2019 (10) TMI 1429 - HC - Indian Laws

Seeking stay of the operation of cancellation letters dated 29/30th March, 2019 and/or 3rd April, 2019 issued by the respondent - non-payment of part of consideration - main plank of the argument of the petitioners is that although a Special Payment Plan was appended to the Apartment Buyer's Agreement, but neither of the parties adhered to the same - HELD THAT - There is merit in this contention of the petitioners. A bare perusal of the Special Payment Plan indicates that 31st October, 2018 was the cut off date by which 70% of the consideration ought to have been paid. However, as the undisputed facts emerge, the respondent had received 70% or 57% or 60% of the sale consideration respectively in different cases and significantly on dates, different from those in the Schedule. Thus, it prima facie appears that the parties had orally entered into a different understanding, giving a go-bye to the Special Payment Plan. Neither party adhered to the 10% advance payment at the time of booking and nor were the subsequent two installments paid as per the Special Payment Plan. Seen in this light, respondent is not right in its contention that the petitioners knew the Schedule as per which the payments were to be made and there was thus no necessity to notify the petitioners for balance payments. The respondent cannot even contend that there was a breach or a default in the installments payable by 30th November, 2018 and 31st December, 2018. Once the parties have, by their conduct, adopted a methodology different from the one in the special payment plan, respondent cannot be heard to say that the Schedule of the installment plan should have been adhered to. There is no quarrel with the proposition that Section 9 has been enacted to give urgent interlocutory reliefs to the parties and delay is a significant factor in considering the grant of such a relief. However, the telling facts of the present cases are such that the petitioners cannot be ousted only on the ground of delay and laches, if any. The respondent had received substantial part of the sale consideration from the petitioners at a time when they needed the money for their huge investments and have without putting them to even a demand notice or a reminder, cancelled the allotments. The affidavit filed by the respondent itself shows from the allotment letters appended thereto, that the Apartments have been resold at a much higher price and, prima facie, the impression is that the cancellation was done only with the purpose to sell the Apartments at higher prices. It does seem a little strange that when parties have entered into a sale purchase agreement and have exchanged substantial amount of sale consideration, the other party would cancel the allotment without even giving an opportunity to the purchaser to make good, the balance outstanding payment - this contention of respondent is even factually not correct. Parties were exchanging letters till May, 2019 and the money received by respondent was sought to be refunded by the respondent in July, 2019. The petitions were filed in August, 2019 and in my view are not barred by delay and laches. This Court is of the view that if the subject Apartments are not preserved, irreparable prejudice will be caused to the petitioners who have been able to set up a, prima facie, case in their favour for grant of an interlocutory injunction - respondent is hereby restrained from executing Sale Deeds in respect of the Apartments, which are the subject matter of the present petitions as well as from parting with the possession, in any manner. Petition allowed.

Summary

Issues Involved:
1. Sanctity of the Special Payment Plan.
2. Obligation to send a demand notice/reminder.
3. Applicability of RERA provisions.
4. Time as the essence of the contract.
5. Authenticity of documents relating to third-party transactions.
6. Impact of delay in approaching the Court.
7. Entitlement to mandatory injunction under Section 9 of the Arbitration & Conciliation Act.
8. Effect of transactions in favor of third parties.

Detailed Analysis:

1. Sanctity of the Special Payment Plan:
The Court noted that although a Special Payment Plan was appended to the Apartment Buyer’s Agreement, neither party adhered to it strictly. Payments were made and accepted on dates different from those specified in the plan, indicating an oral understanding between the parties. The Court held that the respondent could not insist on the written schedule when they had accepted payments on different terms.

2. Obligation to Send a Demand Notice/Reminder:
The Court found that even though the Apartment Buyer’s Agreement did not expressly require a demand notice, the respondent should have sent a notice or reminder before canceling the allotments, especially since substantial payments had been received. The Court noted that the cancellation letter itself mentioned that reminders had been sent, which the petitioners disputed receiving.

3. Applicability of RERA Provisions:
The Court left open the question of whether the agreements were governed by RERA, noting that this issue should be determined by the Arbitral Tribunal. The petitioners argued that the respondent violated RERA by not adhering to the prescribed model agreement and failing to issue demand notices.

4. Time as the Essence of the Contract:
The Court did not make a definitive ruling on whether time was of the essence, leaving this issue for the Arbitral Tribunal to decide. The petitioners argued that time was not of the essence, citing various judgments, while the respondent contended that it was, based on the specific terms of the agreement.

5. Authenticity of Documents Relating to Third-Party Transactions:
The Court found prima facie merit in the petitioners’ contention that the transactions with third parties appeared to be forged or fabricated. The timing of the allotments and the involvement of the respondent’s Managing Director in one of the transactions raised doubts about their genuineness.

6. Impact of Delay in Approaching the Court:
The Court rejected the respondent’s argument that the petitioners were disentitled to relief due to delay. It noted that the parties had been in communication until May 2019, and the petitions were filed in August 2019, which did not constitute undue delay.

7. Entitlement to Mandatory Injunction under Section 9:
The Court held that the petitioners had made out a prima facie case for an interim injunction to preserve the subject apartments until the arbitration proceedings concluded. The Court emphasized the need to prevent irreparable harm to the petitioners and to ensure that the arbitration award, if in their favor, would not be rendered nugatory.

8. Effect of Transactions in Favor of Third Parties:
The Court restrained the respondent from executing sale deeds or parting with possession of the apartments, despite the respondent’s claim that the apartments had been sold to third parties. The Court found the transactions suspicious and noted that the respondent had not mentioned these sales in earlier communications with the petitioners.

Conclusion:
The Court granted an interim injunction restraining the respondent from executing sale deeds or parting with possession of the disputed apartments. The petitioners were directed to deposit the balance sale consideration with the Court. The Court left open several substantive issues for determination by the Arbitral Tribunal, emphasizing that its observations were only for the purpose of deciding the interim relief under Section 9 of the Arbitration & Conciliation Act.