Alfa Tiger Cyprus Investments ... vs Mr. Shakti Nath & Ors.
2011 Latest Caselaw 3076 Del

*           THE HIGH COURT OF DELHI AT NEW DELHI



%                                      Judgment delivered on: 4th July, 2011

                                 OMP 99/2011

ALPHA TIGER CYPRUS INVESTMENTS NO.3 LTD. & ANR.
                                         ..... Petitioners

                                         versus

MR. SHAKTI NATH & ORS.                                      ..... Respondents

AND

CS(OS) NO.394/2011

MR. SHAKTI NATH & ORS. ..... Plaintiffs

versus

ALPHA TIGER CYPRUS INVESTMENTS NO.2 LTD. & ORS.

..... Defendants

Advocates who appeared in this case:

For the Petitioners : Mr Sanjeev Puri, Sr. Adv. with Mr. Ruchin Midha and Mr Rohit Puri, Advs.

For the Respondents : Mr Suhail Dutt, Sr. Adv. with Mr Ujjwal Sharma and Mr Achit Singh, Advs. for R-1 to 4.

CORAM:-

HON'BLE MR JUSTICE MANMOHAN SINGH

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

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

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

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.1 of 41 MANMOHAN SINGH, J

1. By this order I shall decide the present petition under Section

9 of the Arbitration and Conciliation Act, 1996 as well as the suit for

decree and permanent injunction being CS(OS) No. 394/2011 along with

the pending applications being I.A. No. 2694/2011 (under Order 39 Rule

1 & 2 CPC) and I.A. No. 3635/2011 (under Section 45 of the Arbitration

& Conciliation Act,1996) for referring the matter to the Arbitrator. The

prayer made by the petitioners in OMP 99/2011 reads as under:

(a) Pass an ad-interim ex-parte order in favour of the petitioners and against the respondents restraining the respondents, their agents/representatives or anyone acting under them from dealing/parting with possession/ disposing/ selling/transferring/encumbering or creating third party rights directly or indirectly on the Galaxia Project admeasuring 45202 sq. mtrs. out of a total area of 100450 sq. mtrs. situated at Plot No.1, Sector 140A, Noida of respondent No.5 except as provided in the Revised Galaxia Agreements;

(b) Pass an ad-interim ex-parte order in favour of the petitioners and against the respondents directing the respondents, their agents/representatives or anyone acting under them from dealing/ parting with/disposing/selling/ transferring/encumbering or creating third party rights on the assets of the respondent Nos. 1 to 4 including the properties and the shares in various companies held by them until the respondents furnish adequate financial security to the petitioners in order to satisfy their claim before the arbitration;

(c) Direct to respondents to deploy security to protect the Galaxia Project land clear it from any

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.2 of 41 current or future encroachments and trespassers and direct respondents No. 1 to 4 not to use the Galaxia Project Land for any purpose other than the purpose specified for such land in the Revised Galaxia Agreements and thereafter in the Settlement Agreement;

(d) Pass an order confirming the ad-interim ex-parte order in terms of above reliefs (a) to (c) till the passing/finality of the arbitral award;

(e) Pass an ad-interim ex-parte order in favour of the petitioners and against the respondents, directing the respondents to furnish security for an amount of INR 50,00,00,000/- (Rupees Fifty Crores), which is part of the monetary claim raised by the petitioners in the arbitration.

2. CASE OF THE PETITIONERS

(i) The respondents No.1 to 3 are the family members and are the

promoters of Logix Soft-Tel Private Limited, the respondent No.4. The

respondents No.1 to 4 are engaged in the business of, inter alia,

construction and development of information technology parks and

special economic zones and other real estate projects. The respondent

No.5 is IT Infrastructure Park Private Limited company registered at D-

922, New Friends Colony, New Delhi. In the year 2008, the respondents

No.1 to 4 approached the petitioners and represented that their wholly

owned company i.e. respondent No.5 had entered into a co-development

agreement with one M/s Sarv Mangal Realtech Private Limited, for co-

developing a special economic zone for information technology /

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.3 of 41 information technology enabled services at Plot No. 140A, Noida, Uttar

Pradesh (hereinafter referred to as "Galaxia project"). The respondents

told the petitioners that they would obtain all necessary

instructions/approvals from the relevant authorities and that if the

petitioners made an investment in the Galaxia Project, the petitioners

would obtain high returns on their investment. Thereafter, the petitioners

and the respondents entered into a Shareholders Agreement and a Share

Subscription and Purchase Agreement both dated 21.03.2008 on certain

terms and conditions.

(ii) In the terms of Share Subscription and Purchase Agreement

dated 21.03.2008, the respondents were required to fulfill certain

specified conditions prior to the investment by the petitioner No.1 in

respondent No.5. But, the respondents were unable to fulfill the

conditions as contained in the "Galaxia Agreements" within the

stipulated time and the petitioner No.1, under those circumstances,

became entitled to cancel the transaction. It was agreed mutually to

amend the "Galaxia Agreements" therefore, both the parties re-

negotiated the "Galaxia Agreements" and after negotiations, the parties

executed and restated the shareholders agreement dated 02.07.2009 to

restructure their respective investments in respondent No.5 and a

Restated Share Subscription and Purchase Agreement dated 02.07.2009

to record the revised terms and conditions relating to issuance of fresh

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.4 of 41 capital of respondent No.5 to the petitioners and respondent Nos. 1 to 4

and the transfer of shares held by respondent Nos. 1, 2 and 4 in

respondent No.5 to the petitioners. It was agreed by the parties that their

relationship would be governed by the terms of the Restated

Shareholders Agreement and the Share Subscription and Purchase

Agreement for which purpose the Galaxia Agreements were terminated

by the petitioners and respondents by executing a termination agreement

dated 11.07.2009. Thereafter, the Restated Shareholders Agreement and

Restated Share Subscription and Purchase Agreement were amended

from time to time, amongst others, by a Supplemental Agreement dated

08.12.2009. The Shareholders Agreement, Share Subscription and

Purchase Agreement and the Supplemental Agreement are collectively

referred to as the "Revised Galaxia Agreements".

(iii) Pursuant to the execution of the Revised Galaxia Agreement,

the petitioners invested an amount of Rs. 45,00,27,747/- (Rupees Forty

Five Crores Twenty Seven Thousand Seven Hundred and Forty Seven

Only) in the Galaxia through subscription to the securities as well as

acquisition of existing securities. On 15.12.2009, the respondents No.1,

2 and 4 transferred the shares of respondent No.5 held by them in favour

of the petitioners. Certain shares of respondent No.5 were also issued

and allotted to the petitioners in accordance with the terms and conditions

of Galaxia Agreement. The petitioners became 50% shareholders in the

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.5 of 41 company, i.e., respondent No.5. In or around 2009, certain disputes

arose between the parties leading to the ICC Administrator bearing

reference No. 16952/CYK.

(iv) After the extension of time by the petitioners to the

respondents and after the petitioners altered their position by investing a

sum of Rs.45 crores in respondent No.5 on the assurances and

representations of the respondents No.1 to 4, the respondents No.1 to 4

sought to terminate the Revised Galaxia Agreements vide their letter

dated 17.12.2009 with the malafide intention as they themselves had

breached the Galaxia Agreements. The respondents, vide their notice of

arbitration dated 04.01.2010, sought to invoke arbitration under the

Galaxia Agreements and Revised Galaxia Agreements by appointing their

nominee arbitrator in terms of the arbitration clause, but, as the

arbitration invoked by the respondents was pre-mature, the respondents

withdrew their notice of arbitration, vide their letter dated 12.01.2010.

According to the petitioners, since the respondents failed to remedy the

breaches pointed out by the petitioners, the petitioners invoked arbitration

clause as per the Revised Galaxia Agreements vide notice of arbitration

dated 06.02.2010, wherein the petitioners nominated their nominee

arbitrator and in response to the said notice, the respondents agreed to

refer the disputes, to the arbitration by appointing their nominee arbitrator

by letter dated 12.02.2010.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.6 of 41

3. After commencement of the arbitration under the Galaxia

Agreements, the parties showed their interest to reach an amicable

settlement to the extent that it was agreed/proposed that the petitioners

would receive a minimum of Rs.45 crores from the sale of Galaxia

Project Land and a further sum in proportion to the 50% shareholding of

the petitioners in the event of the sale consideration for the Galaxia

Project Land exceeded Rs.90 crores.

4. On the basis of aforesaid proposal, both the parties executed

the settlement agreement dated 28.05.2010. Pursuant to the said

settlement agreement, the petitioners and respondents jointly sent a

written request to the ICC vide letter dated 15.06.2010 for keeping the

arbitration in abeyance. It was communicated in the said letter that the

same is done in terms of the settlement agreement and either party shall

be at liberty to request the ICC to resume the arbitration process, if the

settlement is not arrived between the parties.

5. The said request of the parties was accepted by the ICC vide

its letter dated 21.06.2010 and the proceedings were kept in abeyance.

6. On 29.10.2010, Bradley J. Bauman, nominee director of the

petitioners on the Board of Directors of respondent No.5, had sent an e-

mail to the respondent No.1 stating that on a visit to Galaxia Project site,

members of the petitioners‟ management team had noticed that some

squatters/trespassers had set up hutments at the Galaxia Project Land and

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.7 of 41 that the boundary wall on the Galaxia Project Land appeared to have

been dismantled. In the said e-mail, the respondents were requested to

take immediate steps to remove them from the project site, appoint

security agencies and file an appropriate criminal action as well as initiate

other appropriate legal action to remove such unauthorised people from

the project site. The request was also made to have a meeting in this

regard. As per the contention of the petitioners, the respondent No.1

failed to respond to the said e-mail sent by him. However, he verbally

agreed to hold a board meeting on 24.11.2010. The respondent No.1 did

not meet the representative of the petitioners on 24.11.2010 and agreed

to hold the board meeting on the next date, i.e., 25.11.2010. On that day

also, the respondent No.1 refused to allow the second nominee director

of the petitioners to participate in the meeting through tele-conference

and refused to let the board meeting proceed, on the pretext that

participation through tele-conference would not be considered as valid

participation by the Board of Directors of respondent No.5. The

nominated director of the petitioners thereafter issued a notice dated

06.12.2010 calling for a meeting of the Board of Directors to be held on

07.01.2011 in accordance with the Articles of Association of respondent

No.5. However, since the respondents No.1 and 2 failed to attend the

meeting, the meeting was adjourned to 27.01.2011.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.8 of 41

7. As the respondents No.1 and 2 refused to hold valid board

meetings and denied the knowledge of identities of the

squatters/encroachers, the petitioners made attempts to verify the identity

of the squatters, who were illegally and unauthorisedly occupying the

Galaxia Project Land.

8. On investigation, the petitioners came to know that the

persons were construction labour working on projects promoted by the

respondents No.1 to 3 (family members) in respect of construction of

their project, namely, "Logix Blossom County" which is being carried

out in close proximity to the Galaxia Project Land and the said persons

had been engaged by, amongst others, B.L. Kashyap, who was a

contractor for "Logix Blossom County" which is the project of

respondents No.1 to 4. The petitioners thereafter took the photographs

of the encroachers/squatters on the Galaxia Project Land.

9. Thereafter, on 31.01.2011, the present petition under Section

9 of the Arbitration and Conciliation Act, 1996 was filed by the

petitioners against the respondents. Along with the petition, the

petitioners also filed an application, being IA No.1505/2011 under Order

26 Rule 9 read with Section 151 CPC for appointment of a Local

Commissioner. In the main petition, the notice was issued to the

respondents for 04.02.2011 and in the application for appointment of

Local Commissioner, Ms Fareha A. Khan was appointed as the Local

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.9 of 41 Commissioner in order to find out the factual position at the site and to

give her report after inspection. She was allowed to enter the plot of land

in question and furnish the report regarding the extent of encroachment

on the plot of land in question which is the subject matter of the petition.

10. Thereafter, the Local Commissioner filed her report dated

15.02.2011 along with Annexure A to Annexure F. The relevant

paragraphs of the report read as under:

"5. That an enquiry was further made by the undersigned as to whether there is any sign board put up by the plaintiffs indicating the proposed construction of the „Galaxia Project‟ in Block B of the said property. The undersigned was informed by Mr. Jacob that there was indeed such a signboard; however the same has since been removed by the Defendants.

6. That in the area identified as Block „B‟, the undersigned noticed that there were rows of small brick built hutments with asbestos roofs that had been constructed. Apparently, the said brick houses had been built for the purposes of housing construction workers. This fact was subsequently confirmed upon enquiries made by the undersigned at the site. Enquiries made by the undersigned further revealed that the inhabitants of the said brick hutments included constructions workers and their families. The site of the Galaxia Project also had a brick structure which was a tea stall run one Shri D.K. Rawat. The undersigned was informed by Shri D.K. Rawat that he has been providing tea, snacks etc. in the said shop to the inhabitants of the settlement for the past one month. Photographs of the small brick hutments are annexed hereto and marked as Annexure „C colly‟.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.10 of 41

7. That in addition to the aforesaid small brick hutments, the undersigned also noticed that a concrete batching plant has been constructed on the site of the Galaxia Project. Raw materials and equipments for carrying out building constructions such as concrete millers, generators etc were also seen on the site. The said equipment, as evidence from the photographs taken at site, belonged to a construction agency by the name of „Simplex Agency‟. Photographs of raw materials and equipments on the site of the Galaxia Project are annexed hereto and marked as Annexure „D‟ colly.

8. That the undersigned also met a person who indentified himself as one Shri Shivendra Kevat, who was deployed as a security guard on the site of the Galaxia Project. Shri Kevat informed the undersigned that he was a security guard employed with „Advik Agency‟, which agency was in-charge of the security of the said site having deputed by the said „Simplex Agency‟.

9. That the undersigned also met another person who identified himself as Shri Shekhar Bhardwaj, who was a mechanical foreman in the employment of Simplex Agency. Shri Bhardwaj informed the undersigned that the plot belongs to "Logix", which had assigned „Simplex Agency‟ the task of carrying out construction on an adjoining plot. Shri Bhardwaj informed the undersigned that Simplex Agency has been allowed to use the said site by "Logix" to house the construction workers who are engaged for carrying out construction on an adjoining plot. Shri Bhardwaj said that the said site has been used as a "labour colony" for the past 3 to 4 months. In was informed that the said site was also used by Simplex Agency as a workshop for its batching plant, concrete millers, generators etc. In the estimate of Shri Shekhar Bhardwaj, the said site houses about 150 to 200 people.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.11 of 41

10. That the undersigned then entered a room which was informed to the undersigned to be the site office of „Simplex Agency‟. The undersigned noticed certain charts pasted on the wall, which indicated that Simplex Agency was carrying out work for „Logix Infrastructures Private Limited‟ for the project at J-J1-KAYA , A, P-Q of Blossom County at Sector 137, NOIDA.

Photographs of the said charts were taken and are annexed hereto and marked as Annexure „E colly‟.

Shri Bhardwaj informed the undersigned that the construction on J-J1-K, A, P-Q of Blossom Country at Sector 137, NOIDA was being carried out by the construction workers living at the property in question (Block B). On a request made by the undersigned to meet the officer in charge of the site, the undersigned was informed by the said Shri Bhardwaj that the site- in-charge, Shri A.K. Tripathi was overseeing/ supervising construction being carrying out on the adjoining plot."

11. Before filing reply to the petition, the respondents No.1 to 4

filed a suit for declaration and injunction against the petitioners as well as

respondent No.5 herein, being CS (OS) No.394/2011, claiming the

following reliefs:

"(a) Pass a decree of declaration declaring that the letter dated 28.01.2011 re-commencing the Galaxia arbitration being reference No.16952/CYK before the International Chambers of Commerce is null and void, inoperative and in-effective;

(b) Pass a decree holding that there is no arbitration agreement between the Parties;

(c) Pass a decree of Injunction permanently restraining the Defendant Nos.1 to 2 from

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.12 of 41 initiating/re-opening the Galaxia Arbitration in contravention of the terms of the Galaxia Settlement Agreement;

(d) Pass any such other and further order as this Hon‟ble Court may deem fit and proper in the circumstances of the case."

12. The respondents also moved an application under Order 39

Rules 1 and 2 CPC for seeking injunction. Upon service in the suit, the

petitioners filed an application under Section 45 of the Arbitration and

Conciliation Act, being IA No.3635/2011, praying that suit filed by the

respondents No.1 to 4 is not maintainable due to the reason that the

arbitration has already been invoked in accordance with clause 23.22 of

the Restated Shareholders Agreement dated 02.07.2009 before the ICC.

13. With the consent of the parties, the present petition as well as

the suit and the interim applications filed in the suit were heard together.

In view of the report filed by the Local Commissioner, the petitioners

have strongly insisted for the interim order to be passed immediately

against the respondents No.1 to 4 thereby restraining them from

dealing/parting with/disposing/selling/ transferring/encumbering or

creating third party rights on the assets of the respondents No.1 to 4

including the personal properties and shares in various companies held by

them until the respondents furnish an adequate financial security to the

petitioners in order to satisfy their claim before arbitrator. The reasons

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.13 of 41 assigned by the petitioners were that since the Galaxia Project Land is

occupied by the encroachers/squatters and also various construction

works are being carried out by the respondents without the consent of the

petitioners and also various plants have been put for the purpose of

construction at the adjoining site of the respondents No.1 to 4, therefore,

there is hardly any guarantee to secure the amount of the petitioners.

14. It was stated by the learned counsel for the petitioners, that

vide letter dated 13.04.2011, the Noida authority issued a warning to

cancel and terminate the lease deed if the amount is not deposited by

20.04.2011 and forfeit the amount already deposited against the said plot

and for re-entry to the respondents because of failure of overdue

instalments by the respondents and the petitioners thereafter would not be

able to secure their amount. The learned counsel for the petitioners has

also tried to show the conduct of the respondents by stating that despite

the specific report submitted by the Local Commissioner against the

respondents, they still denied the fact that there is encroachment or there

is any material lying at the site which belongs to the respondents. When

this fact was verified by the court, the counsel appearing on behalf of the

respondents made a statement, that the tresspassers/persons at the site are

not the employees of the respondents and have nothing to do with the

Galaxia Project in Block B. The equipments lying there does not belong

to the respondents. The respondents have not appointed Simplex Agency

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.14 of 41 for the purpose of construction. The labour working at the site are not

employed by them and even the photographs filed along with the report

produced by the Local Commissioner were not from the same site in

question and also created doubt as to whether the Local Commissioner

had actually visited at the site of the Galaxia Project Land.

15. In view thereof, the respondents were directed to file an

affidavit about the statements made by them, but, at the same time in

order to verify the facts, vide order dated 12.05.2011, with the consent of

the parties, another Local Commissioner, i.e., Joint Registrar (Original

Side) of this Court was appointed to find out the factual position of the

property in consonance with the report already submitted by the earlier

Local Commissioner.

16. The following directions were given to him:

"a. The Local Commissioner shall visit the Plot No.140A, Noida, U.P. along with the representatives of the petitioner and the respondents on 17.05.2011 at 10:30 a.m.

b. The Local Commissioner shall find out the factual position about the extent of encroachment, if any, on the plot of land in question and will also give his report while comparing the report of the earlier Local Commissioner in respect of veracity and genuineness of the report.

c. He is also authorized to take the fresh photographs at the site from the same situation as the photographs were taken by the earlier Local Commissioner. The Local Commissioner shall take the services of the photographer at its own."

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.15 of 41

17. The second Local Commissioner again visited at the site on

17.05.2011 in pursuant to the order and filed his report on 18.05.2011.

The relevant paras 5 to 9 of the report read as under :

"5. The Blossom County Project of the respondent No.4, M/s. Logix Soft-Tel Private Ltd., which is under construction is not adjoining the "land in question" but across the road, some 20-25 meters away from the "land in question".

6. The "land in question" was physically examined by me and photographed. Almost 70% of the "land in question" stands encroached upon. The following were seen existing on the "land in question" :-

(i) 350-400 brick/asbestos hutments, covered with tin or asbestos, housing labour (photographs C-2 to C-5);

(ii) Approximately ten toilets in the left corner (photograph C-14);

(iii) Bath area in the centre of the hutments with huge water tanks (photograph C-6);

(iv) A huge concrete batching plant for mixing Rori, Badarpur, Sand and Cement alongside the Mechanical Control Room (photographs C-7 to C-

10);

(v) Huge mounds of Rori and Ret (Photographs C-7 & C-8);

(vi) Electricity gang box/fuse box for supply of electricity (photographs C-11 to C-13);

(vii) Approximately 4-5 flood lights (photograph C-

14);

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.16 of 41

(viii) One Airtel dish antenna;

(ix) Two large generator sets for operating the concrete batching plant (photograph C-15);

              (x) Washed clothes         being   dried   on     wire
              (photograph C-16).

7. Surprisingly, at the time of inspection, all the hutments, except a few, were found locked. A few hutments had their tin doors closed but there were no locks. A few hutments were seen lying open which were not in use. Apparently, the occupants of these hutments had prior information of the date & time of the visit and appeared to have been removed from the site. This is proved by the following few statements :-

(i) One Mr. Chand, at the time when the commission was under execution came on a Tata Loader vehcile (photograph C-17) to deliver fresh supplies of cold drinks and was seen asking about the residents of the hutments. He stated before me that he is an almost daily supplier of drinks to the canteen at the beginning of the hutments and that there is lot of activity in the hutments every day.

(ii) One young gentleman was seen moving around in the hutments. He was spoken to. He identified himself as Babloo S/o Shri Narain Thakur, aged about 20 years (photograph C-18 & C-19). He took us to his hut and stated that around 15 people lived in that hut. On a query as to how 15 people could live in that small hut, he said some people sleep on the tinned roof also. He further stated that all the labourers worked at that site and pointed towards the Blossom County Project of defendant No.4, across the road.

(iii) In Babloo‟s hut, another gentleman was found sleeping. He was called and spoken to. He identified himself as Bibu Kumar S/o Sh. Moto Saini, aged 23-24 years (photographs C-20 & C-

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.17 of 41

21). He stated that he had come to Delhi since the last 2-3 days and was living with his brother Ram Parresh Kumar, who was working at this site and pointed towards the Blossom County Project of the respondent No.4 across the road.

On a query as to why he was not working, he said that the labour contractor, Birender Patel, had gone to Sitamarhi district, Bihar to fetch more labour and that he will be returning today after which he will start working.

(iv) Freshly washed clothes were seen drying in the Sun (photograph C-16).

              (v)       Some hutments, where doors were not
              locked, were seen through.      Freshly cleaned

utensils alongwith some fresh vegetables were seen lying inside, evidencing that people were living there.

(vi) There was water in the water tanks in the bath area, which appeared to have been used in the morning, as evidenced by the water on the sides (photograph C-6).

(vii) There was water seen near the concrete batching plant, which implied that the plant had been operated in the morning and the mixture transported through Transit mixers (photograph C-7).

(viii) There were light tyre marks also near the batching plant.

7. The representative of respondent No.4, Mr. H.S. Chaudhary, denied any knowledge as to whose labour was staying at the land in question or as to who had put up the batching plant.

8. The Blossom County Project of respondent No.4 is a huge project under construction and is closest to the land in question,

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.18 of 41 which is jointly owned by the petitioner and the respondent No.4. It is difficult to imagine a scenario that the defendants have allowed their land, which is closest to their site under construction, to be used without their knowledge for stay of labour of another construction site much farther away or the concrete batching plant being put up by some third party without their knowledge.

9. That, as stated by the two men present and interviewed at the site, the labour working at the Blossom County Project site of the respondent No.4 is staying at the land in question and considering the location of the "land in question" and the Blossom County site under construction of respondent No.4, it can safely be presumed that the batching plant is being used for the construction work at the Blossom County Project site of the respondent No.4, by the respondent No.4, or at its behest by any agency working for them at the Blossom County Project."

18. It appears from the report of the second Local Commissioner

that all the activities going on at the site of the plot were being carried out

at the behest of respondents or their agencies and the labour, material and

plants were at the site i.e. land in question for the construction of work

were actually meant for another project of the respondents i.e. Blossom

County.

19. After having heard both the sides, the orders were reserved on

20.05.2011. The matters were again mentioned by the learned counsel

for the parties on 03.06.2011 when the learned counsel for the

respondents sought two days time to file the an additional affidavit due

the change of circumstances.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.19 of 41

20. With the consent of the parties, the following order was

passed on 03.06.2011 in OMP No. 99/2011 and I.A. No. 1505/2011:

"The above said matter was argued and reserved for orders on 20.05.2011. The matter has mentioned by the learned senior counsel for both the parties today. The learned senior counsel for the respondents seeks two days time to file an additional affidavit due to the change of the circumstances. He submits that Noida Authority has agreed to extend the time for making the overdue installment by six months and payment would be made by the respondents without prejudice and subject to the adjustment. He further submits that in view of the order passed earlier, all trespassers, third parties and hutments/construction workers have been removed and the respondents have every intention to remove the plant within two weeks and the respondents have no objection if same local commissioner already appointed can again visit at site and verify the position. Counsel submits that these events may be considered at the time of disposing of the petition.

The learned counsel for the petitioner states that in view of the subsequent development after reserving the order, the matter has been discussed by the petitioner and he has no objection if the respondents be granted time to file the additional affidavit and same local commissioner be appointed to verify the position at the site. Let the additional affidavit be filed within two days.

In the meanwlhie, Mr Lorren Bamniyal, Joint Registrar (Original Side), is again appointed as a Local Commissioner with the direction to visit the Plot No.140A, Noida, U.P., along with the representatives OMP No. 99/2011 & CS(OS) No.394/2011 Page No.20 of 41 of the petitioners and respondents after two weeks from today and shall find out the factual position about the extent of encroachment, if any, on the plot in question and other plants etc. The Local Commissioner shall also take the photographs at the site from differnet angles and also verify the statement of the respondents made by them in Court today.

The Local Commissioner shall file his report within one week from the date of his visit.

The earlier report filed by the Local Commissioner is taken on record.

Fee of the Local Commissioner is fixed at Rs.40,000/- to paid by the respondents. Copy of the order be given dasti to the Local Commissioner and both the parties."

21. The affidavit was filed on 04.06.2011. Relevant paras of the

affidavit read as under:

"4. I state that the Respondent has infact discussed the matter relating to payment of overdue installment with Noida Authority and Noida Authority have agreed to extend the time for making payment of overdue installment by six months subject to payment of Rs.1,56,38,355.

5. I state that the Petitioner and the Respondent are required to make payment in equal share. Since the Petitioner despite making statements in court earlier that they are willing to share 50% of the amounts payable to Noida Authority during mentioning of the matter in the morning in Court on June 3, 2011, the Respondent has paid the entire sum of Rs.1,56,38,355 via Challan No.34258 dated 3rd June, 2011 as informed to the court on June 3, 2011 to safeguard the asset of the project company.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.21 of 41 However, the payment of Rs.1,56,38,355 has been made without prejudice to all the rights, remedies and contentions of the Respondent in law against the petitioners and the Respondent Company including but not limited to obtaining reimbursement from the Petitioner‟s of its share of Rs.78,19,177.50 due to their non-

cooperation and defaults of the Petitioners in paying their share with a view to jeopardize the asset of the company.

6. In view thereof, the contentions of the Petitioner that the security of project land would not be available towards the arbitration claims of the Petitioner are totally redundant and untenable. In fact the Petitioner is liable to reimburse and provide security to the Respondent for the payment made to Noida Authority which includes the share of the Petitioners.

7. I state that pursuant to order dated May 12, 2011 of this Hon‟ble Court, all trespassers, third parties, quarters/hutments/construction workers who had trespassed into the project land have been removed from the Project including their hutments etc. However, there is one concrete batching plant, which has been shut down and is being currently dismantled and shall be completely dismantled and removed within two weeks. This Hon‟ble Court can even appoint the same local commissioner to verify the said facts. Therefore, the project land is clearned of all encroachments and is available as security for any alleged claim of the Petitioner in the Arbitration and the Petition can be disposed off accordingly.

8. I state that the above facts may be taken into consideration while disposing off

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.22 of 41 the Petition under Section 9 of Arbitration and Conciliation Act, 1996."

22. The Local Commissioner who was appointed second time

vide order dated 03.06.2011 again visited the land in question after two

weeks i.e. 18th June, 2011 as the respondents in the affidavit dated

04.06.2011 made the statement that the remaining material would be

removed within two weeks. After visit, he filed his report on 23.06.2011

nad has given the comparative position of the status report of land as it

was on 17th May, 2011 at his first visit and as it was found on 18th June,

2011, the same reads as under:

S. No. Status as on 17.5.2011 Status as on 18.6.2011

1. 350-400 brick/asbestos Removed hutments, covered with tin or (photographs B-2 to B-4) asbestos, housing labour.

      2.       Approximately ten toilets in the               - do -
               left corner.

      3.       Bath area in the centre of the                 - do -
               hutments with huge water tanks.

4. A huge concrete batching plant The batching plant has since for mixing Rori, Badarpur, Sand been dismantled and only the and Cement alongside the steel supports remain to be Mechanical Control Room. removed. (photographs B-5 to B-6)

5. Huge mounds of Rori and Ret Still lying. Yet to be removed. In fact, their quantity was more than what was noticed during the earlier visit. (photographs B-

5 to B-8)

6. Electricity gang box/fuse box Removed.

               for supply of electricity     (photographs B-2 to B-4)

      7.       Approximately 4-5 flood lights.    - do -


OMP No. 99/2011 & CS(OS) No.394/2011                                   Page No.23 of 41
       8.     One Airtel dish antenna          Still standing.
                                              (photographs B-9 to B-10)

9. Two large generator sets for Not removed but not operating the concrete batching operating either. plant.

(photographs B-11 to B-12)

10. Washed clothes being dried on Some still there. Appear to wire. be of the manpower employed in the process of dismantling. (photographs B-13)

23. The statement was made on behalf of respondent No.4 that

the process of removing the entire material from the land in question

could not be completed because of inclement weather and the same

would be completed within maximum period of next three days.

24. As regards the relief sought by the petitioners to restrain the

respondents from creating any third party interest in the personal

properties of the respondents No.1 to 3, the request was strongly

opposed by the learned counsel for the respondents on the grounds that

all the tress-passers, third parties, quarters/hutments/construction have

been removed from the project and the respondents have also paid the

overdue installment on 03.06.2011. Further, relying upon Clauses 5.3

to 5.3.3 of the agreement wherein the provision of sale of

company/project land is available, the learned counsel for the

respondents submitted that the request of the petitioners cannot be

allowed. The said clauses of the agreement read as under:

OMP No. 99/2011 & CS(OS) No.394/2011                          Page No.24 of 41
               "5.3       Sale of the Company/Project Land

              5.3.1     The Investors shall, at their sole election

and discretion, have a right to cause the Company to sell or transfer the Project Land, or cause the Promoters and Company to sell all of the Shares of the Company to a third party.

5.3.2 The Investors shall have the right to seek sale/lease/transfer of the Project Land and the First Phase Assets in any manner as the Investors may, in their sole and absolute discretion, decide and shall have the right to take all steps and do all things necessary to give effect to the provisions of this Clause 5.3, including without limitation through appointment of co-developer or sub-co-developer/ joint co-developer, seeking de-notification of the SEZ Project Land, seeking approval of NOIDA for lease or sublease, creating any encumbrances or changes on the Project Land, transferring the development rights pertaining to the Project Land or entering into any agreement for the commercial exploitation of the Project Land.

5.3.3 All of the amounts received from the sale or Transfer of the Project Land and, or, sale of Shares as set forth in Clause 5.3.1 and Clause 5.3.2 shall be used and the balance, if any, shall be distributed amongst the Parties in the manner set forth below and in the following order of priority:

(a) First, one hundred percent (100%) to the Investors until the Investors have received the Investors Capital and an amount equal to IRR of 19% (nineteen percent) on the Investors Capital;

(b) Second, one hundred percent (100%) to the Promoters until the Promoters have received the Promoters First Stage Capital and an amount equal to Nineteen percent (19%) IRR on its Promoters Capital;

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.25 of 41

(c) Third, pari passu to the Investors and the Promoters, until both the Investors and the Promoters have received an amount equal to a twenty-five percent (25%) IRR on the Investors Capital and the Promoters First Stage Capital respectively; and

(d) Fourth, sixty percent (60%) to the Promoters and forty percent (40%) to the Investors on a pari passu basis."

25. It is also argued by the learned counsel for the respondents

that the petitioners are not justified in approaching the Arbitral Tribunal

before the expiry of twelve months period as provided in the Settlement

Agreement. In reply, the counsel for the petitioners stated that the

petitioners have approached the Arbitral Tribunal with the rights by

invoking Clause 2.3 of the settlement agreement which permits the

petitioners to exercise their discretion to recommence the arbitration in

accordance with the provision of Galaxia Agreements in case breaches

are committed by the respondents. Since the respondents have breached

the said Clause, therefore, the petitioners rightly approached the Arbitral

Tribunal by invoking the said Clause, as it was within their discretion to

recommence the arbitration proceedings under the Galaxia agreements.

26. The following points were also argued by the respondents in

support of their submissions at the time of hearing of the matters:

1) The settlement agreement has no arbitration Clause and is

not covered by arbitration as it novates the Galaxia

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.26 of 41 agreement. Therefore, the petitioners have no right to

recommence the Galaxia arbitration as the disputes are to

be decided on the basis of the settlement agreement by the

arbitral tribunal.

2) The arbitration agreement is null and void, inoperative or

incapable of being performed in view of the novation of

the Galaxia agreement. Therefore, the application under

Section 45 filed by the petitioner in the Suit is liable to be

dismissed.

3) This Court has no territorial jurisdiction to entertain the

petition as the subject matter of the land is situated at

Noida which is outside the jurisdiction of this Court.

27. The learned counsel for the respondents has argued that the

settlement agreement is not covered by arbitration as there is no

Arbitration Clause in the settlement agreement and in terms and

conditions thereto, in fact the settlement agreement novates the Galaxia

Agreement.

28. Clause 2.1 of the Settlement Agreement keeps the Galaxia

Agreements alive and binding on the parties. It is stated that under the

Settlement Agreement it was only agreed that the Arbitration under the

Galaxia Agreements, which had already commended prior to the

Settlement Agreement, would be kept in abeyance for a period of one

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.27 of 41 year within which the Plaintiffs would be obliged to sell the Galaxia

Project Land and pay to the Applicants a minimum sum of Rs.45 Crores.

Clause 2.1 of the settlement Agreement provides as follows :

"Clause 2.1 : The parties agree that the provisions of the Galaxia Project shall not be deemed as being settled till such time as the entire Galaxia Consideration has been received by the Investors in their nominated overseas bank account".

29. Clause 4.5 of the Settlement Agreement provides that the

Settlement Agreement shall be read in conjunction with the Galaxia

Agreements. The aforesaid Clause 4.5 of the Settlement Agreements is

reproduced herein below :

"Clause 4.5 : Entire Agreement. This Agreement contains the entire settlement terms agreed between the Parties with regard to the matters set forth herein, and this Agreement shall be read in conjunction with the Galaxia Agreements."

30. Clause 2.3 of the Settlement Agreement itself makes

reference to the Arbitration under the Galaxia Agreements and gives the

sole and absolute right to the petitioners to recommence Arbitration

invoked under the Galaxia Agreements on the conditions/events

mentioned therein.

"Clause 2.3 : Notwithstanding anything to the contrary as may be contained in this Agreement or as may be otherwise agreed between the Parties herein, it is clearly agreed and understood between the parties that in the

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.28 of 41 event that the entire Galaxia Consideration or any part thereof is not received by the Investors within the timelines stipulated hereinabove, for any reason whatsoever, or in the event any of the Promoters have failed to fulfill any of their obligations herein or if the Promoters have committed a breach of the terms of this Agreement of if any other act or omissions that has such effect is committed or omitted, then without prejudice to any other rights of the Investors under the Galaxia Agreements, the Investors shall have the right, to be exercised in their sole and absolute discretion, to recommence the Galaxia Arbitration in accordance with the provisions of the Galaxia Agreements.

It is, jointly and severally, agreed and acknowledged by the Promoters that in such an event, as stated above, the Investors shall be entitled to all rights that ensues in their favour under this Agreement and otherwise including the right to claim and to forthwith receive the entire outstanding amount of or any sum otherwise payable to and claimed by the Investors. The Promoters unambiguously and unequivocally acknowledge and declare that the amounts agreed to be paid to the Investors i.e. the entire Galaxia Consideration, in terms of this Agreement are undisputed and payable to the Investors."

31. A mere reading of clause 2.1 of the settlement agreement

dated 28.05.2010 makes it clear that the provisions of the Galaxia

Agreements, which contain the arbitration clause, shall remain valid and

binding on the parties. Even as per clause 4.5 of the settlement

agreement, the settlement agreement is to be read in conjunction with the

Galaxia agreements.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.29 of 41

32. Under these circumstances, it is clear that in the settlement

agreement, the parties had agreed to, only suspend the Galaxia

agreements for a period of 12 months. Clause 2.3 clearly provided that

the petitioners shall have the right, in their sole and absolute discretion, to

re-commence the Galaxia arbitration. The petitioners in the present

matter have already recommenced the Galaxia arbitration invoked on

06.02.2010. By implication of clause 2.1 read with clause 4.5, which

indicates that the same is to be read in conjunction with Galaxia

agreements, and clause 23, the settlement agreement contains an

arbitration clause.

A perusal of the aforesaid Clauses 4.5, 2.3 and 2.1 prima

facie shows that the Galaxia Agreements are valid and binding on the

parties and the Settlement Agreement in no manner supersedes or

novates the Galaxia Agreements.

Therefore, the terms of the Galaxia Agreements by

implication are expressly incorporated in the Settlement Agreement,

which includes the Arbitration clause contained in the Galaxia

Agreements.

33. Even otherwise in terms of Section 16, the arbitral tribunal, in

the present case constituted under the ICC rules, has the power to rule on

its own jurisdiction and determine issues with regard to the claim of the

petitioners or the recommencement of arbitration by the petitioners under

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.30 of 41 the settlement agreement. This Court in the case of Bhushan Steel Ltd.

v. Singapore International Arbitration Centre: 2010 (118) DRJ 112

had an occasion to deal with the similar point. The relevant paras of the

said judgment are reproduced hereinbelow :

"25. It is thus clear that a Court can intervene only in the event that its intervention is provided for under the Act. One of the main objects of the Act is to minimise the supervisory role of the courts in the arbitral process. Section 5, as evident, is brought of the new Act to encourage the resolution of disputes expeditiously and in a cost effective manner. Therefore, the extent of judicial intervention is limited by the non-obstante provision of Section 5 of the Act. As per the settled law, the Court should not be obliged to bypass the provisions of the Act in exercise of its power and jurisdiction.

35. The scheme of the Act is clear in this regard. It is settled law that once it is held that there is a valid arbitration agreement between the parties, the suit would not be maintainable as the genesis of the entire dispute raised in the plaint is that there is no agreement. Section 45 can be resorted to if there are disputes between the parties as to the validity of the arbitration agreement.

36. Section 45 provides that when a judicial authority is seized of an action in a matter in respect of which the parties have an agreement of arbitration, the judicial authority at the request of one party to the arbitration shall refer the dispute to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.31 of 41 Therefore, it is not possible to accept the submission of the

respondents that the Galaxia agreements have now become null and void,

inoperative or incapable of being performed. Clause 2.1 of the

Settlement Agreement clearly states that the provisions of the Galaxia

Agreements i.e. SHA, SSPA, RSA, RSSPA and the Supplemental

Agreement shall remain valid and binding on the Parties. Further, the

Galaxia Agreements have neither been terminated nor rescinded by either

Party and have been expressly kept subsisting under the Settlement

Agreement. Thus, by implication, the Arbitration Clause contained in the

said Galaxia Agreements is valid, binding and subsisting between the

parties. Even under Clause 4.5, the Settlement Agreement is to be read

in conjunction with the Galaxia Agreements. Thus, the contention of the

respondents that the Settlement Agreement supersedes the Galaxia

Agreements and is a Novation of the Galaxia Agreement prima facie on

the face of it is untenable as both the petitioners under the Settlement

Agreement have kept the Galaxia Agreements alive.

34. In fact the respondents themselves first invoked the arbitration

under the Galaxia Agreements and submitted to the jurisdiction of the

arbitral tribunal under ICC. Therefore, the arbitration clause contained in

the Galaxia agreements is operative and capable of being performed as

respondents themselves had nominated the arbitrator on their behalf and

even joint letter was written to the ICC for postponement of arbitration

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.32 of 41 proceedings for 12 months in view of the settlement agreement. There is

no ambiguity that the main basis of recommencing Galaxia arbitration is

main agreement, i.e., the Galaxia agreements.

35. As regards the argument of novation of the Galaxia

agreements in view of the settlement agreement, the learned counsel for

the respondents relied upon the judgment of the Supreme Court Dresser

Rand S.A. v. Bindal Agro Chem Ltd. & Anr.: (2006) 1 SCC 751.

After considering the said judgment, it is clear that the same is

not applicable to the facts of the present case, since, in the said case, an

LOI had been executed which provided that the purchase order that may

be issued on Dresser Rand in future, was to be subject to the General

Conditions of Contract, which contained an arbitration clause. Therefore,

it was in that light of the matter, the Supreme Court had held, that the

reference of General Conditions of Contract in the LOI does not

incorporate the arbitration clause.

36. It is also argued by the respondents that the Galaxia

arbitration has been recommenced on imaginary grounds and in fact the

petitioners could not have recommenced the Galaxia arbitration after the

execution of fresh settlement agreement between the parties and now the

arbitral tribunal has no jurisdiction to continue with the said proceedings

in view of the scope of powers of the tribunal.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.33 of 41

37. The said submission of the respondents is without any

substance and is contrary to the principle of law as provided under

Section 62 of the Contract Act. In the case of Lata Construction & Ors

v. Dr. Rameshchandra Ramniklal Shah and Anr.: (2000) 1 SCC 586,

it was held by the Supreme Court that one of the essential requirements

of novation as contemplated by Section 62 of the Contract Act is that

there should be complete substitution of a new contract in place of the

old contract, which has the effect of rescinding or extinguishing the terms

of the original contract and where the original contract need not be

performed. In this regard, reliance is also placed upon Stracon India

Ltd. v. UTV Software Communication Ltd.: AIR 2002 Delhi 209 and

Enmas Engineering Pvt. Ld. v. M/s Andritz OY & Anr.: CS No.924 of

2006 and IA No.178 of 2007.

38. The Supreme Court in the case of Shin Etsu Chemicals Co.

Ltd. Vs. Aksh Optifibre Ltd. (2005) 7 SCC 234 has by majority held that

the view as to whether the arbitration agreement is not null and void,

inoperative or incapable of being performed has to be a prima facie view

and the Court is not required to give a final finding upon leading of

evidence on the same. It is further held that once prima facie the court is

convinced that the arbitration agreement between the parties is not null

and void, inoperative or incapable of being performed, the court ceases to

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.34 of 41 have jurisdiction on the dispute before it and the court is then bound to

refer the parties to Arbitration.

39. Therefore, the suit filed by the respondents is not maintainable

as the respondents had themselves first invoked the Arbitration under the

Galaxia Agreements jointly with the petitioners and suspended it for the

term under the Settlement Agreement and thus, submitted to the

jurisdiction of the ICC and then agreed and acknowledged the sole right

of the petitioners to recommence the arbitration, after it was kept in

abeyance. Now the respondents are not entitled to seek any relief

restraining the petitioners from re-commencing Arbitration with the ICC,

in terms of the Settlement Agreement.

40. The fact is that the petitioners have invested Rs. 45 Crores in

the Galaxia Project and the respondents themselves agreed to execute the

Settlement Agreement by giving assurances and representations with

regard to return of the petitioners‟ investment and are now trying to

frustrate the rights of the petitioners by seeking to restrain the petitioners

from exercising their rights under the Galaxia Agreement. The

arbitration agreement, therefore, cannot be treated as null and void and

incapable of being performed.

41. The last submission of the respondents, that this Court has no

territorial jurisdiction in the matter as the land in question is in Noida. It

is argued by the respondents that the relief claimed in Section 9 Petition

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.35 of 41 relates to determination of rights and interests in immovable property

which is outside the jurisdiction of this court as the injunction sought for

is in relation to the project land in Noida. The respondents submit that

the proviso to Section 16 (d) could not be applicable in the present case

as all the actions for specific performance in relation to the property as

sought for in Petition is not enforceable though the personal obedience of

the respondents i.e. the company which is based in Noida of which the

petitioners are 50% shareholder. The following decisions have been

referred to:

(A) The respondents have referred the judgment

titled Competent Investment Limited vs. GL Asia

Mauritius II Cayman Limited and Others where the

immovable property was situated in Goa and in

substance the relief sought was in respect of an

injunction against sale of immovable property situated

outside the jurisdiction of this court and it was held

that such a relief could not be granted by courts in

Delhi.

(B) In Harshad Chiman lal Modi vs. DLF

Universal Limited and Another (2005) 7 SCC 791,

the Supreme Court held that actions against res or

property should be brought in the forum where such

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.36 of 41 res is situated. A court within whose territorial

jurisdiction the property is not situated has no power to

deal with an decide the rights or interests in such

property. The Court held that there can be no

arguments with regard to bar under Section 20 where

Section 16 (d) is applicable.

Other decisions relied on by the respondents in support of

their submission are Pacific Greens Infracon Private Limited vs. Senior

Builders Limited 159 (2009) DLT 130, Globe Cogeneration Power

Limited vs. Shri. Hiranyakeshi Sahakari Sakkere Karkhane Niyamit

AIR 2005 Kant 94.

42. Undoubtedly, in view of the dicta in Harshad Chimanlal

Modi (supra) this court would not have jurisdiction but the same is

otherwise as the petitioners are not claiming any rights in the immovable

property and the claims of the petitioners against the respondents, of

which arbitration is sought are for breach of agreement by the

respondents. The agreements provide that the same is executed at New

Delhi and the parties had also agreed to the venue of arbitration at New

Delhi. Further the following are the admitted positions in the matter, the

detail of which is given as under:

a. The SHA and SSPA were executed at New Delhi.

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.37 of 41 b. The respondents are residing at and working for gain in New

Delhi.

c. The clause 23.21.1 and clause 18.2 of the SHA and SSPA

provide exclusive jurisdiction to the Courts at Delhi.

d. The amounts were received by the respondents in New

Delhi.

43. Most of those decisions have been discussed in the case of

Bhawna Seth vs. DLF Universal Ltd. & Anr. 138 (2007) DLT 639.

Legal proposition which has been culled out from them is that there is a

distinction between suits in relation to specific performance of agreement

in question without the relief of possession and in suits where additional

claim for delivery of possession is also prayed for. In the present case,

the petitioners have sought relief of injunction in respect of suit property,

situated in Noida of which he is co-sharer and in possession and the

alleged conduct of respondents amounts to disturbing common

possession of the plot by planting, tresspassers/third

parties/quarters/hutments/construction workers/ batching plant etc. which

have now been removed and affidavit in this respect has been filed by

respondents on 04.06.2011.

Further, the respondents themselves have filed the suit for

declaration and injunction against the petitioners wherein the respondents

have invoked the jurisdiction of this Court by stating that the Galaxia

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.38 of 41 settlement agreement was executed by the parties at Delhi and the

Galaxia settlement agreement provides exclusive jurisdiction to Courts at

Delhi. It is a matter of fact that the relief sought by the petitioners in the

present petition does not involve determination of any right in the

immovable property. Therefore, the decisions, referred to by the

respondents, are not applicable in the present case and this court has got

the jurisdiction to try the petition and the relief can be obtained for the

reasons given as relief can be granted if the case is made out.

44. As aready mentioned that one of the reliefs claimed by the

petitioners is for restraining the respondents from creating third party

interest in the personal properties of the respondents No.1 to 4, for which

the petitioners have also referred to in the petition and they are strongly

pressing for this relief. I feel, that in view of the affidavit filed by the

respondents on 04.06.2011 and also as per the specific Clause 5.3 to

5.3.3 of the agreements, the petitioners are not entitled to the said relief

due to as the respondents have informed the Court that all the trespassers,

third parties, squatters/hutments/construction workers who had

trespassed into the project land have been removed from the project

including their hutments etc. An undertaking is also given by the

respondents that one concrete batching plant, which has been shut down

and is being currently dismantled, shall be completely dismantled and

removed within two weeks. The respondents have also deposited the

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.39 of 41 overdue installment of Rs.1,56,38,3565/- via Challan No.34258 dated

03.06.2011 to safeguard the asset of the project company to the Noida

Authority to extend the time for six months and after the said compliance,

the land in question for sale would be available if necessary, therefore,

the said is rejected, however, liberty is granted to the petitioners to move

fresh application in case the respondents during the pendency of the

Arbitration proceedings will breach the undertaking given by them by

way of affidavit, without the leave of the Tribunal or with the consent of

the parties.

45. However, considering the overall facts and circumstances of

the matters, it is directed that the respondents shall continue to make the

payment of instalment till the completion of arbitration proceedings and

they shall have the right to move the interim application before the

arbitral tribunal to make the payment in equal shares or adjustment of the

amount.

46. As far as the other reliefs sought in the present petition are

concerned, the present petition is disposed of with the direction that the

respondents, their agents, representatives or any other person acting on

their behalf, are restrained from dealing/parting with possession/

disposing/ selling/transferring/encumbering or creating third party rights

directly or indirectly on the Galaxia Project admeasuring 45202 sq. mtrs.

out of a total area of 100450 sq. mtrs. situated at Plot No.1, Sector 140A,

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.40 of 41 Noida of respondent No.5 and are also restrained from allowing any

encroachment in future or making any construction or setting up any plant

without the leave of the Arbitral Tribunal.

47. For the reasons already mentioned above, the application

under Section 45 of the Arbitration and Conciliation Act, 1996 is

allowed. Consequently, the suit filed by the respondents is dismissed.

All pending applications also stand disposed of.

48. The findings arrived at and observations made are tentative in

nature and these shall not come in the way of Arbitral Tribunal where the

dispute and contentions have been raised by the parties and Arbitral

Tribunal shall decide the matter as per its own merit.

49. No costs.

MANMOHAN SINGH, J JULY 04, 2011 jk/dp

OMP No. 99/2011 & CS(OS) No.394/2011 Page No.41 of 41