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TMI Blog2023 (7) TMI 1562X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations made therein are prima facie and shall not operate to the prejudice of any of the parties at any subsequent stage of proceeding. The entire matter is still at large before the learned Sole Arbitrator. It has been informed by respective counsel, that the parties are in the process of adducing evidence before the learned Sole Arbitrator. The impugned order does not foreclose the right of any of the parties to the arbitration to place relevant material on record and/or take every contention as may be available under law before the learned Sole Arbitrator, at the time of final arguments. As such, the various legal contentions raised by the learned counsel for the appellant regarding the Joint Venture Agreement being not capable of specific performance and/or as to whether the appellant's rights, as an alleged bonafide purchaser can be interdicted or not, are all issues which are yet to be determined by the learned Sole Arbitrator. The law is also well settled that this court while exercising jurisdiction under Section 37 of the Act would be loathe to interfere with an interim measure of protection granted by an Arbitral Tribunal, particularly when the order passed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using project on the terms agreed in the alleged JVA. 5. As per the aforesaid Joint Venture Agreement, the claimant firm was to transfer to respondent nos.2 to 8 a sum of Rs. 10 Lacs per acre. The area of the property in question was to the extent of 27.3265 acres. 6. Pursuant to the Joint Venture Agreement, a part consideration of Rs. 1,50,000/- was paid to each of the respondent nos.2 to 8. As such, the respondent no.1/claimant is stated to have paid a total of Rs. 10,50,000/- to the respondent nos.2 to 8 at the time of execution of the Joint Venture Agreement. 7. The Joint Venture Agreement contemplated profit sharing between the respondent no.1 and the respondent nos.2 to 8 after development of the warehousing project. It was further contemplated that the sale deeds in favour of the newly incorporated LLP i.e. SY Logistics Park LLP would be executed by 31.12.2019. 8. Disputes arose between the parties on account of alleged failure on the part of the respondent nos.2 to 8 to execute the sale deeds, as contemplated in the Joint Venture Agreement. 9. Consequently, disputes have arisen between the parties, the respondent no.1 invoked the Arbitration Clause conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of claims, filed before the learned Sole Arbitrator is as under: "In view of the foregoing, the Claimant respectfully prays that the Hon'ble Arbitral Tribunal may be graciously pleased to: A. Pass an Award directing specific performance of the Joint Venture Agreement dated 30.08.2019, and directing the Respondents to execute their respective Sale Deeds qua the Disputed Property in favour of the joint venture entity that would be set up in terms of the Joint Venture Agreement dated 30.08.2019; OR IN THE ALTERNATIVE B. Direct the Respondents to jointly and/or severally pay the Claimant a total sum of Rs. 14.14 Crore as loss of profit in terms of Claim 2, along with pas and pendente lite interest, calculated at 18% simple interest per annum, from 01.01.2020 till the date of Award; C. Direct the Respondents to jointly and/or severally pay the Claimant a total sum of Rs. 15,50,000/- (Rupees Fifteen Lakh Fifty Thousand Only) as Refund of initial deposit in terms of Claim-3, along with past and pendente lite interest, calculated at 18% simple interest per annum, from the date of each payment till the date of Award; D. Direct the Respondent to jointly and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 80 Crores from Punjab National Bank and only after taking necessary approvals and permissions from the concerned authorities did it proceed to carry out the construction work for the purpose of setting up of a factory on the property in question. The possession of the property in question is stated to be with the appellant. 16. It is further contended that the respondent no.1 belatedly invoked the arbitration clause as incorporated in the Joint Venture Agreement dated 30.08.2009. However, even after filing the petition under Section 11 of the Act on 07.03.2020, no steps were taken by the respondent no.1 to effect service on the respondent nos.2 to 8. It is contended that the sale deeds in favour of the appellant were executed on 19.03.2020 and 11.06.2020, i.e. prior to the service being affected of the Section 11 petition on the respondent nos.2 to 8. It is stated that the part consideration, alleged to have been paid by the respondent no.1 is miniscule, as compared to the consideration paid by the appellant and the investment undertaken by the appellant. 17. It has been emphasized that the petition under Section 9 of the Act was filed by the respondent no.1 almost aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f convenience is in favour of vacating of the impugned order, passed by the learned Sole Arbitrator and to allow the appellant to have unhindered rights in respect of the land in question without any inference by the respondent no.1. SUBMISSIONS ON BEHALF OF RESPONDENT NO.1 23. On the contrary, learned counsel for the respondent no.1 has contended that the respondent nos.2 to 8 colluded with the appellant for the purpose of creating third party rights in the subject matter of arbitration after commencement of arbitration on 04.02.2020 (the date on which the notice of invocation of arbitration was issued by the respondent no.1). 24. It has been strenuously contended that the appellant is not a bonafide purchaser since the appellant bought the land with full knowledge of the aforesaid prior background and the Joint Venture Agreement dated 30.08.2019. It is contended that the relief of specific performance as sought by the respondent no.1 in the arbitration proceedings will be rendered infructuous if protective and injunctive orders are not passed qua the property in question. 25. It has been emphasized that the order passed by the learned Sole Arbitrator is a well-reasoned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the contentions raised by the appellant herein. As regards the contention of the appellant, regarding the delay on the part of the respondent no.1/claimant in invoking the arbitration and/or filing the petition under Section 9 of the Act, it has been held in the impugned order as under: "74. There was no delay by the Claimant as alleged by the Respondents in filing the application under Section 9 of the Act. The record shows that the Claimant in terms of the Dispute Resolution Clause (Clause 12.7) sent a Consultation Notice on 02.01.2020 to Respondents No. 1 to 7 to amicably resolve the dispute. The Respondents No. 1 to 7 replied vide letter dated 10.01.2020 and refused to settle the dispute amicably. Thereafter, on completion of stipulated period of 30 days, on 04.02.2020, the Claimant invoked the arbitration clause and sent Invocation Notice to Respondents No. 1 to 7 for appointing/nominating its arbitrator. The Respondents No. 1 to 7 admittedly received the notice on 10.02.2020, but chose not to reply to the same. The Claimant was thus constrained to file Petition under Section 11 of Arbitration and Conciliation Act, 1996 for appointment of arbitrato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer in favour of the appellant was prima facie, a product of collusion between the respondent nos.2 to 8 and the appellant. In this regard reference may be made to the following observations in the impugned order passed by the learned Sole Arbitrator: "76. The Respondents No. 1 to 7 also appear to be parties in collusion with the Respondent No. 8 in supressing material facts from the Court. Reply to Section 11 Petition was admittedly filed by the Respondents No. 1 to 7 on 03.11.2021 (after one and half years of filing of petition), but there was not a whisper in the said reply about the creation of any third-party rights in the Disputed Property. It was only when the Claimant filed its Section 9 Petition (which was later converted to Section 17 Petition before this Tribunal) that the Respondents revealed that they had created third- party rights in the said Disputed Property subsequent to the filing of Section 11 petition by the Claimant. No justification is forthcoming on the record as to why Respondents No. 1 to 8 concealed and hid this material fact from the Hon'ble High Court. Instead, the Respondents No. 1 to 7 took the plea in the Section 11 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution of the project on the transferred land, detailed steps have been outlined and the responsibility of the entire construction is vested in the Claimant, the Respondents No. 1 to 7 having no role to play. The bargain of the parties is set out in clear terms and the said bargain constitutes transfer of land from the first party to the second party, the development of the land into are house facilities by the second party at its own costs and expenses and upon completion of construction of the warehouse, the rents to be shared on the constructed warehouse between the first party and the second party in the ratio of 30:70. The formation of the LLP appears to be merely with a view to facilitate the whole transaction, and could aptly be said to be a module for carrying out the bargain of the parties." 35. In para-82 of the impugned order, learned Sole Arbitrator has also taken note of the amendment of Section 10 of the Specific Reliefs Act (by Act 18 of 2018), as a result of which the grant of relief for specific performance is no longer discretionary. Reference in this regard is rightly made to the decision of the Supreme Court in the case titled as B. Santoshamma v. D. Saral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itrator, the respondent no.1 has primarily sought specific performance of the Joint Venture Agreement dated 30.08.2019 and directions against the respondent nos.2 to 8 to execute their respective sale deeds qua the property, as contemplated in the Joint Venture Agreement. 37. In case the interim measure of protection, as sought in the application under Section 17 of the Act is not granted and the appellant is permitted to deal with the property in question, then the main relief sought in the statement of claim would be rendered infructuous. The contention that the appellant has invested huge amounts of money in purchasing the land/property in question from the respondent nos.2 to 8 and carrying out the construction thereon cannot defeat the prior rights of the respondent no.1. 38. This has also been rightly noticed in paras 79 and 80 of the impugned order as under: "79. As regards the contention of Mr. Sethi that the Respondent No. 8 has made massive investments, whereas the Claimant has invested a negligible sum of money and, therefore, irreparable loss will be caused to the Respondent No. 8 who has invested Crores of rupees in the construction of the Factory, Plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the balance land is in the possession of Respondents No. 1 to 7. Thus, even assuming that some construction has been made on 3 acres of land out of the total land measuring 27.3265 acres, it is not open to the Respondent No. 8 to contend that it had made investments in crores of rupees on the Disputed Property, whereas the Claimant has invested a negligible amount of money nor it is open to it to claim any special equities in this regard." 39. After considering the entire gamut of circumstances, the impugned order does directs the appellant and the respondent nos.2 to 8 to maintain status quo in respect of title and possession of the land in question and refrain from changing the character of the property so that no further third party right/equity are created in respect thereof. No fault whatsoever can be found with these directions. 40. Further, the impugned order directs that if the appellant chooses to carry on factory operations or other commercial activity on the three acres of land comprising of the property in question, it will not be open to the appellant to claim any special equity by reasons thereof. 41. The above directions passed by the learned Arbitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein it has been held as under: "59. Review under Section 37 of interlocutory orders under Section 17 is not strictly appellate. Jurisdiction of courts under Section 37 (2) is even more limited and proscribed than the jurisdiction that it exercises under Section 37(2)(a) or for that matter under Section 34. The discretionary jurisdiction exercised by arbitrator merits interference only where such exercise is palpably arbitrary or unconscionable." 45. Also in L&T Finance vs. DM South India Hospital Pvt. Ltd.(supra), it has been held by this Court as under: "25. As long as the Arbitral tribunal has weighed the two factors - i) protection of arbitral corpus and preservation of arbitral process and ii) balanced equities between the parties on consideration of prima facie case, balance of convenience and irreparable damage; the Court should not interfere with such orders. As Section 37 is not strictly like an appeal process." 46. In Sanjay Arora & Ors. Vs. Rajan Chadha & Ors.(supra), this court held as under: "This Court has already opined, in Dinesh Gupta v. Anand Gupta MANU/DE/1727/2020 and Augmont Gold Pvt. Ltd. v. One97 Communication Ltd that the considerations guiding ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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