the Appellant had clearly abandoned the arbitration. He pointed
out that the Appellant unconditionally withdrew the first
Application under Section 11 filed by it on 12 th April 2018
without seeking liberty to file a fresh. He then pointed out that
the second Application under Section 11 was filed on 5 th July,
2023 which was almost six years from the date on which the
Arbitral Award was set aside. He submitted that the Respondent
Owners had issued the termination notice dated 24 th July 2006
12 2021 SCC Online Bom 13958
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and invoked arbitration by a notice dated 2 nd September 2006
and the award was set aside on 8th February 2017. Mr.
Khandeparkar submitted that the Arbitration Application under
Section 11 (6) of the Arbitration Act ought to have been filed
within three years from the date of the Award being set aside. In
support of his contention that Article 137 of the Limitation Act,
1963 would also apply in the instant case, he placed reliance
upon the judgement of the Hon'ble Supreme Court in the case of
Bharat Sanchar Nigam Ltd. & Anr. Vs. M/s Nortel
Networks India Pvt Ltd.13. He then pointed out that once the
limitation period commences the same continues to run and
exclusion of time, if any, would only be as per Sections 12 to 24
of the Limitation Act or Section 43(4) of the Arbitration Act. In
the present case it was his contention that none of the grounds
for exclusion of time under Section 12 to 24 of the Limitation Act
were available to the Appellant.
18 Mr. Khandeparkar, then submitted that the Appellant
could not be permitted to hitch their wagon to the Arbitration
13 (2021) 5 SCC 738
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Appeal filed by the Respondent Owners since whatever the
outcome thereof, the Appellant would not be granted the relief of
specific performance in whatever the fate of those proceedings
were. It was thus, he submitted that the exclusion of time as per
Section 43(4) of the Arbitration Act could not be extended
beyond the date on which the Arbitral Award was set aside under
Section 34 unless there was a stay of such order. In this context,
he pointed out that the words used in Section 43 (4) of the
Arbitration Act were "Where the court orders that an arbitral
award be set aside" and not "where the proceedings for setting
aside the arbitral award concludes". Basis this, he submitted that
the intention of the legislature was clear and unambiguous that
the trigger point for limitation was date on which the award is
set aside. He submitted that the exclusion of time cannot be
kept in abeyance or suspension without an order of the Court.
He pointed out that the exclusion of time could only be claimed
when the Appeal filed under Section 37 of the Arbitration Act
was filed by an unsuccessful petitioner and where the award was
set aside in such Appeal for the first time. It was submitted that
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the exclusion of time contemplated under Section 43 (4) comes
into operation immediately when the award is set aside and the
same cannot be kept in abeyance absent a specific stay. He then
submitted that it was well settled that the law of limitation is a
harsh law, but equally had to be applied with all its rigour when
the statute so prescribes. He submitted that the Court has no
power to extend the period of limitation on equitable grounds
even though the statutory provision may sometimes cause
hardship or inconvenience to a particular party. He submitted
that the Court had no choice but to enforce it giving full effect to
the same. In support of his contention, he placed reliance upon
the judgment of the Hon'ble Supreme Court in the case of
F.Liansanga & Anr vs Union of India & Ors.14
19 Mr. Khandeparkar then submitted that the doctrine of
merger does not apply to Section 34 or Section 37 of the
Arbitration Act. He submitted that the proceedings under Section
34, after an Arbitral Award is passed, are not proceedings which
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are in continuation of the Arbitral Proceedings. He submitted
that unlike the Appeal, in a Petition under Section 34, the Court
can either set aside an Arbitral Award or part thereof or then
dismissed the Arbitration Petition. It cannot pass a decree or
allow a claim which has been rejected by the Arbitral Tribunal. In
support of his contention, he placed reliance upon a judgement
of the Hon'ble Supreme Court in the case of MMTC Limited Vs.
Vedanta Ltd.15. He thus submitted that considering the limited
scope of Section 34 Petition filed by the Respondent Owners, the
Appellant cannot be permitted to take advantage of the
pendency of such Appeal to assert that the filing/pendency of
the same has suspended the Appellant's right indefinitely. He
submitted that the concept of merger would also not apply in the
present case because execution proceedings under Arbitration
Act are always in the context of an Award. He submitted that the
order passed by a Court under Section 34 or Section 37 is never
executed. He submitted that it is the Award passed by the
Arbitral Tribunal which is executed under Sections 35 and 36 of
the Arbitration Act. He, therefore, submitted that the otherwise
15 (2019) 4 SCC 163
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applicable rule of merger in the context of Suits and Appeals
would not be applicable to arbitral proceedings.
20 Mr. Khandeparkar then submitted that the Appellant
had taken no effective steps to actually commence the Arbitral
Proceedings and thus had no present right to seek any injunctive
reliefs qua the said property. He pointed out that despite the fact
that the Respondent Owners had issued a notice of termination
dated 24th July 2006, the Appellant had at no point thereafter
taken any steps to stay the effect of such termination or to
restrain Respondent Owners from acting thereon. He submitted
that therefore there was absolutely no fetter on the Respondent
Owners in any manner dealing with the subject property for the
last approximately 18 years. He pointed out that the Respondent
Owners were constrained to execute the Development
Agreement with the Respondent Developer on account of the
fact that the building had outlived its life and had to be
demolished pursuant to the notice dated 21st October 2022
issued under Section 354 of the Mumbai Municipal Corporation
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Act, 1888. He pointed out that the Appellant, save and except
for deposit/payment of an amount of Rs.22,00,000/-, had taken
no steps whatsoever. He pointed out that the said amount of Rs.
22,00,000/- along with interest had been deposited with the
Prothonotary and Senior Master. He then submitted that it was
well settled that a mere Memorandum of Understanding creates
no interest in the property and further that there was no
registered document, basis which the Appellant could claim any
rights in the said property. He pointed out that the Appellant, if
at all, would always be entitled to claim compensation in terms
of money, but the Appellant was merely attempting to profiteer
from what was a purely commercial transaction in respect of
which the Appellant had failed to perform/discharge its
obligations.
21 Mr. Khandeparkar submitted that it was imperative for
the Appellant, who was seeking interim protection under Section
9 of the Arbitration Act, to satisfy the Court that the arbitral
proceedings were infact actually contemplated or manifestly
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intended, and that the Appellant was positively going to
commence the proceeding within a reasonable period of time. In
support of his contention, he placed reliance upon a judgement
of the Hon'ble Supreme Court in the case of Firm Ashok
Traders & Anr. Vs. Gurumukh Das Saluja & Ors.16. In the
present case, he reiterated that the Appellant had effectively
abandoned the proceedings having taken no steps whatsoever
since 2017 except for filing the first Arbitration Application in the
year 2018 and then subsequently withdrawing the same. He
submitted that the Appellant's conduct in the present case did
not even remotely reflect that the Appellant actually
contemplated or manifestly intended that the Appellant was
going to commence Arbitration Proceedings within a reasonable
time.
22 Mr. Khandeparkar, in dealing with the judgement of
the Hon'ble Supreme Court in the case of Cox and Kings Ltd.
(supra) relied upon by the Appellant, pointed out that the
Appellant's reliance thereon was entirely misplaced. He pointed
16 (2004) 3 SCC 155
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out that since the Respondent Developer was not a party to the
Memorandum of Understanding, the Respondent Developer could
not be regarded as a party as contemplated in Section 2(1)(h)
and Section 7 of the Arbitration Act. Equally he pointed out that
the Appellant was not a party to the Development Agreement,
which was admittedly executed only between the Respondent
Owners on the one hand and the Respondent Developer on the
other hand. It was thus, he submitted that the Appellant could
not implead the Respondent Developer in the Section 9 Petition
or seek to challenge a document executed by the Respondent
Developer in arbitration proceedings to which the Respondent
Developer had not consented to be a part of. He submitted that
the cause of action, if any, that the Appellant might have against
the Respondent Developer was entirely independent of the
arbitral proceedings between the Appellant and the Respondent
Owners. He, therefore, submitted that it was incumbent upon
the Appellant to have adopted an appropriate independent
remedy against the Respondent Developer as may be available
to the Appellant in law. He submitted that any cause of action
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that the Appellant might have against the Respondent Developer
was thus independent and distinct from the cause of action that
the Appellant had against Respondent Owners.
23 Mr. Khandeparkar then, in dealing with the judgement
of this Hon'ble Court in the case of Siddhivinayak Realties
Pvt. Ltd. (supra), submitted that the same was wholly
inapplicable to the facts of the present case, since in that case
the Plaintiff therein when withdrawing the Section 11 Petition
filed was infact granted liberty to file a Suit whereas in the
present case the Appellant had unconditionally withdrawn the
first Section 11 Application. .
24 Mr. Khandeparkar then placed reliance upon an order
passed by this Court in the case of Wadhwa Group Holdings
Pvt. Ltd. Vs. Homi Pheroze Ghandy & Anr.17 submitted that
this Court had taken the view that notwithstanding the pendency
of an Appeal under Section 37, a party can file and maintain an
Application under Section 11 for constituting the Arbitral Tribunal
17 Order dated 7th March 2022 in Commercial Arbitration Application No.414 of 2019.
LGC 26 of 33
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after securing an order of setting aside an Arbitral Award. He
submitted that this was because there was no stay of the order
setting aside the order of the Arbitral Tribunal and also
considering the scheme of the Arbitration Act contemplates
expeditiousness. He submitted that the ratio in the case of
Siddhivinayak Realties Pvt. Ltd. (supra) would not be
applicable.
Submission of Mr. Mogre, on behalf of Respondent-
Owners.
25 Mr. Mogre while adopting the submissions made by
Mr. Khandeparkar placed reliance on the judgment in the case of
Dirk India Pvt. Ltd. (supra) to submit that the same had been
properly construed by the Learned Single Judge. He pointed out
that if the Appellant had been granted relief in Section 9 Petition,
the same would result in interim specific performance of a
contract in the teeth of Arbitral Award which held to the
contrary. He pointed out that the interference of the Court at
this stage to grant what in essence, according to him, was a
mandatory order for interim specific performance would negate
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a sanctity and efficacy of the Arbitral process. He submitted this
because even if the Respondent Owners were to fail in the
Arbitration Appeal, the Appellant would still not be entitled to
specific performance in these proceedings. He, therefore,
submitted that what a litigating party could not possibly obtain
upon completion of the proceedings under Section 34, they could
not secure in a Petition under Section 9 as an interim measures
of protection. Basis this, he submitted that the question of
Appellant now in the present fact scenario seeking interim
measures of protection did not arise. He also then reiterated that
despite the Respondent Owners having issued a letter of
termination in the year 2006, no steps whatsoever were taken
by the Appellant to in any manner restrain the Respondent
Owners from dealing with the said property. He pointed out that
there has thus never been any fetter upon the Respondent
Owners from dealing with the said property. He, therefore,
submitted that the Respondent Owners were well and sufficiently
entitled to enter into the Development Agreement. He pointed
out that the amount paid by the Appellant had been deposited in
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this Court and would be returned to the Appellant along with
accrued interest, therefore, no prejudice whatsoever would be
caused to the Appellant. Basis this, he submitted that the
present Appeal be dismissed.
Reasons and Conclusion
26 As already noted by us above, the Appellant's
challenge in the present Appeal is twofold. Firstly, the Appellant
has contended that relief under Section 9 of the Arbitration Act
was denied to the Appellant on both factually as also legally
untenable basis and, secondly, that the Learned Single Judge
had effectively rendered the second Application under Section 11
qua Respondent Developer as infructuous. It was basis this that
both Mr. Setalvad appearing on behalf of the Appellant and Mr.
Khandeparkar appearing on behalf of the Respondent Developer,
advanced detailed arguments on the aspect of the
maintainability of the second Application under Section 11. We
must, however, note that what is before us is an Appeal from an
Order passed in a Petition filed under Section 9 of the Arbitration
Act and not either the section 11 Application or any challenge
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thereto. It is for this reason that it is not necessary for us to
enter into the realm of the controversy of the maintainability or
otherwise of the Section 11 Application which is presently
pending and shall no doubt be heard and decided on its own
merits. For this reason, we make it clear that the second
Application under Section 11 being Commercial Arbitration
Application No. 165 of 2023 shall be heard and disposed of on its
own merits uninfluenced by the observations made by the
Learned Single Judge in the Impugned Order.
27 Insofar as the Appellant's challenge to the failure to
grant interim measures of protection to the Appellant, what we
find is that the Learned Judge has essentially denied relief to the
Appellant by placing reliance upon the judgement of this Hon'ble
Court in the case of Dirk India (supra) on the basis that the
Appellant was the unsuccessful party in arbitration and was thus
not entitled to seek any relief under Section 9 of the Arbitration
Act. We find that this premise is palpably erroneous since infact
that Arbitral Award was set aside, and the Appellant had sought
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31 COMAP-92.23 .doc
to have its claim adjudicated afresh. In these circumstances it
cannot be said that the Appellant was the unsuccessful party in
arbitration. We must also that the Learned Single Judge has
infact in the Impugned Order noted that the Parties were at a
pre arbitration stage which would mean that the judgement in
the case of Dirk India (supra) would infact not apply. Another
patent error in the Impugned Order is that the Learned Single
Judge has erred in recording that the Appellant had not invoked
arbitration and was merely seeking a restraint order against a
third-party/Developer, who had entered into an agreement with
the Respondent owners. Firstly, there is no dispute that the
Appellant had infact filed Commercial Arbitration Application No.
165 of 2023 i.e. the Second Arbitration Application in which both
the Respondent Owners and the Respondent Developer were
parties and against all of whom the appointment of an Arbitrator
was sought for and secondly, it is well settled that relief under
Section 9 can be granted against a third party. The objection as
to whether or not the Respondent Developer could be made a
party to the Arbitration proceedings was an issue to be decided
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32 COMAP-92.23 .doc
by the Arbitral Tribunal as has been held by the Hon'ble
Supreme Court in the case of Cox and Kings (supra).
28 Given the above, we find force in the contention of
Mr. Setalvad learned senior counsel appearing on behalf of the
Appellant that by the Impugned Order, the Appellant has
effectively been rendered remediless. We must also note that
there has been not adjudication on merits by the Learned Judge
but the Appellant has been denied relief only on the aforesaid
grounds which we have found untenable. In view thereof, we
accordingly set aside the Impugned Order and remand the
matter back to the Learned Single Judge for consideration of the
same afresh. We make it clear that the observations made in
this order are only for the purposes of considering and disposing
of the present Appeal and shall not in any manner come in the
way of the Learned Single Judge when deciding Commercial
Arbitration Petition (L) No. 12018 of 2023. All the rights and
contentions of the parties are kept open.
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33 COMAP-92.23 .doc
29 For the reasons stated herein above, the captioned
Appeal is disposed of in aforesaid terms.
30 In view of the disposal of the Appeal, the captioned
Interim Application does not survive and the same is accordingly
disposed of.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE)
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