Madras High Court
Rdb Chennai Realtors Llp vs M/S.Arul Murugann Promoters on 18 September, 2025
Author: G.Jayachandran
Bench: G.Jayachandran
Arb Appeal Nos.35 & 36 of 2025
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 18.09.2025
CORAM:
THE HONOURABLE DR. JUSTICE G.JAYACHANDRAN
and
THE HONOURABLE MR. JUSTICE MUMMINENI SUDHEER KUMAR
Arb Appeal Nos.35 & 36 of 2025
and
C.M.P.Nos.22710 & 22714 of 2025
RDB Chennai Realtors LLP
Rep by its Designated Partner,
Govindasamy Chinnadurai,
No.258/2, The Royal Castle, Club House,
Thirmudivakkam Main Road,
Thirumudivakkam, Kancheepuram 600 132. .. Appellant
Vs.
M/s.Arul Murugann Promoters
Rep by its Partner,
Having office at No.19/2B, Ramachandra Stree,
T. Nagar, Chennai 017. .. Respondent
COMMON PRAYER: Arbitration Appeals are filed under Section 37 of
the Arbitration and Conciliation Act, 1996, read with Section 13(1) of
Commercial Courts Act, 2015, to set aside the Impugned Order dated
02.09.2025 passed under section 17 of the Arbitration and Conciliation
Act 1996, by the Honble Arbitral Tribunal comprising of the Learned
Sole Arbitrator in I.A Nos.1 and 2 of 2025 in Arb Case No.2 of 2025.
1/10
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For Appellant : Mr.Jhabakh Pawan Kumud
For Respondent : Mr.K.R.Arun Kumar, Caveator
COMMON JUDGMENT
The present Arbitration Appeals have been filed seeking directions
against the interim orders passed by the learned sole Arbitrator on the
applications filed under Section 17 of the Arbitration and Conciliation
Act.
2. The sum and substance of the dispute, which is now pending for
final adjudication in the Arbitration Case No.2 of 2025 before the learned
Sole Arbitrator is that the respondent herein, who is the owner of the large
extent of land situated in Kancheepuram District, entered into a Memo of
Understanding with the appellant on 17.12.2021 in order to promote the
land into a residential/commercial layout and marketing the same.
3. Under the terms of Memo of Understanding (MoU), the
appellant was granted rights to promote and market the layout, including
activities such as advertising, organizing the property inspections for
prospective buyers and circulating layout plans. In return for these
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services, the appellant was entitled to retain as consideration the amount
realized over and above Rs.1300/- per sq.ft., from the sale of the plots. In
other words, the respondent, as the land owner, would be entitled for
Rs.1300/- sq.ft., and any excess amount fixed by selling the plots will be
appropriated by the appellant.
4. The original MoU provided the six months time framed for
completion of the arrangements. However, the project could not be
completed within the stipulated period. As a result, both parties mutually
entered into a second MoU on 27.03.2024, whereby the respondent
agreed to receive Rs.1400/- per sq.ft., in the place of the earlier agreed
sum of Rs.1300/-. This second agreement also had a stipulated time frame
for performance, which eventually expired on 30.06.2024. Despite the
expiry of both agreements, parties continued to engage in the sale of plots
even after 30.06.2024. The appellant has now alleged that the respondent
had independently dealt with the property to the third parties in violation
of the exclusive rights clause contained in the agreement, which had
entitled the appellant to market and sell the property.
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Arb Appeal Nos.35 & 36 of 2025
5. The appellant herein has approached this Court invoking Section
9 of Arbitration and Conciliation Act. This Court, taking note of the
nature of the dispute, had previously appointed a retired Judge of this
Court as sole Arbitrator and relegated the matter to arbitration. Liberty
was given to the appellant to seek interim protection under Section 17 of
the Arbitration and Conciliation Act, if he desires so.
6. Pursuant to the same, the appellant has filed the Interlocutory
Application Nos.1 and 2 of 2025, before the Arbitrator:
(i) I.A.No.1 of 2025 - injunction restraining the respondent, his
agents and representatives from dealing with or alienating the unsold
plots covered under the MoU dated 17.12.2021 and 27.03.2024.
(ii) I.A.No.2 of 2025- direction to the respondent to furnish
security for a sum of Rs.12,81, 95, 895/-.
7. On hearing both sides and considering the materials on record,
the learned Arbitrator found that the appellant herein did not establish a
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prima facie case to justify an injunction restraining the respondent from
selling the entire extent of unsold property. The Arbitrator also notes the
fact that even after the expiry of the extended period under the second
MoU, the appellant is able to sell only 59,420 sq.ft of lad, leaving a
balance of 1,35,453 sq.ft., unsold.
8. After perusing the statement of accounts and taking into
consideration of the interest of both parties, the Arbitrator, as a balancing
measure, passed an order restraining the respondent from selling 40,000/-
sq.ft., out of the remaining 1,35,453 sq.ft., of land. Consequently, the
respondent, the original land owner was permitted to deal with the
remaining extent of 95,453 sq.ft..
9. With respect to I.A.No.2 of 2025, the Arbitrator held that the
prayer for furnishing security was not maintainable, when an application
for injunction sought such relief only as an alternate remedy. The
Arbitrator observed that the appellant herein is already protected by way
of an injunction restraining the respondent from alienating 40,000 sq.ft.,
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of land. There is no reason to direct the respondent to furnish further
security.
10. Being aggrieved by the said order, the appellant has filed the
two arbitration appeals, one against the dismissal of the application
seeking an order of injunction and the other challenging the rejection of
the application seeking direction to furnish security.
11. The learned counsel appearing for the appellant submitted that
by permitting the respondent herein to deal with the remaining extent of
land 95,453 sq.ft., would grave prejudice the interest of the appellant. The
learned counsel contended that restricting the injunction only to an extent
of 40,000 sq.ft., is inadequate and it opposed to the public policy, which
warrants intervention of High Court.
12. The learned counsel further submitted that having observed that
the time is not an essence of the contract in a specific performance suit,
the learned Arbitrator ought not to have given liberty to the respondent to
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sell around 95,453 sq.ft., of land and restricting the protection only to an
extent of 40,000 sq.ft.. If the respondent alienate significant portion of the
property i.e., 95,453 sq.ft., of land, the bonafide interest of the appellant
will be left unprotected.
13. After giving anxious consideration to the submissions made by
the learned counsel for the appellant and nature of the dispute, this Court
finds that on a specific understanding that the land of the respondent will
be promoted and marketed by the appellant herein. An initial Memo of
Understanding was entered into on 17.12.2021, which was subsequently
extended and modified by mutual agreement on 27.03.2024.
14. Though both agreements stipulated a specific time for
performance, the conduct of the parties clearly indicates that the
contractual agreement continued beyond the period, enabling the intended
purpose of MoU to be carried out without any impediment. However,
after the lapse of nearly three years from the original MOU, the matter
now been precipitated to the level of the stage of arbitration.
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15. Taking note of the fact that out of total extent of 1,94,873 sq.ft.,
the appellant has able to sell only 59,470 sq.ft., which is slightly more
than 25% of the total land area, while the remaining approximately 75%
of the land remains unsold. and balance around 75% of the land remains
unsold. Taking these facts into account, the learned Arbitrator, by order
dated 02.09.2025, considered it appropriate to pass a restraint order only
to an extent of 40,000 sq.ft., of land.
16. Accordingly, the respondent was injuncted from alienating that
portion of the land. This order was passed as a balancing measure to
protect the interest of the appellant without unduly restricting the
respondent's rights over the remaining land.
17. Though the learned counsel for the appellant contends that this
restraint order is inadequate to protect the appellant's interest, this Court
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finds that the Arbitrator has duly considered the statement of accounts
including the payments made by the appellant to the respondent and the
expenditure incurred by the appellant, had passed the above order, which
in view of this Court is a balancing measure in order to save great interest
of both parties.
18. This Court finds no violation of the public policy as alleged in
the appeals. In the result, both the Arbitration Appeals stand dismissed.
We have no doubt that the Arbitrator will proceed with the adjudication of
the main case and dispose the same as early as possible. Consequently,
connected miscellaneous petitions are closed. No costs.
[Dr.G.J., J.] & [M.S.K., J.]
18.09.2025
Index : Yes/No
Internet : Yes/No
rpl
Dr.G.JAYACHANDRAN., J.
and
MUMMINENI SUDHEER KUMAR., J.
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Arb Appeal Nos.35 & 36 of 2025
rpl
Arb Appeal Nos.35 & 36 of 2025
18.09.2025
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