2018 (8) TMI 1238 - SC - Indian Laws

Hand over 8 flats and 16 parking spaces to respondent No.1/plaintiff - principles of moulding of relief - For passing such mandatory order the learned Single Judge placed reliance on the decision of this Court in Gaiv Dinshaw Irani and Others Versus Tehmtan Irani and Others 2015 (9) TMI 1066 - SUPREME COURT , holding that the Courts ought to mould the relief in accordance with the changed circumstances for trying the litigation or to do complete justice. Held that - The appellant could be bound only by the agreement dated 10 March, 2003 in his favor and executed by him. Admittedly, the said agreement is the subject matter of arbitration proceedings, inter alia because respondent No.2 had failed to discharge its obligation thereunder. The appellant has already parted with the possession of flats to respondent No.2 in furtherance of agreement dated 10th March, 2003 and respondent No.1/plaintiff could be accommodated only against those flats. Asking the appellant to hand over additional 8 flats and 16 parking spaces by way of mandatory order, would be to superimpose the liability of respondent No.2/defendant No.1 on the appellant for discharging its obligation qua respondent No.1/plaintiff in relation to the agreement entered between them dated 22nd September, 1999 and including Settlement Agreement dated 4th November, 2016 and Consent Terms dated 25th September, 2017, to which the appellant is not a party. The learned Single Judge as well as the Division Bench have committed fundamental error in applying the principle of moulding of relief which could at best be resorted to at the time of consideration of final relief in the main suit and not at an interlocutory stage. The nature of order passed against the appellant is undeniably a mandatory order at an interlocutory stage. There is marked distinction between moulding of relief and granting mandatory relief at an interlocutory stage. As regards the latter, that can be granted only to restore the status quo and not to establish a new set of things differing from the state which existed at the date when the suit was instituted. It is well established that an interim mandatory injunction is not a remedy that is easily granted. It is an order that is passed only in circumstances which are clear and the prima facie material clearly justify a finding that the status quo has been altered by one of the parties to the litigation and the interests of justice demanded that the status quo ante be restored by way of an interim mandatory injunction - In the factual scenario in which mandatory order has been passed against the appellant is in excess of jurisdiction. Such a drastic order at an interlocutory stage ought to be eschewed. It cannot be countenanced. The invocation of principle of moulding of reliefs so also the exercise of power to grant mandatory order at an interlocutory stage, is manifestly wrong - The appellant would be bound only by the agreement entered with respondent No.2 dated 10th March, 2003 and at best the tripartite agreement dated 11th September, 2009. The respondent No.2 having failed to discharge its obligation under the stated agreement dated 10th March, 2003, cannot be permitted to take advantage of its own wrong in reference to the arrangement agreed upon by it with respondent No.1/plaintiff and including to defeat the claim of the appellant in the arbitration proceedings. It is appropriate to revive the ad-interim order passed by the Single Judge of the High Court on 3rd December, 2012 in Notice of Motion No.147/2013 and as corrected on 17th December, 2012, which shall operate until the disposal of the suit or until it is modified by the High Court on account of subsequent developments, if any, as and when occasion arises - appeal allowed.

Issues Involved:
1. Validity and binding nature of the Development Agreement and Tripartite Agreement.
2. Specific performance of the Development Agreement and Tripartite Agreement.
3. Interim reliefs and appointment of a Court Receiver.
4. Application of arbitration clauses.
5. Granting of mandatory interlocutory injunction.
6. Moulding of relief at an interlocutory stage.

Issue-wise Detailed Analysis:

1. Validity and Binding Nature of the Development Agreement and Tripartite Agreement:
The Supreme Court considered the agreements dated 22nd September 1999 and 11th September 2009. The agreements were deemed valid, subsisting, and binding between the parties involved. This was essential to establish the foundation for the specific performance sought by respondent No.1.

2. Specific Performance of the Development Agreement and Tripartite Agreement:
Respondent No.1 sought specific performance of the agreements, including the handing over of 22,500 sq. ft. constructed area and proportionate car parking spaces. The Single Judge and Division Bench upheld the specific performance claim, directing the appellant to hand over 8 flats and 16 parking spaces to respondent No.1. However, the Supreme Court found that the appellant could not be bound by the settlement agreement and consent terms entered into between respondent Nos.1 and 2, as the appellant was not a party to those agreements.

3. Interim Reliefs and Appointment of a Court Receiver:
Respondent No.1 sought interim reliefs to restrain the appellant and respondent No.2 from creating third-party rights in the suit property and to appoint a Court Receiver. An ad-interim consent order was passed on 3rd December 2012, restraining the defendants from selling or creating third-party rights in respect of certain flats and parking spaces. The Supreme Court revived this ad-interim order, which would continue until the final disposal of the suit.

4. Application of Arbitration Clauses:
The appellant sought to refer the suit to arbitration under the Arbitration and Conciliation Act, 1996. The High Court rejected this application, stating that the Tripartite Agreement did not contain an arbitration clause, and mere reference to previous agreements with arbitration clauses did not suffice. The Supreme Court upheld this view, noting that the appellant was bound only by the agreement dated 10th March 2003, which was subject to separate arbitration proceedings.

5. Granting of Mandatory Interlocutory Injunction:
The Single Judge granted a mandatory interlocutory injunction directing the appellant to hand over 8 flats and 16 parking spaces to respondent No.1. The Supreme Court found this to be an error, as such a drastic order at an interlocutory stage was not justified. The Court emphasized that mandatory injunctions at an interlocutory stage should be granted only to restore the status quo and not to establish a new set of circumstances.

6. Moulding of Relief at an Interlocutory Stage:
The High Court applied the principle of moulding relief to grant the mandatory injunction. The Supreme Court held that this principle should be applied at the final stage of the suit, not at an interlocutory stage. The Court noted that the High Court was swayed by the consent agreement between respondent Nos.1 and 2, to which the appellant was not a party. The appellant could not be bound by the settlement agreement and consent terms between the other respondents.

Conclusion:
The Supreme Court set aside the High Court's judgment and order, finding that the High Court exceeded its jurisdiction in granting the mandatory interlocutory injunction. The Court revived the ad-interim order dated 3rd December 2012, which would continue until the final disposal of the suit. The observations made in the judgment were limited to the interlocutory matter and would not influence the substantive proceedings pending between the parties. The appeal was allowed, and no costs were awarded.

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