Citation : 2023 Latest Caselaw 1033 Tel
Judgement Date : 2 March, 2023
HIGH COURT FOR THE STATE OF TELANGANA
COMMERCIAL COURT APPEAL NO.21 OF 2022
Between :
M/s. Ranganath Properties Pvt. Ltd.,
Rep. by its Directors
Ramesh Chand Kalantri, S/o. Late Dhanraj Kalantri
Aged about 62 years, Occ : Business
R/o. 5-8-294, Chirag Lane, Mahesh Nagar,
Nampally, Hyderabad and 15 others
...Appellants/Petitioners
And
Phonix Tech Zone Pvt. Ltd., (formerly known as
Phonenix Embassy Tech Zone Pvt. Ltd.,)
(Developer) Rep. By its Managing Director,
P. Gopi Krishna, registered office at
Sy.No.27/1 to 27/4, Nanakramguda,
Gachibowli, Ranga Reddy District,
Telangana - 500 032. & 2 others
...Respondents
DATE OF COMMON ORDER PRONOUNCED: 02.03.2023
SUBMITTED FOR APPROVAL:
1. Whether Reporters of Local newspapers Yes/No
may be allowed to see the judgment?
2. Whether the copies of judgment may be Yes/No
marked to Law Reporters/Journals
3. Whether Their Lordships wish to Yes/No
see the fair copy of the judgment?
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COMCA.No.21 OF 2022
2
* HONOURABLE SRI JUSTICE P. NAVEEN RAO
AND
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
+ COMMERCIAL COURT APPEAL NO.21 OF 2022
% DATED 02ND DAY OF MARCH, 2023
Between :
# M/s. Ranganath Properties Pvt. Ltd.,
Rep. by its Directors
Ramesh Chand Kalantri, S/o. Late Dhanraj Kalantri
Aged about 62 years, Occ : Business
R/o. 5-8-294, Chirag Lane, Mahesh Nagar,
Nampally, Hyderabad and 15 others ...Appellants
And
$ Phonix Tech Zone Pvt. Ltd., (formerly known as
Phonenix Embassy Tech Zone Pvt. Ltd.,)
(Developer) Rep. By its Managing Director,
P. Gopi Krishna, registered office at
Sy.No.27/1 to 27/4, Nanakramguda, Gachibowli,
Ranga Reddy District, Telangana - 500 032. & 2 others
..Respondents
<Gist:
>Head Note:
! Counsel for the Petitioner : Sri B. Venkat Rama Rao,
^Counsel for Respondents : Sri P. Soma Sekhar Reddy
Sri Srinivas Velagapudi.
? CASES REFERRED:
1. ILR 2021 Karanataka 3215
2. (2021) 10 SCC 210
3. (2015) 1 SCC 1
4. 2022 SCC Online SC 1028
5. Manu/PH/1545/2020
6. (2015) 3 SCC 49
7. (1995) 2 SCC 630
8. (2020) SCC 234
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COMCA.No.21 OF 2022
3
HONOURABLE SRI JUSTICE P. NAVEEN RAO
AND
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
COMMERCIAL COURT APPEAL NO.21 OF 2022
Date: .03.2023
Between:
M/s. Ranganath Properties Pvt. Ltd.,
R/o. By its Directors
Ramesh Cahnd Kalantri, S/o. Late dhanraj Kalantri
Aged about 62 years, Occ : Business,
R/o. 5-8-294, Chiraj Lane, Mahesh Nagar,
Nampally, Hyderabad and 15 others
.....Petitioners
And
Phoenix Tech Zone Pvt. Ltd., (formerly known as
Phoenix Embassy Tech Zone Pvt. Ltd.,)
(Developer) Rep by its Managing Director,
P. Gopi Krishna, registered office at
Sy.No.27/1 to 27/4, Nanakramguda,
Cachibowli, Ranga Reddy District,
Telangana - 500 032 and 2 others.
.....Respondents
The Court made the following:
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COMCA.No.21 OF 2022
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HONOURABLE SRI JUSTICE P. NAVEEN RAO
AND
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
COMMERCIAL COURT APPEAL NO.21 OF 2022
JUDGMENT: {Per the Hon'ble Sri Justice J. Sreenivas Rao}
The appellants filed this appeal aggrieved by the orders dated
06.06.2022 passed by learned Special Judge for Trial and Disposal of
Commercial Disputes Court, Ranga Reddy District at L.B. Nagar in
C.O.P.No.3 of 2022 in C.O.P.No.7 of 2022 dismissing the application
filed under Section 9 (1) of Arbitration and Conciliation Act 1996
(hereinafter referred to as 'the Act, 1996') for grant of injunction
restraining the Respondents 1 & 2 or any other person(s) acting,
dealing or otherwise claiming under the authority of the said
respondents in any form of whatsoever by way of sale, mortgage,
creating any kind of encumbrance, lease/licence or otherwise
changing the nature of the development of the petition schedule
property, whatsoever, pending the disposal of the arbitration
proceedings.
2. For the sake of convenience, hereinafter the parties will be
referred to as "petitioners" and "respondents", as they were arrayed
before the trial Court.
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COMCA.No.21 OF 2022
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3. Petitioners filed Arbitration Petition vide C.O.P.No.7 of 2022
under Section 9 (1) of the Act 1996 for grant of injunction restraining
the Respondents 1 & 2 or any other person/s acting, dealing, (or)
otherwise claiming under the authority of the said Respondents in
any form of whatsoever form all that petition schedule property i.e.
the petition schedule saleable/leasable built-up area/property
together with proportionate undivided three-towers i.e., Tower No.1,
Towner No.2 and Towner No.6 coming up in Acs.06.08 guntas in
Sy.Nos.128 & 138 (larger extent) as per sanctioned master plan out
of total single project (under the name and style ('Phoenix Business
Hub') site admeasuring Acs.15.36 guntas covered by Sy.Nos.118 (P),
120(P), 121(P), 122 (P), & 138(P) situated at Nanakramguda Village,
Serilingampally Mandal of Ranga Reddy Dist. by way of sale, more
creating any kind of encumbrance, lease/ license (or) otherwise
changing the nature of the development of the said schedule
property other than IT/ITES office commercial space in any manner
whatsoever, pending the disposal of the arbitration proceedings. In
the said petition, the petitioners contended that they are owners and
possessors of the land to an extent of Acs.6.08 guntas in Sy.Nos.122
and 138 situated at Nanakramguda (V) of Serilingampally (M), Ranga
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Reddy Dist. The respondent No.1 represented by its Managing
Director Sri P.Gopi Krishna, claiming as one of the reputed builders
in the limits of GHMC, approached the petitioners in the year 2015
to develop the petitioners' properties as common projects, and the
petitioners are represented by their authorized person namely Sri B.
Sunil and he had common negotiations on the proposal of
Respondent No.1; in pursuant to the said negotiations between the
petitioners and the respondents, it was represented that they would
develop the petitioners' properties together with the properties of
other adjacent owners as joint property into SEZ/buildings for the
purpose of IT/ITES/Commercial place and the same shall be
developed to achieve more advantageous and beneficial to one and
all in total as one unit on extent of Acs.15.46 cents covered by
Sy.Nos.118(p), 120(p), 121(p), 122(p) and 138(p) of Nanakramguda
(V).
3.1. The petitioners further stated that the Respondent No.1
through mail dt. 04.04.2015 informed that they will construct
2,00,000 Sq. fts., saleable/leasable area per acre in the large extent
of project and the petitioners/land owners were to be given 25%
share in the said saleable/leasable built-up area with proportionate
PNR,J& JSR,J
COMCA.No.21 OF 2022
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share in the common area/parking etc., remaining 75% is in favour
of the developers. In pursuance of the negotiations the petitioners
and respondents have entered into a common understanding under
the preliminary agreement dt. 06.12.2015 with a nomenclature as
'Term Sheet' wherein the respondents agreed to give the land owners
share at 55,000 sq.ft. per acre with proportionate car parking space
undivided share in the large extent of project assuring that they will
be constructing 2,00,000 sq.ft per acre.
3.2. The petitioners further stated that they came to know that in
April, 2019 the respondents were constructing more built-up area
than the initial plan/understanding. By way of mail the petitioners
demanded to increase their share of property on additional
constructed area. The petitioners further stated that respondents
have mutually agreed to enhance the owners share ratio from 55,000
sq.ft. to 70,000 sq.ft per acre, saleable & leasable area and they will
be constructing total built up area in the project with intention to
increase the area from 2,00,000 sq.ft per acre to 2.69,000 sq.ft per
acre. Accordingly, the respondents have executed addendum to the
Supplemental Development Agreement in the year 2019. They
further stated that the respondents made TS-I Pass for construction
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COMCA.No.21 OF 2022
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of 6 towers (High Rise Towers) and the same was not intimated to the
petitioners. The respondents obtained permission for the proposed
construction behind back of the petitioners with an ulterior motive to
deprive the legitimate share of the petitioners in total built-up area.
In such circumstances, the petitioners invoked the provisions of the
Arbitration and Conciliation Act, 1996. Clause 23 of Development
Agreement-cum-General Power of Attorney (hereinafter referred as
DAGPA) specifically says that any dispute or difference whatsoever
arising under or connection with the agreement, if not settled
mutually between the parties, the same shall be settled by way of
arbitration in accordance with the Act, 1996.
3.3. The petitioners further state that on 31.08.2019 they visited
the project site and found a brochure of different master plan but the
respondents did not furnish any information in spite of request made
by the petitioners. At that stage, the petitioner filed application
under RTA on 03.03.2020 and 23.03.2020 and obtained information
on 16.03.2021, wherein the concerned authorities stated that the
TSIIC has granted permission to the respondents to extend building
permit dated 04.02.2021 for two towers, each consists of 4 cellars
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and ground floor plus 29 upper floors in the larger extent of the
project.
3.4. The petitioners further averred that the respondents stated that
the initial share of the petitioners as agreed at 55,000 sq.ft per acre
is revised to 70,000 sq.ft per acre. The respondents unilaterally
allotted the constructed area upto 70,000 sq.ft only, though the
respondents were constructing high rise towers and obtained
permission from the authorities without knowledge of the petitioners.
The petitioners being the land owners are entitled for sharing ratio in
proportionate of 1:3 in total built up area or project in the land.
They further stated that the respondents violated all the terms of
DAGPA and they refused to enhance the land owners share of
saleable and leasable in the enhanced SFI of the project, since the
respondents have already entered into agreement between
"Sensation Infraction" and there is every possibility that respondents
may alienate the subject property.
4. Respondent Nos. 1 and 2 filed counters denying the averments
made by the petitioners inter alia contending that the COP filed by
the petitioners is not maintainable on the ground of jurisdiction. As
per clause 23 of DAGPA entered between the parties "Any disputes
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COMCA.No.21 OF 2022
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that/or differences whatsoever arising under or in connection with the
agreement which could not be settled by the parties through
negotiations, shall be finally settled by arbitration in accordance with
the Act, 1996 by an arbitral panel comprising of three arbitrators, one
appointed by the owners and one by the Developer and the two
arbitrators so appointed shall appoint the third arbitrator, who shall
be the Chairman of the arbitral panel. The venue of arbitration shall
be Hyderabad." In pursuance of the said clause the venue of
arbitration is only at Hyderabad. In view of the same, any dispute
arising out of DAPGA including petition under Sections 9, 34 or
Section 37 of the Act, 1996, the parties shall file petitions before the
Courts at Hyderabad, which shall have exclusive jurisdiction to try
and dispose such controversy between the parties. Hence the COP
filed by the petitioners before the learned Special Judge for Trial and
Disposal of Commercial Disputes, Ranga Reddy District at L.B.
Nagar is not maintainable and the said Court is not having
jurisdiction to adjudicate the dispute.
4.1. The respondents further contended that as per the provisions
of Section 20 (A) r/w Section 41 and r/w Serial No.5 (e) of the
Schedule to the Specific Relief Act, 1963, the petition filed by the
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COMCA.No.21 OF 2022
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petitioners for seeking injunction is not maintainable under law. The
respondents further contended that as per Sec.41 (ha) of Specific
Relief Act an injunction cannot be granted if it would impede or delay
the progress or completion of any infrastructure project as per the
said provision of law, no injunction can be granted in respect of the
infrastructure project, if such orders would impede or delay the
progress of such projects included in Special Economic Zones (SEZ),
as such the relief claimed by the petitioners are expressly barred
under the amended provisions of Specific Relief Act, 1963. The
petitioners have not complied with the requirement of 'pre-institution
mediation' as stipulated under the provisions and rules made under
the Commercial Courts Act, 2015.
4.2. The respondents further contended that the petitioners
suppressed the other material facts even though the respondents
intimated latest plans which were being applied for permission before
the statutory authorities, such as Telangana State Industrial
Infrastructure Corporation (TSIIC) from time to time and even the
status of development of SEZ project through mails dated
03.04.2019. The respondents further stated that the petitioners
herein entered DAGPA with first respondent and thereafter the
PNR,J& JSR,J
COMCA.No.21 OF 2022
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petitioners entered into Supplementary Development Agreement
(SDA) with respondent No.1. Finally, the petitioners entered into
ASDA with the respondent No.1 increasing the petitioners' share
from earlier lump sum area from 55,000 sq.ft per acre to 70,000 sq.ft
per acre. Suppressing several facts, the petitioners approached the
Court with unclean hands and the petitioners have not satisfied the
ingredients as required for grant of injunction.
5. Basing on the pleadings of the respective parties, the Court
below framed the following point for consideration:
(1) Whether the petitioners are entitled for the relief as
prayed for?
6. The Court below after considering the contentions of the
respective parties, material evidence on record and also after hearing
both the parties was pleased to dismiss the COP by its order dated
06.06.2022 holding that the petition schedule property falls under
the category of Special Economic Zone and particularly Section 20(a),
41 (ha) of Specific Relief Act, 1963 (Amended Act, 2018) is expressly
bar grant of injunction and further held that the petitioners are not
entitled to grant injunction under Section 9 of the Act, 1996.
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7. Questioning the above said order, the petitioners filed the
present appeal.
8. The learned counsel for the petitioners vehemently contended
that the Court below without properly considering the pleadings,
documentary evidence, dismissed the C.O.P. He further contended
that the petitioners have satisfied all the essential ingredients for
grant of injunction as enumerated under Order XXXIX Rules 1 and 2
of CPC i.e. prima facie case, balance of convenience and irreparable
loss and in spite of the same, the Court below erroneously dismissed
the COP.
9. The learned counsel for the petitioner further contended that
the Court below dismissed the COP by applying the provisions of
Sections 20 (a) and 41 (ha) of the Specific Relief Act, 1963 and
Amended Act, 2018, the petition schedule property situated in the
Special Economic Zone, as such the petitioners are not entitled for
grant of injunction. Though the said provisions are not applicable to
the petitioners' case, as the relief sought by the petitioners in COP is
only to protect their legitimate share, interest over the petition
schedule property, as the petitioners have not sought injunction
restraining the respondents to carry out the construction activities in
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COMCA.No.21 OF 2022
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the petition schedule property. The petitioners have sought
equitable relief restraining the respondents not to alienate or create
any third-party rights in respect of their legitimate shares only. In
such circumstances, the prohibition made under Sections 20(a), 41
(ha) of the Specific Relief Act, 2018 is not applicable. He further
contended that the amended provisions of Sections 20 (a), 41 (ha) of
the Specific Relief Act, 1963 were inserted by Act 18 of 2018 with
effect from 01.10.2018, whereas the petitioners and respondents
have entered into DAGPA and SDA prior to Amended Act came into
force and the said amended provisions of the Act 18 of 2018 are
prospective in nature and the same are not applicable to the
petitioners' case.
10. The learned counsel further contended that the Court below
failed to appreciate the fact that the contract between the land
owners and developers for development of property by way of
construction of built up area or within the (saleable and leasable
rights) in the project in terms of the development agreement coming
up in Economic Zone does not fall within the definition of
infrastructure project as specified in Category 5-e of the schedule
under the caption of Commercial Project and Infrastructure Special
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COMCA.No.21 OF 2022
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Sector. He further submits that the petitioners had sought for an
injunction not to alienate the petition schedule property which is
subject matter of arbitration and did not ask for an injunction not to
proceed with the construction or any other activities and the reasons
assigned by the Court below that if injunction is granted it will
hamper progress of the project by relying upon the clause 4.2 and
clause 9 of DAGPA to the effect that the said recitals show that
owner shall not in any way obstruct the implementation of the
project. The petitioners have sought only relief to protect their share
in the schedule of property and the petitioners have not sought the
relief restraining the respondents carrying out the construction or
any other activity. In such circumstances, the Court below ought to
have granted injunction as sought in the COP.
11. In support of his contentions, the learned counsel for the
petitioners relied upon the following judgments:
(1) Smt. Katta Sujatha Reddy & Another Versus Siddamsetty Infra
Projects Pvt. Ltd., & Others in Civil Appeal No.5822 of 2022 (arising
out of SLP © No.13565 of 2021), dated 25-08-2022;
(2) M.Suresh Vs. Smt. Mahadevamma & Others1;
(3) Asst. Excise Commissioner, Kottayam and Others Vs. Esthappan
Cheriqan and another2;
1
ILR 2021 Karnataka 3215
2 (2021) 10 SCC 210
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COMCA.No.21 OF 2022
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(4) Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika
Township Pvt. Ltd.3;
(5) Patil Automation Pvt. Ltd., & Others Vs. Rakheja Engineers Pvt.
Ltd.,4;
(6) Landmark Apartments Pvt. Limited Vs. Advance India Projects
Limited5 ;
(7) Associate Builders Vs. Delhi Development Authority6
12. On the other hand, the learned Senior Counsel Sri V. Ravinder
Rao representing the respondent Nos.1 and 2 strongly contended
that as per the provisions of Section 42 (2) of the Special Economic
Zone, 2005, Section 41 (ha) of Specific Relief Act 1963 as amended
by Act 18 of 2018 appendix schedule (e) there is specific prohibition
prohibiting grant of injunction on the properties situated in Special
Economic Zone. The learned Senior Counsel further contended that
as on today no arbitral proceedings were commenced. Unless and
until the arbitral proceedings commence and the petitioners
proved/established their entitlement of share of more than 77,000
sq.ft per acre in the constructed area as claimed in the C.O.P, the
petitioners are not entitle to seek injunction. He further submits
that Section 41 of Specific Relief Act came into force on 01.10.2018
3 (2015) 1 SCC 1
42022 SCC Online SC 1028
5
MANU/PH/1545/2020
6(2015) 3 SCC 49
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and the provisions of the amended acts are applicable to the present
case and the Court below after considering the pleadings,
documentary evidence on record and after hearing the parties and
also after examining the provisions of Special Economic Zones Act,
Specific Relief Act, 1963 and Amended Act 18 of 2018, Contract Act,
1872 and the law laid down by the Hon'ble Apex Court as well as
High Courts dismissed the COP by giving cogent reasons and there
are no grounds in the appeal filed by the petitioners to interfere with
the impugned order passed by the Commercial Courts and the same
is liable to be dismissed.
13. In support of his contentions, the learned Senior Counsel relied
upon the following judgments.
(1) R. Rajagopal Reddy (dead) by LRs and Others Versus Padmini
Chandrasekharan (dead) by L.Rs7;
(2) BGS SGS Soma JV Vs. NHPC Limited8
14. Sri Velagapudi Srinivas, learned counsel for the respondent
No.3 contended that the petitioners and respondents have entered
into DAGPA and SDA and terms and conditions of the contract are
binding between the parties and the petitioners filed COP claiming
7(1995) 2 SCC 630
8(2020) SCC 234
PNR,J& JSR,J
COMCA.No.21 OF 2022
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relief contrary to the terms and conditions of the contract. He
further contended that the land owners surrender their rights over
the property to the developers and they are not entitled to the relief
claimed in COP. He also contended that the dispute between the
parties is about sharing ratio and the said dispute has to be raised
by the petitioners before the Arbitral Tribunal and they have to
prove/establish by producing necessary evidence. In the event, if
they succeeded then only, they are entitled to claim the particular
share in the petition schedule property.
15. He relied upon the Clauses 8 and 11 of DAGPA which read as
follows:
"8. Commencement of Developmental work:
8.1. The Developer shall commence the developmental work on the
Schedule Property within six (6) months from the date of receiving the
sanctioned plan from the concerned authority and also all statutory
permissions required to start construction, including but not limited to
obtaining the required NoC/ approvals from the competent authority for
the proposed development of the Schedule Property/Joint Property.
8.2. The Developer shall have the sole discretion in selection of
construction materials, method of construction, equipment to be used for
construction and other related techniques of construction etc., and that
the Owners shall not interfere with the same.
8.3. The Owners shall extend full co-operation to the Developer to complete
the development and construction of the Project. The Owners shall not
create any impediments or obstruction in the way of the Developer in
developing or constructing the Project.
8.4 The Developer may, at its sole discretion, agree to execute
additional items of work as required by the Owners on a separate and
mutually agreed terms and/ or rates or that the Owners shall be at liberty
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to get any additional items of work done by their own agency only after
possession of the Owners' share is handed over to the Owners by the
Developer. The time taken for undertaking such additional work shall be
added to the time stipulated for completion of construction of the "Owners'
share" stipulated in the scheme.
11. Borrowings:
11.1 The Parties are entitled to obtain loans and advances from the banks
or financial Institutions and/or other persons to the extent of their
respective shares in the Schedule Property ss may be required by them. To
further clarify, the Developer is entitled to obtain loans, v mortgaging,
creating charge, lien, giving collateral security of undivided interest in the
Schedule Property to the extent of its share and obtain sums from
Financial Institutions, Banks, etc., for the purpose of construction of the
Project.
Supplementary Development Agreement
A. The Owners entered lain the Development Agreement with General
Power of Attorney dated 06.04.2016 registered as Document No.
3626/2016 in the Office of the Sub Register of Balanagar ("DAGPA") with
the Developer for development of their land admeasuring 8460 yards (Acs.
1-29.98 Gts) in Survey No. 138/part of Nanakramguda Village,
Serilingampally Mandal, Ranga Reddy District, more fully described in the
Schedules A, B, and C thereto, hereinafter referred to the "Schedule
Property", together with neighboring, adjacent and abutting properties
("Joint Property"), for the purpose of joint development of the total land into
an SEZ or Buildings for IT/ITES office space as proposed by the Developer
with amenities and facilities, more fully described in Annexure-1 thereto
(Project), so as to achieve more advantages and benefits to one and all,
such as elegance of the complex, a good marketable extent of developed
area and market the same. The Schedule Property and the Joint Property
are hereinafter together referred to as the "Larger Land".
....
....
D. Originally, some of the land owners of the land in Survey No. 118, 120, 121 and 122 of Nanakramguda Village ("the said land"), had entered into an arrangement with the Third-Party Developer in the year 2014 for development of the said land, which is now part of the same Project, of which the Schedule Property is a part. The Developer has agreed to settle the claims and demands of the Third-Party Developer vide separate document towards their time and efforts in developing the said land, in confirmation of which the Third-Party Developer has joined this SDA. Subject to their rights under the DAGPA, the Owners have agreed for the same.
Now this SDA witnesseth as under:
1)...
2)...
3)...
PNR,J& JSR,J COMCA.No.21 OF 2022
4)...
5) THAT the Owners do hereby release, renounce and relinquish all their rights, title, interests, claims and demands in the Leasable / Chargeable Areas and proportionate undivided share of land allotted to the share of the other owners of the Larger Land and the Developer. Similarly, the Developer does hereby release, renounce and relinquish all its rights, interests, claims and demands in the Leasable Chargeable Area and proportionate undivided share of land allotted to the share of the Owners.
In Addendum to Supplementary Development Agreement
C. Subsequently, the Owners have renegotiated with the Developer for revision in their share. The Parties, after due deliberations, have mutually agreed on-
1) revision of the Building Plans of the building/s, in which the Owners' share is allotted,
2) revision in the efficiency factor in the definition assigned to "Saleable /Leasable/Chargeable Area" under Clause 2.2 (e) of the DAGPA from "0.78 (+/- 0.02)" to "0.75".
3) revision in the entitlement of the Owners provided in Annexure-3 appended to the DAGPA from "55,000 sft of Leasable/Saleable Area per acre" to "70,000sft of Leasable/Saleable Area per acre" with "0.75" efficiency towards the entire share of the Owners;
4) revision in the allocation/demarcation of the Owners' share made under the SDA and
5) delivery of Owners' shares as per terms of the Development Agreement on or before 18.01.2021.
In view of the above, the parties have felt to expedient to amend the demarcation and allocation of Leasable/Chargeable Area falling to the share of the respective owners in the Project.
Now this Addendum wtinesseth that
1)...
2)...
3)...
4)...
5) The entitlement of the Owners in Annexure-3 appended to the DAGPA is hereby revised from "55,000 sft of Leasable / Saleable Area per acre" to "70,000 sft of Leasable/Saleable Area per acre" with an efficiency of "0.75" with proportionate undivided share in the Project Land and one (1) car parking lot for every 800 sft of Leasable Area.
PNR,J& JSR,J COMCA.No.21 OF 2022
9). The Developer is hereby authorized and empowered to (a) represent before concerned departments, authorities, etc., in all matters affecting the Project Land, including the Schedule Property, for road widening or otherwise; (b) claim any benefit or compensation, including but not limited to relaxation of setbacks, TDR or other benefits; and (c) use such benefit or compensation for the sole use and benefit of the Developer at its sole discretion.
14). The Development Agreement shall remain in force as amended by this Addendum. In case of any conflict between the Development Agreement and this Addendum, this Addendum shall prevail. Unless defined in this Addendum, all defined terms will have the meanings ascribed to such terms in the DAGPA or SDA."
15.1. Learned counsel relied on the following decision:
State of Rajasthan Vs. Nav Bharat Construction Co.9
16. Having heard the learned counsels for respective parties,
now the points that arise for consideration in this appeal are as
follows:
(1) Whether the Petitioner is entitled for grant of injunction as claimed in C.O.P. No.7 of 2022 under law?
(2) Whether the impugned order passed by the Court below in C.O.P. No.7 of 2022, dated 06.06.2022 is sustainable under law?
(3) To what relief?
POINT NOS.1 AND 2:
17. As per the contentions of the respective parties, evidence on
record, it shows that the respondents have approached the
petitioners in the year 2015 to develop the petitioners properties as
common project together with the properties of other adjacent
9(2006) 1 SCC 86 PNR,J& JSR,J COMCA.No.21 OF 2022
owners as joint property into SEZ/buildings for the purpose of
IT/ITES/Commercial place and the same shall be developed to
achieve more advantageous and beneficial to one and all in total one
unit on an extent of Acs.15.46 cents covered by Sy.No.118(p), 120(p),
121(p), 122(p) and 138(p) of Nanakramguda (V). The petitioners
contended that the Respondent No.1 through Mail dt.04.04.2015
informed that they will construct 2,00,000 Sq. fts., saleable/leasable
area per acre in the large extent of project and the petitioners/land
owners were to be given 25% sale in the said saleable/leasable built-
up area with proportionate share in the common area/parking etc.,
remaining 75% is in favour of the developers. Accordingly, the
petitioners and respondents have entered into a common
understanding under the preliminary agreement dt. 06.12.2015 with
a nomenclature as 'Term Sheet' wherein the respondents agreed to
give the land owners share at 55,000 sq.ft. per acre with
proportionate car parking space undivided share in the large extent
of project assuring that they will be constructing 2,00,000 sq.ft per
acre.
17.1. According to the petitioners as the respondents were making
the construction of the built-up area more than the initial PNR,J& JSR,J COMCA.No.21 OF 2022
plan/understanding, by way of mail, the petitioners demanded to
increase their share of property on additional constructed area and
the respondents have agreed to enhance the owners share from
55,000 sq.ft. to 70,000 sq, ft per acre, saleable & leasable area and
they would be constructing total built up area in the project with
intention to increase the area from 2,00,000 sq.ft per acre to
2.69,000 sq.ft per acre. Accordingly, the respondents have executed
addendum to the Supplemental Development Agreement in the year
2019. They further contended that the respondents made TS-I Pass
for construction of 6 towers (High Rise Towers) and the same was not
intimated to the petitioners, the respondents obtained permission for
the proposed construction behind their back with an ulterior motive
to deprive their legitimate share in total built-up area.
17.2. The petitioners further contended that they obtained
information under RTA Act, on 16.03.2021, wherein they came to
know that TSIIC has granted permission to the respondents for
extension of building permission dated 04.02.2021 for two towers
each 4 cellars and ground floor plus 29 upper floors in the large
extent project.
PNR,J& JSR,J COMCA.No.21 OF 2022
17.3. The petitioners further stated that the respondents stated that
the initial share of the petitioners as agreed at 55,000 sq.ft per acre
is revised to 70,000 sq.ft per acre. The respondents unilaterally
allotted the constructed are upto 70,000 sq.ft only though the
respondents constructed high rise towers and obtained permission
from the authorities without knowledge of the petitioners. The
petitioners being the land owners are entitled for sharing ratio in
proportionate to 1:3 in the total built up area or project in the land.
They further stated that the respondents violated all the terms of
DAGPA and they refused to enhance the land owners share of
saleable and leasable or in the enhanced SFI of the project, since the
respondents have already entered into agreement between
"Sensation Infraction" and there is every possibility that respondents
may alienate the subject property. Hence, the petitioners filed COP
for seeking grant of injunction.
18. Respondent Nos.1 and 2 filed counters denying the averments
made by the petitioners inter alia contending that the COP filed by
the petitioners is not maintainable on the ground of jurisdiction. As
per the clause 23 of DAGPA entered between the parties "Any
disputes that/or differences whatsoever arising under or in PNR,J& JSR,J COMCA.No.21 OF 2022
connection with the agreement which could not be settled by the
parties through negotiations, shall be finally settled by arbitration in
accordance with the Act, 1996 by an arbitral panel comprising of
three arbitrators, one appointed by the owners and one by the
Developer and the two arbitrators so appointed shall appoint the
third arbitrator, who shall be the Chairman of the arbitral panel.
The venue of arbitration shall be Hyderabad. In pursuance of the
said clause the venue of arbitration is only at Hyderabad. In view of
the same, any dispute arising DAPGA including petition under
Sections 9, 34 or Section 37 of the Act, 1996. Such parties shall be
filed before the Courts at Hyderabad, which shall have exclusive
jurisdiction to try and dispose the controversy between the parties.
Hence the COP filed by the petitioners before the learned Special
Judge, for Trial and Disposal of Commercial Disputes Court, Ranga
Reddy District at L.B. Nagar is not maintainable and this Court is
not having jurisdiction to adjudicate the dispute.
18.1. The respondents further contended that as per Section 20 (A)
r/w Section 41 and r/w. Serial No.5 (e) of the Schedule to the
"Specific Relief Act, 1963"- As per Sec.20 (a) Special Provisions for
Contract relating to infrastructure project - No injunction shall be PNR,J& JSR,J COMCA.No.21 OF 2022
granted by a Court in a suit under this Act. The respondents further
contended that as per Sec.41 (ha) of Specific Relief Act an injunction
cannot be granted if it would impede or delay the progress or
completion of any infrastructure project. Such project including
Special Economic Zones (SEZ), as such the relief claimed by the
petitioners are expressly barred under the amended provisions of
Specific Relief Act, 1963. The petitioners have not complied with the
requirement of 'pre-institution mediation' as stipulated under the
provisions and rules made under the Commercial Courts Act, 2015.
18.2. The respondents further contended that the petitioners
suppressed the other material facts even though the respondents
intimated latest plans which were being applied for permission before
the statutory authorities, such as Telangana State Industrial
Infrastructure Corporation (TSIIC) from time to time and even the
status of development of SEZ projection through mails dated
03.04.2019. The respondents further stated that the petitioners
herein entered DAGPA with first respondent and thereafter the
petitioners entered into Supplementary Development Agreement
(SDA) with respondent No.1. Finally, the petitioners entered into
ASDA with the respondent No.1 increasing the petitioners share from PNR,J& JSR,J COMCA.No.21 OF 2022
earlier lump sum area from 55,000 sq. ft per acre to 70,000 sq. ft per
acre. The petitioners suppressing several facts approached the Court
with unclean hands and the petitioners have not satisfied the
ingredients as required for grant of injunction.
19. The Court below after considering the contentions of the
parties, evidence on record and also examining the provisions of
Special Economic Zone Act, 2005 and Specific Relief Act, Contract
Act, and the decisions relied on by the parties, dismissed the COP by
giving specific reasons holding as under:
"25. Hence, the contention of the petitioners for grant of interim relief or injunction, is rejected as it is clearly appeared to this Court that after obtaining ad interim order there is impede or delay in the progress of the infrastructure project of the respondents by raising huge funds, which is also contrary to the infrastructure projects covered under Special Economic Zones. Accordingly, this point is answered in favour of respondents and against the petitioners.
26. It is the specific contention of the learned counsel for respondent that as per Development Agreement with General Power of Attorney dated 06.04.2016, more particularly as per clause 4.2 and clause 9 - The land 'owners shall not made any obstruction in any manner in implementation of the project and the petitioners contrary to the terms of the agreement approached this Court and obtained ad interim Injunction order by misrepresenting the facts including terms of the DAGPA.
27. On this aspect this Court has carefully gone through the prime agreement i.a., DAGPA dt. 06.04.2016 in particular, Clause 4.2 which contemplates that:- "The Developer shall, from the date of execution of this Agreement enter upon the schedule property as contemplated in this agreement in implementing the project on the schedule property and the developers right carry out construction and development works shall be continuous and absolute and the Owners shall not in any manner. whatsoever, destruct implementation of the Project."
Clause 9 of the DAGPA also contemplates OBSTURCTION TO FREE DEVELOPMENT:
PNR,J& JSR,J COMCA.No.21 OF 2022
"The developer shall from the date of being put in physical possession of the schedule property, be deemed to have an absolute and invocable license to implement the project on the schedule property and the developers right to carry out the construction and development works shall be continuous, absolute and irrevocable and the owners shall not in any manner whatsoever obstruct implementation of the project. Further, any impediments arising due to defective title or possessory rights of the owners shall be cleared by the owners at their own cost and expense and the timeline for completion of the project shall be deemed to be proportionately extended by the time the project of development/ construction of the project is adversely affected by such impediments.
On careful consideration of the above-mentioned clauses the petitioners approached this Court by suppressing the material facts including Clause 4.2 and Clause 9 of the DAGPA, wherein the petitioners categorically agreed that they shall not obstruct implementation of the project in any manner, as such, this Court is of the considered view that the petitioners have approached this Court by suppressing the terms of agreement and sought for interim measures U/Sec.9 of Arbitration Act. On this ground also the petitioners are not entitled for any interim relief.
29. In the present case, as discussed above, though there are clauses under 4.2 and 9 of DAGPA, suppressing the said clauses and without invoking the provisions of Section 12-A of the Act, for pre-institution mediation and settlement efforts, the petitioners straight away approached this Court by seeking interim relief and also failed to explain any urgency in granting the interim relief. As such this Court is of the considered view that the petitioners failed to comply with the requirements of pre-institution and mediation as required under Section 12-A of the Commercial Court Act, 2015.
30. .......... But, as per Sec.20A and Sec.41 (ha) and Serial No 5 of Schedule of Specific Relief (Amended Act) Act, 1963 (Act 18 of 2018) which expressly bars for grant of injunction in respect of the infrastructure projects, as it would impede or delay the progress or completion of the said project. Admittedly the respondent clearly established that the partition schedule property is notified as Special Economic Zone under Sub Sec. 1 of Sec. 4 of SEZ Act, 2005, R/W, Rule 8of SEZ Rules, 2005 vide Government of India and Ministry of Commerce and Industry's notification SO No.687(E), dt.22-07-2017 and Notification No.8.0.2179(E), dt.04-07-2017 and even on the considering the subsequent de-notification the substantial portion of the project is covered under Special Economic Zone, and even the petitioners in their petition at Para No.2.2 and also Para No.4 pleaded that the property is being developed as SEZ property and even otherwise the documents such as DAGPA, SDA clearly establish that the petition schedule property is being developed as SEZ and more particularly the petition schedule property squarely falls under the extent as mentioned in the notification dt.04-07-2017 notifying the said project as SEZ.
31. Therefore, considering the entire case facts and lengthy arguments of both counsels this court is of the considered opinion that the petition PNR,J& JSR,J COMCA.No.21 OF 2022
schedule property falls under the category of Special Economic Zone and particularly the Sec.20A, 41(ha) including schedule 5 of the Specific Relief Act Amended in 2018 are squarely applicable to the case of respondent, as such the petitioners are not entitled to grant interim measures/injunction under Section 9 of Arbitration and Conciliation Act by applying the principles of Order-XXXIX, Rule-1 and 2 of CPC. Accordingly, this point is answered against the petitioners."
20. At this stage, it is expedient to consider the decisions relied by
learned counsel.
21. The decisions cited by learned counsel for petitioner and the
ratio laid down therein are as under:
21.1. In Smt. Katta Sujatha Reddy (supra) in Civil Appeal No.5822 of
2022 (arising out of SLP © No.13565 of 2021), dated 25-08-2022,
(SCC Para Nos.26, 47, 48,53, & 54) read as under:
"26. Before dealing with Issue A, we would like to highlight certain facts which may be relevant. On 26-3-1997 and 27-3-1997 two agreements to sell were executed between the vendors and purchaser for two separate parcels of land in Survey Nos. 301 (part), 302, 303, 304 (part). The sale considerations for the aforesaid land were Rs 38,37,500 and Rs 1,82,500 respectively. Out of the above sale considerations, the vendors received an advance of Rs 34,70,000 and Rs 10,850 in furtherance of the performance of the aforesaid agreement.
47. The High Court, in the impugned order, has taken a different approach in categorising the Specific Relief Act, 1963 as procedural and holding that the 2018 Amendment is also a procedural provision which requires to be given retrospective effect. The High Court places reliance on an old case of Radheshyam Kamila v. Kiran BalaDasi [Radheshyam Kamila v. Kiran BalaDasi, 1971 SCC OnLine Cal 15 : AIR 1971 Cal 341] , wherein the High Court, while relying upon the commentary of Pollock & Mulla on Indian Contract Act and Specific Relief Act (4th Edn.) specifically observed that "specific relief, as a form of judicial process, belongs to the law of procedure". In this context, the Court came to a conclusion that such procedural amendment ought to be given retrospective effect.
PNR,J& JSR,J COMCA.No.21 OF 2022
48. We do not subscribe to the aforesaid reasoning provided by the High Court for the simple reason that after the 2018 Amendment, specific performance, which stood as a discretionary remedy, is not (sic now) codified as an enforceable right which is not dependent anymore on equitable principles expounded by Judges, rather it is founded on satisfaction of the requisite ingredients as provided under the Specific Relief Act. For determination of whether a substituted law is procedural or substantive, reference to the nature of the parent enactment may not be material. Instead, it is the nature of the amendments which determine whether they are in the realm of procedural or substantive law.
53. Under the pre-amended Specific Relief Act, one of the major considerations for grant of specific performance was the adequacy of damages under Section 14(1)(a). However, this consideration has now been completely done away with, in order to provide better compensation to the aggrieved party in the form of specific performance.
54. Having come to the conclusion that the 2018 Amendment was not a mere procedural enactment, rather it had substantive principles built into its working, this Court cannot hold that such amendments would apply retrospectively."
21.2. In M.Suresh (supra), paragraph-33 reads as under:
"33. In the light of the aforesaid judgments, it is clear that ordinarily, the effect of amendment by 'substitution' is that, the substituted provision stands repealed and the amended provision is substituted in the place of earlier provision from the date of inception of the enactment, but it is not absolutely applicable in all circumstances. If the amendment Act expressly specifies that the substituted provision shall come into force from a particular date subsequent to the date of amendment/the date the amendment come into force, the said amendment is prospective in nature notwithstanding such amendment is by way of 'substitution'. The intention of the legislature being clear, no retrospective effect could be given from the date of inception of the statute. There may not be any cavil on this legal proposition relating to substantial law. It is well settled that the interpretation of provisions must depend on the text and context. The real intention of the legislature has to be gathered from the text and context. The amendment Act contemplates that the said amendment by way of 'substitution' would come into force on such day the Central Government may, by Notification in the Official Gazette, appoint and different dates may be appointed for different provisions of the Act, 1st October 2018 is the date appointed for the amended provisions to come into effect. As such, amendment to each provision whether it is procedural or substantial has to be examined de horse the Act in general is construed to be procedural."
21.3. In Asst. Excise Commissioner, Kottayam (supra),
paragraphs-15 and 16 read as under:
PNR,J& JSR,J COMCA.No.21 OF 2022
"15. In this case, it is evident that when the state-initiated recovery proceedings it did not give credit of the amounts collected under the head of department management fee -as was required under pre-existing Rule
13. Its main contention before this court is that amounts collected as departmental management fee were not adjustable. In view of the decision in Lucka, there cannot be any dispute that contracts entered into before amendment of Rule 13-as in this case-were not to be treated as those transactions for which amounts were non- adjustable. There is no indication that Rule 13 applied retrospectively.
16. There is profusion of judicial authority on the proposition that a rule or law cannot be construed as retrospective unless it expresses a clear or manifest intention, to the contrary. In Commissioner of Income Tax v Vatika Township this court, speaking through a Constitution Bench, observed as follows:
"28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not f.no. 1 (2015) 1 SCC 1 tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips vs. Eyre, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law.
29. The obvious basis of the principle against retrospectivity is the principle of 'fairness', which must be the basis of every legal rule as was observed in the decision reported in L' Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co.Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later."
PNR,J& JSR,J COMCA.No.21 OF 2022
21.4. In Commissioner of Income Tax (Central)-I, New Delhi
(supra), paragraph-27 reads as under:
"General Principles concerning retrospectivity:
27. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of 'Interpretation of Statutes'. Vis-à-vis ordinary prose, a legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof."
21.5. In Patil Automation Pvt. Ltd., (supra), paragraphs-30, 91,
99, 105 and 113 read as under:
"30. It is, accordingly, by the Amending Act that Section 12-A came to be inserted. We may notice the Rules which came to be published in the Gazette and thereby came into force on 3-7-2018. Rule 3 reads as follows:
"3. Initiation of mediation process.--(1) A party to a commercial dispute may make an application to the Authority as per Form 1 specified in Schedule I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online;
(2) The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form 2 specified in Schedule I through a registered or speed post and electronic means including e-mail and the like to the opposite party to appear and give consent to participate in the mediation process on such date not beyond a period of ten days from the date of issue of the said notice.
(3) Where no response is received from the opposite party either by post or by e-mail, the Authority shall issue a final notice to it in the manner as specified in sub-rule (2).
PNR,J& JSR,J COMCA.No.21 OF 2022
(4) Where the notice issued under sub-rule (3) remains unacknowledged or where the opposite party refuses to participate in the mediation process, the Authority shall treat the mediation process to be a non-starter and make a report as per Form 3 specified in the Schedule I and endorse the same to the applicant and the opposite party.
(5) Where the opposite party, after receiving the notice under sub- rule (2) or (3) seeks further time for his appearance, the Authority may, if it thinks fit, fix an alternate date not later than ten days from the date of receipt of such request from the opposite party.
(6) Where the opposite party fails to appear on the date fixed under sub-rule (5), the Authority shall treat the mediation process to be a non-starter and make a report in this behalf as per Form 3 specified in Schedule I and endorse the same to the applicant and the opposite party.
(7) Where both the parties to the commercial dispute appear before the Authority and give consent to participate in the mediation process, the Authority shall assign the commercial dispute to a mediator and fix a date for their appearance before the said mediator.
(8) The Authority shall ensure that the mediation process is completed within a period of three months from the date of receipt of application for pre-institution mediation unless the period is extended for further two months with the consent of the applicant and the opposite party."
91. Section 12-A of the Commercial Courts Act provides for mediation. This is a provision, which was inserted as per the Amending Act (Act 28 of 2018) enacted in the year 2018 and it came into force with effect from 3-5- 2018. By the said amendment, in fact, Chapter III-A was inserted and Section 12-A is the sole section in the said chapter. A plain reading of Section 12-A makes the following position clear:
91.1. The lawgiver has declared that if a suit under the Act does not "contemplate" any urgent interim relief, then, it cannot be instituted unless the plaintiff seeks pre-litigation mediation. The pre-institution mediation is to be done in the manner, procedure, which is to be prescribed by the Central Government. The pre-litigation mediation is to be completed within a period of three months from the date of the application made by the plaintiff under sub-section (1) [see Section 12- A sub-section (3)].
91.2. The period of three months can, however, be extended for a period of two months provided there is consent to the same by the parties [see the first proviso to Section 12-A sub-section (3)]. By the second proviso, the Legislature has taken care to provide that the period, during which the parties remained occupied with the pre-
PNR,J& JSR,J COMCA.No.21 OF 2022
litigation mediation, is not to be reckoned for the purpose of computing the period of limitation under the Limitation Act, 1963.
91.3. As to what would happen, if the parties arrive at the settlement, is provided for in Section 12-A sub-section (4). The settlement is to be reduced into writing and signed by the parties to the dispute and the mediator. The effectiveness of a settlement arrived at in the course of the pre-institution mediation contemplated in Section 12-A, has been dealt with in Section 12-A sub-section (5). Parliament has accorded the settlement, the same status and effect as if it is an arbitral award, on agreed terms under sub-section (4) of Section 30 of the Arbitration and Conciliation Act, 1996.
91.4. Spread over five sub-sections, this standalone section in Chapter III-A, no doubt, supported by the Rules, in our view, substantially manifests a definite scheme to effectively deal with the perceived urgent problem of acute clogging of the justice delivery system, which had to be de-congested. Section 12-A cannot be perceived as merely intended to reach quicker justice, and what is more, on terms, which are mutually acceptable to the parties concerned. Even, more importantly, it was to produce a vital and significant effect on the very interest of the nation. We have perused the Statement of Objects and Reasons. To attract foreign capital by enhancing its rather low standard in the ease of doing business, it was and is still necessary to showcase an efficient and quick justice delivery system in commercial matters. In fact, India, which was ranked at 142 out of 189 countries, in the Ease of Doing Business Index, in 2015, climbed up to only 130 in the year 2016. By 2020, India stood at the 63rd position.
99. We may sum-up our reasoning as follows:
99.1. The Act did not originally contain Section 12-A. It is by amendment in the year 2018 that Section 12-A was inserted. The Statement of Objects and Reasons are explicit that Section 12-A was contemplated as compulsory. The object of the Act and the Amending Act of 2018, unerringly point to at least partly foisting compulsory mediation on a plaintiff who does not contemplate urgent interim relief. The provision has been contemplated only with reference to plaintiffs who do not contemplate urgent interim relief. The legislature has taken care to expressly exclude the period undergone during mediation for reckoning limitation under the Limitation Act, 1963. The object is clear.
99.2. It is an undeniable reality that courts in India are reeling under an extraordinary docket explosion. Mediation, as an alternative dispute mechanism, has been identified as a workable solution in commercial matters. In other words, the cases under the Act lend themselves to be resolved through mediation. Nobody has an absolute right to file a civil suit. A civil suit can be barred absolutely or the bar may operate unless certain conditions are fulfilled. Cases in point, PNR,J& JSR,J COMCA.No.21 OF 2022
which amply illustrate this principle, are Section 80CPC and Section 69 of the Partnership Act.
99.3. The language used in Section 12-A, which includes the word "shall", certainly, goes a long way to assist the Court to hold that the provision is mandatory. The entire procedure for carrying out the mediation, has been spelt out in the Rules. The parties are free to engage counsel during mediation. The expenses, as far as the fee payable to the mediator, is concerned, is limited to a one-time fee, which appears to be reasonable, particularly, having regard to the fact that it is to be shared equally. A trained mediator can work wonders.
99.4. Mediation must be perceived as a new mechanism of access to justice. We have already highlighted its benefits. Any reluctance on the part of the Court to give Section 12-A, a mandatory interpretation, would result in defeating the object and intention of Parliament. The fact that the mediation can become a non-starter, cannot be a reason to hold the provision not mandatory. Apparently, the value judgment of the lawgiver is to give the provision, a modicum of voluntariness for the defendant, whereas, the plaintiff, who approaches the court, must, necessarily, resort to it. Section 12-A elevates the settlement under the Act and the Rules to an award within the meaning of Section 30(4) of the Arbitration Act, giving it meaningful enforceability. The period spent in mediation is excluded for the purpose of limitation. The Act confers power to order costs based on conduct of the parties.
105. There is a plea by Shri Saket Sikri, that if this Court holds that Section 12-A is mandatory it may be done with only prospective effect. He drew support of the judgment of this Court in, Jarnail Singh v. LachhmiNarain Gupta [Jarnail Singh v. LachhmiNarain Gupta, (2022) 10 SCC 595] : (SCC paras 48-49)
"48. ... While interpreting the scope of Article 142 of the Constitution, this Court held that the law declared by the Supreme Court is the law of the land and in so declaring, the operation of the law can be restricted to the future, thereby saving past transactions.
49. The power of this Court under Article 142 of the Constitution is a constituent power transcendental to statutory prohibition. [Ashok Kumar Gupta v. State of U.P., (1997) 5 SCC 201 : 1997 SCC (L&S) 1299] In Orissa Cement Ltd. v. State of Orissa [Orissa Cement Ltd. v. State of Orissa, 1991 Supp (1) SCC 430] , this Court observed that relief can be granted, moulded or restricted in a manner most appropriate to the situation before it in such a way as to advance the interests of justice. The doctrine of prospective overruling is in essence a recognition of the principle that the Court moulds the reliefs claimed to meet the justice of the case, as has been held in Somaiya Organics (India) Ltd. v. State of U.P. [Somaiya Organics (India) Ltd. v. State of U.P., (2001) 5 SCC 519 : AIR 2001 SC 1723] It was further clarified that while in Golak PNR,J& JSR,J COMCA.No.21 OF 2022
Nath [Golak Nath v. State of Punjab, AIR 1967 SC 1643 : (1967) 2 SCR 762], "prospective overruling" implied an earlier judicial decision on the same issue which was otherwise final, this Court had used the power even when deciding on an issue for the first time. There is no need to refer to other judgments of this Court which have approved and applied the principle of prospective overruling or prospective operation of judgments. There cannot be any manner of doubt that this Court can apply its decision prospectively i.e. from the date of its judgment to save past transactions."
113. Having regard to all these circumstances, we would dispose of the matters in the following manner:
113.1. We declare that Section 12-A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12-A must be visited with rejection of the plaint under Order 7 Rule 11. This power can be exercised even suo motu by the court as explained earlier in the judgment. We, however, make this declaration effective from 20-8-2022 so that stakeholders concerned become sufficiently informed.
113.2. Still further, we however direct that in case plaints have been already rejected and no steps have been taken within the period of limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the plaintiff.
113.3. Finally, if the plaint is filed violating Section 12-A after the jurisdictional High Court has declared Section 12-A mandatory also, the plaintiff will not be entitled to the relief."
21.6. In Associate Builders (supra), paragraphs - 27 and 29 read as
under:
"27. Coming to each of the heads contained in Saw Pipes [(2003) 5 SCC 705 : AIR 2003 SC 2629] judgment, we will first deal with the head "fundamental policy of Indian law". It has already been seen from Renusagar [Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644] judgment that violation of the Foreign Exchange Act and disregarding orders of superior courts in India would be regarded as being contrary to the fundamental policy of Indian law. To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law.
xxx PNR,J& JSR,J COMCA.No.21 OF 2022
29. It is clear that the juristic principle of a "judicial approach" demands that a decision be fair, reasonable and objective. On the obverse side, anything arbitrary and whimsical would obviously not be a determination which would either be fair, reasonable or objective."
22. The decision relied by Learned Senior Counsel Sri V.Ravinder
and the ratio of the decisions is as under:
22.1. In R. Rajagopal Reddy (supra), paragraphs - 10, 11 and 15
read as under:
"10. It is thereafter that the Act came to be passed by both the Houses of Parliament and came into force as stated above. It might be appreciated that though the Law Commission recommended retrospective applicability of the proposed legislation, Parliament did not make the Act or any of its sections expressly retrospective in its wisdom. A bird's-eye view of the Act clearly establishes this position. The Act being Act No. 45 of 1988 in its preamble states that it is an act to prohibit benami transactions and the right to recover property held benami, for matters connected therewith or incidental thereto. Section 3 which is the heart of the Act imposes the required prohibition of benami transactions. It reads as under:
"3. Prohibition of benami transactions. -- (1) No person shall enter into any benami transaction.
(2) Nothing in sub-section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved, that the said property had been purchased for the benefit of the wife or the unmarried daughter.
(3) Whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under this section shall be non-cognizable and bailable."
A mere look at the above provisions shows that the prohibition under Section 3(1) is against persons who are to enter into benami transactions and it has laid down that no person shall enter into any benami transaction which obviously means from the date on which this prohibition comes into operation i.e. with effect from 5-
9-1988. That takes care of future benami transactions. We are not PNR,J& JSR,J COMCA.No.21 OF 2022
concerned with sub-section (2) but sub-section (3) of Section 3 also throws light on this aspect. As seen above, it states that whoever enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both. Therefore, the provision creates a new offence of entering into such benami transactions. It is made non-cognizable and bailable as laid down under sub-section (4). It is obvious that when a statutory provision creates new liability and new offence, it would naturally have prospective operation and would cover only those offences which take place after Section 3(1) comes into operation. In fact Saikia, J. speaking for the Court in Mithilesh Kumari case [(1989) 2 SCC 95 : (1989) 1 SCR 621] has in terms observed at page 635 of the report (SCC p. 107, para 22) that Section 3 obviously cannot have retrospective operation. We respectfully concur with this part of the learned Judge's view. The real problem centres round the effect of Section 4(1) on pending proceedings wherein claim to any property on account of it being held benami by other side is on the anvil and such proceeding had not been finally disposed of by the time Section 4(1) came into operation, namely, on 19-5-1988. Saikia, J. speaking for the Division Bench in the case of Mithilesh Kumari [(1989) 2 SCC 95 : (1989) 1 SCR 621] gave the following reasons for taking the view that though Section 3 is prospective and though Section 4(1) is also not expressly made retrospective, by the legislature, by necessary implication, it appears to be retrospective and would apply to all pending proceedings wherein right to property allegedly held benami is in dispute between parties and that Section 4(1) will apply at whatever stage the litigation might be pending in the hierarchy of the proceedings:
(1) Section 4 clearly provides that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be real owner of such property. This naturally relates to past transaction as well. The expression "any property held benami" is not limited to any particular time, date or duration. Once the property is found to have been held benami, no suit, claim, or action to enforce any right in respect thereof shall lie.
(2) Similarly sub-section (2) of Section 4 nullifies the defences based on any right in respect of any property held benami whether against the person in whose name the property is held or against any other person in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property. It means that once a property is found to have been held benami the real owner is deprived of such defence against the person in whose name the property is held or any other person. In other words, in its sweep Section 4(2) engulfs past benami transactions also.
(3) When an Act is declaratory in nature, the presumption against retrospectivity is not applicable. A statute declaring the benami PNR,J& JSR,J COMCA.No.21 OF 2022
transactions to be unenforceable belongs to this type. The presumption against taking away vested right will not apply in this case inasmuch as under law it is the benamidar in whose name the property stands, and law only enabled the real owner to recover the property from him which right has now been ceased by the Act. In one sense there was a right to recover or resist in the real owner against the benamidar. Ubi jus ibiremedium. Where the remedy is barred, the right is rendered unenforceable.
(4) When the law nullifies the defences available to the real owners in recovering the benami property from the benamidar, the law must apply irrespective of the time of the benami transactions. The expression "shall lie" under Section 4(1) and "shall be allowed" in Section 4(2) are prospective and shall apply to present (future stages) and future suits, claims or action only.
(5) The word 'suits' would include appeals and further appeals as appeals are in continuation of the suits. This is an aspect of procedural law and, therefore, when procedure is changed for deciding any such proceedings between the parties the provisions of such procedural law can be applied to such pending proceedings by necessary implication.
(6) Repelling the contention that rights of the parties to a suit would be determined on the basis of rights available to them on the date of filing of the suit and distinguishing the judgment of this Court in Nand Kishore Marwah v. Samundri Devi [(1987) 4 SCC 382] , it was observed that the aforesaid case was for eviction where the rights of the parties on the date of suit were material unlike in this case where subsequent legislation has nullified the defences of benami-holders.
11. Before we deal with these six considerations which weighed with the Division Bench for taking the view that Section 4 will apply retrospectively in the sense that it will get telescoped into all pending proceedings, howsoever earlier they might have been filed, if they were pending at different stages in the hierarchy of the proceedings even up to this Court, when Section 4 came into operation, it would be apposite to recapitulate the salient feature of the Act. As seen earlier, the preamble of the Act itself states that it is an Act to prohibit benami transactions and the right to recover property held benami, for matters connected therewith or incidental thereto. Thus, it was enacted to efface the then existing right of the real owners of properties held by others benami. Such an Act was not given any retrospective effect by the legislature. Even when we come to Section 4, it is easy to visualise that sub- section (1) of Section 4 states that no suit, claim or action to enforce any right in respect of any property held benami against the person in whose name the property is held or against any other shall lie by or on behalf of a person claiming to be the real owner of such property. As per Section 4(1) no such suit shall thenceforth lie to recover the possession of the property held benami by the defendant. Plaintiff's right to that effect is sought to be taken away and any suit to enforce such a right after coming into operation of PNR,J& JSR,J COMCA.No.21 OF 2022
Section 4(1) that is 19-5-1988, shall not lie. The legislature in its wisdom has nowhere provided in Section 4(1) that no such suit, claim or action pending on the date when Section 4 came into force shall not be proceeded with and shall stand abated. On the contrary, clear legislative intention is seen from the words "no such claim, suit or action shall lie", meaning thereby no such suit, claim or action shall be permitted to be filed or entertained or admitted to the portals of any court for seeking such a relief after coming into force of Section 4(1). In Collins English Dictionary, 1979 Edition as reprinted subsequently, the word 'lie' has been defined in connection with suits and proceedings. At page 848 of the Dictionary while dealing with Topic No. 9 under the definition of term 'lie' it is stated as under:
"For an action, claim appeal etc. to subsist; be maintainable or admissible."
The word 'lie' in connection with the suit, claim or action is not defined by the Act. If we go by the aforesaid dictionary meaning it would mean that such suit, claim or action to get any property declared benami will not be admitted on behalf of such plaintiff or applicant against the defendant concerned in whose name the property is held on and from the date on which this prohibition against entertaining of such suits comes into force. With respect, the view taken that Section 4(1) would apply even to such pending suits which were already filed and entertained prior to the date when the section came into force and which has the effect of destroying the then existing right of plaintiff in connection with the suit property cannot be sustained in the face of the clear language of Section 4(1). It has to be visualised that the legislature in its wisdom has not expressly made Section 4 retrospective. Then to imply by necessary implication that Section 4 would have retrospective effect and would cover pending litigations filed prior to coming into force of the section would amount to taking a view which would run counter to the legislative scheme and intent projected by various provisions of the Act to which we have referred earlier. It is, however, true as held by the Division Bench that on the express language of Section 4(1) any right inhering in the real owner in respect of any property held benami would get effaced once Section 4(1) operated, even if such transaction had been entered into prior to the coming into operation of Section 4(1), and henceafter Section 4(1) applied no suit can lie in respect to such a past benami transaction. To that extent the section may be retroactive. To highlight this aspect, we may take an illustration. If a benami transaction has taken place in 1980 and a suit is filed in June 1988 by the plaintiff claiming that he is the real owner of the property and defendant is merely a benamidar and the consideration has flown from him, then such a suit would not lie on account of the provisions of Section 4(1). Bar against filing, entertaining and admission of such suits would have become operative by June 1988 and to that extent Section 4(1) would take in its sweep even past benami transactions which are sought to be litigated upon after coming into force of the prohibitory provision of Section 4(1); but that is the only effect of the retroactivity of Section 4(1) and nothing more than that. From the conclusion that Section 4(1) shall apply even to past benami transactions to the aforesaid extent, the next step taken by the Division Bench that therefore, the then existing rights got destroyed and even though suits by real owners were filed prior to coming into operation of Section 4(1) they would not survive, does not logically follow.
PNR,J& JSR,J COMCA.No.21 OF 2022
15. In the case of GarikapatiVeeraya v. N. Subbiah Choudhry [AIR 1957 SC 540 : 1957 SCR 488] (AIR p. 553, para 25) Chief Justice S.R. Das speaking for this Court has made the following pertinent observations in this connection:
"The golden rule of construction is that, in the absence of anything in the enactment to show that it is to have retrospective operation, it cannot be so construed as to have the effect of altering the law applicable to a claim in litigation at the time when the Act was passed."
22.2. In State of Rajasthan (supra), paragraph - 27 reads as under:
"27. There can be no dispute to the well-established principle set out in these cases. However, these cases do not detract from the law laid down in Bharat Coking Coal Ltd. case [(2001) 4 SCC 86] or Continental Construction Co. Ltd. case [(1988) 3 SCC 82] . An arbitrator cannot go beyond the terms of the contract between the parties. In the guise of doing justice, he cannot award contrary to the terms of the contract. If he does so, he will have misconducted himself. Of course, if an interpretation of a term of the contract is involved then the interpretation of the arbitrator must be accepted unless it is one which could not be reasonably possible. However, where the term of the contract is clear and unambiguous the arbitrator cannot ignore it."
22.3. In BGS SGS Soma JV (supra), Hon'ble Supreme Court held in
Para Nos. 59, 61 and 82 as under:
"59. Equally incorrect is the finding in AntrixCorpn. Ltd. [AntrixCorpn. Ltd. v. Devas Multimedia (P) Ltd., 2018 SCC OnLine Del 9338] that Section 42 of the Arbitration Act, 1996 would be rendered ineffective and useless. Section 42 is meant to avoid conflicts in jurisdiction of courts by placing the supervisory jurisdiction over all arbitral proceedings in connection with the arbitration in one court exclusively. This is why the section begins with a non obstante clause, and then goes on to state "...where with respect to an arbitration agreement any application under this part has been made in a court..." It is obvious that the application made under this part to a court must be a court which has jurisdiction to decide such application. The subsequent holdings of this court, that where a seat is designated in an agreement, the courts of the seat alone have jurisdiction, would require that all applications under Part I be made only in the court where the seat is located, and that court alone then has jurisdiction over the arbitral proceedings and all subsequent applications arising out of the arbitral agreement. So read, Section 42 is not rendered ineffective or useless. Also, where it is found on the facts of a particular case that either no "seat" is designated by agreement, or the so-called "seat" is only a convenient "venue", then there may be several courts where a part of the cause of action arises that may have jurisdiction. Again, an application under Section 9 of the Arbitration Act, 1996 may be preferred before a court in PNR,J& JSR,J COMCA.No.21 OF 2022
which part of the cause of action arises in a case where parties have not agreed on the "seat" of arbitration, and before such "seat" may have been determined, on the facts of a particular case, by the Arbitral Tribunal under Section 20(2) of the Arbitration Act, 1996. In both these situations, the earliest application having been made to a court in which a part of the cause of action arises would then be the exclusive court under Section 42, which would have control over the arbitral proceedings. For all these reasons, the law stated by the Bombay and Delhi High Courts in this regard is incorrect and is overruled.
61. It will thus be seen that wherever there is an express designation of a "venue", and no designation of any alternative place as the "seat", combined with a supranational body of rules governing the arbitration, and no other significant contrary indicia, the inexorable conclusion is that the stated venue is actually the juridical seat of the arbitral proceeding.
82. On a conspectus of the aforesaid judgments, it may be concluded that whenever there is the designation of a place of arbitration in an arbitration clause as being the "venue" of the arbitration proceedings, the expression "arbitration proceedings" would make it clear that the "venue" is really the "seat" of the arbitral proceedings, as the aforesaid expression does not include just one or more individual or particular hearing, but the arbitration proceedings as a whole, including the making of an award at that place. This language has to be contrasted with language such as "tribunals are to meet or have witnesses, experts or the parties" where only hearings are to take place in the "venue", which may lead to the conclusion, other things being equal, that the venue so stated is not the "seat" of arbitral proceedings, but only a convenient place of meeting. Further, the fact that the arbitral proceedings "shall be held" at a particular venue would also indicate that the parties intended to anchor arbitral proceedings to a particular place, signifying thereby, that that place is the seat of the arbitral proceedings. This, coupled with there being no other significant contrary indicia that the stated venue is merely a "venue" and not the "seat" of the arbitral proceedings, would then conclusively show that such a clause designates a "seat" of the arbitral proceedings. In an international context, if a supranational body of rules is to govern the arbitration, this would further be an indicia that "the venue", so stated, would be the seat of the arbitral proceedings. In a national context, this would be replaced by the Arbitration Act, 1996 as applying to the "stated venue", which then becomes the "seat" for the purposes of arbitration."
23. We have carefully analyzed the ratio laid down in the above
decisions and the contentions of the appellants. With respect to the
contention of the appellants, that the Specific Relief (Amendment) Act,
2018, is not applicable in the present case, as it is prospective in nature, PNR,J& JSR,J COMCA.No.21 OF 2022
and would not be applicable to the DAGPA entered between the parties on
06.12.2015, the lower Court was right in observing that upon the
executing of the agreement, the parties had, in fact entered into
subsequent Supplemental Developmental Agreement (SDA) and Addendum
to the Supplemental Developmental Agreement (ASDA) in 2019. These
Agreements were with respect to change in share of the saleable/leasable
area allotted to the appellants. Therefore, these agreements would prevail
over the DAGPA and since these agreements were entered in the year 2019
i.e. after coming into force of the Specific Relief (Amendment) Act, 2018.
24. Therefore, the contention raised by the learned counsel for the
appellants and the judgments relied upon would not have any application
to the present case, as the amended provisions of the Specific Relief Act,
2018 would be rightly applicable to the present case.
25. Moreover, the judgments relied upon by the petitioners are not
applicable to the facts and circumstances of the case on the ground
that the petition schedule property comes within the Special
Economic Zone. Section 42 (ha) of the Specific Relief Act, 1963 as
amended by the Amended Act, 2018 specifically imposes bar to grant
injunction.
26. As per the pleadings and submissions of the respective parties,
the Court below rightly finds that the main dispute between the PNR,J& JSR,J COMCA.No.21 OF 2022
parties is about the sharing ratio. As per the terms and conditions of
the DAGPA and SDA, the respondents have agreed to allot built up
area of 70,000 sq. ft per acre to the petitioners. The specific
contention of the respondents is that they are complying with the
terms and conditions of the agreement. The contention of the
petitioners that as the respondents are making extra construction
than what was earlier proposed, they are entitled to additional built-
up area in the same proportion is an issue to be considered in
arbitral proceedings/civil proceedings. The contention of the
petitioners that the respondents obtained permission contrary to the
terms and conditions of the DAGPA, SDA behind their back and the
respondents violated the terms and conditions of the agreement, is
again a matter requires consideration in arbitral proceedings/civil
proceedings. As per the averments and submissions of the respective
parties as of now arbitration proceedings are not yet commenced.
27. As already observed supra, the petitioners have to establish the
claim of entitlement of additional constructed area in the extra
construction portion by initiating proceedings before appropriate
Court of law or before Arbitral Tribunal. However, with regard to
prayer sought by petitioners, in view of the specific provision in PNR,J& JSR,J COMCA.No.21 OF 2022
Section 41 (ha) of the Specific Relief Act, 1963, as amended by the
Amended Act, 2018 the petitioners are not entitled for grant of
injunction, as sought in the COP.
28. This Court do not find any illegality, irregularity, error in the
impugned order passed by the Court below and there are no grounds
in the appeal. Accordingly, Point Nos.1 and 2 are answered.
POINT NO.3:
29. In view of reasons assigned on Point Nos.1 and 2, the
petitioners are not entitled for grant of injunction, as prayed for.
30. Accordingly, Appeal is dismissed without costs. However, it is
made clear that all issues are left open to be urged in Arbitral
proceedings or in any civil proceedings. Pending miscellaneous
applications if any shall stand closed.
___________________________ JUSTICE P. NAVEEN RAO
_____________________________ JUSTICE J. SREENIVAS RAO Date: 02.03.2023 Note L.R. Copy to be marked : Yes
B/o.
Skj PNR,J& JSR,J COMCA.No.21 OF 2022
PNR,J& JSR,J COMCA.No.21 OF 2022
HONOURABLE SRI JUSTICE P. NAVEEN RAO AND HONOURABLE SRI JUSTICE J. SREENIVAS RAO
COMMERCIAL COURT APPEAL NO.21 OF 2022
Date: .03.2023
Note
L.R. Copy to be marked : Yes
B/o.
Skj
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