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SBPL Infrastructure Limited v/s India Media Services Private Limited

    A. P. No. 78 of 2012

    Decided On, 03 May 2013

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE PATHERYA

    For the Petitioner: Abhrajit Mitra, Jishnu Chowdhury, Sarvopriya Mukherjee, Soumava Ghosh, Abhijit Sarkar, Advocates. For the Respondent: S.N. Mookherjee, Sr. Adv., Jayjit Ganguly, Pradeep Sancheti, Advocates.



Judgment Text

Patherya J.

This is an application filed under Section 9 of the 1996 Act for interim relief in view of the arbitration clause contained in agreement dated 5th December, 2005. In view of such arbitration clause arbitration proceedings was initiated in October, 2011. Subsequently the Arbitrator by his award dated 18th January, 2012 passed an award terminating the arbitration proceeding due to efflux of time.

The case of the petitioner is that India Media Services Private Limited paid sums on behalf of Indian Express (Madurai) and in view of such payment Indian Express (Madurai) agreed to transfer to it its property at Hyderabad. A suit for specific performance was filed by the respondent against Indian Express (Madurai) and a consent decree was passed on 17th March, 2004. In 2011 the property was conveyed to the respondent. The petitioner herein had financed payment to the respondent to enable payment by it on behalf of Indian Express (Madurai). The property which was to come to the respondent from Indian Express (Madurai) was to be transferred under an agreement to the petitioner herein directly as a nominee, such nomination agreement is dated 5th December, 2005. In proceedings filed before the Supreme Court of India on 14th March, 2011 an order was passed directing the parties to maintain status quo with regard to possession of the Hyderabad property. The arbitration clause has been accepted by all parties as the respondent was the claimant in arbitration proceedings. Subsequently it was contended by the respondent who was the claimant therein before the arbitrator that the said agreement stood frustrated as the arbitration proceedings was not concluded within 60 days from the date of entering into reference. In fact on 11th December, 2011 an undertaking was given before the Arbitrator by the respondent not to deal with or dispose of the property for a period of three months from the date of award. In spite of the Supreme Court’s order a development agreement was executed by the respondent and undertaking given before the Arbitrator. In the affidavit of evidence filed by the respondent the claimant has categorically stated that the only shareholder of the respondent is M-real India and that the conveyance in favour of the respondent was executed on 8th July, 2010. As the only shareholder of the respondent is Mreal India, there is every possibility of the said sole shareholder taking a decision to dispose of the said property and in the event such a situation does arise, the petitioner will be remediless. The arbitrator terminated the proceedings on 18th January, 2012, therefore the undertaking given no longer exists. Since 14.12.2011 the situation has not changed which would warrant discontinuance of such undertaking. Therefore to protect the interest of the petitioner an order of injunction be passed restraining the respondent from disposing of the said property either by transfer of shares or otherwise.

Counsel for the respondent submits that the agreement between the parties is dated 5th December, 2005. The suit filed by the respondent against Indian Express (Madurai) was decreed and Indian Express (Madurai) adjusted the monies by transfer of the Hyderabad property to the respondent. This transfer though effected no possession of the Hyderabad property has been given to the respondent. As per order dated 14th March, 2011 the parties were directed to maintain status quo with regard to possession of the Hyderabad property. On 28th November, 2007 the agreement was sought to be cancelled and the said cancellation is the subject matter of dispute before the Arbitrator. The agreement was cancelled in 2007 and since November, 2007 till November, 2011 no step has been taken to set-aside the cancellation. No Court proceedings has been initiated nor is there any interim order.

Clause-B of the Nomination Agreement dated 5th December, 2005 specifically stated that the guarantor approached the nominee and offered to get the conveyance of the schedule property in the name of the nominee from the vendor and it was agreed that the nominee would take conveyance for Rs. 15 crores. The terms of payment was also set out in Clause-5 of the said agreement. Pursuant to the aforesaid on 8th July, 2010 a conveyance deed was executed wherein one of the witnesses is one Mr. Manoj Sharma a representative of the petitioner. At the meeting held between the parties on 20th February, 2010 the modalities of the agreement was worked out viz. outright sale or a joint venture agreement. This will also be reflected in the pleadings in paragraph 3 of the petition.

On failure of working out the modalities on 28th November, 2007 a letter was issued cancelling the agreement dated 5th December, 2005. Therefore the Nomination Agreement which is the basis for seeking an order under Section 9 of the 1996 Act does not exist. The petitioner derives a right to seek an interim order under the agreement dated 5th December, 2005. From the contents of the letter dated 16th February, 2009 and 27th October, 2010 it will appear that there is a deviation from the original agreement.

The only reason for giving the undertaking was by way of a concession in the belief that the arbitration proceedings will be completed in a short time. The cancellation has been accepted by the petitioner as criminal proceedings were initiated therefore the petitioner is estopped from relying on the agreement of 2005. Before the Hyderabad Court in AOP 1840 of 2011 the petitioner has specifically stated that on the verge of concluding the transfer of shareholding the respondent in spite of the petitioner’s specific request and while the MOU was in existence, DLF had refrained from extending the deposit in which the advance amount was kept for utilization. As transfer of shareholding was to take place in respect of the property situate outside the jurisdiction of this Court, this Court has no territorial jurisdiction to entertain the application as held in 2007 (2) CLJ 312.

In the counter claim filed by the petitioner before the Arbitrator, the petitioner has sought for an award for specific performance of the agreement dated 5th December, 2005 and seeks transfer of the subject property to it by various modes one of them being by transfer of the entire share capital of the claimants by its existing shareholder. It has also sought that the respondent or its nominee becomes the absolute owner of all the assets and properties of the claimants by virtue of the hundred percent shareholding. In the alternative it has sought that in the event Nomination Agreement was not accepted then the consideration sum be increased. It has also sought for handing over vacant and peaceful possession of the property which admittedly is lying in Hyderabad outside the jurisdiction of this Court. As possession and title is sought of an immovable property outside the territorial jurisdiction of this Court and this Court cannot grant final reliefs in respect thereof, the question of granting interim reliefs in aid thereof will not arise. That the property is in Hyderabad will appear from the schedule of property described in the agreement dated 5th December, 2005. Therefore this Court will have no jurisdiction to entertain this application. By this application the petitioner seeks symbolic possession as an interim measure. Section 2(e) of the 1996 Act has defined Court as follows:-

'2(e) ‘Court’ means the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration, if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such Principal Civil Court, or any Court of Small Causes.'

Section 9 entitles the Court to pass an order. In the event a suit was filed by the petitioner, it would be a suit for land as the property is situate in Hyderabad and this Court will have no jurisdiction as held in AIR 1983 SC 1272 and (2001) 7 SCC 698.

Possession directed to be given by order dated 18.5.2007 is as per the draft being Annexure-‘I’. By the order dated 18.5.2007 the contention as regards possession not being granted was rejected and the defendant No.3 therein was directed to execute and register the Deed of Conveyance as set out in the said order. Delivery of possession was also directed within a fortnight from the date of execution and registration of conveyance. Execution of conveyance is dated 18.4.2011 and possession was to be given within a fortnight thereof. Therefore the recording in the Deed of Conveyance dated 8th July, 2010 that possession had been given to the purchaser by the vendor is incorrect in the light of the order dated 18.5.2007. Orders were also passed on 22nd February, 2011 and the Supreme Court passed its order on 14th March, 2011 directing the parties to maintain status quo with regard to possession of the Hyderabad property.

In paragraph 53 of the counter affidavit filed to the special petition and affirmed on 9th June, 2011 it has categorically been stated that the SLP be dismissed for the reasons set out therein. The Nomination Agreement of 5th December, 2005 was procured by payment of Rs. 1 crore in cash and this will appear from the evidence taken in proceedings filed in Hyderabad and also letter dated 31st September, 2009. From the aforesaid it reveals that the Nomination Agreement dated 5.12.2005 has been induced by coercion. In the affidavit of evidence filed by the respondent the payment of Rs. 1 crore finds mention. In the counter claim except for denial no explanation has been given. From a reading of the letter dated 27th October, 2009 written by the advocate of the petitioner to the respondent the payment of an additional amount of Rs. 1 crore in cash finds mention. The agreement being induced by coercion is no agreement in the eye of law.

The letter of cancellation dated 28th November, 2007 has not been challenged, in fact has been accepted and in view of such acceptance the Nomination Agreement cannot be performed therefore the petitioner is not entitled to any relief.

The reliefs sought are barred by laws of limitation. Therefore any proceedings in respect thereof are barred by laws of limitation. Reliance is placed on AIR 1966 SC 153. In view of the cancellation letter it is impossible to perform the Nomination Agreement therefore no relief can be granted. The Development Agreement is dated 10th October, 2011. Prayer a(ii) made in the counter claim cannot be granted as none of the shareholders have been made parties. There is also no specific object whose performance can be sought. The amount of 27 crores also varies from the sum of Rs. 15 crores mentioned in the Nomination Agreement.

In the Section 9 application for the first time the plea of waiver has been taken. By E-mail message dated 14th October, 2008 and letter dated 25th October, 2008 the petitioner gave a proposal to enter into a share holders agreement whereby the petitioner would take over the Hyderabad property and all other liabilities and assets will go to the existing shareholders. This agreement was a fall out of the agreement dated 5th December, 2005 but as the Nomination Agreement stands cancelled the shareholders agreement can also not be worked out. Even after the said shareholders agreement further agreements needed to be executed. Inspite of various modalities sought to be worked out no conclusion has been reached. From the letter dated 1st April, 2009 it is evident that no final decision has been taken and the cheque dated 25th March, 2009 of Rs. 1 crore was retained by the petitioner. This also shows that no final decision has been taken. Initially the petitioner had suggested a joint venture but the same did not materialize and therefore it was decided to enter into a share holders agreement but the same was also not finalized. To obtain an order of specific performance evidence and proof of agreement is necessary as held in 1998 (5) SCC 381. In view of cancellation of the Nomination Agreement the petitioner has no right in the said property.

Reliefs claimed before the Arbitrator cannot be relinquished in an application filed under Section 9 of the 1996 Act. The point of territorial jurisdiction has not been taken and as held in AIR 1975 Calcutta 293 that in case the Court has no jurisdiction no amendment can be allowed. Therefore the counter claim cannot be amended.

Prayers (b) and (e) relates to title and (c) relates to possession. As the cancellation is in 2007 and proceedings, if any, filed will be barred. Therefore this application merits no order and be dismissed.

In reply it has been submitted by the petitioner that in C.S. 205 of 2009, G.A. 2901 of 2009 was filed wherein the point of territorial jurisdiction was taken. The said application was dismissed. In the instant petition an undertaking has been given by the petitioner that it will not claim possession and as held in G.A. 2463 of 2003 filed in C.S. 355 of 2000 that where the claim of possession is abandoned it will not render the suit for land. The order dated 18.5.2007 and the order of the Division Bench are applicable in the instant case. As regards the point of limitation in paragraphs 7 and 8 of the petition it has been specifically pleaded that the cancellation by letter dated 28th November, 2007 is unilateral and in fact the said communication has been waived by the respondent as will be evident from the dealings and transactions thereafter.

In the affidavit of evidence filed on behalf of the respondent it has been specifically stated that it was known to both the parties as on 16th December, 2005 or 17th December, 2005 that the Nomination Agreement had failed and could not be given further effect. It is only on 2nd May, 2008 when the statement of claim was filed that the petitioner came to know of the letter of cancellation dated 28th November, 2007 and therefore the point of waiver has been taken inthis petition filed under Section 9 of the 1996 Act.

It has been contended by the respondent that the Nomination Agreement stands frustrated. In the statement of claim filed reliefs seeking a declaration for cancellation of the Nomination Agreement before the Arbitrator has been made. Clause 2.06 and 7.14 of interpretation of contracts by Kim Lewison Q.C. states that while considering a contract objectively the Court is to consider the commercial purpose of the contract under consideration and in case of two interpretations ought to select the meaning which best serves the commercial purpose of the contract and validates the instrument.

There is no dispute with the proposition laid down in 2001 (7) SCC 698. Possession must be claimed specifically. As the petitioner is ready and willing to give up the said claim therefore this decision will not apply to the facts of this case. 2007 (2) CLJ 312 is distinguishable as that was the only case which dismissed an application under Section 9 of the Act. 1998 (5) SCC 381 is also distinguishable.

Having considered the submissions of the parties, Section 9 of the 1996 Act deals with grant of interim order by Court for preservation of any property which is the subject-matter of a dispute in arbitration.

By the application filed under Section 9 of the 1996 Act, the petitioner seeks an order of injunction restraining the respondent from acting contrary to the agreement dated 5.12.2005 by transfer of shares or otherwise as an interim measure.

On a reading of the agreement dated 5.12.2005 the property which is the subject-matter of dispute is in Hyderabad, i.e. outside the territorial jurisdiction of this Court.

Section 9(ii)(e) of the 1996 Act empowers the Court to pass such interim measure of protection as the Court can pass in relation to any proceedings before it. This therefore contemplates that the Court must have jurisdiction to pass orders in validly instituted proceedings and to determine that, the territorial and pecuniary jurisdiction must be considered.

Section 2(1)(e) defines Court as follows:-

'Court' means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal Civil Court, or any Court of Small Causes.

In the instant case the property is situate outside the territorial jurisdiction of this Court. Protection of such property is sought and this Court would not have jurisdiction to entertain a suit or any proceedings in which possession of such immovable property is sought. In case no possession is sought and the relief claimed is simply for enforcement of the agreement for sale, then the suit can be entertained even if the property is outside the territorial jurisdiction of this Court but this is not so in the instant case.

A counter claim has been made in the counter statement filed by the petitioner for specific performance of the agreement dated 5.12.2005 and one of the modes mentioned is by handing over vacant possession and execution of necessary documents to ensure peaceful possession. This would in case of a suit render it to be a 'suit for land'.

In paragraph 55 of the application the petitioner has undertaken to relinquish the claim for possession, but relinquishment of any claim made in arbitration proceedings can only be given up before the arbitra

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tor and mere undertaking will not suffice. In view of the claim for possession of the property made in arbitration proceedings, no relief can be granted in this application and will oust the jurisdiction of this Court. The scope of Section 9 of the 1996 Act is in pari materia with the provisions of Order 39 of the CPC and Section 36 of the Specific Relief Act, 1963 and any relief granted thereunder is discretionary in nature. As the main relief could not have been granted in a suit filed, grant of interim relief cannot be entertained far less granted as held in AIR (1983) SC 1272. The unreported decision dated 11th December, 2001 in T. No. 570 of 1998 arising out of A.P. 237 of 1998 (Akla Builders Pvt. Ltd. –vs.- Cityscape Developers Pvt. Ltd. & Anr.) is distinguishable on facts as the respondent therein had submitted to the jurisdiction of the Court and for that reason the Section 9 application was allowed, such is not the case here. The unreported decision dated 9.12.2011 passed in APOT 61 of 2004 (BOC India Ltd. –vs.- Karan Singh Binayak) is not applicable to the facts of this case as no possession of the property was sought in the reported decision. Similarly the unreported decision in G.A. 2901 of 2009 passed on 22.12.2009 (Hindustan National Glass & Industries Ltd. –vs.- Ganesh Kumar Agarwal) is also distinguishable on facts as possession has been claimed in the counter claim in the instant case. As this Court would otherwise have no jurisdiction in respect of the subject-matter, ouster of the Hyderabad Court cannot be implied. Accordingly, this application fails and is dismissed. The interim order granted stands vacated. Although arguments on merit has been made by the respondents but it is made clear that the merit of the case has not been considered and it is only on the point of lack of territorial jurisdiction that this application has been dismissed.
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