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2011 DIGILAW 1514 (MAD)

M. Siva Prakasam v. K. R. Narayanan

2011-03-17

VINOD K.SHARMA

body2011
Judgment :- VINOD K.SHARMA.J., 1. This order shall dispose off Original Application Nos.1028 of 2010 and 1031 of 2010, both titled as M.Siva Prakasam vs. Mr.K.R.Narayanan. 2. In Original Application No.1028 of 2010, the prayer made is for grant of interim injunction, restraining the respondent, his men, servants or agents from alienating Flat Nos.1 to 9 in Door No.1, New No.49, Present No.41, 1st Main Road, Now Door No.49, Siringeri Mutt Road, Ramakrishna Nagar, Chennai, in favour of third parties. 3. In Original Application No.1031 of 2010, the prayer made is to grant interim injunction, restraining the respondent, his men, servants or agents from interfering with the peaceful possession of the petition in respect of the Flat Nos.1 to 9 in Door No.1, New No.49, Present No.41, 1st Main Road, Now Door No.49, Siringeri Mutt Road, Ramakrishna Nagar, Chennai – 600 028. 4. The facts leading to the filing of applications under Section 9 of the Arbitration and Conciliation Act, 1996, reads as under: i) That the parties to litigation entered into Memorandum of Understanding (MOU) for joint development of the property dated 23.12.2003. The respondent was in possession and enjoyment of the property, bearing Old No.1, New No.49, Present No.41, 1st Main Road, Ramakrishna Nagar, Chennai-600 028, measuring an extent of three grounds 1635 sq.ft. by virtue of settlement deed, executed by his mother K.Kalyani Kutty Amma, W/o.Late M.Ramachandran, dated 16th December 2002, and patta in his name, as sole and absolute owner. ii) The applicant herein agreed to develop the property on a joint venture basis, whereby, the respondent, owner of the property, agreed to hand over the possession of the property under ownership of the respondent, so as to enable the applicant to construct residential / non-residential apartments investing his capital and labour. It was agreed that constructed area shall be shared between the Owner and the Developers as per the MOU. iii) As per the MOU, the applicant was to bear the entire expenses of construction of residential / non-residential apartments, strictly in conformity to the Development Control Rules of the CMDA. The respondent was to be allotted residential flat in the 3rd and 4th floor, measuring a super built up area as per plan together with covered car park in the ground floor. The respondent was to be allotted residential flat in the 3rd and 4th floor, measuring a super built up area as per plan together with covered car park in the ground floor. iv) Whereas the applicant was to be allotted residential flat in the 1st and 2nd floor, measuring a super built up area as per plan together with covered car park in the ground floor. v) The applicant also deposited a sum of Rs.25 lakhs by way of security deposit as per the details given in the MOU. vi) According to Memorandum of settlement, a sum of Rs.10 lakhs was paid by way of demand draft at the time of signing of agreement. The respondent was also to execute a Power of Attorney in favour of the applicant at the time of signing of agreement in consideration of receipt of Rs.10 lakhs. Further sum of Rs.15 lakhs was agreed to be paid at the time of delivery of vacant possession of property to the applicant herein. vii) The amount was agreed to be adjusted against the amount payable to the respondent and otherwise was to be refunded to the applicant. It was also agreed that in consideration of the applicant, constructing and handing over residential flat in the 3rd and 4th floor to the respondent, the respondent was to sell to the applicant or his nominees 50% undivided share, right, title and interest in the land fully described in the schedule of the MOU. viii) The respondent also agreed to execute Power of Attorney in favour of the applicant to sell undivided share in the land to prospective purchaser and also to apply for planning permission and other incidental powers required for development of the land, subject to the cost being incurred by the applicant. ix) The other normal terms and conditions were also incorporated in the MOU entitling the applicant to complete the construction work. x) In addition, it was agreed by the applicant to pay a sum of Rs.10,000/- till the date of handing over possession of constructed flat to the respondent. ix) The other normal terms and conditions were also incorporated in the MOU entitling the applicant to complete the construction work. x) In addition, it was agreed by the applicant to pay a sum of Rs.10,000/- till the date of handing over possession of constructed flat to the respondent. The Clause-21 of the MOU entered into between the parties reads as under: [21] Any dispute between the parties herein arising under this Development Agreement shall be referred to a panel of 3 Arbitrators, one to be appointed by each of the parties and the Third Arbitrator to be appointed by the Two Arbitrators jointly and the arbitration proceedings shall be in accordance with the Indian Arbitration Act then in force." 5. The case set up by the applicant in the affidavit is that while handing over the building for development, the respondent did not hand over the original title deed, which was done only on 24.05.2007, i.e. after three and half years of entering the MOU. This resulted in delay in getting planning permission. But in spite of escalation of prices, the applicant completed construction of all the four floors, numbering 12 flats, i.e. 3 flats in each floor and 24 car parks by the end of December 2009. 6. The respondent executed power of attorney in terms of Clause-7 of the MOU. Besides the agreed amount, another sum of Rs.1 lakh was paid to the respondent for his urgent needs, by treating it to be additional security. The amount of Rs.26,00,000/-(Rupees Twenty Six Lakhs only) paid as security has not been refunded to the applicant. 7. After completion of construction on 16.01.2010, the respondent requested the applicant to hand over the keys of three flats at the 4th floor allotted to him for ceremony of Grahapravesam, by stating that 17.01.2010 was auspicious day and promised to return the keys by next day, i.e. 18.01.2010. The respondent failed to return the keys and continued occupation of two flats on the 4th floor. 8. The respondent also requested the applicant to execute sale deed as attorney holder in favour of Mrs.Vatchala, the respondent's nominee, which was complied with and sale deed of Flat No.12 on the 4th floor was executed. 9. In stead of complying with the undertaking of returning keys, the respondent sent lawyer's notice on 10.05.2010, cancelling the Power of Attorney. 10. The respondent also requested the applicant to execute sale deed as attorney holder in favour of Mrs.Vatchala, the respondent's nominee, which was complied with and sale deed of Flat No.12 on the 4th floor was executed. 9. In stead of complying with the undertaking of returning keys, the respondent sent lawyer's notice on 10.05.2010, cancelling the Power of Attorney. 10. The applicant claims that unilateral cancellation of power of attorney by the respondent was illegal, improper and motivated. The respondent, in violation of the MOU, occupied 3rd floor flats, allotted to him without refunding the security deposit amount and also without paying a sum of Rs.5,40,000/- being the deposits for electricity service, water and drainage charges etc. This act of the respondent resulted in preventing the applicant, from selling 6 flats in the 1st and 2nd floor allotted to the applicant, as per MOU. 11. The applicant showed his willingness to hand over 3 flats in 3rd floor, falling to the share of respondent, subject to deposit of security amount and Rs.5,40,000/- (Rupees Five Lakhs Forty Thousand only) towards electricity service connection, water and drainage charges and refund of security amount. 12. The applicant also directed the respondent to execute a fresh power of attorney, enabling to deal with the flats allotted to him in the 1st and 2nd floors. Instead of honouring the MOU, the respondent asked the applicant to go for arbitration. The applicant claims that the respondent has trespassed on the scheduled property, which was in exclusive possession of the applicant. 13. The applicant approached Civil Court for grant of injunction, restraining the respondent from alienating the schedule mentioned properties or to interfere with the possession of the applicant. 14. On receipt of notice, the respondent filed application under Section 8 for stay of suit, in view of arbitration clause in the MOU. In view of the objection by respondent to submit to Civil Court jurisdiction, in view of arbitration agreement, the suit was withdrawn and the applicant issued a notice nominating Arbitrator on his behalf, but till date, the respondent has taken no steps to nominate his Arbitrator. 15. In view of the facts stated herein above, the applicant prays for interim protection as prayed for. 16. No counter has been filed nor the facts stated herein above are disputed. 15. In view of the facts stated herein above, the applicant prays for interim protection as prayed for. 16. No counter has been filed nor the facts stated herein above are disputed. The application is opposed by the respondent, on the ground that no injunction can be granted against true owner. In support of the stand, learned counsel for the respondent, vehemently contended that admittedly, land is under ownership of the respondent, being a registered owner of the property, therefore, no injunction, can be granted against him in view of the settled law. 17. This contention of the learned counsel for the respondent deserves to be noticed to be rejected. Though the proposition canvassed by the learned counsel for the respondent cannot be doubted, being as per well settled law. However, in the present case, though the respondent is the owner of the land, but it is not disputed that the flats on the land have been constructed by the applicant from his own resources, that too, with the written permission of the respondent. The power of attorney was also given for consideration, as is clear from the terms of the MOU. The respondent cannot, therefore, claim ownership of the flats. 18. In the peculiar facts and circumstances of the case, the applicant cannot claim himself to be owner of the flats constructed on the land, as the parties are, prima facie, governed by the agreed terms of the MOU, specially when a sum of Rs.26 lakhs has been paid to the respondent, as security to comply with the terms agreed to, which undisputedly, have been complied with, by the applicant. 19. It is next contended by the learned counsel for the respondent that prayer for injunction made by the applicant deserves to be rejected on account of delay in approaching the Court. The contention of the learned counsel for the respondent was that the relief of injunction being equitable discretionary relief, gets defeated with delay. 20. This contention again is misconceived. The respondent was put in possession of flats, which was agreed to be allotted to him for temporary purpose on the understanding that possession of flats would be returned to the respondent after performing ceremony of Grahapravesam. The continuation of possession by the respondent, in violation of understanding, gives continuous cause or action, thus, this contention of the learned counsel for the respondent is also rejected. 21. The continuation of possession by the respondent, in violation of understanding, gives continuous cause or action, thus, this contention of the learned counsel for the respondent is also rejected. 21. It is next contended by the learned counsel for the respondent that the respondent had the absolute right to cancel the power of attorney. Learned counsel for the respondent referred to covenant in the power of attorney, wherein, it is recorded that the power of attorney is without consideration. However, this covenant in the power of attorney is contrary to Clause-5 of the MOU, as respondent had agreed to execute power of attorney on receipt of Rs.10 lakhs, which, admittedly, was paid. 22. The contention of the learned counsel for the respondent that proper court fee was not affixed on the power of attorney, cannot be of any help, as the respondent cannot take any benefit of his own wrong to defeat the rights of the applicant. 23. Similarly, the contention of the learned counsel for the respondent that in absence of mention of consideration in the power of attorney, this Court is not competent to see the attending circumstances also cannot be accepted, as the Court has the jurisdiction to see the attending circumstances, to do substantial justice to parties in lis. Once the execution of the MOU is not disputed, contents thereof can always be relied upon to come to the conclusion whether power of attorney was for consideration or not. 24. It was next contended by the learned counsel for the respondent that the relief claimed in the application cannot be granted. 25. This contention again is misconceived. This Court can always issue interim injunction in the interest of justice and the respondent can be restrained from creating third party interest in the property against the settled terms between the parties, merely by delaying arbitration proceedings by not nominating Arbitrator in terms of the arbitration agreement. This Court can also direct the respondent not to interfere in the possession of the applicant, as admittedly, possession of two floors was taken on the clear understanding that it was only for performing Grahapravesam and the entry of the respondent can only be in terms of the MOU, entered into between the parties. 26. The Court can modify the relief claimed in view of the facts and circumstances of the case, as per settled law. 27. 26. The Court can modify the relief claimed in view of the facts and circumstances of the case, as per settled law. 27. It was next contended by the learned counsel for the respondent that no third party interest can be created nor this Court can issue mandatory injunction. In support of this contention, learned counsel for the respondent placed reliance on the judgment of the Hon'ble Supreme Court in the case of Arjun Singh, appellate vs. Mohindra Kumar & Others, respondent reported in AIR 1964 SC 993 . 28. The reading of said judgment shows that it has no application to the controversy in this petition, or the contentions raised by the learned counsel for the respondent, as no prayer is made by the applicant for creation of third party interest, but the prayer is to secure the property, being subject matter of the arbitration. 29. In view of the position explained above, it has now to be considered as what relief the applicant is entitled by way of interim measure. 30. It is, prima facie, proved that construction of all the four floors was raised by the applicant from his own resources. In addition, the respondent is holding a sum of Rs.26 lakhs by way of security. The respondent, therefore, had no legal right to take possession of the property in violation of agreed terms, to exclusion of the applicant. 31. As per the MOU, as it was the duty of the applicant to provide alternative residence to the respondent, the respondent can be allowed to continue in possession of the property in his possession for personal use. However, the rent being received by the respondent from the tenants, who have been put in possession cannot be enjoyed by the respondent. 32. Consequently, while permitting the respondent to continue possession of the flats in his possession for personal use, rent received from the tenants is directed to be deposited in the bank, pending arbitration proceedings and right to rent will be determined by the Arbitrator. The deposit be made under intimation to the applicant. The amount can be withdrawn by either party with the permission of Arbitrate Tribunal, on consideration of facts and circumstances, in exercise of powers under Section 17 of the Arbitration and Conciliation Act. 33. The deposit be made under intimation to the applicant. The amount can be withdrawn by either party with the permission of Arbitrate Tribunal, on consideration of facts and circumstances, in exercise of powers under Section 17 of the Arbitration and Conciliation Act. 33. Keeping in view the fact that the respondent, who has no right to occupy 1st and 2nd floor, measuring a super built up area as per plan together with covered car park on the ground floor. The respondent is restrained from interfering in possession of the applicant on the 1st and 2nd floor in terms of Clause-4 of the MOU. The respondent is further restrained from executing any fresh Power of Attorney in favour of any other person, as the cancellation of Power of Attorney, prima facie, is not in consonance with law, as the Power of Attorney was for consideration. 34. The respondent is also directed to nominate his Arbitrator in terms of the arbitration agreement within 30 days on receipt of certified copy of this order. In the event of failure to do so, it will be open to the applicant to take steps to appoint Arbitrator on his behalf in accordance with law. 35. These applications are ordered in the terms referred to above.