P.V.S.Diwakar vs T.N. Vishwamber
2021 Latest Caselaw 2274 Tel

     HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
                                  AND
        HONOURABLE SRI JUSTICE T.VINOD KUMAR

                         C.M.A. No.254 of 2021

JUDGMENT: (Per Hon'ble Sri Justice M.S. Ramachandra Rao)


       This Appeal is filed under Section 37 of the Arbitration and

Conciliation Act, 1996 (for short 'the Act') challenging the order

dt.30-03-2021 in A.O.P.No.621 of 2019 of the II Additional District

Judge, Ranga Reddy District at L.B. Nagar allowing the application

filed under Section 9 of the Act filed by respondent and granting

injunction against the appellant from alienating or disposing of the

schedule property to others pending disposal of C.M.A.No.496 of

2015 on the file of this Court.

The Background

facts

2. The land in an extent of Ac.10.00 situated in Sy.Nos.251/4 and

252/4 situated at Wattinagulapally village, Rajendranagar Mandal,

Ranga Reddy District originally belonged to the paternal grandmother

of the appellant and she had bequeathed the same to the appellant and

his two brothers under a registered Will dt.22.09.1982.

3. The respondent along with P.Kishan Prasad had come forward

to purchase an extent of Ac.5.00 of land out of the total extent of

Ac.10.00 and paid Rs.30.00 lakhs under a receipt-cum-sale

commitment.

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4. The said land is allegedly affected under G.O.Ms.No.111 issued

by the State Government restricting constructions within a particular

radius of Osman Sagar and Himayathsagar water bodies; and having

come to know the same and after several rounds of deliberations, the

respondent and his associate entered into an Agreement of Mutual

Benefit Settlement dt.06.09.2006 with the appellant and his brothers.

5. Under the said agreement, the parties have agreed to sell the

subject land to the third parties and to share the proceeds thereof and

it was also agreed that any unsold part of land at the end of 9 months

from the date of the Agreement may be registered in favour of the

parties of the second part at a price upto Rs.3.20 crores per acre.

O.P.No.568 of 2007

6. It was contended by appellant that the terms of the Agreement

of Mutual Benefit Settlement did not workout and no sales to the third

parties have taken place nor the respondent and his associate have

come forward for getting the land registered in their name at the price

as agreed upon in the Agreement; and so the respondent and his

associate invoked Section 9 of the Act, and filed O.P.No.568 of 2007

before the I Additional District Judge, Ranga Reddy District at

L.B.Nagar for an interim measure by way of injunction restraining the

respondents therein from alienating the subject land.

7. The said Court passed orders directing maintenance of status

quo.

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8. Thereafter the respondent approached the High Court under

Section 11(6) of the Act for appointment of an Arbitrator and

accordingly, Justice P.L.N. Sarma (Retd) was appointed as an

Arbitrator.

The arbitral award

9. The Arbitrator passed an award dt.10.10.2009 rejecting the

claim of the respondent for specific performance of the agreement

dt.06.09.2006 and merely directed refund of the amount with interest

to the respondent and his associate by the appellant and his brothers.

A.O.P.No.55 of 2010

10. The respondent and his associate challenged the Award by way

in A.O.P.No.55 of 2010 under Section 34 of the Act before the II

Additional District Judge, Ranga Reddy at L.B. Nagar and the same

was allowed by order dt.08.04.2015 setting aside the award, and

holding that the respondent and his assocaite are entitled to claim

specific performance of the contract on depositing the Government

value with goodwill as offered by them.

C.M.A.No.496 of 2015

11. The appellant and his brothers questioned the order

dt.08.04.2015 in A.O.P.No.55 of 2010 in C.M.A.No.496 of 2015

before the High Court ; and an interim order was passed on

27.07.2015 in C.M.A.M.P.No.1002 of 2015 staying the order under ::4::

Appeal, and the said order is still in force and the said Appeal is

pending.

O.P.No.621 of 2019

12. The respondent again filed O.P.No.621 of 2019 invoking

Section 9 of the Act seeking an injunction restraining the appellant

from alienating the schedule lands pending disposal of C.M.A.No.496

of 2015.

13. He pleaded that there were certain transactions during the years

2010 and 2013 by way of Gift Deeds/sale deeds by the appellant and

his brothers and that certain sale deeds were executed by the brothers

of the appellant in his favour in the year 2018, and that there were

some enquiries by third parties for purchase of the schedule land and

so it is necessary to restrain the appellant from making any

alienations.

The stand of the appellant

14. The Appellant opposed A.O.P.No.621 of 2019 raising several

contentions.

15. It was contended therein that Section 9 of the Act is not

maintainable since the Arbitration was over long back and the petition

filed under Section 34 of the Act was also over in 2015 itself, and the

matter is sub judice in C.M.A.No.496 of 2015 and hence any relief to

be sought for is to be sought only in the said C.M.A. and not by way

of an application under Section 9 of the Act. He stated that there is no ::5::

cause of action for the filing the application merely on the basis of

alleged enquiries by third parties. It was also pleaded that the

respondent has collusively purchased certain extents of land from the

brothers of the appellant and was trying to harass the appellant by way

of present application, which is not maintainable.

The order in AOP NO.621 of 2019

16. By order dt.30.03.2021, the Court below allowed A.O.P.No.621

of 2019.

17. It held that after entering into the Agreement of Mutual Benefit

Settlement dt.30.08.2006, the two brothers of the appellant

compromised the issue with the respondent and his associate and in

consequence thereof, the two brothers of appellant executed Exs.P-7

to P-9 registered sale deeds dt.27.12.2018; in view of the same, the

dispute is settled among the respondent and his associate and two

brothers of the appellant; and consequently, no cause of action

survives for the respondent to sue the two brothers of appellant and

also join his associate as a petitioner in A.O.P.No.621 of 2019.

18. It also rejected the contention of the appellant that the

compromise or settlement between the respondent and his associate

on onside and the two brothers of the appellant on another side will

make the Agreement of Mutual Benefit Settlement dt.30.08.2006

unexecutable against the appellant. It relied on Section 44 of the

Indian Contract Act, 1872. It also held that the doctrine of frustration

contained in Section 56 of the said Act is not applicable.

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19. The Court below also referred to Ex.P-5 registered gift

settlement deed dt.01.02.2010 executed by appellant in favour of his

wife, which showed that specific extent of Ac.1.06½ gts and another

land was alienated; that the said land was part of the land which was

the subject matter of Agreement of Mutual Benefit Settlement

dt.30.08.2006; that such an execution of gift deed indicates that there

must have been a partition among the appellant and his brothers, and

that was why even the brothers of the appellant executed Exs.P-7 to P-

9 registered sale deeds on 27.12.2018 in favor of respondent and his

associate.

20. It also took note of the fact that O.P.No.568 of 2007 had got

dismissed for default and the status quo granted therein no longer

survives and the respondent cannot be faulted in filing A.O.P.No.621

of 2019 in seeking interim relief on a new and different cause of

action which accrued on him later i.e. pendency of C.M.A.No.496 of

2015 in this Court.

21. The Court below also noted that in violation of the interim

status quo order granted in O.P.No.568 of 2007, appellant had

executed the registered gift settlement deed Ex.P-5 dt.01.02.2010 in

favour of his own wife, Ex.P-6 registered sale deed dt.27.12.2013 and

Ex.P-10 registered sale deed dt.01.11.2014 to third parties and so

there is justification for respondent in filing A.O.P.No.621 of 2019.

22. Challenging the same, this Appeal is filed.

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The present Appeal

23. Heard Sri V.Srinivas, learned Senior Counsel for

Ms.V.Chitralekha, leaned counsel for appellant and Sri

I.V.Radhakrishna Murthy, learned counsel for respondent.

24. Learned counsel for appellant contended that the Court below

ought not to have granted interim injunction restraining the appellant

from alienating 'A' and 'B' schedule properties since the basis of the

pleading of the appellant is merely an allegation of respondent that

appellant was trying to alienate his share of the property to third

parties and that a neighbouring land ower K.Pratibha had approached

the respondent on 30.10.2019 and made enquiries. He alleged that

even the affidavit of the said neighbouring land owner has not been

filed by respondent to substantiate the said pleading and there is no

basis for the apprehension of respondent that appellant is alienating

the subject property.

25. Learned counsel for respondent refuted the said contention and

supported the order passed by the Court below.

The consideration by the Court

26. We have noted the contentions of both sides.

27. There is no dispute that the property transaction which is

subject matter of Agreement of Mutual Benefit Settlement

dt.30.08.2006 was subject matter of an arbitral award dt.10.10.2009

and the learned Arbitrator had rejected the claim of respondent for ::8::

specific performance of the said agreement and merely directed

refund of the amount to the respondent and his associate by the

appellant and his brothers with interest; that the said award has been

challenged in A.O.P.No.55 of 2010 by the respondent and his

associate under Section 34 of the Act in the Court of the II Additional

District Judge, Ranga Reddy at L.B. Nagar; and the said Court had

passed an order on 08.04.2015 allowing the O.P. and setting aside

Award and holding that respondent and claimants are entitled to

specific performance of award contract on depositing the Government

value with goodwill as offered by them.

28. It is also an admitted fact that the appellant and his brothers

have questioned the order dt.08.04.2015 in A.O.P.No.55 of 2010 in

C.M.A.No.496 of 2015 and this Court had passed an interim order in

C.M.A.M.P.No.1002 of 2015 on 27.07.2015 staying the order passed

in A.O.P.No.55 of 2010.

29. So, the dispute between the appellant and respondent has not

yet attained finality and it would have to be adjudicated in

C.M.A.No.496 of 2015 pending before this Court for the last 6 years.

30. If before adjudication of C.M.A. the appellant is allowed to

make alienations of the subject property, certainly there would be

serious prejudice to the respondent and his associate.

31. The fact that the appellant had executed Ex.P-5 registered gift

settlement deed dt.01.02.2010 in favour of his wife, Ex.P-6 registered

sale deed dt.27.12.2013 and Ex.P-10 registered sale deed ::9::

dt.01.11.2014 in favor of third parties shows that in spite of interim

order granted in A.O.P.No.568 of 2007, the said alienations had been

made by the appellant. Merely because a third party affidavit of

K.Pratibha, neighbouring land owner had not been filed, it cannot be

said that the respondent cannot be granted any relief .

32. In fact the very filing by the appellant of the appeal against the

order dt.30.03.2021 in A.O.P.No.621 of 2019 challenging such a

restraint indicates that the appellant has an intention to sell the subject

property, for otherwise there was no necessity for filing of this appeal

at all.

33. In our considered opinion, preservation of the property pending

disposal of C.M.A.No.496 of 2015 is necessary, and the appellant

cannot be allowed to create third party interests on the subject

property without the dispute being adjudicated in the said CMA.

34. We therefore do not find any merit in the appeal and it is

accordingly dismissed. No costs.

35. Consequently, miscellaneous petitions, pending if any, shall

stand closed.

______________________________ M.S. RAMACHANDRA RAO, J

___________________ T.VINOD KUMAR, J Date: 03-08-2021 Vsv