Sati Oil Udyog Ltd. v. Avanti Projects and Infrastructure Ltd.
2009-12-07
I.A.ANSARI
body2009
DigiLaw.ai
JUDGMENT I.A. Ansari, J. 1. This is an appeal under Section 37(1)(a) of the Arbitration and Conciliation Act, 1996 ('the Act of 1996') against the order, dated 24.2.2009, passed, in Misc. (Arbitration) Case No. 103/2009, by the learned District Judge, Kamrup. 2. The material facts and various stages, which have given rise to the present appeal, may, in brief, be set out as under: (i) The applicant-respondent heroin, which is a company incorporated under the Companies Act, 1956, filed an application under Section 9 of the Act of 1996, the case of the applicant-respondent being, in brief, thus: (a) The opposite party, (i.e., the appellants herein) are companies, registered under the Companies Act. The appellants approached the respondent to enter into a joint venture agreement with the respondent on the basis of their representation that the appellants were joint owners of the suit land, they had been in actual physical possession of suit land, some portions of the suit land were under the possession of a third party, who has a small marble godown under the appellants, but is willing to vacate the same and handover the possession thereof to the appellants. The respondent has taken a decision to develop the suit land into a multi-purpose complex by way of joint venture agreement as aforesaid. In this joint venture, the share of the appellants would be 45% of the constructed area and the sole obligation and responsibility of the appellants would be to give vacant possession of the suit land to the respondent for the purpose of construction thereon. A concluded contract, thus, came into existence between the respondent and the present appellants. On 15.6.2006, the respondent, on the one hand, as developer, and one Mr P.D. Deorah, the common director of the two appellant-companies, as owner, executed an agreement, in writing, in the form of term sheet, whereby and where under the parties had finalised the broad terms and conditions of the joint venture for construction of multipurpose complex on the suit land. By means of four cheques, applicant-respondent, in discharge of its obligation under the term sheet, dated 15.6.2006, paid rupees twenty lakh in favour of the present appellants as part payment of the security deposit. The payment, so made, was acknowledged by the appellants.
By means of four cheques, applicant-respondent, in discharge of its obligation under the term sheet, dated 15.6.2006, paid rupees twenty lakh in favour of the present appellants as part payment of the security deposit. The payment, so made, was acknowledged by the appellants. On 15.6.2006, the respondent also paid a further sum of rupees five lakh, by two cheques, in favour of the appellants, towards part payment of cost for obtaining sanction in terms of the agreement. In or about first week of December 2007, the respondent was informed by the appellants that Guwahati Metropolitan Development Authority had issued no objection certificate to the appellants for construction over the suit land. Soon after issuance of the NOC, appellant No. 2, under its letter, dated 4.10.2008, requested the respondent to make further disbursement of a sum of rupees fifteen lakh as shifting charges with a request to transmit the same to their bank account. Pursuant to such instructions given by the appellants, the respondent paid a sum of rupees fifteen lakh to the appellants by way of a cheque on 8.1.2008. On 4.3.2008, a Memorandum of Understanding ('MoU') was signed between the parties concerned, whereunder the appellants acknowledged the payment received from the respondent under the agreement, dated 15.6.2008, and also agreed to take necessary steps for removal of the said marble godown. The appellants also, in terms of the MoU, were to get removed and vacated 7/8 sheds standing on the Zoo Road, which fall outside the suit land. (b) By a facsimile message, dated 1.7.2008, the appellants demanded a sum of rupees twenty-one lakh from the respondent on the ground that the occupants of the suit land had agreed to vacate the occupied portion of the suit land in favour of the appellants for consideration of rupees twenty-one lakh. Believing in the representation so made, the respondent forwarded a cheque of rupees twenty-one lakh under a covered letter, dated 26.7.2008, in favour of the appellant No. 2. By their letter, dated 23.8.2008, the appellants confirmed that the marble godown had been vacated and requested the respondent to commence construction on the suit land. In the meantime, acting on the representation made by the appellants, the respondent has started mobilising its men and machinery for the purpose of commencement of construction on the suit land. Under the terms of the contract, concluded between the parties, the contract is specifically enforceable.
In the meantime, acting on the representation made by the appellants, the respondent has started mobilising its men and machinery for the purpose of commencement of construction on the suit land. Under the terms of the contract, concluded between the parties, the contract is specifically enforceable. In terms of the agreement, dated 15.6.2006, the respondent has performed all its obligations and is ready and willing to perform its further obligations under the contract except performance of those terms and conditions, which have been waived by the appellants. However, while the respondent was taking necessary steps for commencing the work and had, in the meanwhile, incurred even additional expenditure of rupees twenty-seven lakh for preparation of sanction plan, etc., the respondent's men and agents, deployed on the suit land, found that some unknown men and agents of a third party were visiting the suit land and were enquiring about the project. On 21.2.2009, some men, along with engineer, visited the suit land and requested that they be allowed to lake measurement of the land. On being confronted by the respondent, the said men informed that the appellants were taking steps to sell the suit land by way of an outright sale to a third party. Further enquiry, in this regard, revealed that the said men and agents of a third party had been authorised by the appellants to take measurement of the said plot. The respondent's men and agents, then, lodged a complaint at Dispur Police Station. (c) Under the agreement entered into between the parties, there is provision for arbitration. The respondent has been advised to take steps for referring their dispute to arbitration in terms of the arbitration clause. The agreement, dated 15.6.2006, contains an express negative covenant, whereby the appellants, as owners of the suit land, have expressly agreed not to enter into any agreement or understanding with any third party with regard to the suit land after execution of the agreement, dated 15.6.2006.
The agreement, dated 15.6.2006, contains an express negative covenant, whereby the appellants, as owners of the suit land, have expressly agreed not to enter into any agreement or understanding with any third party with regard to the suit land after execution of the agreement, dated 15.6.2006. (ii) Having formed the view that the respondent had been able to make out a prima facie case for obtaining interim order of injunction, the balance of convenience was in favour of granting ad-interim order for protection of the suit property and that irreparable loss would ensue if interim protection, as prayed for, was not granted and that compensation, in terms of money alone, would not afford adequate relief to the respondent, the learned District Judge passed an order, on 24.2.2009, for issuance of notices to the appellants herein directing them to show cause as to why the respondent-company's prayer shall not be allowed. This apart, as an interim measure, for protection of the property, the learned District Judge directed, on 24.2.2009, the appellants herein not to create, until further order, any third party interest over the suit property and maintain status quo over the suit land as on that day, i.e., on the date of passing of the order aforementioned. Aggrieved by the order, dated 24.2.2009, aforementioned, the appellants have preferred this appeal. 3. I have heard Mr. K.N. Choudhury, learned senior Counsel, appearing on behalf of the appellants, and Mr. S. Shyam, learned Counsel, for the applicant-respondent. 4. Resisting the appeal at its very threshold, Mr. Shyam contends that this appeal is not maintainable under Section 37(1)(a) of the Act of 1996 inasmuch as the order, impugned in this appeal, is not an order, which can be properly regarded as an interim measure, within the meaning of Section 9 of the Act of 1996. The reason for raising such a contention by Mr. Shyam is this: An interim measure, within the meaning of Section 9, means, according to Mr. Shyam, an order, which would be finally passed upon hearing the parties concerned on the application made under Section 9. 5. The impugned order, points out Mr. Shyam, is not the result of judicial determination of any contentious issue; rather, they said order, according to Mr. Shyam, has been passed by the learned court below ex-debito justitiae only to prevent the application, made by the respondent, from becoming redundant and frustrated. 6.
5. The impugned order, points out Mr. Shyam, is not the result of judicial determination of any contentious issue; rather, they said order, according to Mr. Shyam, has been passed by the learned court below ex-debito justitiae only to prevent the application, made by the respondent, from becoming redundant and frustrated. 6. In the present case, since the impugned order is an order, which has been passed ex-parte and without hearing the present appellants, this order, according to Mr. Shyam, cannot be regarded as an order passed as an interim measure within the meaning of Section 9 of the Act of 1996. Such an order, further contends Mr. Shyam, is not an appealable order. In support of his submissions, Mr. Shyam refers to, and relies upon. Symphony Services Corporation (India) (P.) Ltd. v. Sudip Bhattacharjee 2009 (1) R.A.J. 609 (Kar.). 7. Controverting the submissions made, on behalf of the applicant-respondent, Mr. K.N. Choudhury, learned senior Counsel, appearing for the, opposite party-appellants, points out that Section 9specifically mentions interim injunction as one of the interim measures of protection and, hence, an interim order of injunction, whether passed ex parte or otherwise, would amount to an interim measure within the meaning of Section 9 and such an order would be an appealable order under Section 37(1)(a). The present appeal is, therefore, according to Mr. Choudhury, maintainable. 8. Referring to the case of Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P.) Ltd. (2007) 7 SCC 125 , Mr. Choudhury submits that in Adhunik Steels Ltd. (supra), the Apex Court has pointed out that injunction is a form of specific relief and it cannot be expected that the Legislature, while enacting Section 9 and providing therein for relief of injunction, intended that the court, while granting injunction, in exercise of its powers under Section 9, would not take into account the accepted principles, which govern granting of injunction under the Specific Reliefs Act. An order of injunction, interim or otherwise, according to Mr. Choudhury, cannot be passed unless the accepted principles, governing or refusing granting of injunction, so permit. 9. Making this Court traverse extensively through the decision of Adhunik Steels Ltd. (supra), Mr.
An order of injunction, interim or otherwise, according to Mr. Choudhury, cannot be passed unless the accepted principles, governing or refusing granting of injunction, so permit. 9. Making this Court traverse extensively through the decision of Adhunik Steels Ltd. (supra), Mr. Choudhury submits that the Apex Court has pointed out, in Adhunik Steels Ltd. (supra), that an injunction order can be granted under Order XXXIX, Rule 2 of the Code of Civil Procedure, 1908 ('Code') by a civil court restraining breach of contract and there is no reason as to why the principles, on which such an injunction order is granted in a civil suit, be not applied to an application, under Section 9 of the Act of 1996 too, if such an application seeks interim injunction by virtue of Section9. A temporary injunction, whether passed ex parte or otherwise, is, nevertheless, insists Mr. Choudhury, an interim measure within the meaning of Section 9 and such an order is appealable. 10. While considering the preliminary objection, which the respondent-company has raised with regard to maintainability of this appeal, it needs to be borne in mind that the relevant portion of the impugned order, dated 24.2.2009, reads as under: Issue notice to the applicant-respondents to show cause as to why prayer of the applicant-respondent-company will not be allowed. In the meantime, as an ad-interim measure for protection of the property, it is hereby ordered that the applicant-respondents will not create any third party interest over the suit property and will maintain the status quo of the said land as on today, until further order. 11. From a bare reading of what the learned trial court below has directed, it becomes abundantly clear that the learned court below has, for protection of the suit property, directed that the appellants herein shall not create any third party interest over the suit property and maintain status quo of the suit land until further order, There can be no doubt that the impugned directions amount to granting of injunction.
Whether such an order, because of the fact that it has been passed ex parte, would fall within the ambit of Section 9 and be regarded as an interim measure within the meaning of Section 9and/or whether such directions, as have been given by the interim order, would be amenable to the appellate provisions aimed in Section 37(1)(a) of the 1996 Act, are questions, which this Court is, now, required to determine. 12. While considering the rival submissions made as regards the maintainability of this appeal, what needs to be, first, determined is the question whether an application, seeking interim measure under Section 9, gives rise to a 'proceeding' within the meaning of Section 141 of the Code. The question, therefore, is as to what a 'proceeding' means? 13. The question, posed above, brings this Court to the provisions of Section 141, which reads as follows: 141. Miscellaneous proceedings.- The procedure provided in this Code in regard to suit shall be followed, as far as it can be made applicable, in all proceedings in any court of civil jurisdiction. Explanation- In this section, the expression "proceedings" includes proceedings under Order IX but does not include any proceeding under Article226 of the Constitution. 14. The question as to what the word 'proceeding', occurring in Section 141, conveys is not easy to answer, for, Section 141 has a long and, interestingly enough, a tumultuous past. In this regard, worth noticing it is that the Code has, as a whole, undergone several amendments since its introduction in the year 1859, the principal amendments being in 1861, 1877, 1882, 1908, 1999 and 2002. 15. In the Code of 1859, there was no provision (as the one, which we have, under Section 141), laying down the procedure for trial of miscellaneous proceedings. It was, for the first time, in the Code of 1861 that such a provision was introduced. The said provisions came to be retained in Section 647 of the Code of 1877 and the Code of 1882 too. Section 647 of the Codes of 1877 and 1882 read as follows: The procedure herein prescribed shall be followed, as far as it can be made applicable, in all proceedings in any court of civil jurisdiction other than suits and appeals. 16.
Section 647 of the Codes of 1877 and 1882 read as follows: The procedure herein prescribed shall be followed, as far as it can be made applicable, in all proceedings in any court of civil jurisdiction other than suits and appeals. 16. To put an end to the difference of views among the High Court's as to whether a 'proceeding', in execution, falls within Section 647, an Explanation was added to the Section 647 by the CPC (Amendment) Act of 1892, which read thus: Explanation- This section does not apply to applications for execution of decrees, which are proceedings in suits. 17. Laying down as to what the term 'proceeding', appearing in Section 647, conveyed, the Privy Council, in Thakur Prasad v. Fakirullah ILK (1895) 17 All 106 (PC), held and observed, * * * their lordships think that the proceedings, spoken of in Section 647, include original matters in the nature of suits, such as, the proceedings in probate, guardianship and so forth and do not include executions. 18. Though Thakur Prasad (supra) settled the meaning of the word 'proceedings' appearing in Section647 (presently, Section 141) by laying down that 'proceedings' "include original matters in the nature of suits", it gave rise to a fresh spate of conflicting views from the various High Courts on the meaning of the words, "original matters", occurring in Thakur Prasad (supra). For instance, while there was one set of decisions taking the view that an application under Order IX, Rules 9 and 13, same as applications made under Order XXI, Rules 89, 90, 91, 97 and 100, are original matters, the other set of views was that these are not original proceedings, for, the applications, made under Order IX, Rules 9 and 13, trace their origin to suits and, similarly, the applications, made under Order XXI, Rules 89, 90, 91, 97, 99 and 100, owe their birth to execution proceedings. The reason for the controversy, which so erupted, was that the word, "original" was capable of, at least, two different shades of meanings. In its primary sense, the "original matters" would mean those matters, which are capable of coming into existence on its own and not as derivative to some other suit or proceeding; for example, a proceeding for probate or guardianship comes into existence on its own and these proceedings do not owe their birth to any other proceeding.
In its primary sense, the "original matters" would mean those matters, which are capable of coming into existence on its own and not as derivative to some other suit or proceeding; for example, a proceeding for probate or guardianship comes into existence on its own and these proceedings do not owe their birth to any other proceeding. In contrast, a proceeding, under Order IX, Rule(s) 9 and/or 13, same as proceedings under Order XXI, Rules 89, 90, 91, 97and/or 100, derive their birth from suits and execution proceedings respectively. These proceedings are, strictly speaking, not original in nature; rather, these proceedings are derivatives or off-shoots of either suits or execution proceedings. However, though derivatives or off-shoots, the proceedings, under Order IX, Rules 9 and 13, are nevertheless independent of the suit and take birth on dismissal of the suit or on passing of an ex parte decree. Similarly, the proceedings, under Order XXI, Rules 89,90, 91, 97 and 100, are original proceedings in a limited sense, for, these proceedings too are not really different stages of any execution proceeding, but are independent thereof. To put it differently, since these proceedings are not different stages of the suits or of the execution proceedings to which they owe their birth and are, in a limited sense, independent of the suit or the execution proceedings to which they owe their birth inasmuch as none of these proceedings rests on the pendency of the suit or the execution proceeding, these proceedings can be regarded as 'original matters', though in a limited sense. Such conflicting views from the High Courts, therefore, rested on the interpretation of the Privy Council's decision, in Thakur Prasad (supra), revolving around the meaning of the word, "original" used therein. 19. When the controversy as to what can be considered as 'original matters' for the purpose of Section 141 was, thus, on, came the decision of a three-Judge Bench in Dokku Bhushayya v. Katragadda Ramakrishnayya AIR 1962 SC 1886 . In this case, a person named Bapiah instituted a suit against Dokku Bhushayya, then a minor, his father and another person on a promissory note executed by the two last mentioned persons. Dokku Bhushayya was represented, in the suit, by his maternal grandfather as his guardian ad litem. A decree was passed in the suit.
In this case, a person named Bapiah instituted a suit against Dokku Bhushayya, then a minor, his father and another person on a promissory note executed by the two last mentioned persons. Dokku Bhushayya was represented, in the suit, by his maternal grandfather as his guardian ad litem. A decree was passed in the suit. The decree-holder put the decree in execution and obtained an order for the sale of certain properties in which Dokku Bhushayya's interest was involved. The properties were sold in due course in favour of a clerk of the decree-holder. Thereafter, Dokku Bhushayya's guardian ad litem made an application, under Order XXI, Rule 90 of the Code, for setting aside the sale. Later, however, the guardian ad litem came to a settlement with the decree-holder and the auction-purchaser. According to the terms of settlement, the guardian ad litem was to give up his contention regarding the invalidity of the sale and withdraw the petition made for setting aside the sale and also give up possession of the properties sold to the auction purchaser and, in return thereof, the decree-holder and the auction-purchaser agreed to give up their claim for costs of the petition. In pursuance of this agreement, the petition was withdrawn and dismissed by order made on 12th August, 1932. After attaining majority, Dokku Bhushayya filed a suit, in the year 1944, to set aside the order of 12th August, 1932, and for a re-hearing of the petition, which was dismissed by the order passed on that date. The suit was decreed by the trial court, but on appeal, the decision of the trial court was reversed by the High Court at Madras and the suit was ordered to be dismissed. It was in these circumstances that Dokku Bhushayya came, in appeal, before the Supreme Court. The question, which, thus, came up before the Supreme Court, was as to whether the order of 12th August, 1932, was voidable under Order XXXII, Rule 7 of the Code, at the instance of the appellant? Order XXXII, Rule 7, it may be noted, forbids the guardian from entering into any agreement or compromise, on behalf of a minor, with reference to a suit without leave of the court and provides that any such agreement or compromise, entered into without the leave of the court, shall be voidable against all parties other than minor. 20.
Order XXXII, Rule 7, it may be noted, forbids the guardian from entering into any agreement or compromise, on behalf of a minor, with reference to a suit without leave of the court and provides that any such agreement or compromise, entered into without the leave of the court, shall be voidable against all parties other than minor. 20. Referring to, and relying upon, Thakur Prasad (supra), the Supreme Court, in Dokku Bhushayya (supra), observed and held, this view has ever since been followed. We have already held that the application by the judgment-debtor to set aside the sale is a proceeding in execution and, therefore, Section 141 of the Code will not apply for two reasons, namely, (1) as execution proceedings were continuation of suit within the meaning of Order XXXII, Rule 7 of the Code, and as the Code provided specifically for suits. Section 141 could not be invoked; and (2) as we have held, an application by a judgment-debtor to set aside a sale, is a proceeding in execution, and, therefore, Section 141, which applies only to original proceedings, does not apply to such proceedings. 21. What, in substance, the Apex Court held, in Dokku Bhushayya (supra), is that to be a 'proceeding', within the meaning of Section 141, the proceeding must not be a stage and/or continuation of another proceeding or suit and since an execution proceeding (same as an appeal) is merely a continuation or extension of a suit, execution proceedings cannot be regarded as 'proceeding' within the meaning of Section 141. In other words, as a stage in a suit, such as, an execution proceeding, or a proceeding, which rests on the pendency of a suit or appeal, such as, an application for temporary injunction, not being an original and independent proceeding, is not a 'proceeding' within the meaning of Section 141. 22.
In other words, as a stage in a suit, such as, an execution proceeding, or a proceeding, which rests on the pendency of a suit or appeal, such as, an application for temporary injunction, not being an original and independent proceeding, is not a 'proceeding' within the meaning of Section 141. 22. I may briefly pause here to point out that since an application for injunction, made under Order XXXIX, Rules 1 and 2 lies only during the pendency of a suit or appeal, it logically follows that though applications for temporary injunction, made under Order XXXIX, Rules 1 and 2, are registered as miscellaneous proceedings, such applications, for temporary injunction, do not really give rise to 'proceedings' within the meaning of Section 141, for, application for temporary injunction can neither be treated as a 'proceeding' in the nature of an original suit nor can it be treated as a proceeding, which is independent of the existence of the suit or the appeal. No wonder, therefore, that in Shiv Shakti Coop. Housing v. Swaraj Developers (2003) 6 SCC 659 , while summarizing the effect of the recent amendments to the Code, the Apex Court observed, thus: 32. A plain reading of Section 115 as it stands makes it clear that the stress is on the question whether the order in favour of the party applying for revision would have given finality to suit or other proceeding. If the answer is "yes" then the revision is maintainable. But on the contrary, if the answer is 'no' then the revision is not maintainable. Therefore, if the impugned order is interim in nature or does not finally decide the lis, the revision will not be maintainable. The legislative intent is crystal clear. Those orders, which are interim in nature, cannot be the subject-matter of revision under Section 115. 23. The decision, rendered in Shiv Shakti Co-op. Housing (supra), makes it abundantly clear that granting or not granting of injunction does not finally dispose of the suit or the proceeding within the meaning of Section 141. Had an injunction application made, under Order XXXIX, Rules 1 and 2, been a 'proceeding' within the meaning of Section 141, granting of temporary injunction and/or refusal to grant temporary injunction could have been taken to have disposed of the 'proceeding' within the meaning of Section 141 and. revision against such an order would have, then, been maintainable.
Had an injunction application made, under Order XXXIX, Rules 1 and 2, been a 'proceeding' within the meaning of Section 141, granting of temporary injunction and/or refusal to grant temporary injunction could have been taken to have disposed of the 'proceeding' within the meaning of Section 141 and. revision against such an order would have, then, been maintainable. However, since an application for temporary injunction, though registered as a miscellaneous proceeding, does not really give rise to a 'proceeding', which is either original or not dependent on the survival of the suit or the appeal, it cannot be regarded, and is, in fact, not regarded, as a 'proceeding' within the meaning of Section 141. Thus, granting of temporary injunction or refusing to grant temporary injunction and/or affirming temporary injunction by an appellate court does not end the 'proceeding', hence, such a temporary order of injunction, in the light of the Shiv Shakti Coop. Housing (supra), is not revisable. 24. What may, now, be noted is that in Munshi Ram v. Banwari Lal AIR 1962 SC 903 , a two-Judge Bench of the Supreme Court held that it was competent for the court, before which an award by an arbitrator is filed, to pass a decree in terms of a compromise reached by the parties to the arbitration award, though the compromise entered into by the parties may be at variance with the arbitral award. Referring to the decision in Munshi Ram (supra), a two-Judge Bench of the Supreme Court observed and held, in Ram Chandra Agarwal v. State of Uttar Pradesh AIR 1966 SC 1888 , thus, Similarly, recently this Court has held in Munshi Ram v. Banwari Lal AIR 1962 SC 903 , that under Section 41 of the Arbitration Act and also under Section 141, CPC, it was competent, for the court, before which an award made by an arbitration tribunal is filed for passing a decree in terms thereof, to permit parties to compromise their dispute under Order XXIII, Rule 3, CPC. Though there is no discussion, this Court has acted upon the view that the expression "civil proceeding" in Section141 is not necessarily confined to an original proceeding like a suit or an application for appointment of a guardian, etc., but it applies also to a proceeding which is not an original proceeding. 25.
Though there is no discussion, this Court has acted upon the view that the expression "civil proceeding" in Section141 is not necessarily confined to an original proceeding like a suit or an application for appointment of a guardian, etc., but it applies also to a proceeding which is not an original proceeding. 25. It may be carefully noted that the decision in Earn Chandra Agarwal (supra), was rendered without, of course, referring to Thakur Prasad (supra) and Dokku Bhushayya (supra). Be that as it may, what the Supreme Court held, in Ram Chandra Agarwal (supra), was that a proceeding, in order to fall within the meaning of the word 'proceeding' in Section 141, need not necessarily be an original proceeding. 26. What, however, needs to be borne in mind is that though in the light of the decision in Ram Chandra Agarwal (supra), a 'proceeding', for the purpose of being a proceeding under Section 141, may not necessarily be an original proceeding, such as, an application for probate, yet a 'proceeding', in order to be a proceeding within the meaning of Section 141, has to be nevertheless a 'proceeding', which is not a stage of an already pending proceeding and is also not dependent on the existence or survival of another proceeding. A proceeding under Order IX of the Code falls within the meaning of the word 'proceeding' in this limited sense. No wonder, therefore, that the Explanation to Section 141specifically makes a proceeding under Order IX of the Code a miscellaneous proceeding within the meaning of Section 141. These proceedings take birth from dismissal of the suit or from passing of an ex parte decree in the suit. Though born out of the suits, these 'proceedings' are not, unlike execution proceedings, stages of a suit. 27. Can, therefore, the decision, in Ram Chandra Agarwal (supra), be read to mean that every 'proceeding', during the progress of a suit or an appeal, such as, a proceeding arising out of an application for temporary injunction, be treated as a 'proceeding' within the meaning of Section 141? Would such a reading of the decision in Ram Chandra Agarwal (supra) not be an incorrect proposition of law?
Would such a reading of the decision in Ram Chandra Agarwal (supra) not be an incorrect proposition of law? While answering this crucial question, what needs to be borne in mind is that the decision of the five-Judge Bench, in Thakur Prasad (supra), has not been completely overruled and that the decision, in Dokku Bhushayya (supra), has been rendered by a Bench of three Judges; hence, the decision of two-Judge Bench, rendered in Ram Chandra Agarwal (supra), cannot be read to run wholly contrary to the law laid down in Thakur Prasad (supra) and also in Dokku Bhushayya (supra). The decision, in Ram Chandra Agarwal (supra), therefore, needs to be read in its correct perspective. When so read, it becomes abundantly clear, as already indicated hereinabove, that a 'proceeding' under Section 141, though may not be original, has to be, nevertheless, a 'proceeding', which is not really an extension of suit or appeal and though an offshoot from either a suit or an appeal, it has to be independent of the existence of the suit or the appeal in the sense that for its existence and survival, such a 'proceeding' must not depend on the survival of any suit or appeal. Such a proceeding may, therefore, come into existence, when no suit or appeal is pending for disposal. Viewed, thus, a 'proceeding', under Order IX, Rule 4, for restoration of a suit, is a 'proceeding' within the meaning of Section 141, for, a 'proceeding', under Order IX, Rule 4, is, strictly speaking, not an extension of suit and though it may be regarded as an offshoot from a suit, it comes into existence, when the suit is not pending and it is capable of standing on its own. Similarly, an application, made under Order IX, Rule 13, seeking to get set aside an ex parte decree, is a 'proceeding', within the meaning of the expression 'proceeding', occurring in Section 141. Considered in this light, a proceeding, which starts with the filing of an application for restoration or readmission of appeal under Order XLI, Rule 19, is also a 'proceeding', for, it is not really an extension of suit or appeal, and though an offshoot therefrom, it is an independent proceeding capable of standing on its own. 28.
Considered in this light, a proceeding, which starts with the filing of an application for restoration or readmission of appeal under Order XLI, Rule 19, is also a 'proceeding', for, it is not really an extension of suit or appeal, and though an offshoot therefrom, it is an independent proceeding capable of standing on its own. 28. In the backdrop of the position of law as discussed above, when I revert to the case at hand, what attracts the eyes, most prominently, is that when an application is made under Section 9 of the Act of 1996 to a civil court, such an application gives rise to a 'proceeding', which is original in nature, such a 'proceeding' and is not dependent upon the pendency of any suit or appeal. In fact, Section 9makes it clear that an application, seeking interim measure, as provided in Section 9, may be made even before any arbitral proceeding has commenced. Thus, even before commencement of an arbitral proceeding, an application, under Section 9, may be filed and such an application, being original in nature, shall stand on the same footing as does a 'proceeding' within the meaning of Section 141 of the Code. 29. While considering the above aspect of the matter, what also needs to be borne in mind is that the Code stands divided, broadly speaking, into two parts. While the main body of the Code, which consists of sections, creates jurisdiction for the civil courts, the Rules, framed under various orders, indicate the procedure for exercise of such jurisdiction. In other words, the Rules, framed under various orders of the Code, lay down the procedure for exercise of the powers conferred on such courts. Taking note of this prominent feature of the Code, observed the Supreme Court, in Vareed Jacob v. Sosamma Greevarghese and Ors. (2004) 6 SCC 378, thus: the main feature of the Code is its division into two parts. The main body of the Code consists of sections which create jurisdiction while the rules indicate the manner in which the jurisdiction has to be exercised. 30. Coupled with the above, it is also imperative to note that Section 141 makes applicable to a 'proceeding' (which can be described as a 'proceeding' under Section 141) only procedural part of the Code and not that part, which relates to jurisdiction of the courts under the Code.
30. Coupled with the above, it is also imperative to note that Section 141 makes applicable to a 'proceeding' (which can be described as a 'proceeding' under Section 141) only procedural part of the Code and not that part, which relates to jurisdiction of the courts under the Code. It was in this view of the matter that the Apex Court held, in Nawab Usman Ali Khan v. Sagar Mai AIR 1965 SC 1798 , that by virtue of Section 141 of the Code, only the procedure provided for suits in the Code and not the substantive right of the appellant thereunder can be applied to proceeding under the Arbitration Act. In short, only procedural part of the Code will apply to proceedings under Section 141 and not the substantive rights of the parties or the provisions creating jurisdiction of the courts under the Code. 31. What emerges from the above discussion is that unlike the Code, whereunder the substantive power to grant injunction is embodied in Section 94(c) and, in certain extraordinary circumstances, injunction may be granted by taking resort to Section 151 of the Code See Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal AIR 1962 SC 527 , the power to grant injunction, in an arbitration proceeding, is derived by a court under Section 9 of the 1996 Act. What is, however, imperative to point out is that though an application, made under Section 9 of the 1996 Act, gives rise to a "proceeding", it is the procedural part of the Code, which would be applicable to such a 'proceeding'. Logically, therefore, the provisions, embodied in Order XXXIX, in respect of granting of injunction, would also be applicable to, and available for, disposal of an application under Section 9. 32. Ordinarily, no order, adverse to the interest of a party, can be passed without giving an opportunity to such a party to have his say in the matter. Consequently, had no provisions for making ex parte order of injunction been made in Order XXXIX, Rule 3 of the Code, an order of injunction could not have been passed, under the Code, without giving any opportunity of showing cause, in that regard, to the party against whom an order of injunction is sought for.
Consequently, had no provisions for making ex parte order of injunction been made in Order XXXIX, Rule 3 of the Code, an order of injunction could not have been passed, under the Code, without giving any opportunity of showing cause, in that regard, to the party against whom an order of injunction is sought for. Had no provisions been specifically made available in the Code, in this regard, one could have, perhaps, contended that the power to grant ex parte order of injunction is derived by a court under the principle that every court has the power to pass an order, which it must pass so as to ensure that the application, made before it, does not become infructuous merely because of the fact that no specific provision has been made dispensing, in an emergent situation, the necessity to pass ex parte order. This is nothing but doctrine of implied power. It is well settled, as observes the Supreme Court, in Sakiri Vasu v. State of U.P. (2008) 2 SCC 409 , that when a power is given to an authority to do something, it includes such incidental or implied powers, which would ensure the proper doing of that thing. In other words, when any power is expressly granted by a statute, there is impliedly included in the grant, even without special mention, every power and every control, the denial of which would render the grant itself ineffective. Thus, where a statute confers jurisdiction, it impliedly also grants the power of doing all such acts or employ all such means as are essential or necessary for its execution. 33. The reason for resorting to the above principle, which is popularly known as the doctrine of implied power, is that many of the minor details are, at times, omitted from legislation and such omissions may be required to be fulfilled by an authority or a court, while enforcing or exercising its powers under such legislation so that the jurisdiction, exercisable by it, under the legislation, is not rendered redundant ineffectual and infructuous.
It is, thus, precisely to ensure that when a person approaches a court for remedy of his grievances and such grievances, though remediable, cannot be remedied by the court merely because some other acts are to be done by the court in order to enable it exercise the jurisdiction conferred on it, such legislation is presumed to carry such powers for the court, which are necessary to ensure that a grievance, brought before it in accordance with law, does not get frustrated merely because legislation is silent on the minor details as regards exercise of jurisdiction. In ascertaining a necessary implication, the court simply determines the legislative will and makes it effective. What is necessarily implied is as much part of the statute as if it were specifically written therein. [See Sakiri Vasu (supra)]. As observed by Crawford, in his Statutory Construction (3rd edn., P. 267): ...If these details could not be inserted by implication, the drafting of legislation would be an interminable process and the legislative intent would likely be defeated by a most insignificant omission. 34. In short, an express grant of statutory powers carries with it, by necessary implication, the authority to use all reasonable means to make such grant effective. Thus, in ITO v. M.K. Mohammad Kunhi AIR 1969 SC 430 , the Apex Court held that the Income Tax Appellate tribunal has implied powers to grant stay, although no such power has been expressly granted to it by the Income Tax Act. See also Union of India v. Paras Laminates (P.) Ltd. (1990)4 SCC 453 , RBI v. Peerless General Finance and Investment Co. Ltd. (1996) 1 SCC 642 , CEO & Vice-Chairman, Gujarat Maritime Board v. Haji Daud Haji Harun Abu (1996) 11 SCC 23 , J.K. Synthetics Ltd. v. CCE (1996) 6 SCC 92 , State of Karnataka v. Vishwabharathi House Building Coop. Society (2003) 2 SCC 412 , etc. In Savitri v. Govind Singh Rawat (1985) 4 SCC (Crl.) 556, the Supreme Court was required to deal with an interim order of maintenance, passed under Section 125, Cr.PC, when no specific provision, enabling a magistrate to grant interim maintenance had been provided. It is at a later stage that specific provisions have been made under Section 125, Cr.PC for interim maintenance.
It is at a later stage that specific provisions have been made under Section 125, Cr.PC for interim maintenance. However, even when no specific provision had existed for granting of interim maintenance under Section 125, Cr.PC, interim maintenance had been granted by a magistrate. The authority to grant such maintenance, under Section 125, Cr.PC, was under challenge before the Supreme Court. The question, which arose in the case of Savitri (supra), for determination, was succinctly described by the Apex Court, in paragraph 4 of its decision, which reads as under: 4. A reading of the above provisions shows that they are intended to provide for a preventive remedy for securing payment of maintenance which can be granted quickly and in deserving cases with effect from the date of the application itself. The rate of maintenance that can be awarded is also limited even though under the law governing the parties a competent civil court may order payment of a larger sum by way of maintenance in appropriate cases. The civil courts have inherent power to grant interim maintenance pending disposal of the suit for maintenance. The point for consideration is whether the magistrate can also make such an interim order or not. 35. The Apex Court pointed out, in Savitri (supra), that it is the duty of the court to interpret the provisions of Chapter IX of the Code in such a way that the construction, placed on them, would not defeat the very objective of the legislation. In the absence of any expressed prohibition, it is appropriate to consider, holds the Apex Court, that the provisions, in Chapter IX conferred an implied power on the magistrate to direct the person, against whom an application is made under Section125, Cr.PC, to pay some reasonable sum; by way of maintenance, to the applicant, seeking maintenance, pending final disposal of the application. Every court must be deemed, points out the Supreme Court, in Savitri (supra), to possess, by necessary intendment, to hold such power, as are necessary to make its order effective. This principle is embodied in the maxim "ubi aliquid conceditur, conceditur et id sine quo res ipsa esse non-potest" (where any thing is conceded, there is conceded also anything without which the thing itself cannot exist).
This principle is embodied in the maxim "ubi aliquid conceditur, conceditur et id sine quo res ipsa esse non-potest" (where any thing is conceded, there is conceded also anything without which the thing itself cannot exist). Whenever anything is required to be done by law and it is found impossible to do that thing unless something, not authorised in express terms, be also done, then, that something else will be supplied by necessary intendment. 36. In the Code, however, being conscious of the fact that a situation may arise, where the very objective of granting of injunction would be defeated by delay if the order of injunction, proposed to be passed, is not passed without giving notice to the party, against whom the order is proposed to be passed, Parliament has made specific provisions, in this regard, in Order XXXIX, Rule 3. 37. In the backdrop of what has been pointed out above, when Order XXXIX, Rule 3 is read, it become clear that the Parliament has provided that no court shall, ordinarily, pass an order of injunction without giving notice to the party, against whom the order is proposed to be made, except where it appears to the court that the object of granting injunction would be defeated by delay. The proviso to Rule 3 of Order XXXIX further shows that when a court is required to make an order of injunction, without giving notice of the application to the opposite party, the court shall, amongst others, record reasons for forming its opinion that the object of granting injunction would be defeated by delay. 38. What further follows from the above discussion is that since an application under Section 9 of the 1996 Act gives rise to a 'proceeding', within the meaning of Section 141 of the Code, the procedural part of the Code, including Order XXXIX is applicable to, and available for, disposal of an application, seeking injunction, made under Section 9 of the 1996 Act. When the law has made, with the help of Order XXXIX, Rule 3, specific provisions enabling a court, while exercising its powers under Section 9, to pass an ex parte order of injunction, the question of the court resorting to the doctrine of implied power does not arise at all. 39. Coupled with the above, this Court must point out that in Adhunik Steels Ltd. (supra), which Mr.
39. Coupled with the above, this Court must point out that in Adhunik Steels Ltd. (supra), which Mr. Choudhury has referred to, the Apex Court has held that when a party is given the right to approach an ordinary court of civil jurisdiction without providing special procedure or special set of rules governing grant of interim injunction, such as a proceeding under Section 9, the rules, which such a court, ordinarily, follows would govern the exercise of power conferred by the Act. Thus, when there is nothing in the Act of 1996 prescribing any specific or special procedure for granting of ah ex parte order of injunction and when there is nothing in the said enactment prohibiting a civil court from taking resort to Order XXXIX, Rule 3 for the purpose of passing an ex parte order of injunction on an application made under Section 9 of the Act of 1996, there can be no doubt at all that a court, while considering an application under Section 9 of the Act of 1996, has to follow the procedure prescribed by Order XXXIX and the rules framed thereunder including Rule 3 so long as the Rules, contained in Order XXXIX do not come in the way, or run contrary to, exercise of power under Section 9. 40. In the face of the specific provisions available for granting of ex parte order of injunction, the submissions, made by Mr. Shyam, that a court passes an ex parte interim order of injunction, under Section 9, by taking resort to the principle of ex-debito justitiae, cannot be accepted. I, therefore, find no substance in the submissions, made on behalf of the respondent, that unless the party, against whom the orders of injunction were sought for, is heard, or the contentious issues relevant to, or connected with, such an order of injunction, are finally decided after hearing the parties concerned, an order of injunction, passed on an application under Section 9, without giving any notice to the opposite party, or the party, against whom injunction is sought for, would not amount to an interim measure within the meaning of Section 9. 41. It has been also contended by Mr.
41. It has been also contended by Mr. Shyam that an order of injunction, granted under Section 9, without giving notice to the party against whom the injunction is sought for, cannot be regarded as an appealable order under Section 37(1)(a) of the Act of 1996. In other words, what Mr. Shyam contends is that an order of injunction, passed ex parte, under Order XXXIX, Rule 3, is not an appealable order, because no specific provision has been made for appeal, under Section 37(1)(a), against an ex parte order of injunction granted under Section 9. Though it is not specifically mentioned, Mr. Shyam appears to have been referring to a decision of the Division Bench of this Court, delivered on 29.7.1998, in MA(F)2011/98 (Union of India and Ors. v. Subhash Mohan Dev), wherein it has been held that an order, passed under Rule 3 of order XXXIX is not an appealable order. To set at rest, the question as to whether an order of injunction, passed ex parte under Order XXXIX, Rule 3, is or is not an appealable order, a reference needs to be made to a decision of the Full Bench of this Court, in Akmal Ali and Ors. v. State of Assam (1984) 1 GLR 133, wherein, taking the view that an order of injunction, passed without giving notice in exercise of the court's power under Order XXXIX, Rule 3 is, nevertheless, an appealable order, the Full Bench observed as under: If an order of ad-interim injunction is passed under Order XXXIX, Rule 1 or 2 of the Code of Civil Procedure, whether ex parte or otherwise, it is appealable, as Order 43, Rule 1(r) enables a party, aggrieved by any order under Order XXXIX, Rule 1 or 2 to prefer an appeal. In our opinion, therefore, the court cannot refuse to entertain an appeal only on the ground that such orders are temporary or interim or provisional. Similarly, by their very nature ad-interim injunctions passed under Order 39, Rule 1 or 2 are always rendered ex parte. Parliament being fully aware of the situation permitted appeals against such orders. In our opinion, therefore, an ex parte order of temporary injunction whether provisional, temporary or interim, are appealable, if rendered under Order 39, Rules 1 and 2.
Similarly, by their very nature ad-interim injunctions passed under Order 39, Rule 1 or 2 are always rendered ex parte. Parliament being fully aware of the situation permitted appeals against such orders. In our opinion, therefore, an ex parte order of temporary injunction whether provisional, temporary or interim, are appealable, if rendered under Order 39, Rules 1 and 2. On perusal of Order 43, Rule 1(r) we notice that it speaks that an appeal shall lie from an 'order' under Rule 1, Rule 2A, Rule 4and Rule 10 of Order 39. Therefore, any order under Rules 1, 2, 2A and 4 is appealable. However, there is a line of decisions in which it has been held that an ex parte or ad-interim order of injunction under Order 39 Rules 1, 2, 2A is not appealable as it is temporary or ex parte or non-speaking. But in the same breath the High Court's recognize the right of petition against such orders under Order 39, Rule 4 of the Code. An ex parte non-speaking temporary or ad-interim order of injunction is revisable: but it is not appealable, although the characteristics of the impugned order are absolutely the same both in Order 39, Rule 4 as well as in Order 43, Rule 1(r), seems to be irreconcilable . If it is an order of injunction it is revisable under Order 39, Rule 4. Situated, thus, we find it difficult to accept the line of reasoning and respectfully differ from the view. In our opinion, all ex parte ad-interim injunction are appealable under Order 43, Rule 1(r) as well as revisable under Order 39, Rule 4 of the Code. Any controversy as to whether reasons need be recorded while making an ex parte order of ad-interim injunction has been removed by the introduction of Rule 3, which provides that the court after recording reasons for its satisfaction that the object of granting injunction would be defeated by delay, etc., may pass an order of ex parte ad-interim injunction under Rules 1 and 2of Order 39. It does not stand to scrutiny that an ad-interim order devoid of reasons, rendered in violation of the well-known principles that a judicial order must contain reasons, and in violation of the mandatory provision of Rule 3 can escape the jurisdiction of the appellate court, but the same order can be revised by the very same court. 42.
It does not stand to scrutiny that an ad-interim order devoid of reasons, rendered in violation of the well-known principles that a judicial order must contain reasons, and in violation of the mandatory provision of Rule 3 can escape the jurisdiction of the appellate court, but the same order can be revised by the very same court. 42. From the above observations, made in Akmal Ali (supra), what can be gathered is that the Full Bench of this Court has taken the view that the Parliament, being fully aware of the fact that an interim order of injunction is invariably required to be passed ex parte, has made provisions for appeal against such ex parte orders. In this regard, the Full Bench points out that Order 43, Rule 1(r)speaks that an appeal shall lie from a order under Rule 1, Rule 2(A), Rule 4 and Rule 10 of Order XXXIX and this necessarily implies that an ex parte temporary injunction, whether provisionally temporary, or interim, is appealable. When the characteristic of both the orders of injunction, whether ex parte, or otherwise, is same, it would be unreasonable to hold, points out the Full Bench, that the Parliament, while providing that an order of injunction, which is passed after giving notice, shall be appealable, would be intended to have made an order, which is passed ex parte and without hearing the party, against whom the order is made, non-appealable. When Order XLIII, Rule 1(r)provides for a right of appeal against an order, passed under Rule 1 of Order XXXIX it cannot be read into such provisions, held the Full Bench, that an order, which is passed ex parte under XLIII, Rule 1(r), would not be included within the expression "order" appearing in Order XLIII, Rule 1(r) and would not be regarded appealable. On this reasoning, the Full Bench holds, in Akmal Ali (supra), that the characteristic of an ex parte order of injunction is same as an order passed after hearing the parties concerned and, hence, there is no reason to treat the two orders differently and there is also no reason to take the view that while an order, if passed after hearing the parties concerned, is appealable, an order, which is passed without hearing the party, though putting the same restrictions, would not be appealable.
Since this Court is bound to follow the Full Bench decision, in Akmal All (supra), there is no escape from the conclusion that an order of injunction, which is passed without giving notice under Order XXXIX, Rule 3, is an appealable order. 43. Extended logically, the principle, propounded in the case of Akmal Ali (supra), by the Full Bench of this Court, would apply with equal vigour to an application, made under Section 9 of the Act of 1996. Thus, when there is nothing in Section 9 and/or Section 37(1)(a) to show that an order, passed ex parte under Section 9, would not be an appealable order, such a restrictive interpretation cannot be attributed to Section 37(1)(a). There can be, therefore, no escape from the conclusion that an order of injunction, passed under Section 9, is an appealable order under Section 37(1)(a) irrespective of the fact as to whether such an order is passed ex parte or upon hearing the parties concerned. 44. In support of his submission that an interim measure, which Section 9 envisages, must be an order, which is based on final adjudication of the application made under Section 9, Mr. Shyam relies on Symphony Services Corporation (India) (P.) Ltd. (supra). 45. For the reasons, which I have already assigned above, I respectfully express my inability to agree with the observations made, and the law laid down, in Symphony Services Corporation (India) (P.) Ltd. (supra), wherein the basis of taking the view, which Mr. Shyam seeks to advance, is that when Section 9 uses the word 'granting', the use of the word 'granting' would necessarily mean final adjudication of the application made under Section 9 of the Act of 1996. The relevant observations, made in this regard, at para 12, read as under: 12. Section 37 of the Act would related to the appealable orders. Indeed, granting or refusing to grant any interim measure under Section 9 of the Act is an appealable order. The nomenclature or the usage of the word 'granting' under Section 9 of the Act would necessarily mean the final adjudication of the application under Section 9 of the Act. 46. In the light of the decision of the Full Bench, in Akmal Ali (supra), coupled with the other reasons, which I have assigned above, I am clearly of the view that Section 37 contemplates all orders whether ex parte, ad-interim or otherwise.
46. In the light of the decision of the Full Bench, in Akmal Ali (supra), coupled with the other reasons, which I have assigned above, I am clearly of the view that Section 37 contemplates all orders whether ex parte, ad-interim or otherwise. 47. Though, in support of his contention that an ex parte order of injunction is not appealable, Mr. Shyam has also referred to the case of Niko Resources Ltd. v. Gujarat Petroleum Corporation, decided on 6.9.2000, by the Delhi High Court, I do not find that this decision helps the case of the respondent inasmuch as this decision is not attracted to the facts of the present case, for, Niko Resources Ltd. (supra) merely holds that when no decision has been taken on a prayer for interim injunction and the matter is simply adjourned, it would not amount to granting of injunction. There can be no doubt that every order, passed in a proceeding under Section 9, may not be an interim measure. Considered in this light, an order of adjournment, without deciding the question of granting of injunction, would not amount to interim measure. The present one is not, however, a case, where the impugned order has not granted any relief. In fact, relief, though ad interim, stands granted by the impugned order. 48. Situated, thus, I hold that the present appeal is maintainable. 49. Challenging the impugned order, Mr. K.N. Choudhury, learned senior Counsel, contends that in the case at hand, while making its application under Section 9, the respondent had merely stated that it had been advised to go for arbitration. Advice to go for arbitration is, according to Mr. Choudhury, not an adequate statement for the fact that the respondent had decided to opt for arbitration and it is following this decision to opt for arbitration that the respondent had made the application under Section 9. In such a situation, contends Mr. Choudhury, the learned court below ought not to have entertained the application under Section 9. 50. Drawing attention of this Court to the decision of the Apex Court, in Sundaram Finance Ltd. v. NEPC Ltd. (1999) 2 SCC 479 , Mr.
In such a situation, contends Mr. Choudhury, the learned court below ought not to have entertained the application under Section 9. 50. Drawing attention of this Court to the decision of the Apex Court, in Sundaram Finance Ltd. v. NEPC Ltd. (1999) 2 SCC 479 , Mr. Choudhury submits that though an application, seeking interim measure can be made under Section 9 of the 1996 Act, the fact remains that there has to be, apart from a pre-existing cause, a manifest intention, on the part of the applicant, showing that the applicant intends to take recourse to the arbitral proceedings. In the present case, the respondent, in its application, made, under Section 9, had merely stated, reiterates Mr. Choudhury, that the respondent had been advised to go for arbitration for resolution of their dispute and, that is why, the respondent had made the application under Section 9. Mr. Choudhury submits that the averments, made in the application under Section 9, to the effect that the applicant-respondent had been advised to go for arbitration, is not reflective of an intention to go for arbitration and that the respondent, on the basis of such a statement alone, cannot be said to have made out a case for invoking the jurisdiction of the court under Section 9. 51. While considering the submissions made above, it needs to be pointed out that an application under Section 9 can be made before or during an arbitral proceeding or at any time after making the arbitral award, but before enforcement of the award. If, while making an application under Section 9, a person makes a statement that he is making the application under Section 9 following the advice given to him that he should go for arbitral proceeding, it would, ordinarily, be, in the absence of anything showing to the contrary, an indication of the fact that the applicant, acting upon the advice, has opted to invoke the arbitration clause and, that is why, he has made the application under Section 9. Though it is rightly contended by Mr. Choudhury, that while making the application under Section 9, there must be manifest intention, established by the applicant, that he had, indeed, decided to opt for arbitration, the fact remains that no notice, invoking arbitral clause, is required to be issued by a party before it makes an application under Section 9. 52.
Though it is rightly contended by Mr. Choudhury, that while making the application under Section 9, there must be manifest intention, established by the applicant, that he had, indeed, decided to opt for arbitration, the fact remains that no notice, invoking arbitral clause, is required to be issued by a party before it makes an application under Section 9. 52. It would, therefore, depend on the facts of a given case as to whether a person has established such facts, which manifest his intention that he has decided to opt for arbitration for resolution of his dispute or not. What is required, while making an application under Section 9, is that the party, who makes the application, satisfies the court that there exists a valid arbitration agreement and that the applicant intends to take resort to arbitration for resolution of dispute. Once the applicant satisfies the court as indicated hereinbefore, the court shall acquire jurisdiction to pass such orders, as are permissible, under Section 9, including an order of injunction. In fact, in Sundaram Finance (supra), the Apex Court has further pointed out that the court, while invoking its jurisdiction under Section 9, may even pass a conditional order so as to force the applicant to take effective steps for commencing arbitral proceedings. This shows that if the court has any reason to doubt that an applicant, having obtained an order under Section 9, may delay arbitral proceeding, the court has the freedom to make its order, under Section 9, a conditional one and, thereby, force the applicant, who seeks to invoke the court's jurisdiction under Section 9, to take effective steps for the purpose of commencing requisite arbitral proceedings. The relevant observations, made, in this regard, in the case of Sundaram Finance (supra), at para 19, road as under: 19. When a party applies under Section 9 of the 1996 Act, it is implicit that it accepts that there is a final and binding arbitration agreement in existence. It is also implicit that a dispute must have arisen which is referable to the Arbitral Tribunal. Section 9 further contemplates arbitration proceedings taking place between the parties. Mr.
When a party applies under Section 9 of the 1996 Act, it is implicit that it accepts that there is a final and binding arbitration agreement in existence. It is also implicit that a dispute must have arisen which is referable to the Arbitral Tribunal. Section 9 further contemplates arbitration proceedings taking place between the parties. Mr. Subramanium is, therefore, right in submitting that when an application under Section 9 is filed before the commencement of the arbitral proceedings, there has to be manifest intention on the part of the applicant to take recourse to the arbitral proceedings if, at the time when the application under Section 9 is filed, the proceedings have not commenced under Section 21 of the 1996 Act. In order to give full effect to the words "before or during arbitral proceedings" occurring in Section 9, it would not be necessary that a notice invoking the arbitration clause must be issued to the opposite party before an application under Section 9 can be filed. The issuance of a notice may, in a given case, be sufficient to establish the manifest intention to have the dispute referred to an arbitral tribunal. But a situation may so demand that a party may choose to apply under Section 9 for an interim measure even before issuing a notice contemplated by Section 21 of the said Act. If an application is so made, the court will first have to be satisfied that there exists a valid arbitration agreement and the applicant intends to take the dispute to arbitration. Once it is so satisfied, the court will have the jurisdiction to pass orders under Section 9 giving such interim protection as the facts and circumstances warrant. While passing such an order and in order to ensure that effective steps are taken to commence the arbitral proceedings, the court while exercising jurisdiction under Section 9 can pass a conditional order to put the applicant to such terms as it may deem fit with a view to see that effective steps are taken by the applicant for commencing the arbitral proceedings. What is apparent, however, is that the court is not debarred from dealing with an application under Section 9 merely because no notice has been issued under Section 21 of the 1996 Act. (emphasis added) 53.
What is apparent, however, is that the court is not debarred from dealing with an application under Section 9 merely because no notice has been issued under Section 21 of the 1996 Act. (emphasis added) 53. Bearing in mind what is indicated above, when I turn to the case at hand, what transpires is that the respondent had stated, while making the application under Section 9, that it had been advised to go for arbitration. If this statement of the respondent is considered in the light of the fact that following the advice, so received, the respondent had made the application, under Section 9, it becomes, in the absence of anything showing to the contrary, clear that the respondent had decided to act upon the advice, so given to it, and had accordingly made an application under Section 9. This impression gets reinforced by the subsequent conduct of the respondent inasmuch as the impugned order was passed on 24.2.2009, and, closely following the passing of the, impugned order, the respondent applied for appointment of arbitrator. In fact, the arbitrator has already been appointed. If the conduct of the respondent is dispassionately considered, it becomes clear that the respondent had decided to act upon the advice and decided to go for arbitration and, that is why, the respondent had made its application, under Section 9, and followed the said application by taking effective steps to commence arbitral proceeding. Situated, thus, I do not find any material to hold that, while making application under Section 9, the respondent, in the present case, had no intention to opt for, arbitration or that the respondent's application, made under Section 9, did net reveal sufficient materials manifesting respondent's intention to invoke arbitration clause of their agreement with the present appellants. 54. Whether the reliefs, which the respondent have sought for under Section 9, were or were not obtainable in the present case, is a question, which, now, falls for determination. In this regard, it is noteworthy that referring to the provisions of Clause (e) of Section 41 of the Specific Relief Act, 1963, Mr. Choudhury submits that the provisions, contained in Clause (e), make the legislative intent clear that no injunction can be granted by a court to prevent breach of such a contract, the performance of which would not be specifically enforced. In the present case, contends Mr.
Choudhury submits that the provisions, contained in Clause (e), make the legislative intent clear that no injunction can be granted by a court to prevent breach of such a contract, the performance of which would not be specifically enforced. In the present case, contends Mr. Choudhury, the agreement, which the parties had entered into, was not an agreement for transfer of 'immovable property'. In such circumstances, further contends Mr. Choudhury, specific performance of the contract, in question, is not possible inasmuch as whatever loss may be sustained by the respondent for the breach, if any, of the contract, in question, such loss or damage can be very well compensated in terms of money. 55. Reacting to the submissions, so made, on behalf of the respondent, Mr. Shyam, learned Counsel, submits that as far as the respondent is concerned, it has always been ready and willing to perform its part of the contract and it had never deviated from the contract This apart, Mr. Shyam submits that the project, in question, which the respondent had undertaken, pursuant to the agreement reached with the appellants, is a very valuable project for the respondent inasmuch as the respondent has spent huge amount of money on the project and the respondent's goodwill in the market would be seriously prejudiced and adversely affected if the project falls through. Such a devastating consequence, according to Mr. Shyam, cannot be measured in terms of money. Further-more, contends Mr. Shyam, the contract between the parties rests on transfer of 'immovable property' inasmuch as the respondent, under the contract, is entitled to receive as much as 55% of the area, which may be constructed. 56. The fact that the agreement, existing between the parties, in the present case, does entitle the respondent to receive as much as 55% of the area, which may be constructed on the suit land, is not really in dispute nor is it in dispute that the appellant would own, on completion of construction, 45% of the constructed area of the proposed multiplex complex. 57.
57. Leaving aside, for a moment, the question as to whether the contract, between the parties, is specifically enforceable or not, let me clarify as to whether the agreement, existing between the parties, in the present case, that the respondent would be entitled to receive, and become owner of 55% of the area, which may be constructed pursuant to the agreement between the parties concerned, amounts to 'transfer of immovable property' or not. 58. I may pause here to point out that transfer of property, as defined by Section 5 of the Transfer of Property of Act ('the T.P. Act') means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, or to himself and one or more other living persons. Section 5 also clarifies that the expression, 'living person', appearing in Section 5, includes a company or association or body of individuals, whether incorporated or not. 59. While considering the submission made by Mr. Choudhury, it needs to be borne in mind that Section 10 of the Specific Relief Act, makes it abundantly clear that specific performance of contract is enforceable, subject to certain conditions, irrespective of the fact as to whether the breach of a contract relates to transfer of 'immovable property' or 'movable property'. In other words, not only a contract to transfer 'immovable property', but also a contract to transfer 'movable property' can be specifically enforced subject to, of course, such conditions and limitations as may have been prescribed under the Specific Relief Act. The distinction between the two, namely, contract for transfer of 'immovable property' and the contract for transfer of 'movable property' vis-a-vis specific performance of these two contracts is that while, in the case of a contract to transfer of 'immovable property', the court is statutorily bound to raise a presumption that such a contract cannot be adequately relieved by compensation in money, no such presumption can be raised in respect of a contract to transfer 'movable property'. 60. The limited question, however, which I am, at this stage, concerned with, is this: Whether, in the face of the terms and conditions of the agreement, entered into between the parties concerned, there was a contract to transfer immovable property or not.
60. The limited question, however, which I am, at this stage, concerned with, is this: Whether, in the face of the terms and conditions of the agreement, entered into between the parties concerned, there was a contract to transfer immovable property or not. In other words, the question is whether the covenant, in the agreement, that upon completion of the construction, the respondent would own as much as 55% of share, in the constructed area, can be regarded as a contract to transfer immovable property or not. One needs to note that the T.P Act gives a negative definition of immovable property inasmuch as Section 3 of the T.P. Act, while interpreting the expression 'immovable property', states that unless there is something repugnant in the subject or context, immovable property does not include standing timber, growing crops or grass. In such circumstances, one has to necessarily take help of the General Clauses Act, 1897, to understand the meaning of the term 'immovable property'. It may, now, be noted that Section 3(26) of the General Clauses Act, provides that 'immovable property' shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything, which is attached to the earth. 61. It is, therefore, seen from the above definition of the 'immovable property', given in Section3(26) of the General Clauses Act, that anything attached to the earth is also an immovable property. The term 'attached to the earth' is defined in Section 3 of the Transfer of Property Act to mean- (a) rooted in the earth, us in the case of trees and shrubs; (b) imbedded in the earth, as in the case of walls or buildings; or (c) attached to what is so imbedded for the permanent beneficial enjoyment of that to which it is attached; 62. I may pause here to point out that a 'sale' is, as defined by Section 54 of the TP Act, a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised. Thus, when 'sale' is a transfer of ownership, it follows that on 'sale' of an 'immovable property', the owner of the 'immovable property' ceases to have any right, title or interest in such property.
Thus, when 'sale' is a transfer of ownership, it follows that on 'sale' of an 'immovable property', the owner of the 'immovable property' ceases to have any right, title or interest in such property. As against the fact that a sale is a transfer of ownership, a mortgage is, as defined by Section 58 of the T.P. Act, merely, a transfer of interest in a specific 'immovable property' for the purpose of securing the payment of money advanced or to be advanced by way of loan. In the case of a mortgage, though the title to the property remains with the owner as mortgager, his interest, in the property, stands transferred to the mortgagee. Thus, an agreement for mortgage is also an agreement for transfer of 'immovable property', because, to the extent that the mortgager acquires, interest in the property, the owner's interest in the property gets reduced. Similar is the situation with a development agreement. In a development agreement of an immovable property, the owner's right, title and interest, depending upon the terms of contract, stand reduced to the extent that the developer acquires, rights, title and interest, in such property. 63. In the present case, according to the contract, which the parties have entered into, it is clear that on completion of the project, the respondent were to become owner of 55% of the constructed area. However, which part of the constructed area would belong to the respondent has not been ascertained. The fact of the matter remains that there is nothing in the agreement to show that the appellants' title to the suit land would still remain with them, when the respondent would become owner of half of the multipurpose complex, which may be raised on the suit land. Unless the agreement shows that the developer, while becoming the owner of the half of the building, which may be raised on a plot of land, cannot have any right on the land, the logical comprehension of such transfer would be that the developer would not only become owner of the half of the building, but also become co-owner of the plot of land on which the building is built to the extent that the developer acquires such ownership.
Necessarily, and consequently, therefore, the respondent, while becoming the owner of 55% of the constructed area, would not only become owner of the building to the extent of 55% of the constructed area, but would also become a co-owner of the suit land. The controversy can be viewed from another perspective. On construction of the building on the suit land, let us assume, the appellants remain the owner of the suit land. In such circumstances, unless the agreement shows otherwise, the appellants would remain owner of the building, constructed on the suit land, to the exclusion of others, including the developer, i.e., the respondent. In reality/however, what the agreement, entered into between the parties, reflects, is that upon completion of the project, the respondent acquires not only right, but also title to the extent of 55% of the constructed building. This would amount to reduction of interest of the owner, (i.e., of the appellants), in the suit property, because, the building, on its construction, would remain on the suit land and cannot be considered independent of, or divorced from, the suit land. To the extent that the interest of the owner in the constructed area gets reduced by virtue of the agreement, in question, there can be no doubt that such a transaction would amount to transfer of the ownership of immovable property in favour of the respondent from the appellants. 64. Coupled with the above, on construction of the building, the land as well as the building would be treated, in the light of the General Clauses Act, as 'immovable property' and 55% of such 'immovable property', (i.e., the constructed building) would fall in the share of the respondent; the consequence would be that, to the extent that the respondent acquires right, title and interest in such immovable property, the appellants' rights, title and interest therein would get extinguished. That apart, the appellants, even if it is not stated in the agreement, would be bound, in order to enable the respondent enjoy the fruits of the contract, to execute necessary 'sale deed' transferring 55% of the appellants-owners' rights, title and interest in the constructed property in favour of the respondent.
That apart, the appellants, even if it is not stated in the agreement, would be bound, in order to enable the respondent enjoy the fruits of the contract, to execute necessary 'sale deed' transferring 55% of the appellants-owners' rights, title and interest in the constructed property in favour of the respondent. Such a contract, as in the present case, cannot but be regarded as a contract to transfer immovable property and, breach of such a contract would, ordinarily, be specifically enforceable inasmuch as Section 10 of the Specific Relief Act, makes it clear that unless and until the contrary is proved, the court shall presume that the breach of contract to transfer immovable property cannot be adequately relieved by compensation in money. 65. The appellants, in the present case, have not been able to show, at this stage, as to how, if the agreement, entered into between the parties, amounts to transfer of immovable property, the breach of such contract can be relieved by way of compensation in money. This apart, Mr. Shyam, learned Counsel, has considerable force in his submission that in a project of the kind, as in the present case, the goodwill of the developer remains at stake. If the contract fails, the developer would lose his goodwill. In such circumstances, it is difficult to comprehend, unless it can be shown otherwise, that the breach of a contract of the present nature can be adequately compensated in terms of money. This observation, made by this Court, rests on the assumption that the contract, in question, is a specifically performable contract and the breach of the contract is attributable to the appellants, who are the owner of the suit land. If, however, as would be discussed hereinafter, the contract is found to be, for some reasons, not a specifically enforceable contract, or if the contract, in the present case, is found to be a specifically enforceable contract, but the breach of the contract is not attributable to the appellants, there would be no question of granting relief of specific performance of contract. This Court, at this stage, is not deciding, finally, as to whether the contract can or cannot be specifically enforced.
This Court, at this stage, is not deciding, finally, as to whether the contract can or cannot be specifically enforced. At this stage, this Court is merely required to determine if, on the basis of the facts pleaded and the materials on record, the respondent can be said to have succeeded in making out any case that the contract, in question, can be specifically enforced and the respondent is, therefore, entitled to the reliefs of interim measures, which it has sought for in its application under Section 9. 66. Mr. Choudhury submits that in the ultimate analysis, what becomes clear from the application made, under Section 9, by the respondent is that the respondent seeks specific performance of the contract, which, according to the respondent, is a concluded contract. Mr. Choudhury's contention is that specific relief is a discretionary relief, which can be granted by a court only and not by an arbitrator and, hence, an arbitrator is not empowered, under the law, to make an award for specific performance of contract. If a specific performance of contract cannot be awarded by an arbitrator, submits Mr. Choudhury, it follows, as a corollary, that no injunction of the nature, as has been granted by the impugned order, could have been legally granted. There can be no dispute, submits Mr. Choudhury, that the jurisdiction to grant relief of a decree of specific performance is, according to Section 20 of the Specific Relief Act, discretionary in nature, the court is not bound to grant such relief, merely because it is lawful to do so, but must be based on sound and reasonable principle guided by judicial principles arid capable of correction by a court of appeal. Such discretionary relief, according to Mr. Choudhury, is not awardable in an arbitration proceeding and, consequently, no injunction, as granted by the impugned order, could have been ordered. 67. The submissions, made by Mr. Choudhury, as noted above, cannot detain us inasmuch as the Apex Court, in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan and Ors. (1999) 5 SCC 651 , has taken the view that the right to specific performance deals with contractual rights and it is certainly open to the parties to agree, with a view to shorten litigation in regular courts, to refer issues, relating to specific performance of their contract, to arbitration.
(1999) 5 SCC 651 , has taken the view that the right to specific performance deals with contractual rights and it is certainly open to the parties to agree, with a view to shorten litigation in regular courts, to refer issues, relating to specific performance of their contract, to arbitration. There is no prohibition, in the Specific Relief Act, points out the Supreme Court, in Olympus Superstructures (P.) Ltd. (supra), that the issues, as regards specific performance of contract relating to immovable property, cannot be referred to arbitration nor is there any such prohibition contained in the Act of 1996. The Apex Court has further pointed out, in Olympus Superstructures (P.) Ltd. (supra), that unlike English Arbitration Act, 1950, or Section 48(5)(b) of the English Arbitration Act, 1996, which contain prohibition relating to specific performance of contract concerning immovable property, the Act of 1996, in India, contains no such prohibition. In substance, the decision, in Olympus Superstructures (P.) Ltd. (supra), holds that an arbitrator can award specific performance of contract. This conclusion gets reinforced from the fact that in Rodemadan India Ltd. v. International Trade Expo Centre Ltd. (2006) 11 SCC 651 , the Supreme Court, at para 22, by referring to the case of Olympus (supra), has reiterated that it is within the competence of an arbitrator to award specific performance of contract. 68. However, it is for the parties to decide if they would refer a particular dispute or class of disputes to arbitration or not. If arbitration agreement gives an indication that all disputes, arising out of a contract, are referable to arbitration, the arbitrator would have all such powers, which may be exercised by a regular court so far as the reliefs are concerned except where granting of such relief is expressly or impliedly barred under the law. It, therefore, remains open for the parties to specifically provide, in an arbitration agreement, that so far as specific performance of contract is concerned, the same would not be referable to arbitration and/or a suit may also be filed in respect of specific performance of such a contract. If such agreement exists between the parties, there would be no bar for any of the affected parties to seek remedy of specific performance of contract from a civil court of competent jurisdiction. 69.
If such agreement exists between the parties, there would be no bar for any of the affected parties to seek remedy of specific performance of contract from a civil court of competent jurisdiction. 69. Coming to the merit of this appeal, I may point out that it is contended by Mr. Choudhury that under the term sheet, the joint venture agreement, entered into by the parties, was a time bound project. Mr. Choudhury further submits that while the respondent had the obligation to give security deposit of rupees two crore to the appellants in a phased manner as mentioned in the term sheet, the obligation of the appellants was to provide land to the respondent and it was the respondent, who was to undertake construction. Mr. Choudhury points out that in discharge of its obligation under the term sheet, the respondent paid, on 15.6.2006, by way of four cheques, rupees twenty-one lakh in favour of the appellants as part payment of the security deposit. Mr. Choudhury further points-out that the term sheet required that MoU be signed by the parties subject to obtaining of sanction of the plan, which had been submitted, for approval, on 6.4.2006, to the GMDA. In this regard, Mr. Choudhury submits that the appellants were compelled to submit a revised plan to the GMDA and, thus, it took considerable time and as a result thereof, delay occurred. Mr. Choudhury also submits that the plan was finally approved, on 5.12.2007, by the GMDA, but it was clue to delay tactics, adopted by the respondent, that the requisite steps, in tune with the term sheet, could not be taken. Due to delay in the project, the appellants, points Mr. Choudhury, are incurring huge financial loss. 70. It is also the case of the appellants, as presented by Mr. Choudhury, that though at one point of time, it was agreed by the parties that no MoU need be signed, the respondents held the view that the MoU was required to be signed and the MoU was accordingly signed on 4.3.2008. Mr. Choudhuiy contends that in terms of Clause 3.5 of the MoU, time was the essence of the contract. 71. By a facsimile message, dated 27.1.2008, the appellants, Mr.
Mr. Choudhuiy contends that in terms of Clause 3.5 of the MoU, time was the essence of the contract. 71. By a facsimile message, dated 27.1.2008, the appellants, Mr. Choudhury submits, demanded, in terms of the MoU, rupees twenty-one lakh from the respondent informing the respondent that the occupants of the two shops, within the suit land, had agreed to vacate the occupied portion of the suit land and the sum, so demanded, was accordingly paid, by way of cheque, by the respondent to the appellants. According to Mr. Choudhury, since there was no further hurdle, the appellants were under the impression that the project would commence in terms of the MoU and that the development agreement would be signed by the parties and, simultaneously, the appellants would also receive the balance amount of rupees 116.00 lakh, but the respondent deliberately drafted the development agreement in such a manner that the conditions, in the draft agreement, were contrary to, and inconsistent with, the conditions laid down in the term sheet, the approved plan and the MoU. 72. Mr. Choudhury, therefore, contends that though the respondent submitted the draft agreement at two stages, namely, on 30.6.2006 and in September 2008, yet the conditions, laid down therein, were beyond the scope of the agreed terms and conditions and the appellants could not, therefore, sign the said contract agreement. The appellants claim, according to Mr. Choudhury, that they have come to learn that the respondent does not have necessary financial resources to pay Rs. 116.00 lakh and, under severe financial crunch, respondent is deliberately delaying the project by offering a draft development agreement to be signed by the appellants, though the draft agreement is not in tune with the conditions incorporated in the term sheet and the MoU. 73. It is further contended by Mr. Choudhury that subsequent to the filing of the present appeal, the correspondence, which have been exchanged between the parties concerned, clearly reveal that the contract, in question, now, stands frustrated inasmuch as some shops, located at Zoo Road, were to be removed by the appellants and, on removal of the said shops, the appellants were to receive a sum of Rs. 25 lakh. The shops, points out Mr. Choudhury, do not fall within the suit land, owned by the appellants, but fall outside the suit land. Mr.
25 lakh. The shops, points out Mr. Choudhury, do not fall within the suit land, owned by the appellants, but fall outside the suit land. Mr. Choudhury submits that the appellants have not been able to remove the said shops and according to what the letters of the respondent reflect, the respondent demands that the appellants' share, in the profit, be reduced to 20% from 45% if the appellants do not succeed in getting the said shops removed, particularly, because the removal of the said shops, according to the respondent, is necessary for frontage of the building, which the respondent wants to construct, and also for having appropriate access to such a building. At any rate, points out Mr. Choudhury, the contract, which was, originally, entered into by the parties concerned has become unworkable and if it has to be worked out anew, it would be a new contract. The original contract, therefore, insists Mr. Choudhury, has become frustrated and cannot be specifically enforced and when the contract, in question, cannot be specifically enforced, the learned court below ought not to have granted injunction in favour of the respondent. In support of his submission that the court should, in the facts and circumstances of the present case, take into account the developments, which have taken place subsequent to the filing of the appeal, Mr. Choudhury refers to, and relies upon, the case of Jai Mangal Oraon v. Smt. Mira Nayak and Ors. (2000) 5 SCC 141 . 74. Responding to the submissions, so made, on behalf of the appellants, Mr. Shyam contends that the submissions, made, on behalf of the appellants, that the project was a time bound project and that it was due to deliberate inaction, on the part of the respondent, that the construction of the project could not be commenced, are all submissions, which relate to merit of the dispute and it is the arbitrator, who has the jurisdiction to decide as to whether it is due to latches on the part of the respondent or on the part of the appellants that the project could not take off. It is further submitted by Mr. Shyam that the events subsequent to the filing of the appeal would not, in the present case, be appropriate to take into account for the purpose of determination if the contract has become impossible to be performed. 75.
It is further submitted by Mr. Shyam that the events subsequent to the filing of the appeal would not, in the present case, be appropriate to take into account for the purpose of determination if the contract has become impossible to be performed. 75. While fully agreeing with the contention of Mr. Shyam that the question as to whether the delay in the commencement of the project, which is the subject-matter of controversy, is or is not attributable to the respondent, is a question, which falls within the jurisdiction of the arbitrator and cannot, therefore, be decided in this appeal, what cannot be discarded or ignored and must be pointed out is that there is no dispute before this Court that the draft agreement, which has been eventually offered by the respondent to the appellants for execution, contains terms and conditions, which are not in tune with the term sheet and the MoU. Though the person, whose fault has led to delay in the project is a question for the arbitrator to decide, it is the duty of this Court to ascertain if, in the face of the admitted facts, specific performance of the contract, which the parties had entered into, is at all legal and permissible, in other words, it is the duty of this Court to determine if the contract entered into by the parties is specifically enforceable. The reason is very simple and the reason is that in the light of the provisions of Section 41(e) of the Specific Relief Act, no injunction, interim or otherwise, as rightly pointed out by Mr. Choudhury, can be granted or could have been granted if the contract, in the present case, was either, at its very inception, incapable of being specifically enforced or the contract, due to development, which took place subsequent to the contract, has made the contract impossible to be performed and specifically unenforced. 76. It is, therefore, necessary to examine if the contract, in question, on the basis of the admitted materials, was, at its very inception, a contract, which could have been specifically enforced or, though, originally, enforceable, the contract has, now, become, due to subsequent development, impossible to be specifically performed. If the contract was not specifically enforceable, the question of granting any interim injunction, as has been done, in the present case, by the impugned order, cannot arise. 77.
If the contract was not specifically enforceable, the question of granting any interim injunction, as has been done, in the present case, by the impugned order, cannot arise. 77. In the light of what has been pointed out above, one cannot ignore the fact that there is no dispute before this Court that the contract, entered into between the parties, had envisaged different steps to be taken at different stages. It is also not in dispute that a draft agreement had been agreed to be signed by the parties before the construction commences. It is the respondent's case that the construction could not be commenced due to, amongst others, the fact that the appellants had not signed the draft agreement. The appellants, on the other hand, contend that they could not sign the agreement inasmuch as the draft agreement contained such terms and conditions, which were not consistent with the terms and conditions, which the parties had agreed to in the term sheet, MoU and the approved plan. 78. What is, now, curious to note is that it is not contended, on behalf of the respondent, that the draft agreement, which the respondent has offered to the appellants, contains such terms and conditions, which are not wholly in tune with the term sheet, MoU and the approved plan. Leaving aside, for a moment, the question as to whether the contract between the parties is or is not specifically enforceable, what must be pointed out is that even if the contract, in question, was specifically enforceable, such specific performance, according to the respondent itself, was subject to the condition of execution of the draft agreement. In other words, if the draft agreement is not executed, specific performance of the contract is not possible. When the draft agreement, offered to the appellants, was, admittedly, not in tune with the agreed terms and conditions aforementioned, it follows, as a corollary, that the respondent cannot be allowed to have the benefit of its own wrong. If the contract were specifically enforceable and it could not be enforced due to the fact that the respondent had not, in tune with the agreed terms and conditions of the parties concerned, offered the draft agreement, the respondent cannot be allowed to reap the benefit of its own wrong by allowing the impugned order of injunction to survive.
If the contract were specifically enforceable and it could not be enforced due to the fact that the respondent had not, in tune with the agreed terms and conditions of the parties concerned, offered the draft agreement, the respondent cannot be allowed to reap the benefit of its own wrong by allowing the impugned order of injunction to survive. This would be allowing the respondent to seek enforcement of the specific performance of the contract, though it is due to respondent's own omission to submit a correct draft agreement that the contract could not be specifically enforced. When the draft agreement has not been offered by the respondent to the appellants in tune with the term sheet and the MoU, there is no concluded contract reached between the parties and no specific performance of the contract, in question, can at this stage, as rightly contended by Mr. Choudhury, be awarded. In such a situation, when there is prima facie no concluded contract, as indicated hereinbefore, the question of granting even interim order of injunction could not have arisen. 79. Having pointed out above that it is within the competence of an arbitrator to award, in a given case, the specific performance of contract, what, now, needs to be mentioned, as correctly pointed out by Mr. Choudhury, by relying upon the law, laid down in Adhunik Steels Ltd. (supra), is that the power to grant injunction, even in an application under Section 9 of the Act of 1996, is nothing, but an exercise of power of granting injunction under the Specific Relief Act. Mr. Choudhury correctly points out that the Apex Court has clearly held, in Adhunik Steels Ltd. (supra), that under Section 28of the Act of 1996, even an arbitral tribunal has to decide a dispute, submitted to it, in accordance with the provisions of substantive laws, for the time being in force, in India, if it is not international commercial arbitration. As a proposition of law, submits Mr. Choudhury, there can be no dispute and there is, in fact, no dispute, in this appeal, that granting of injunction, even in the realm of Section 9of the Act of 1996, is a relief, which will be governed by substantive laws, which are in force in India and such substantive laws would obviously include the Specific Relief Act and the Code of Civil Procedure. 80.
80. I may point out that in Adhunik Steels Ltd. (supra), it was contended, on behalf of the appellant, Adhunik Steels Ltd., that Section 9 of the Act of 1996 stood independent of Section 94 and OrderXXXIX of the Code, which deal with granting of injunction, and further that exercise of power under Section 9 of the Act of 1996 is also not controlled by anything contained in the Specific Relief Act. As against this contention, the respondent contended, in Adhunik Steels Ltd. (supra), that by way of an interim measure, the court could pass an order for preservation or custody of the subject-matter of the arbitration agreement irrespective of the fact as to whether the order passed was in a mandatory form or was in a prohibitory form. Dealing with this issue, the Apex Court has pointed out, in Adhunik Steels Ltd. (supra), that neither Section 9 of the Act of 1996 nor any other provision contained therein has provided the conditions for grant of such interim protection and has, therefore, left it to the court to exercise the jurisdiction vested in it as a court. The Apex Court has also held that neither the provisions of the Code nor the provisions of the Specific Relief Act can be kept out, while considering the question as to whether any order, by way of interim measure or protection, should or should not be granted in the fact situation of a particular case. In no uncertain words, the Apex Court has held, in Adhunik Steels Ltd. (supra), that an injunction order can be granted under Order XXXIX , Rule 2 by a civil court restraining breach of the contract and there is no reason as to: why the principles, on which an injunction order is granted in a civil suit, be not resorted to, or applied to, in an application under Section 9 of the Act of 1996 or when such an application seeks interim injunction by virtue of Section 9. The Apex Court has further pointed out, in Adhunik Steels Ltd. (supra), as has been rightly contended by Mr. Choudhury, that it is difficult to imagine that the Legislature, while enacting Section 9, intended to make a provision as regards grant of injunction de hors the accepted principles, which, ordinarily, govern grant of interim injunction. 81.
The Apex Court has further pointed out, in Adhunik Steels Ltd. (supra), as has been rightly contended by Mr. Choudhury, that it is difficult to imagine that the Legislature, while enacting Section 9, intended to make a provision as regards grant of injunction de hors the accepted principles, which, ordinarily, govern grant of interim injunction. 81. In Nepa Ltd. v. Manoj Kumar Agrawal AIR 1999 MP 57 , Madhya Pradesh High Court had held that while considering an application for interim protection under Section9 of the 1996 Act, the provisions of the Specific Relief Act cannot be applied inasmuch as the court does not decide, while considering an application under Section 9, the merits of the case or rights of the parties and it considers only the question of existence of arbitral clause and the necessity of taking interim measures for issuing necessary directions or orders. The Apex Court pointed out, in Adhunik Steels Ltd. (supra), that when the grant of relief, by way of injunction, is, in general, governed by the Specific Relief Act, and Section 9 of the Act of 1996, which provides for interim injunction, the relevant provisions of the Specific Relief Act, cannot be kept out of consideration, for, grant of interim injunction, under Section 9, has to be necessarily based on the principles governing grant of injunction under the relevant provisions of the Specific Relief Act, and the law, in general, having a bearing on the same. Thus, the view, taken in Nepa Ltd. (supra), has not been agreed to and there can, therefore, be no escape from the conclusion that the provisions of the Specific Relief Act, and other substantive laws, such as, the law of contract, in a given case, cannot be said to be outside the purview of Section 9 if, in a given case, the court, under Section 9 of Act of 1996, is required to take a decision on the question of granting of interim injunction. The relevant observations, which appear at para 17, read as under: 17.
The relevant observations, which appear at para 17, read as under: 17. In Nepa Ltd. v. Manoj Kumar Agrawal a learned Judge of the Madhya Pradesh High Court has suggested that when moved under Section 9 of the Act for interim protection, the provisions of the Specific Relief Act cannot be made applicable since in taking interim measures under Section 9 of the Act, the court does not decide on the merits of the case or the rights of parties and considers only the question of existence of an arbitration clause and the necessity of taking interim measures for issuing necessary directions, or orders. When the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration. For, the grant of that interim injunction has necessarily to be based on the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. Under Section 28 of the Act of 1996, even the Arbitral Tribunal is enjoined to decide the dispute submitted to it, in accordance with the substantive law for the time being in force in India, if it is not an international commercial arbitration. So, it cannot certainly be inferred that Section 9 keeps out the substantive law relating to interim reliefs. (emphasis added) 82. In, view of the fact that the Contract Act, 1872, and the Specific Relief Act, being substantive laws, would apply to an arbitration proceeding, it logically follows that an order, under Section 9 of the Act of 1996, cannot be passed, in any case, ignoring either the Specific Relief Act, or the law of contract as in force in India. 83. Bearing in mind the above prominent aspects of the law of arbitration, when I revert to the facts of the present case, what attracts the eyes, most prominently, is that the contract between the parties does not only cover the suit land, but also a plot of land located outside the suit land. The term sheet, dated 15.6.2008, contains the phases of payment from the developer to the owners of the suit property, i.e., from the end of the respondent to the appellants.
The term sheet, dated 15.6.2008, contains the phases of payment from the developer to the owners of the suit property, i.e., from the end of the respondent to the appellants. Clause 3.8, which is relevant, in this regard, reads as under: The Developer shall pay an interest free refundable deposit of Rs. 2(two) crore (Security Deposit) for securing/guarantying. Owners for implementation of the Transaction within in a stipulated period defined, in 3.10 below. The Developer shall also pay Rs. 10 (ten) lakhs being nonrefundable amount towards, cost of sanction of plans this is addition to the Security Deposit. The payment of the Security Deposit shall be in the following manner (1) On signing of the term sheet: 21.00 lacs. (2) On signing of the MOU, subject to obtaining of sanction of plans submitted by the owners before the competent authority and on approval of the Draft Development Agreement Rs. 21.00 lakh. (3) On removal/vacation of Shops on Zoo Road, which is located outside the said property: Rs. 21.00 lakh. (4) On removal/Vacation of Marble Godown and other occupiers in the said property: Rs. 21.00 lakh. (5) On signing of approved Development Agreement/Power of Attorney to be executed in favour of Developer for causing construction/sale/marketing: Rs. 116.00 lakh. (emphasis added) 84. From a close reading of Clause 3.8, it becomes, amongst others, clear that, on signing of the term sheet, the appellants were to receive Rs. 21 lakh and, on signing of MoU, subject to obtaining of sanction of plans from the GMDA, and on approval of the draft development agreement, the appellants were to receive another sum of Rs. 2.1 lakh from the respondent. This apart, on removal of the marble godown and other occupiers of the suit property, the appellants were to further receive Rs. 21 lakh from the respondent. 85. What is, now, of immense importance to note is that Clause 3.8 reveals that the appellants were to receive yet another sum of Rs. 21 lakh, for, under Sub-clause (3) of Clause 3.8, one of the conditions for performance of the contract, which the parties had entered into, was that the appellants were to get removed and vacated some shops at Zoo Road, which fall outside the suit land. 86.
21 lakh, for, under Sub-clause (3) of Clause 3.8, one of the conditions for performance of the contract, which the parties had entered into, was that the appellants were to get removed and vacated some shops at Zoo Road, which fall outside the suit land. 86. Coupled with the above, Clause 8.4 of the MoU, dated 4.3.2008, reiterates the conditions of Sub-clause (3) of Clause 3.8 as aforementioned inasmuch as Clause 8.4 too reads, "The Developer on removal/vacation of 7-8 (seven to eight) shops on Zoo Road, which is located outside the said land, shall pay to the owners Rs. 21,00,000 (Rupees twenty-one lakh) on such removal." 87. There is nothing in the term sheet or the MoU or even in the application, which has been made, under Section 9, by the respondent, that the shops, standing on the Zoo Road; which the appellants were to get removed and vacated, fall within the control or authority of the appellants. 88. Thus, the terms and conditions of the contract, which the parties have entered into, demonstrate, more than clearly, that one of the essential conditions for performance of the contract, in question, was that the appellants were to get removed and vacated 7 to 8 shops, which stand on Zoo Road, and fall outside the suit land. 89. What follows from the above discussion is that the performance of the contract, in question, was possible prima facie only when the conditions of removal of the shops, standing on the Zoo Road, was fulfilled. Thus, the present contract was nothing, but a contingent contract. 90. To put it a little differently, I may pause here to point out that the term 'contingent, when appended to the term contract', determines the time for the performance of the contract. Section 31of the Contract Act, states that a 'contingent contract' is a contract to do or not to do something if some event, collateral to such contract, does or does not happen. In 'contingent contract', the performance of contract is, thus, dependent on the happening or not happening of some collateral event. Thus, a 'contingent contract' contains, within itself, two contracts, firstly, the principal Act agreed to be done or not be done, and embedded, in this principal contract, is the collateral contract of contingency. Sections 32, 33, 34 are various contingencies contemplated in the Contract Act. 91.
Thus, a 'contingent contract' contains, within itself, two contracts, firstly, the principal Act agreed to be done or not be done, and embedded, in this principal contract, is the collateral contract of contingency. Sections 32, 33, 34 are various contingencies contemplated in the Contract Act. 91. So far as the performance of contract is concerned, the courts can direct specific performance only in a concluded contract. The principal contract, in a contingent contract, cannot be specifically performed unless the contingency arises and, therefore, it can be said that till the contingent condition is fulfilled, the contract is not a concluded contract. 92. What surfaces from the above discussion is that the contract, which the parties have entered into, is a 'contingent contract', which is inherently determinable in nature. When a contract is determinable in its nature. Section 14(c) of the Specific Relief Act makes it clear that such a contract cannot be specifically enforced. Obviously, therefore, until the time the condition of removal of the shops, at Zoo Road, is fulfilled, the question of specific performance of the contract, which the parties have entered into, does not arise at all. Viewed in this light, it becomes clear that the respondent could not have claimed, in the fact situation of the present case, specific performance of the contract and, in the absence of the contract being enforceable, no interim injunction, in the light of the provisions of Section 41(e) of the Specific Relief Act, could have been granted in favour of the appellants inasmuch as Section 41(e) clearly lays down that when specific performance of contract cannot be enforced, injunction cannot be granted. 93. Closely connected with the above question of the contract being contingent in nature, what, now, needs to be pointed out is that the respondent has submitted, in its affidavit-in-opposition, that the project, under consideration, is a shopping mall, which requires a good frontage and proper access to the shopping mall, and, hence, unless the frontage is cleared, the project will have only 30 ft. instead of 165 ft. as per the original agreement. The respondent, in this regard, has referred, and annexed, to its affidavit-in-opposition, a letter, dated 15.4.2009, issued by the appellants. The letter, dated 15.4.2009, aforementioned, was addressed by the appellants to the respondent.
instead of 165 ft. as per the original agreement. The respondent, in this regard, has referred, and annexed, to its affidavit-in-opposition, a letter, dated 15.4.2009, issued by the appellants. The letter, dated 15.4.2009, aforementioned, was addressed by the appellants to the respondent. The relevant portion of the letter, dated 15.4.2009, issued by the appellants, is reproduced here in below: Since the terms and conditions contained in the development agreement dated 15.6.2006 are more or less in conformity with the MoU and the approved plan submitted before the GMDA, we do not have any objection in signing the same and you should also not have any objection. Therefore, we can immediately sign the same and you can pay us the balance security money of Rs. 116.00 lakh. In this context, the other issue which may be raised or rather has been raised by you is the removal of Zoo Road side shops located on some other's land. Since the said shops are located on somebody else's land we cannot remove them and at best the said stipulation can be mutually waived by both the party, the consequence of which will be that you will not be required to pay a sum of Rs. 21.00 lakh. However, if you insist that a stipulation must be performed before execution of the development agreement, then the same would result in impossibility of performance which would render our contract a nullity. 94. In the letter, dated 15.4.2009, the appellants have categorically stated that the new development agreement is not acceptable to them inasmuch as it contains altered and added new clauses. The appellants have also made it clear that it has no objection to the signing of the draft development agreement, dated 15.6.2006, inasmuch as the same is more or less in conformity with the MoU and the approved plan submitted by the GMDA. What is, however, of utmost importance to note is that in this letter, the appellants have stated that if the above offer is not acceptable to the respondent, then, they can mutually terminate the contract without prejudice to the respective rights of the parties concerned to seek appropriate relief. 95.
What is, however, of utmost importance to note is that in this letter, the appellants have stated that if the above offer is not acceptable to the respondent, then, they can mutually terminate the contract without prejudice to the respective rights of the parties concerned to seek appropriate relief. 95. In the letter, dated 15.4.2009, the appellants have further indicated that as regards the removal of the shops, located at Zoo Road, since the said shops fall under someone else's land, the appellants cannot remove them and, at best, such stipulation can be mutually waived by both the parties and, in consequence thereof, the respondent would not be liable to pay the sum of Rs. 21 lakh, which was to be paid to the appellants on their getting the shops, on the Zoo Road, vacated. 96. It is, now, of paramount importance to note that in response to the letter, dated 15.4.2009, of the appellants, the respondent has sent two letters, on 5.6.2009, to the appellants. One of these two letters reads: In course of earnest settlement of the dispute, we in reference to your letter dated 15.4.2009, the term sheet dated 15.6.2006 and the Agreement dated 4th March, 2008, executed between us, state as follows: 1. Almost three years have passed since the execution of the term sheet on 15.6.2006 and you have still not fulfilled your obligations in terms of the term sheet and the agreement executed between us. 2. It is only lately that we have come to learn from your letter dated 15.4.2009 that you will not be able to fulfil your obligation with regard to vacating of shops situated on the Zoo Road. 3. You are aware that removal of the shops from the Zoo Road is very important for commencement of the project both for frontage and access to the site. The value of the property is based on such access to frontage otherwise the value is drastically reduced. 4. Since you have failed to fulfil your obligation we have not been able to commence our construction. 5. We are ready to commence the project once you fulfil your obligation as recorded in the term sheet and agree to pay balance amount of deposit sooner you vacate the shops. 6.
4. Since you have failed to fulfil your obligation we have not been able to commence our construction. 5. We are ready to commence the project once you fulfil your obligation as recorded in the term sheet and agree to pay balance amount of deposit sooner you vacate the shops. 6. If you do not agree to the above proposal then you have to reduce your stake in the project by at least 20% which means the share in the project will be at 75:25 (Developer:Owners) and under such situation the term sheet will be modified accordingly. 7. To discuss such revised terms and conditions, we welcome to Kolkata any time after of 9th June, 2009, with prior notice to sort out the issues and come to a fresh understanding. We vide our letter dated 23rd May, 2009, invited you to Kolkata between 2nd to 6th June, 2009, to discuss and sort out the issues once for all, but you have not reciprocated till now. So by this letter, we hereby communicate our intention and stand in order to proceed further in the project. 8. Please consider and cooperate. 97. Similarly, the respondent's other letter, dated 5.6.2009, reads: 1. By your letter dated 15th April, 2009 for the first time you have expressed your inability to have the front shops vacated. In terms of the term sheet/agreement you have undertaken to have the shops vacated your cost so that the entire project would have a good frontage and based on that the entire project was worked out. 2. So far as we are concerned where are we at fault. We have complied with all our obligations and now it is quite clear that you are not in a position to have the shops vacated and this by itself shows that you were never able to fulfil your obligations. 3. However, without prejudice to what has been stated, we are prepared to proceed on the terms sheet/agreement but then the ratio has to be renegotiated that is to say we will have 75% and you will be entitled to 25% because of your inability to fulfil your obligations and also because of the fact that the project will not fetch the value we had anticipated. 4.
4. However, you can be assured we would like to settle the matter amicably taking into account all the factors so that an amicable settlement is arrived at. This is without prejudice to our other rights and contentions. 98. From what have been stated in its two letters, dated 5.6.2009, by the respondent, it clearly transpires that the respondent has not disputed the fact that the draft development agreement, which it has offered to the appellants, is not in tune with the term sheet and the MoU. This apart, the respondent also treats the removal of the shops, at Zoo Road, as an integral and in severable part of commencement of the entire project inasmuch as removal of the shops, according to the respondent, is necessary for having frontage and access to the site. The respondent also claims that since the appellants have failed to fulfil their obligation to remove their shops from the Zoo Road, the respondent has not been able to commence construction and the respondent is willing to commence the project once removal of the shops, at Zoo Road, as indicated hereinbefore, is completed by the appellants. The respondent contends that the entire project was worked out basing the same on the removal of the shops aforementioned and if the appellants do not agree to get the shops removed, then, the appellants' share, in the profit, would got reduced by, at least, 20%. The contents of the two letters, dated 5.6.2009, aforementioned make it more than abundantly clear that even according to the understanding of the respondent, removal of the said shop was so important that in the event of failure of the appellants to get the shops aforementioned removed the appellants' share, in the profit, would be reduced, from 45% to 20%. The respondent also demands that in terms of the ratio of profit as indicated by them, the term sheet have to be modified. 99. I may, now, pause to point out that there can be no doubt, as pointed out on behalf of the appellant, that it is the duty of the court, particularly, when it is dealing with an appeal that the developments, which are subsequent to the passing of the impugned order, be taken note of.
99. I may, now, pause to point out that there can be no doubt, as pointed out on behalf of the appellant, that it is the duty of the court, particularly, when it is dealing with an appeal that the developments, which are subsequent to the passing of the impugned order, be taken note of. A reference may be made, in this regard, to the case of Pasupuleti Venkateswarlu v. Motor & General Traders (1975) 1 SCC 770 , wherein the Apex Court, at paras 4 and 5, has observed as under: 4. We feel the submissions devoid of substance. First, about the jurisdiction and propriety vis-a-vis circumstances which come into being subsequent to the commencement of the proceedings. It is basic to our processual jurisprudence that the right to relief must be judged to exist as on the date a suitor institutes the legal proceeding. Equally clear is the principle that procedure is the handmaid and not the mistress of the judicial process. If a fact, arising after the lis has come to court and has a fundamental impact on the right to relief or the manner of moulding it, is brought diligently to the notice of the tribunal, it cannot blink at it or be blind to events which stultify or render inept the decretal remedy. Equity justifies bending the rules of procedure, where no specific provision or fair play is violated, with a view to promote substantial justice-subject, of course, to the absence of other disentitling factors or just circumstances. Nor can we contemplate any limitation on this power to take note of updated facts to confine it to the trial court. If the litigation pends, the power exists, absent other special circumstances repelling resort to that course in law or justice. Rulings on this point are legion, even as situations for applications of this equitable rule are myriad. We affirm the proposition that for making the right or remedy claimed by the party just and meaningful as also legally and factually in accord with the current realities, the court can, and in many cases must, take cautious cognisance of events and developments subsequent to the institution of the proceeding provided the rules of fairness to both sides are scrupulously obeyed. On both occasions the High Court, in revision, correctly took this view.
On both occasions the High Court, in revision, correctly took this view. The later recovery of another accommodation by the landlord, during the pendency of the case, has as the High Court twice pointed out, a material bearing on the right to evict, in view of the inhibition written into Section 10(3)(iii) itself. We are not disposed to disturb this approach in law or finding of fact. 5. The law we have set out is of ancient vintage. We will merely refer to Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri which is a leading case on the point Gwyer, C.J., in the above case, referred to the rule adopted by the Supreme Court of the United States in Patterson v. State of Alabama. We have frequently held that in the exercise of our appellate jurisdiction we have power not only to correct error in the judgment under review but to make such disposition of the case as justice, requires. And in determining what justice does require, the court is bound to consider any change, either in fact or in law, which has supervened since the judgment was entered. and said that that view of the court's powers was reaffirmed once again in the then recent case of Minnesota v. National Tea Co. Sulaiman, J., in the same case relied on English cases and took the view that an appeal is by way of a re-hearing and the court may make such order as the Judge of the first instance could have made if the case had been heard by him at the date on which the appeal was heard. Varadachariar, J. dealt with the same point a little more comprehensively. We may content ourselves with excerpting one passage which brings out the point luminously (at p. 103): It is also on the theory of an appeal being in the nature of a re-hearing that the courts in this country have in numerous cases recognized that in moulding the relief to be granted in a case on appeal, the court of appeal is entitled to take into account even facts and events which have come into existence after the decree appealed against. 100. Even in Laxmi & Co. v. Dr. Anant R. Despande and Anr. (1973) 1 SCC 37 , on the question of subsequent development, the Apex Court has observed as under: 27.
100. Even in Laxmi & Co. v. Dr. Anant R. Despande and Anr. (1973) 1 SCC 37 , on the question of subsequent development, the Apex Court has observed as under: 27. It is true that the court can take notice of subsequent events. These cases are where the court finds that because of altered circumstances like devolution of interest it is necessary to shorten litigation. Where the original relief has become inappropriate by subsequent events, the court can take notice of such changes. If the court finds that the judgment of the court cannot be carried into effect because of change of circumstances of the court takes notice of the same. If the court finds that the matter is no longer in controversy the court also takes notice of such event. If the property which is the subject-matter of suit is no longer available the court will take notice of such event. The court takes notice of subsequent events to shorten litigations, to preserve rights of both the parties and to subserve the ends of justice. Judged by these principles it is manifest that in the present case suits are pending. On the one hand the appellant has challenged the decree obtained by Ashar and others as also warrant of execution. On the other hand, the suit instituted by Ashar and others against, inter alia, the appellant in 1965 for possession is pending. This Court cannot say with exactitude that any final decision has been reached on the respective and rival rights and claims of the appellant and the respondent. It is, therefore, neither desirable nor practicable to take notice of any fact on the rival versions of the parties as to subsequent events. 101. In fact, as late as in 2000, the Apex Court, in Jai Mangal Oraon (supra), which Mr. Choudhury relies upon, has observed that it is, by now, well-settled that even subsequent developments or facts and turn of events coming into existence, but found really relevant, genuine and vitally important in effectively deciding the issues raised and necessary to do real, effective and substantial justice or prevent a miscarriage of justice is not only can but ought to be taken into consideration by courts even at the appellate stage. 102.
102. In the backdrop of the position of law with regard to the court's power to take notice of the developments subsequent to filing of an appeal, when I revert to the case at hand, two things clearly emerge from the developments, which have taken place subsequent to the filing of the present appeal, as reflected by, and discernible from, the appellants' letter, dated 15.4.2009, and the respondent's replies thereto by their two letters, both dated 5.6.2009. Firstly, the respondent has not denied the fact that the draft development agreement, offered by the respondent to the appellants, is not in tune with the term sheet and the MoU; it cannot, therefore, be contended by the respondent, in this appeal, that the appellants have raised disputed questions of fact nor can it be said that a concluded contract has been reached by the parties concerned. Had the draft agreement been in tune with the terms sheet and the MoU, the respondent could have, if other legally mandatory conditions were satisfied, sought for specific performance of the contract. Secondly, according to the respondent, the appellants shall either remove the shops at Zoo Road or else, the appellants' share in the profit, in the project, would be reduced to by, at least, 20%. 103. Admittedly, the shops at Zoo Road, as already discussed above, are not located on the land of the appellants. In the absence of any indication given in the term sheet and/or the MoU and/or even in the application, made under Section 9 of the Act of 1996, that the appellants had control over the shops, which are located at Zoo Road, the appellants cannot be forced to get those shops removed. In such circumstances, the original contract entered into by the parties has become, even in the light of the respondent's letters, dated 5.6.2009, aforementioned, impossible to be performed. Thus, the contract, in question, stands frustrated. For the fact that the appellants have not got the said shops removed, they may, at best, subject to what the arbitrator finds, be liable for payment of damages. It is, for the first time, at a later stage of this appeal, contended by the respondent that the shops, at Zoo Road, are under the control of the appellants.
For the fact that the appellants have not got the said shops removed, they may, at best, subject to what the arbitrator finds, be liable for payment of damages. It is, for the first time, at a later stage of this appeal, contended by the respondent that the shops, at Zoo Road, are under the control of the appellants. In fact, in the application made under Section 9, while the respondent specifically averred that the marbal godown, located on the suit land, was under the control of the present appellants, the respondent did not even faintly indicate that the shops, at Zoo Road, are under the control of the present appellants. To a pointed query, however, made by this Court if there is any material to show including the terms sheet that the shops, at Zoo Road, are under the control of the appellants, Mr. Shyam could not draw attention of this Court to any such material. The submission, made by the respondent, that the shops, at Zoo Road, had been under the control of the appellants, is, thus, wholly without substance. 104. I have already pointed out above, that a contract, such as, the present one, which is determinable in nature, is not, in the light of the provisions of Section 14(1)(c) of the Specific Relief Act, specifically enforceable. Thus, the contract, in question, if I may reiterate, is not specifically enforceable. This apart, when the contract stands frustrated, because of the fact that it has become impossible to be performed, such a contract cannot be specifically enforced. 105. For both the reasons noted above, the dispute, if any, between the parties would remain open not for specific performance of the contract, but for resolution of liabilities as regards payment of damages, if any. Mr. Choudhury is, therefore, not incorrect, when he submits that arbitration of the dispute, in question, remains open for resolution of the liabilities of the parties concerned and not for performance of the contract. 106. Drawing attention of this Court to the provisions of Section 42 of the Specific Relief Act, Mr. Shyam has pointed but that in a given case, even if specific performance of a contract cannot be enforced, it is still open to a court to compel performance of the negative part of the contract. The negative part of the contract, in the present case, is, points out Mr.
Shyam has pointed but that in a given case, even if specific performance of a contract cannot be enforced, it is still open to a court to compel performance of the negative part of the contract. The negative part of the contract, in the present case, is, points out Mr. Shyam, that the appellants would not sell the suit land to any one else. Hence, the impugned order, injuncting the appellants from transferring the suit land to any one, other than the respondent, is legal even though the contract, to transfer the immovable property to the respondent, may not have been possible to be specifically performed or may have become impossible to be performed. 107. In order to clearly understand the concept behind Section 42, one needs to carefully analyse the relevance of the provisions of the Contract Act, vis-a-vis the provisions of the Specific Relief Act, as regards breach of contract, in general, and, in particular, breach of such contracts, which are not specifically enforceable. 108. Section 73 of the Contract Act, I may point out, deals with a situation, when there is breach of contract. Section 73 states that when a contract has been broken, the party, who suffers by such breach, is entitled to receive, from the party, who has broken the contract, compensation for any loss or damage caused to him thereby, which, naturally, arose, in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach thereof. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. 109. When an obligation, resembling those created by contract, has been incurred and has not been discharged, any person, suffered by the failure to discharge it, is, according to Section 73, entitled to receive the same compensation from the party in default as if such person had contracted to discharge it and had broken his contract. 110. The Explanation to Section 73 makes it clear that in estimating the loss or damage arising from a breach of contract, the means, which existed of remedying the inconvenience caused by the non-performance of the contract, must be taken into account. 111. A contract regulates the rights and obligations of the contracting parties.
110. The Explanation to Section 73 makes it clear that in estimating the loss or damage arising from a breach of contract, the means, which existed of remedying the inconvenience caused by the non-performance of the contract, must be taken into account. 111. A contract regulates the rights and obligations of the contracting parties. A party to a contract, therefore, cannot claim any right, which, otherwise, is not recognized by the Contract Act. Since the Contract Act deals with various rights and liabilities of the contracting parties, it also provides for the remedies available to a party suffering from breach of a contract. As already indicated, Section 73 of the Contract Act makes it clear that the only remedy, for breach of contract, available, under the Contract Act, is compensation. The Contract Act does not recognize concept of specific performance of contract. It is this vacuum, which the Specific Relief Act, seeks to fill up, by allowing equitable relief of specific performance of contract. However, there are, as will be seen hereinafter, certain limitations on specific performance of contract. Section 10 of the Specific Relief Act, states as under: 10. Cases in which specific performance of contract enforceable.- Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced- (a) when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or (b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. Explanation: Unless and until the contrary is proved, the court shall presume- (i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and (ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases: (a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market; (b) where the property is held by the defendant as the agent or trustee of the plaintiff. 112.
112. The provisions of Section 10, quoted above, when read with Section 38 of the Specific Relief Act, will show that there are certain parities in the principles for allowing specific performance of contract and those of granting injunction. Section 38 reads: Perpetual Injunction when granted.- (1) Subject to the other provisions contained in or referred to by this Chapter, a perpetual injunction may be granted to the plaintiff to prevent the breach of an obligation existing in his favour, whether expressly or by implication. .... (3) When the defendant invades or threatens to invade the plaintiffs right to, or enjoyment of, property, the court may grant a perpetual injunction in the following cases, namely: .... (b) where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion; (c) where the invasion is such that compensation in money would not afford adequate relief; 113. The Clauses (b) and (c) of Sub-section (3) of Section 38, quoted above, contain same principles as are mentioned in Clauses (a) and (b) of Section 10, the reason being equity or evenhandedness. An act or omission may be absolutely legal, yet may appear inequitable. For instance, if, in the light of Section 73 of the Contract Act, an offender of a contract were willing to pay damages to the aggrieved, but the loss, which is likely to be suffered by the aggrieved, is such that compensation, in money, would not have afforded adequate relief, the Contract Act would have been no answer, for, performance of the contract is the only answer to such a problem. This is where the specific performance of contract comes in and the offender may be directed to perform the contract. As the relief is equitable, it is but natural, that the conduct of the aggrieved also has to be equitable. 114. Having referred to the circumstances mentioned in Section 10 of the Specific Relief Act, whereunder specific performance of contract can be ordered, it also becomes important to dwell upon those circumstances, whereunder a contract, even if offended, cannot be specifically enforced. It is Section 14, which deals with those contracts, which are not specifically enforceable. Section 14reads as under: 14.
Having referred to the circumstances mentioned in Section 10 of the Specific Relief Act, whereunder specific performance of contract can be ordered, it also becomes important to dwell upon those circumstances, whereunder a contract, even if offended, cannot be specifically enforced. It is Section 14, which deals with those contracts, which are not specifically enforceable. Section 14reads as under: 14. (1) The following contracts cannot be specifically enforced, namely: (a) a contract for the non-performance of which compensation in money is an adequate relief; (b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms; (c) a contract which is in its nature determinable; (d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise. (2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in Clause (a) or Clause (c) or Clause (d) of Sub-section (1), the court may enforce specific performance in the following cases: (a) where the suit is for the enforcement of a contract,- (i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once: Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract; or (ii) to take up and pay for any debentures of a company; (b) where the suit is for,- (i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or (ii) the purchase of a share of a partner in a firm; (c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land: Provided that the following conditions are fulfilled, namely: (i) the building or other work is described in the contract in terms sufficiently precise to enable the court to determine the exact nature of the building or work; (ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and (iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed. 115. A cautious reading of Section 14 of the Specific Relief Act, will show that even if the contracts, mentioned in Clause 1(a), (b), (c) and (d) of Sub-section (1), deal with the circumstances, where under contracts cannot be enforced, yet these circumstances are not exhaustive and these are regulated by the various other circumstances mentioned in these provisos. The various exigencies, mentioned in these provisions, have been contemplated keeping in mind the Clauses (a) and (b) to Section 10. Thus, the safer way is to bear in mind the principles granting specific performance of contract.
The various exigencies, mentioned in these provisions, have been contemplated keeping in mind the Clauses (a) and (b) to Section 10. Thus, the safer way is to bear in mind the principles granting specific performance of contract. If the principles, mentioned in Clauses (a) and (b) of Section 10, are not attracted in a given case, it can be safely concluded that the specific performance has to be denied. Clauses (a), (b), (c) and (d) of Sub-section (1) of Section 14 of the Specific Relief Act, 1963, can, therefore, be read as exceptions to Section 10. Likewise, Section 16 too can be read as an exception to Section 10, because it will be seen that Section 16 does not lay down any new circumstances; rather, only explains the equitable principles of bona fides and inadequacy of compensation. 116. The question, now, is as to when an injunction can be refused. Section 41 provides, inter alia, as already discussed above, that an injunction cannot be granted- (e) to prevent the breach of a contract, the performance of which would not be specifically enforced. 117. To know the reasons for incorporating Clause (e), we will have to, first, understand the meaning of the term 'obligation', because 'injunction' is granted to prevent breach of an 'obligation'. Section 2(a) of the Specific Relief Act, which defines 'obligation', states that 'obligation' includes every duty enforceable by law. 118. Thus, an 'obligation' is a duty, which the law must recognize as enforceable. When we speak of an obligation arising out of a contract, it has to be shown that the either the Contract Act or the Specific Relief Act makes the obligation a duty and the duty is an enforceable one. That is why, in Section 38(2) of the Specific Relief Act, it has been specifically provided that when any such obligation arises from a contract, the court shall be guided by the rules and provisions contained in Chapter II. I may hasten to point out that Chapter II deals with specific performance of contract. Chapter II, however, also deals with cases, as already discussed above, where contracts cannot be specifically enforced. 119.
I may hasten to point out that Chapter II deals with specific performance of contract. Chapter II, however, also deals with cases, as already discussed above, where contracts cannot be specifically enforced. 119. It is logical to infer that when there is a contract, which the law recognizes as not specifically enforceable, no right exists, in favour of the aggrieved, to seek its performance and, as a corollary thereto, no injunction can be granted to prevent its breach. We can also assume, as an illustration, that A enters into an agreement to marry B, but does not marry. The contract is no specifically enforceable under Section 14(b) as the agreement depends upon the volition of the parties. What if the court by an injunction permanently restrains A from marrying any, one else? Such a situation will be tantamount to compelling A to marry B, or else, to remain unmarried and, in so doing, a contract, which is not enforceable, has been made enforceable in disguise, which is strictly against the equitable principles. 120. It is in the backdrop of what has been discussed above that the provisions, with regard to injunction to perform negative agreement, as embodied in Section 42, need to be, now, considered. Section 42 reads as follows: 42. Notwithstanding anything contained in Clause (e) of Section 41, where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement: Provided that the plaintiff has not failed to perform the contract so far as it is binding on him. 121. The question, now, would be as to what are the principles, based on which we can exercise the discretion to grant injunction to enforce a negative covenant. We must remember that Section 42 is not a licence to do something, which is already prohibited by Section 41. But as the law is all about exigencies and circumstances, Section 42 has to be read as art Exception to Section 41(e). 122. An injunction to enforce an obligation, so far obligations, other than contractual ones, are concerned, is mostly perennial in nature.
But as the law is all about exigencies and circumstances, Section 42 has to be read as art Exception to Section 41(e). 122. An injunction to enforce an obligation, so far obligations, other than contractual ones, are concerned, is mostly perennial in nature. As an illustration, a neighbour is under a legal obligation to respect his neighbour's possession of land or house. This obligation never ceases in the similar capacity. The obligation is, thus, perennial in nature. Therefore, while granting injunction under Section42, it will have to be borne in mind that the injunction, to be granted to enforce a negative covenant, cannot be such as would be perennial in nature, the reasons being, broadly speaking, two. One reason is that a contractual obligation, which is the obligation contemplated in Section 42, ceases, once the obligation is discharged. Hence, injunction has to be granted only till the discharge of the obligation. The other reason is that if such an injunction is granted, which operates in perpetuity, it will amount to specific performance of the contract, which a court would not, and cannot, under the limitations cast on it under Section 14(1)(e), do. Consequently, enforcement of a negative stipulation, if amounts to specific performance of the positive stipulation, would not be granted. 123. Thus, Section 42 has to be interpreted to have left the courts with a discretion to grant, or not to grant, injunction to enforce negative stipulation of a contract, when the affirmative stipulation, in the contract, is such, which cannot, under the law, be specifically enforced. 124. The language of Section 42 shows that the discretion of the court is not intended to be taken away by any thing stated in this section. The use of the word, 'preclude', appearing in the expression, "the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction", shows that the court retains the discretion notwithstanding the limitations imposed by Section 41(e).
The use of the word, 'preclude', appearing in the expression, "the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction", shows that the court retains the discretion notwithstanding the limitations imposed by Section 41(e). To be clear, the expression, "the circumstance that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction", has been used so that Section 41 shall not stand in the way of the court granting an injunction, if the court so considers necessary; what, however, needs to be borne in mind is that the court would have to still consider whether it should, in the exercise of its discretion, grant injunction, or not, to enforce a negative stipulation in a contract, when it cannot force specific performance of the positive stipulation of the contract. The question, therefore, is: how this discretion has to be exercised? 125. The principle of enforcing a negative covenant, in a contract, which is, otherwise, not specifically enforceable, developed more rapidly and robustly in the realm of the contract of personal service. The accepted principle is that a person cannot be forced to serve, against his will, any person as his employer. Experience shows that many a times, having entered into a contract of personal service, an employee undertakes not to work, during the period of such employment, for anyone else. The court of equity felt that contracts of personal service, being not specifically enforceable, while it was not possible to force the employee, who might have committed the breach of such a contract, to serve his employer, the negative stipulation, which requires the employee not to serve, anyone else, during the period of contract (which he had entered into with earlier employer), must, nevertheless, be enforced. Further, everyone must be made to respect the sanctity of a valid contract even if such a contract is not specifically enforceable. 126. In England, therefore, at one point of time, injunction to enforce negative stipulation was granted as a matter of course. Gradually, however, this inflexible rule of enforcing, almost invariably, negative stipulation of personal contract started becoming flexible, when the courts realized that adhering to such a rigid principle would, at times, force the employee to either idleness or even face starvation and, ultimately, be compelled to serve his employer.
Gradually, however, this inflexible rule of enforcing, almost invariably, negative stipulation of personal contract started becoming flexible, when the courts realized that adhering to such a rigid principle would, at times, force the employee to either idleness or even face starvation and, ultimately, be compelled to serve his employer. If an employee were forced to serve his employer, it would have amounted to specifically enforcing the contract of personal service, though, as a principle, the court was not to specifically enforce a contract of personal service. 127. The courts, therefore, began to enforce negative stipulations, by injunction, only when granting of such injunction would not have amounted to specific performance of contract. For instance, a singer, X, undertakes to sing, for a specified period of time, say, two years, only for a music director, Y, and also undertakes not to serve any other music director during the contracted period of two years. In such circumstances, while the court could not have, by way of specific performance, forced the singer, X, to sing for the music director, Y, during the stipulated period, it would have had, invariably, in England, restrained, by way of injunction, the singer, X, from singing for any other music director, Y, for two years. Supposing, now, that the term of agreement was for twenty years. In such circumstances, if the singer, X, was restrained from singing for any other music director, it would have driven the singer, X, to idleness. In such circumstances, though the court had no power to force the singer, X, to sing for the aggrieved music director, Y, the court would have been, by granting injunction, achieved the same object by compelling the singer, X, to sing for the music director, Y, if injunction were granted. Such negative stipulations, which could have driven the employee to idleness, or make him face starvation, came to be considered, in course of time, even by English courts, as unreasonable and against public policy. Thus, in England, where injunction was invariably granted to enforce negative stipulations of contract of personal service, the courts started granting injunction by applying its judicious discretion so as to make enforcement of negative stipulations more rational. 128.
Thus, in England, where injunction was invariably granted to enforce negative stipulations of contract of personal service, the courts started granting injunction by applying its judicious discretion so as to make enforcement of negative stipulations more rational. 128. To put it a little differently, the view, prevailing, at one point of time, in England, that a negative stipulation, even in a contract of personal service, could be enforced and must be enforced by way of injunction, has, gradually, undergone a change and with the realisation of the difficulties faced upon such a rigid and inflexible view, the courts have, ultimately, accepted that even in the case of a negative stipulation, injunction is a discretionary remedy and it may or may not be granted by the court depending upon the circumstances of each given case. Some instances, where injunction was either wholly refused or partly granted and partly refused or granted only in a modified form, though the stipulation, sought to be enforced was a negative stipulation, can be traced to the decisions, in Ebraman v. Bartholomew (1898) 1 Ch 671, Relv-a-Bell Burglar and Fire Alarm Co. Ltd. v. Eisler (1626) Ch. 609 William Robinson & Co. Ltd. v. Heuer (1898) 2 Ch. 451, 1937 (1) KB 209 (supra) and (1954) 1 All ER 155 (supra). 129. Observed Lindley L.J., in Whitwood's case 1897 (2) Ch 416, "the court, looking at the matter broadly, will, generally, do much more harm by attempting to decree specific performance in cases of personal service than by leaving them alone and whether it is attempted to enforce these contracts directly by a decree of specific performance or indirectly by an injunction appears to me to be immaterial". 130. What the law abhors is compelling an employee to work against his will for any particular employer and it does not matter whether this object is achieved by a decree for specific performance or by an injunction. The mischief remains the same and the law requires that such mischief be avoided. In the case (1852) 1 De G.M. & G. 604, even when the courts, in England, had been, as a general rule, enforcing, by way of injunction, negative stipulation of contract of personal service, Lord St. Leonards, while issuing injunction, to prevent the breach of a negative stipulation, disclaimed doing indirectly what he could not have done directly. Lord St.
In the case (1852) 1 De G.M. & G. 604, even when the courts, in England, had been, as a general rule, enforcing, by way of injunction, negative stipulation of contract of personal service, Lord St. Leonards, while issuing injunction, to prevent the breach of a negative stipulation, disclaimed doing indirectly what he could not have done directly. Lord St. Leonards recognized that he could not issue an injunction if doing so would, in effect, be granting specific performance of the contract of personal service, but, since, in the given case, granting of injunction would not have had the effect of compelling specific performance of contract of personal service, Lord St. Leonards granted the injunction. 131. It may be pointed out that, in India, the rule of public policy, precluding specific performance of contract of personal service, was embodied in Section 21 Clause (d) of the Specific Relief Act 1877, and, such a provision is available, as already discussed, in Section 14 of the Specific Relief Act. 132. Now, in the light of the fact that even in India, an employer cannot seek specific performance of a contract of personal service, can he ask for an injunction to restrain the breach of a negative stipulation contained in the contract of personal service? 133. Though Section 41 would have precluded the courts from granting an injunction to prevent breach of negative stipulation, Section 42 provides that in such a case, even though the contract cannot be specifically enforced, the court would still be entitled to grant an injunction restraining the breach of the negative stipulation, if the court,, otherwise, thinks it fit and proper so to do. The bar, created against granting of such an injunction be Section 41(e), is, thus, removed by Section 42; but it does not mean that the court must grant, in India, such an injunction even if the effect of doing so would be to compel the defendant to specifically perform the contract. In India, therefore, a court has a discretion whether or not to enforce a negative stipulation by granting an injunction and the fact that the court has such a discretion is declared, in no uncertain terms, by Section 36 and is further reinforced by Section 38 of the Specific Relief Act. 134.
In India, therefore, a court has a discretion whether or not to enforce a negative stipulation by granting an injunction and the fact that the court has such a discretion is declared, in no uncertain terms, by Section 36 and is further reinforced by Section 38 of the Specific Relief Act. 134. Thus, in tune with the law, as has developed in England, the accepted rule, in India, is that the court will not grant an injunction to restrain breach of a negative stipulation in a contract of personal service, where the effect of doing so would be to compel the defendant to specifically perform the contract. This rule is based upon the principle that the court will not do indirectly what it cannot do directly. A court cannot, for reasons, already pointed out above, grant a decree for specific performance of a contract of personal service. Hence, the court cannot override this limitation by granting instead an injunction to restrain the breach of a negative stipulation contained in the contract if the effect of the injunction would be to compel specific performance of the contract. 135. Thus, in the case of Sunilchand v. Aryodaya Spg. & Wvg. Mills Co. Ltd. AIR 1964 Guj. 115 , Shelat, J., (as his lordship then was) recognized that an injunction would be issued in a case of a negative covenant provided that the effect of such injunction is not specific performance of affirmative agreement of personal service. 136. Closely following the decision, in Sunilchand (supra), a Division Bench of the Gujarat High Court, speaking through P.N. Bhagwati, J, (as his lordship then was), observed, in Lalbhai Dalpatbhai & Co. v. Chittaranjan Chandulal Pandya AIR 1966 Guj. 189 , ...that even where a negative stipulation in a contract of personal service is sought to be enforced, the court has a discretion in the matter and one of the principles, which must guide the discretion of the court, is that if the effect of granting the injunction would be to indirectly compel the defendant to specifically perform the contract of personal service, the court would hot grant such injunction. 137. In Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co.
137. In Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. AIR 1967 SC 1098 , the Apex Court has taken the view that a negative covenant, in a contract of personal service, would be enforced provided that the enforcement of the negative covenant would not drive a person to idleness or would not compel him to go back to the respondent-company. 138. I may point out that in Ehraman (supra), the facts, in brief, were: A traveller for the plaintiffs, a firm of wine merchants, agreed to devote the whole of his attention and time to the business of the plaintiffs, and not, directly or indirectly, engage or employ himself in any other business, or transact any business with any other person or persons than the plaintiffs for a term often years. When the traveller, having left the plaintiffs' employment entered into employment that of another firm, the plaintiffs moved for an injunction to restrain him from engaging, in any other business, and from acting as a traveller for any other firm of winemerchants during the term often years. In Ehraman (supra), Romer, J, observed that when a stipulation becomes unreasonable to enforce, the court will not enforce such an agreement. 139. In Gujarat Bottling Co. Ltd. v. Coca Cola Co. (1995) 5 SCC 545 , which Mr. Shyam has relied upon to show that a negative stipulation, in a contract, can be enforced by invoking Section 42, the Supreme Court, having referred to the cases of Sunilchand (supra), and Niranjan Shankar Golikari (supra), observed, "...The Court is, however, not bound to grant an injunction in every case and an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee either to idleness or to serve the employer." The observations, which the Supreme Court have taken note of, in Gujarat Bottling Co. (supra), are in respect of enforcement of a negative stipulation in a contract of personal service, the contract of personal service not being specifically enforceable. When the enforcement of a negative covenant, by way of injunction, would make the employee idle or would force the employee, indirectly, to serve the employer, whom the employee does not want to serve, court would not enforce such a negative stipulation, for, it would amount to doing something indirectly, which the court would not have done directly.
When the enforcement of a negative covenant, by way of injunction, would make the employee idle or would force the employee, indirectly, to serve the employer, whom the employee does not want to serve, court would not enforce such a negative stipulation, for, it would amount to doing something indirectly, which the court would not have done directly. Thus, negative covenant, even in a commercial contract, or in a contract as regards transfer of immovable property, may be enforced by an injunction under Section 42 provided that the granting of injunction is only in the manner of preventive remedy in order to protect the interest of the person, who suffers by such breach. Where the specific performance of contract is not possible for reasons of law, it would be impossible to enforce such an agreement by taking resort to the negative covenant. 140. While considering Mr. Shyam's submissions, as regards enforcing the negative stipulation of the contract between the parties in the present case, what needs to be noted is that Section 42 deals with a situation, where a contract comprises of an affirmative agreement to do a certain act coupled with a negative agreement not to do certain act. When a contract contains both positive as well as negative covenants, then, if the court finds that it is unable to compel performance of the affirmative agreement, the court can still compel the defaulting party not to do a certain act and, for this purpose, the court can grant an injunction requiring the defaulting party to perform the negative act. The expression, 'unable to compel the specific performance of the affirmative agreement', means that though there was a concluded contract, yet the contract cannot, for some reason, be compelled by the court to be specifically performed. Section 42 does not contemplate a case, where the specific performance of a contract is inherently incapable of being enforced because of the fact that the contract is contingent and the contingency, envisaged by the parties to a contract, has not arisen or fulfilled. Thus, as I have already pointed out above, until the condition of getting the shops, at Zoo Road, vacated is fulfilled, there can be no concluded contract between the parties and the contract is not specifically performable. This apart, the court must be satisfied that the negative agreement would give requisite relief of protecting the interest of the respondent.
Thus, as I have already pointed out above, until the condition of getting the shops, at Zoo Road, vacated is fulfilled, there can be no concluded contract between the parties and the contract is not specifically performable. This apart, the court must be satisfied that the negative agreement would give requisite relief of protecting the interest of the respondent. In the case at hand, even if the appellants are restrained from transferring the suit land to any one other than the respondent, the fact remains that it would permanently prevent the appellants from transferring the land to any one other than the respondent, though, at the end of the day, it would not yield the desired result, of compelling the appellants to transfer the suit land to the respondent. In the present case, if the affirmative part of the agreement, i.e., the agreement to transfer the suit land, in favour of the respondent, fails, preventing the appellants from transferring the suit land to any one, other than the respondent, would not benefit any one. In such circumstances, the question of taking resort to Section 42, in the present case, does not arise at all. 141. What crystallizes from the above discussion is this: The contract, which the parties had entered into, was a contingent contract. Such a contract, in the absence of the conditions having been fulfilled, is not specifically performable? This apart, since the draft agreement, which the respondent insists on the appellants to execute, is not in tune with the terms sheet and the MoU, the contract, in the absence of agreed terms of the contract, cannot be regarded as a concluded contract and is not specifically enforceable. 142. Above all, the contract, in question, as already discussed above, has become impossible to be performed. The contract, therefore, stands frustrated and cannot be specifically enforced. When the specific performance of the contract is not possible or legally enforceable, the question of granting injunction, under Section 41(e) of the Specific Relief Act, does not arise at all, when granting of injunction would compel the respondent to perform a contract, which has remained inconclusive and unenforceable. 143. Coupled with the above, it is necessary to note that it was not the case of the respondent, in the application made under Section 9, that it is the negative covenant of the contract, in question, which needs to be enforced by injunction.
143. Coupled with the above, it is necessary to note that it was not the case of the respondent, in the application made under Section 9, that it is the negative covenant of the contract, in question, which needs to be enforced by injunction. The case, as presented by the respondent, in the learned court below, was never a case under Section 42 nor did the learned court below, in exercise of its power under Section 42, deal with the application, made under Section 9, as an application seeking enforcement of negative stipulation. 144. Before passing the impugned order of injunction, the learned court below ought to have ascertained if the contract is specifically enforceable. When Section 41(e) makes granting of injunction in respect of a contract subject to such contract being specifically enforceable, the learned court below ought to have made some attempts to determine, before passing the impugned order, if the contract, as presented by the term sheet and the MoU, was specifically enforceable. No attempt, in this regard, was made by the learned court below. In fact, it appears that it has completely escaped the attention of the learned court below that since the subject-matter of the application, made under Section 9 by the respondent, related to performance of a contract, it is the duty of the court, before it grants injunction, to determine if the contract is specifically enforceable or not. Without even a tentative finding having been reached, in this regard, the learned court below has passed the impugned order of injunction. It must be borne in mind that whenever an application, seeking injunction, is made, under Section 9, arising out of a controversy as regards performance of a contract, it is the courts duty to determine if the contract was, and has remained, specifically performable or not. If the contract is not performable, granting of injunction is per se illegal unless the case falls under Section 42 of the Specific Relief Act. The present case does not, however, fall within the ambit of Section 42. Situated thus, one has no option but to hold, and I do hold, that the respondent had not been able to make out any prima facie case for granting of injunction. 145.
The present case does not, however, fall within the ambit of Section 42. Situated thus, one has no option but to hold, and I do hold, that the respondent had not been able to make out any prima facie case for granting of injunction. 145. I may, at this stage, pause here to point out that the other relief, which the respondent has sought for, in its application under Section 9, is appointment of a receiver when the contract is not specifically performable, when injunction cannot be granted and when the disputes remain alive only for the purpose of determination of liabilities, the question of appointment of receiver to manage the suit property, or the question of granting injunction, until appointment of receiver, also does not arise at all. The application made by the respondent, under Section 9, was, thus, wholly misconceived and not tenable in law. Situated thus, I hold that the impugned order is wholly illegal and needs to be set aside. 146. In the result and for the reasons discussed above, this appeal is allowed and the impugned order, dated 24.2.2009, is hereby set aside. Appeal allowed.