M/S Pacific Greens Infracon Pvt. ... vs M/S Senior Builders Ltd.
2009 Latest Caselaw 1399 Del

               * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                     Date of Reserve: 13.04.2009
                                                    Date of Order: 15th April, 2009

OMP No. 190/2009
%                                                                    15.4.2009

       M/s. Pacific Greens Infracon Pvt. Ltd. ... Petitioner
             Through:     Mr. Harish Malhotra, Sr. Adv. with
                          Ms. Tania Sharma, Adv.

              Versus


       M/s. Senior Builders Ltd.           ... Respondent
             Through:     Mr.Sanjay Goswami & Mr. H.K. Balaji, Advs.


JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the judgment? Yes.

2. To be referred to the reporter or not?                                    Yes.

3. Whether judgment should be reported in Digest?                            Yes.



JUDGMENT

By this application under Section 9 of the Arbitration & Conciliation

Act, 1996 the petitioner has prayed to the Court that the Court should restrain

respondent from selling, transferring, disposing of or alienating or creating any

third party interest with respect of 50,000 sq. feet of area in a Mall named as

Senior Destination Mall/Senior Mall. The Court should restrain respondent from

interfering into the rights of the petitioner in selling/marketing or dealing with

50,000 sq. feet of area in the aforesaid Mall and the Court should stay the

operation of letter dated 18.2.2009 issued by respondent terminating the Joint

Venture Agreement. It is also submitted that the respondent in advertisements

termed the mall as „Senior Mall‟ while under the Joint Venture Agreement it was

to be named as „Senior Destination Mall‟.

2 Brief facts relevant for the purpose of deciding this application are

that the petitioner entered into a Joint Venture Agreement with the respondent on

28.2.2007 whereas the respondent had entered into a Collaboration Agreement

dated 16.4.2003 with one Mr. Amar Singh for development and construction of a

multi storey commercial building in Gurgaon on a plot of land measuring 6600 sq.

yards. Under the Collaboration Agreement respondent was to receive 60% of

the built up commercial area and Mr. Amar Singh was to have 40%. In respect of

its rights over 60% area, the respondent entered into a Joint Venture Agreement

with the petitioner and the petitioner was to get right of selling for around 50,000

sq. feet unsold space within the 60% share of the respondent and in turn the

petitioner was to infuse funds to the tune of around Rs.15 crore. The petitioner

had paid around Rs.1 crore on 29.1.2007 and Rs.50 lac on the date of execution

of Joint Venture Agreement i.e. 28.2.2007. The petitioner had booked part of the

space with Indiabulls and an amount of Rs.60 lac was paid by Indiabulls to

respondent. It is thus stated that it had already invested Rs.2.1 crore into the

Joint Venture Agreement and the respondent has wrongfully terminated the Joint

Venture Agreement by its letter dated 18.2.2009.

3. The respondent in this case had filed a caveat and appeared in the

case and as agreed between the parties the arguments on the matter have been

heard. Respondent chose not to file any reply. The issue of jurisdiction has

been raised by the respondent apart from the other issues, since the property in

question is situated outside the jurisdiction of the court.

4. Counsel for the petitioner submitted that this Court would have

jurisdiction in view of arbitration clause entered into between the parties and the

fact that the contract between the parties was signed at Delhi. Both the parties

are having their offices and business in Delhi. The Arbitration clause between

the parties reads as under:

23. That is case any disputes or differences arise between the parties to the present agreement the same shall be referred to the members of the Committee who shall in case of any tie between them appoint an umpire to decided the said disputes and differences by majority. The progress of work at site however shall not be stopped even in case of any disputes between the parties. The provisions of Indian Arbitration and Conciliation Act, 1996, to the extent applicable shall govern the working of the said Committee of question of any disputes which may arise. The Courts at New Delhi shall have the sole jurisdiction over the matter.

5. Under the Arbitration Act, the parties are at liberty to chose as to

who will be the Arbitrator to adjudicate the disputes for them, what will be the

place of arbitration. There is no restriction on the parties in choosing these two

factors i.e. Arbitrator and the place of arbitration and the parties can even chose

what will be the law applicable. If one party is the Indian Party and the other is

the foreign party, the parties can chose whether the Indian law will be applicable

or the foreign law will be applicable. But the parties cannot by mutual consent

confer jurisdiction on a Court which otherwise does not have jurisdiction. Merely

because the parties have chosen the place of arbitration as Mumbai, Chennai,

Delhi or Kolkata, it would not mean that the Courts at Mumbai, Chennai, Delhi or

Kolkata will have jurisdiction in respect of application filed under Section 9. In

order to decide an application under Section 9, the Court where application is

made must have jurisdiction taking into account the subject matter of the

application. Section 2(1)(e) read with Section 9 of the Arbitration Act makes it

clear that in order to have jurisdiction to decide an application under Section 9,

the Court entertaining the application should be the Court which has power to

entertain the suit on the facts as mentioned in the application under Section 9,

and the Court is competent to give relief in a suit. In the present case, the

petitioner wants this Court to give relief to the petitioner in respect of 50,000 sq.

feet of area situated in a Mall at Gurgaon. The relief sought by the petitioner

that this Court should restrain respondent from selling, transferring or creating

any third party interest in 50,000 sq. feet area of immovable property situated in

Gurgaon and this Court should restrain respondent from interfering into the

petitioner‟s right of selling this 50,000 sq. feet of area is in respect of immovable

property in Gurgaon. I consider that this Court would have no territorial

jurisdiction since the subject matter of the suit is immovable property and this

immovable property is situated outside the jurisdiction of this Court. The

petitioner however relied on Jatinder Nath v. M/s Chopra Land Developers Pvt.

Ltd. & Anr. JT 2007(4) SC 300 wherein Supreme Court had held as under:

We are of the view that at the relevant time the appellant resided at Faridabad. He resided at Faridabad when the contract was made. Under the contract, the parties agreed to refer all disputes to the Faridabad court. Apart for the residence, we are also concerned with the place of accrual of the cause of action. In the present case, a bare reading of the agreement indicates that it is an agreement of developer. The appellant remains the owner, the Developer remains the contractor. The Developer is the financer. The appellant is the owner of an asset. The contractor/ Developer agrees to exploit that asset on behalf of the owner. The Developer funds the scheme. The building plans remained in the name of the owner. The DDA inform the owner regarding revocation of the building plan. The owner files the writ petition challenging the revocation. The contractor is paid consideration in terms of a part of the property. In the circumstances, it cannot be said that this case is similar to a suit for land. One cannot look at para 16 alone in isolation. On the other hand, with open eyes, the parties had entered into the contract, they had agreed to refer all disputes to an arbitrator at Faridabad and they had agreed that the Faridabad court alone shall have jurisdiction. In a matter of this kind, it cannot be said that the claim is similar to a suit for land. A housing complex has to be constructed at the site. When dispute arises, it will not be confined only to immovable property. Such disputes also require accounts to be maintained. The disputes also involve rendition of accounts. In the circumstances, in our view, section 20 CPC alone is attracted. Therefore, in our view, the High Court was right in holding that the Faridabad court had jurisdiction to make the Award the rule of the Court.

6. I consider that this judgment is of no help to the petitioner. In this

case, the issue involved before the Supreme Court was whether the Civil Court

at Faridabad had jurisdiction to entertain a petition under Section 14 of Arbitration

Act, 1940 or not. In the present case, the issue is whether this Court should

issue an injunction order under Section 9 in respect of the property situated in

Gurgaon. The Counsel for the petitioner submitted that the relief sought by the

petitioner was such which could be made effective by personal obedience of the

respondent and this Court will have jurisdiction in view of proviso to Section 16 of

CPC. In Harshad Chiman Lal Modi v. DLF Universal Ltd. & Anr. (2005) 7 SCC

791 Supreme Court had observed that the Court within whose territorial

jurisdiction the property is not situate has no power to deal with the and decide

rights or interest in such property. A court has no jurisdiction over a dispute in

which it cannot give an effective judgment. The proviso to Section 16 no doubt,

states that though the court cannot, in case of immovable property situate

beyond jurisdiction, grant a relief in rem still it can entertain a suit where relief

sought can be obtained through the person obedience of the defendant. The

proviso is based on a well-known maxim "equity acts in personam". The principle

on which the maxim is based is that the courts can grant relief in suits respecting

immovable property situate abroad by enforcing their judgments by process in

personam i.e. by arrest of the defendant or by attachment of his property. The

proviso to Section 16 is an exception to the main part of the section which cannot

be interpreted or construed to enlarge the scope of the principal provision. It

would apply only if the suit falls within one of the categories specified in the main

part of the section and the relief sought could entirely be obtained by personal

obedience of the defendant. In the present case an injunction is sought for

commercial space of 50,000 sq. feet in a Mall in Gurgaon against sale of this

space and against interference of respondent in sale of this space by the

petitioner. I consider that it is not a case which is covered under proviso to

Section 16 of CPC, it is a case where the interference of the Court is sought in

respect of property situated outside the jurisdiction of Court. I find no reason to

entertain this application.

7. I, even otherswise, find that no ground is made out for grant of

interim injunction as prayed by the petitioner. The petitioner had entered into an

commercial agreement with the respondent, the contract has been terminated by

the respondent after a long correspondence between the parties. Under the

contract/Joint Venture Agreement, the petitioner was to infuse funds to the tune

of Rs.15 crore and in lieu thereof petitioner was entitled to reimbursement of

these funds provided by it for the project and a return on this investment of funds

in the form of 19% of the sale proceeds of 50,000 sq. feet of the commercial

space. If, because of termination of contract, the petitioner is aggrieved, the

petitioner can always claim damages from the respondent. The petitioner has so

far invested Rs.2.1 crore and by the notice the respondent has asked the

petitioner to provide true and proper accounts of the dealings done by the

petitioner in respect of marketing and sale of area put at its disposal. The

petitioner can always claim damages, if any loss is suffered by the petitioner. No

injunction can be issued against the respondent because of termination of

contract from selling commercial area or from entering into any contract in

respect of commercial area.

The petition is hereby dismissed.

April 15, 2009                                   SHIV NARAYAN DHINGRA, J.
vn