M/S Providence Buildtech Pvt. ... vs Mr. Pratap Dube
2009 Latest Caselaw 3140 Del

 *            IN THE HIGH COURT OF DELHI AT NEW DELHI

                               Date of Reserve: July 29, 2009
                              Date of Order: August 12, 2009
+ OMP No.539/2008
%                                               12.08.2009
    M/S. PROVIDENCE BUILDTECH PVT LTD. ... Plaintiff
              Through : Mr. Rajive Sawhney, Sr. Adv. with
                        Mr. Sanjay Bhatt & Mr. Abishek Kumar,
                        Advs.
         Versus

         Mr. PRATAP DUBE                              .... Defendants
                  Through:       Mr. Dhruv Mehta with Mr. Vijay Nair &
                                 Mr. Rajat Joneja, Advs.

         JUSTICE SHIV NARAYAN DHINGRA


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

2.       To be referred to the reporter or not?

3.       Whether judgment should be reported in Digest?

JUDGMENT

1. By this application under Section 9 of the Arbitration and

Conciliation Act, 1996, petitioner has made a prayer that the

respondent be restrained from alienating, encumbering or disposing

of land acquired by him from MAS society whether in his own name

or in the name of any associate or nominee as well as respondent

be restrained from alienating or encumbering property no. 8, Golf

Links, New Delhi and property no.W-53, Greater Kailash, Part II, New

Delhi.

2. It is submitted by the petitioner that M/s. Ritmay

Builders Pvt. Ltd. (RBPL) had entered into an MOU with the

respondent and his company Multivac International Pvt. Ltd (MIPL)

on 19.12.2006. Under the MOU, the petitioner and the respondent

were jointly to undertake the development of land to the extent of

450 acres in Noida and MIPL was to be converted into a Special

Purpose Vehicles for this object. It was subsequently agreed that

the land in Noida would be acquired not in the name of the MIPL but

in the name of a new company incorporated, i.e., petitioner and

RBPL would advance the amount for requisition of the land. RBPL

was to give an advance of Rs.25 crore to the respondent for

securing the transfer of land in favour of the petitioner in Noida. At

the time of executing the MoU, RBPL gave an advance of Rs.5 crore

to respondent and respondent executed promissory notes of Rs.5

crore in favour of RBPL and also issued a cheque of Rs. 5 crore on

account of MIPL. The respondent further agreed to protect interest

of RBPL and agreed to fulfill its obligation under the MOU by

providing security to RBPL of 8, Golf Links, New Delhi, a property

owned by the respondent. The respondent had assured of creating

a mortgage of this property in favour of the petitioner. Apart from

advancing a sum of Rs.5 crore, further amount of Rs.6.5 crore was

advanced by RBPL to the petitioner. After this advance, respondent

executed a collaboration agreement with the RBPL in relation to 8,

Golf Links, New Delhi. It was informed by the respondent that the

property 8, Golf Links, New Delhi was already mortgaged with HDFC

bank, Munirka Branch and therefore cannot be mortgaged to RBPL.

It is submitted that in May, 2007 taking undue advantage of trust,

faith and confidence of the petitioner's director, respondent

misrepresented that he was going to London for a serious heart by-

pass surgery and his survival was doubtful. For his mental comfort

and that his family be not in trouble because of collaboration

agreement, the collaboration agreement be cancelled. Under this

misrepresentation, collaboration agreement was cancelled by RBPL

and the respondent also obtained Navin Munjal's (director of RBPL)

signatures on some letters which were got prepared to confirm that

he had no liability to RBPL. However, Mr. Munjal learnt about

misrepresentation and about falsehood and fraud played by the

respondent. He found out that the respondent had not undergone

any surgery and in fact had diverted funds for his own personal use

and enjoyment. By that time the respondent had been advanced a

sum of Rs.5 crore directly by RBPL and Rs. 1 crore through

petitioner which amount was withdrawn by the respondent for

payment to society from whom Noida land was to be purchased and

another amount of Rs. 23.82 crore was advanced by RBPL to the

petitioner which was paid by it directly to the respondent for specific

purpose of paying the sale price of the land to the society. The

respondent had thus in total received from RBPL Rs.29.82 crore for

the purpose of acquiring and paying towards sale price of Noida

land. The respondent failed to secure the purchase of agreed land

and also failed to fulfill his obligations of obtaining clearance from

statutory authorities for change in land use. He also did not render

accounts of the money advanced to him. In view of this situation,

with the help of a common friend Mr. Anil Arora, meetings were held

between the parties and in early October, 2007, the respondent

agreed that he would resign from the Board of Directors of

petitioner and would transfer his shares/rights in the petitioner's

company to Naveen Munjal. However, he kept on postponing this,

assuring that he was closed to requisitioning the Noida land. In

November, 2007 he was told in a meeting that he had cheated the

petitioner and unless he refunded the amount, criminal action

should be taken against him. Ultimately, an exit agreement dated

29th November, 2007 was signed between the petitioner and the

respondent incorporating the agreement arrived at between the

parties in view of the latest situation. However, the respondent

failed to adhere to the terms of the agreement. The cheques issued

to the petitioner by the respondent for return of the unpaid amount

got dishonoured and proceedings under Section 138 of Negotiable

Instruments Act were initiated against the respondent. The

respondent also filed a Company Petition being CP no.6/08 alleging

oppression and mismanagement in the petitioner's company. It is

submitted that there is an arbitration clause in exit agreement

dated 29th November, 2007 and under this agreement, the

respondent had agreed for completion of acquisition of Noida land

from the society in the name of the petitioner and for refund of an

amount of Rs.3.87 crore only within an agreed time period and in

case the respondent failed to secure the Noida land for the

petitioner he was to refund amount of Rs.14.87 crore in addition to

Rs.15 crore for which he had given post-dated cheques. The

petitioner submitted that the respondent had failed to fulfill any of

the obligations under exit agreement dated 29th November, 2007

and he apprehended that the respondent would alienate or sell the

property in order to defeat the claim of the petitioner. Hence, the

application.

3. The respondent in its reply denied the allegations made

by the petitioner. It is stated by the respondent that the exit

agreement dated 29th November, 2007 was obtained from the

respondent by playing fraud. The exit agreement was lying with the

CA of the respondent duly signed by the respondent and the CA was

to hand over the agreement to the petitioner only after instructions

from the respondent but the petitioner's representative approached

the CA of the respondent and misrepresented that a settlement has

been arrived at and some changes were to be made in the

agreement and therefore it be handed over to the petitioner. He

submitted that the contract between the parties had come to an end

and an MOU was signed in this respect in May, 2008 and a 'No Due

Certificate' was issued by the RBPL. The exit agreement was an

invalid agreement and the present application was a counterblast of

the petitioner since the respondent had filed a suit in Delhi High

Court for declaration.

4. This Court while deciding AA Nos. 9/09 and 10/09 has

held that prima facie agreement dated 28th November, 2007 was

duly signed agreement by the parties. It was signed by the

respondent as a party and by his Chartered Accountant as his

witness. This Court referred the matter between the parties to the

Arbitrator for adjudicating the disputes as raised by the respondent

in the suit as well as as raised by the petitioner in application under

Section 11. There is a prima facie case in favour of petitioner.

Receiving of huge amount by respondent is undisputed.

5. The petitioner has sought a restraint order against the

respondent in respect of a land acquired from MAS society but no

description of the land has been given. Unless there is a description

of the land, this Court cannot issue a blanket restraint order in

respect of land whose no particulars are given. It is pleaded by the

petitioner himself that 8, Golf Links, New Delhi was mortgaged to

HDFC Bank. The interests of HDFC bank are therefore superior to

that of the petitioner. The Court cannot issue a restraint order in

respect of 8, Golf Links, New Delhi so long as the claim of the HDFC

bank is not satisfied since the property stands mortgaged with

HDFCF bank. The third property mentioned by the petitioner is W-

53, Greater Kailash, Part II which seems to be the residential

address of the respondent. Since the amount involved in this case

is huge and documents also reveal that the respondent had given

security of 8, Golf Links, New Delhi which was already lying

mortgaged with HDFC bank. I consider that the interest of the

petitioner can be safeguarded if the residual interests of the

respondent in 8, Golf Links, New Delhi after meeting the claims of

the HDFC bank are not sold and property no. W-53, Greater Kailash,

Part II is made subject matter of the restraint order.

6. I therefore allow the application to the extent that the

respondent shall not alienate or create any third party interest in

property no. 8, Golf Links, New Delhi after meeting out the claims of

the HDFC bank on this property. The respondent is also restrained

from alienating or encumbering or creating third party interest in

respect of the property no. W-53, Greater Kailash, Part II. However,

in case this property is already mortgaged with any banks or

financial institutions, the same shall have precedence over the

petitioner's claim.

7. With these directions, this petition is disposed of.

August 12, 2009                      SHIV NARAYAN DHINGRA J.
ak