AI Structured Summary
Not yet generated for this judgment
No AI summary yet
Generate an eight-section analysis of this judgment — facts, issues, reasoning, ratio and a plain-language gist.
Judgment
378 paragraphs · 8,553 wordsM. Jaichandren, J.—The original side appeals, in O.S.A. Nos. 1 to 4 of 2013, have been filed against the common order passed by the
learned single Judge, dated 12.12.2012, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009. Similarly, the original side appeals, in
O.S.A. Nos. 155 to 158 of 2013, had been filed against the same common order passed by the learned single Judge, dated 12.12.2012, in O.A.
Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009. The original side appeals, in O.S.A. Nos. 1 to 4 of 2013, have been filed by the Embassy
Property Developments limited (formerly known as M/s. Dynasty Developers Private Limited), a company incorporated as per the relevant laws,
having its registered office at Embassy Point, 150, Infantry Road, Bangalore.
The original side appeals, in O.S.A. Nos. 155 to 158 of 2013, had been filed by GWL Properties Limited (formerly known as Gordon
Woodroffe Limited) a company incorporated as per the relevant laws, with its registered office at No. 36, Rajaji Salai, Chennai.
The original applications, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, had been filed, u/s 9 of the Arbitration and Conciliation
Act, 1996, praying for orders of injunction against the respondents 1 to 4 therein, restraining them from, in any manner, alienating, transferring,
encumbering, dealing with, leasing or changing the character of the schedule mentioned properties and for restraining the said respondents their
men, agents and others from acting contrary to or in derogation of the Share Purchase Agreement, dated 21.12.2005.
The applicants in the original applications, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, namely, M/s. Dynasty Developers
Private Limited, (now known as Embassy Property Developments Limited), have filed the original side appeals, in O.S.A. Nos. 1 to 4 of 2013.
The appellant in the original side appeals, in O.S.A. Nos. 155 to 158 of 2013, namely GWL Properties Limited (formerly known as Gordon
Woodroffe Limited) was the fourth respondent in the original applications, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009.
All the original applications, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, had been filed u/s 9 of the Arbitration and
Conciliation Act, 1996. Respondents 1 to 3 in the said original applications are the majority shareholders of Gordon Woodroffe Limited (now
known as GWL Properties Limited). Gordon Woodroffe Limited, the fourth respondent in the said original applications and the appellant in the
original side appeals, in O.S.A. Nos. 155 to 158 of 2013, is said to be the owner of the lands and buildings at Zamin Pallavaram, Maramalai
Nagar Industrial Estate, Rajaji Salai and at Mandwa. In addition to the said properties the said company was in possession of certain
investments/bank balances and fixed deposits. The immovable properties and the securities owned by the said company are morefully described as
schedule B items 1 to 6 and Clause B in O.A. Nos. 452 to 454 of 2006 and in O.A. No. 731 of 2009. The shares held by the respondents 1 to 3
in the original applications are morefully described in schedule A.
Gordon Woodroffe Limited, the fourth respondent in the original applications (now known as GWL Properties Limited) had floated a sale
proposal through an Information Memorandum, in the month of September, 2005. The said Information Memorandum had contained the relevant
particulars relating to the company, including the properties held by it, the share holding pattern, the particulars about the directors and other
financial information, which were relevant for the negotiations relating to the sale of the shares of the company.
The applicant in the original applications, namely, M/s. Dynasty Developers Private Limited (now known as Embassy Property Developments
Limited), the appellant in original side appeals, in O.S.A. Nos. 1 to 4 of 2013, had agreed to purchase the entire equity and preference shares of
respondents 1 to 3 therein, on the basis of the representations contained in the Information Memorandum.
The applicant in the original side applications and the respondents 1 to 4 in the said applications had entered into an agreement, dated
21.12.2005, styled as Share Purchase Agreement, which had been approved by the board of directors of the companies concerned, by way of
board resolutions. The sale consideration agreed upon between the parties to the agreement was rupees 2,38,05,00,000/- and the closing date of
the transaction, under Clause 3.1. of the agreement, was within 30 days from the date of the execution of the agreement or within a further period
of 30 days, which the acquirer shall notify to the seller, in writing.
According to the applicant in the original applications, the respondents had agreed to transfer the shares of the fourth respondent company,
along with the immovable properties, free from encumbrances and obstructions, with valid marketable titles, in accordance with the terms of the
agreement. Any failure on the part of the respondents 1 to 3 to comply with the relevant terms and conditions contained in the agreement would
amount to an act of breach of contract by the respondents. While so, the respondents in the original applications had alleged that the applicant was
responsible for the delay in completing the transaction, as per the agreement, dated 21.12.2005. The respondents had alleged that some of the
properties at Zamin Pallavaram were already under acquisition proceedings and there were certain encroachments in some of the properties. The
applicant had entered into an agreement, in respect of the entire extent, with the knowledge of the acquisition proceedings and the encroachments
and therefore, they are not entitled to claim that the respondents 1 to 3 had failed to clear the obstructions, hindrances and encumbrances, in
respect of the properties concerned, to complete the transaction.
In such circumstances, the respondents had chosen to terminate the Share Purchase Agreement and had expressed their willingness to refund
the amount of rupees 25,00,00,000/-, received as advance, pursuant to the Share Purchase Agreement, dated 21.12.2005. However, it was the
case of the applicant that, inspite of the applicant having been ready and willing to complete the transaction the respondents had failed to perform
their obligations under the said agreement. Thus, a dispute had arisen between the applicant and the respondents.
In view of the dispute that had arisen between the applicant and the respondents in the original applications, the applicant wanted to refer the
said dispute for arbitration, as per the terms and conditions of the agreement. Further, the applicant was of the view that the respondents were
likely to deal with the shares and the properties of the fourth respondent company, either by way of encumbering or alienating the same, during the
pendency of the arbitral proceedings. Therefore, the applicant had filed the original applications for obtaining interim orders of injunction, to restrain
the respondents, their agents, men and others from dealing with the assets of the fourth respondent company, including the shares and the
immovable properties, which were forming a part of the Share Purchase Agreement, dated 21.12.2005. The applicant had contended that if the
respondents were allowed to encumber or alienate the assets of the fourth respondent company it would cause irreparable loss and prejudice to
the applicant and that third party rights may arise, based on such acts of the respondents.
Various grounds had been raised by the respondents in the original applications, opposing the interim reliefs prayed for by the applicant. The
respondents 1 to 3 had alleged that the applicant had failed to complete the transaction, within the time specified in the agreement and therefore, it
was guilty of non-performance of the agreement, as per the terms of the agreement, resulting in the termination of the agreement. As such, the
applicant was not entitled to seek specific performance of the agreement, which was no longer in existence. The only relief that was available to the
applicant was to claim compensation, if any, by way of damages.
The fourth respondent company had opposed the interim reliefs prayed for by the applicant stating that it was not a party to the Share
Purchase Agreement, dated 21.12.2005, and therefore, it was not bound by the arbitration clause incorporated in the said agreement. Therefore,
no relief could be claimed against the fourth respondent as it was a third party to the proposed transaction. The terms of the agreement cannot be
said to be binding on the fourth respondent. As the agreement, dated 21.12.2005, was only in respect of the transfer of shares, the applicant was
not entitled to claim any interim relief of injunction against the fourth respondent company, in respect of its other assets, including the movable and
immovable properties. In such circumstances, the applicant had filed an application u/s 11 of the Arbitration and Conciliation Act, 1996, for the
appointment of an arbitrator. After an arbitrator had been appointed the arbitration proceedings had commenced. In the meanwhile the applicant
had filed the original applications, u/s 9 of the Arbitration and Conciliation Act, 1996, seeking interim reliefs.
It is the case of the fourth respondent in the original applications that, in the order passed u/s 11 of the Arbitration and Conciliation Act, 1996,
it had been held that the fourth respondent company was not a party to the Share Purchase Agreement, dated 21.12.2005. As such, no reliefs
could be prayed for, by the applicant, against the fourth respondent company. Various other grounds had also been raised on behalf of the fourth
respondent.
It had been stated that there was no breach in the performance of the obligations, on the part of the respondents, as per the terms of the
agreement, dated 21.12.2005. Further, the fourth respondent is not a party to the Share Purchase Agreement and the Arbitration Agreement and
the immovable properties belonging to the fourth respondent is not the subject matter of the Share Purchase Agreement and therefore, no relief
could be prayed for by the applicant against the fourth respondent company, in respect of the movable and the immovable properties belonging to
it, by way of an interim measure. Further, the Share Purchase Agreement, dated 21.12.2005, is determinable in nature and therefore, the contract
cannot be enforced against the respondents. As such, the only remedy available to the applicant under the said agreement, is only a claim for
compensation for the loss suffered by it, by way of damages.
The learned single Judge had held, while dismissing the applications, that the Share Purchase Agreement, dated 21.12.2005, is determinable in
nature. The only remedy that would be available to the applicant was to claim damages against the respondents, if any, for the breach of the terms
of the Share Purchase Agreement, dated 21.12.2005. The learned single Judge had held that no relief of injunction could be prayed for and that
specific performance of the agreement would not be the appropriate remedy, as they would be inconsistent with Section 14(c) of the Specific
Relief Act, even if a prima facie case is made out by the applicant and when the balance of convenience is also in its favour. As clause 12.3 of the
agreement states that the said agreement is determinable in nature, the reliefs prayed for by the applicant cannot be granted.
The learned single Judge had also held that it may be true that the application, made u/s 11 of the Arbitration and Conciliation Act, 1996, had
been dismissed against the fourth respondent, on the ground that the fourth respondent was not a party to the arbitration agreement, but the
relevant principle governing the provisions of Section 11 of the Act, need not be the same for considering the application u/s 9 of the said Act.
Section 9 of the Act provides for the granting of the relief, by way of an interim measure, for the preservation of the property, which is the subject
matter of dispute in the arbitration. Such a relief could be prayed for even against third parties. As such, the contentions raised on behalf of the
fourth respondent that an application, u/s 9 of the Arbitration and Conciliation Act, 1996, cannot be maintained against it, had been rejected.
Aggrieved by the said finding the fourth respondent in the original applications had filed the original side appeals, in O.S.A. Nos. 155 to 158 of
2013. The applicant in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, namely, M/s. Dynasty Developers Private Limited (now
known as Embassy Property Developments Limited) had filed the original side appeals, in O.S.A. Nos. 1 to 4 of 2013.
The appellant in the original side appeals had raised various grounds challenging the common order of the learned single Judge, dated
12.12.2012, made in the original applications, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009. The appellant had stated, inter alia,
that the order of the learned single Judge, dated 12.12.2012, has the character of a final order relating to the prayer of the appellants for specific
relief, which is one of the main issues to be decided during the arbitral proceedings. As such, it is contrary to the scheme contemplated in the
provisions of the Arbitration and Conciliation Act, 1996, especially, in Section 5 of the said Act.
The order under challenge is contrary to the provisions contained in Section 9 of the Act, which contemplates interim protection or
preservation of the subject matter of the arbitral proceedings. The learned single Judge had erroneously placed heavy reliance on the decision of
the Supreme Court, in Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others, , erroneously. The learned single Judge had failed to
note that the said decision had been made by the Supreme Court, with regard to the final award passed by the Arbitral Tribunal concerned and
that the said case had not arisen in respect of the Section 9 proceedings. Further, the nature of the contract in the said case was entirely different
from the one which is the subject matter of the present case. The Share Purchase Agreement, which is in question in the present case, is not
unilaterally determinable in nature, as held by the learned single Judge, in her order, dated 12.12.2012.
The learned single Judge had also erred in applying Section 14(1)(c) of the Specific Relief Act, 1963, to the facts of the present case. The
issues which have been decided by the learned single Judge in her order, dated 12.12.2012, are the issues which are to be decided by the Arbitral
Tribunal. Hence, the findings of the learned single Judge in her order, dated 12.12.2012, had determined the issues which ought to have been left
open to be decided by the Arbitral Tribunal, during the arbitral proceedings. When interim reliefs had been granted in favour of the appellant in the
original side appeals, in O.S.A. No. 1 to 4 of 2013, and when such orders had been in force for a considerable length of time, the learned single
Judge ought to have extended the same until the arbitral proceedings had been concluded.
The learned single Judge ought to have seen that the appellant had made a prima facie case and the balance of convenience was in favour of
the appellant and therefore, the learned single Judge ought to have allowed the original applications filed by the applicant, in O.A. Nos. 452 of 454
of 2006 and O.A. No. 731 of 2009. Further, the learned single Judge ought to have noted that the appellant would suffer irreparable loss and
injury, if the original applications were not allowed.
The learned single Judge ought to have seen that the original applications filed by the appellant, u/s 9 of the Arbitration and Conciliation Act,
1996, for protecting the subject matter of the arbitral proceedings, are summary in nature. By the impugned order the learned single Judge had
virtually decided the dispute that had arisen between the appellant and the respondents.
The learned single Judge had wrongly decided that the appellant was not entitled to the specific performance of the agreement and the only
remedy was by way of claim for damages. Such a finding rendered by the learned single Judge had made the entire arbitral proceedings redundant,
contrary to the decision of the Supreme Court, in Hindustan Petroleum Corporation Ltd. Vs. Sri Sriman Narayan and Another, . The order of the
learned single Judge is also contrary to the decision of the Supreme Court, in Rattan Lal (since deceased) through His Legal Representatives Vs.
S.N. Bhalla and Others, .
The learned single Judge had erred in holding that the Share Purchase Agreement was determinable in nature. There is no clause in the said
agreement permitting the unilateral termination of the contract, without assigning any reasons. The respondents ought not to have been permitted to
take advantage of their own wrong and to frustrate the claim of the appellant for specific performance of the agreement in question, pending
adjudication before the Arbitral Tribunal. The learned single Judge had also erred in holding that a contract for sale of immovable property can be
terminated/determined by one party, contrary to the provisions of Section 10 of the Specific Relief Act, 1963.
The learned single Judge had failed to consider the decision of the Supreme Court, in Best Sellers Retail (India) Pvt. Ltd. Vs. Aditya Birla
Nuvo Ltd. and Others, , wherein it had been held that the grant of the relief of temporary injunction ought to be regulated by the code of Civil
Procedure, 1908, and not by the Specific Relief Act, 1963. The learned single Judge ought to have noted that the value of the shares of the fourth
respondent company would depend on the immovable properties possessed by it. Any alienation or encumbrance of the immovable properties
possessed by the fourth respondent company would change the value of the shares, to a large extent.
The learned single Judge ought to have noted the intention of the parties to the agreement, by reading the Information Memorandum, which
would make it clear that the main purpose of the transfer of the shares of the fourth respondent company is for the transferring of the immovable
properties belonging to the said company, which had been morefully described in the schedules annexed to the agreement. Having committed the
breach of the Share Purchase Agreement, dated 21.12.2005, the respondents ought not have been permitted to take advantage of their own
wrong.
The learned single Judge ought to have noted that the claim for damages made by the appellant, before the Arbitral Tribunal, was not by way
of relinquishing the relief of specific performance and that it was only by way of an alternative relief. The learned Judge had failed to note that u/s
21 of the Specific Relief Act, 1963, the appellant was under an obligation to seek damages in lieu of specific performance of the contract. The
learned single Judge had erred in misinterpreting Section 16 of the Specific Relief Act, 1963, and had failed to take note of the decision of supreme
Court, in Motilal Jain Vs. Smt. Ramdasi Devi and Others, and the decision of this Court, in K.V. Narasimhan (died) and Others Vs. S. Salammal
Mudaliar and K.H. Munavar Basha, , wherein it had been held that an alternative claim for damages would not render the primary relief of specific
performance infructuous or redundant.
Mr. P.S. Raman, the learned Senior counsel, appearing on behalf of the appellant in the original side appeals, in O.S.A. Nos. 1 to 4 of 2013,
had submitted that the principles applicable to a civil suit would also be applicable to the arbitral proceedings. It had also been submitted that
Section 9 of the Arbitration and Conciliation Act, 1996, would be applicable, even in respect of third parties. It cannot be contended, on behalf of
GWL Properties Limited (formerly known as Gordon Woodroffe Limited), that it is not a party to the arbitration clause in the Share Purchase
Agreement, dated 21.12.2005 and in the arbitral proceedings pending before the arbitral Tribunal and therefore, no order of injunction can be
passed against it, as prayed for by the appellant.
It had also been pointed out that the name of Gordon Woodroffe Limited had been changed as GWL Properties Limited only because of its
dealings in immovable properties. In fact, the said company had been delisted from the stock market, even before the agreement had been signed.
Thus, it is clear that the value of the shares of the said company was based on its immovable assets. Even otherwise, the sale of shares, by way of
an agreement, could also be enforced by way of specific performance.
It had been stated that, as per the provisions of Section 58 of the Sale of Goods Act, 1930, the court may, if it thinks fit, on the application of
the plaintiff, by its decree, direct that the contract shall be performed specifically, in any suit for breach of contract to deliver specific or ascertained
goods, subject to certain conditions. Further, in Section 10 of the Specific Relief Act, 1963, it has been stated that, unless and until the contrary is
proved, the court shall presume that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in
money and that the breach of a contract to transfer movable property can be so relieved except 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. In the present case the
shares of GWL Properties Limited are not available in the market due to the delisting of the company from the share market. In such
circumstances, the learned single Judge had erred in dismissing the original applications, in O.A. Nos. 1 to 4 of 2013.
Mr. Krishna Srinivasan, the learned counsel appearing on behalf of the appellant, in O.S.A. Nos. 155 to 158 of 2013, had submitted that the
common order of the learned single Judge, dated 12.12.2012, is opposed to law and the facts of the case and therefore, it is liable to be set aside,
in so far as it relates to the findings of the learned single Judge that the appellant is a party to the provisions contained in clause 13 of the Share
purchase agreement, dated 21.12.2005, relating to the settlement of disputes, by way of arbitration, that the immovable properties located at
Zamin Pallavaram, Chennai, belonging to the appellant, namely, GWL Properties Limited (formerly known as Gordon Woodroffe Limited) are the
subject matter of the Share Purchase Agreement, dated 21.12.2005, and that relief could be obtained against the appellant company, by way of an
interim measure in respect of the immovable properties belonging to it.
The learned counsel had also submitted that the common order of the learned single Judge, dated 12.12.2012, is contrary to the provisions of
the Share Purchase Agreement, dated 21.12.2005, and the evidence available on record. The appellant in the original side appeals, in O.S.A.
Nos. 155 to 158 of 2013, cannot be said to be a party, as defined in Section 2(1)(h) of Arbitration and Conciliation Act, 1996. Therefore, GWL
Properties Limited cannot be made a party to the arbitral proceedings pending before the Arbitral Tribunal. Further, no order of interim injunction
can be passed against it, u/s 9 of the Arbitration and Conciliation Act, 1996.
It had been further contended that the learned single Judge had failed to see that the relevant provisions of the Share Purchase Agreement,
dated 21.12.2005, does not include the appellant company, as a party to the said agreement. The term `Acquirer'' shall mean the first respondent
in the present appeals and the term `Sellers shall mean the second, third and the fourth respondents therein. The term `Party'', as defined in the
Share Purchase Agreement, dated 21.12.2005, shall mean the `Acquirer or the `Sellers. The Share Purchase Agreement, dated 21.12.2005, had
been entered into between the first respondent on the one part and the second, third and the fourth respondents on the other part and the appellant
in the appeals, in O.S.A. Nos. 155 to 158 to 2013, is merely a signatory or a confirming party. The arbitration provisions contained in Clause 13
of the Share Purchase Agreement relates to the resolution of disputes between the acquirer and the sellers. Thus, the appellant cannot be included
as a party to the arbitral proceedings and to the provisions of Section 9 of the arbitration and Conciliation Act, 1996.
The learned single Judge had failed to see that the term `Company, as defined in the sale purchase agreement, dated 21.12.2005, refers to the
appellant, in O.S.A. Nos. 155 to 158 of 2013. The appellant is excluded from the definition of the term `Party, as defined in the said agreement.
As such, the appellant in the said appeals is a signatory to the Share Purchase Agreement, dated 21.12.2005, only for the purpose of bearing
certain obligations in relation to the immovable properties located at Zamin Pallavaram, Chennai. In any event, the appellant in the said appeals has
not agreed or acknowledged the arbitration provisions contained in Clause 13 of the Share Purchase Agreement, dated 21.12.2005. Therefore,
the finding of the learned single Judge in her order, dated 12.12.2012, that an order of injunction could be passed against the appellant company,
u/s 9 of the Arbitration and Conciliation Act, 1996, is contrary to law and the facts of the case.
It has been further stated that the learned single Judge had failed to note that the Supreme Court, in Indowind Energy Ltd. Vs. Wescare (I)
Ltd. and Another, , had held that a party, by subsequent conduct, may acknowledge or confirm the arbitration provisions and consequently, it
would be bound by the same. However, in the present case the appellant company had not acknowledged or confirmed the arbitration provisions
contained in Clause 13 of the Share Purchase Agreement, dated 21.12.2005, by its subsequent conduct.
The learned counsel appearing for the appellant, in O.S.A. Nos. 1 to 4 of 2013, had relied on the decision of the Supreme Court, in Firm
Ashok Traders and Another etc. Vs. Gurumukh Das Saluja and Others etc., , to state that the Court hearing an application, u/s 9 of the Arbitration
and Conciliation Act, 1996, would use its discretion of granting an interim relief, if it is just and convenient to do so. In the said case, the Supreme
Court had also held that the time for invoking the jurisdiction of the Court, u/s 9 of the Arbitration and Conciliation Act, 1996, could be before, or
during the arbitral proceedings or at any time after the making of the arbitral award, but before it is enforced in accordance with Section 36 of the
said Act. It had also been held that the court u/s 9 of the Arbitration and Conciliation Act, 1996, only formulates interim measures so as to protect
the right under adjudication before the Arbitral Tribunal from being frustrated. In the facts and circumstances of the said case, the Supreme Court
had held that the right conferred by Section 9 of the Act cannot be said to be one arising out of the contract. The qualification for invoking the
jurisdiction of the court, u/s 9 of the Act, is that the person or the entity should be a party to an arbitration for invoking such powers of the court.
The relief prayed for in an application, u/s 9 of the Act, is neither a relief prayed for in a suit, nor a right arising out of a contract.
The learned counsel had also relied on the decision of the High Court of Delhi, in Pawan Hans Helicopters Ltd. Vs. AES Aerospace Ltd., ,
wherein, it had been held that the qualification for invoking the jurisdiction of the court, u/s 9 of the Arbitration and Conciliation Act, 1996, is that
the person or the entity seeking the interim relief should be a party to the arbitration agreement. Thus, a person not a party to the arbitration
agreement cannot invoke the jurisdiction of the court for the protection, u/s 9 of the Act. As such, it had been made clear that the restricting
qualification would apply only in respect of the party and entity making an application seeking the interim relief. However, an interim relief could be
granted by the court, even against third parties, who are not parties to the arbitration agreement.
The decision of the supreme court, in Best Sellers Retail (India) Pvt. Ltd. Vs. Aditya Birla Nuvo Ltd. and Others, , had been relied on by the
learned counsel appearing for the appellant in the original side appeals, in O.S.A. Nos. 1 to 4 of 2013, to reiterate his contention that the Court
concerned would have to see if the non interference by the court would result in irreparable injury being caused to the party seeking the relief and
as to whether the parties seeking the interim relief need protection from the consequences of the apprehended injury or dispossession resulting in
irreparable injury being caused. The learned counsel had submitted that if an irreparable injury would be caused to the party concerned, the court
would have to grant an interim order to preserve the subject matter of the arbitral proceedings.
In Motilal Jain Vs. Smt. Ramdasi Devi and Others, , the Supreme Court had held that merely because the plaintiff claims damages in a suit for
specific performance of a contract, as an alternative relief, it cannot be said that he is not entitled to the main relief of specific performance of the
contract itself.
The decision, in Francome and Another VS. Mirror Group Newspapers Ltd. and Others, 1984 The WLR, 892, had been relied on to state
that a court, while granting interim orders, ought to pass appropriate orders seeking a balance of justice and not of convenience. The learned
counsel for the appellant had submitted that, even in cases where there is no balance of convenience in favour of the party seeking an interim relief,
the court concerned could grant such interim orders in view of the balance of justice.
The decision of the Supreme Court, in Chloro Controls (I) P. Ltd. Vs. Severn Trent Water Purification Inc. and Others, , had been relied on
to point out that a non signatory or a third party can also be subjected to arbitral proceedings without his consent, in exceptional circumstances. It
had been held that the expression any person claiming through or under, in section 45 of the Arbitration and Conciliation Act, 1996, takes within its
ambit persons who are in legal relationships through or under multiple and multiparty agreements, though they may not be signatories to an
agreement or to an arbitration clause in the agreement. However, a heavy onus would lie on a party to show that, in fact and in law, it is claiming
through or under the signatory party, as contemplated u/s 45 of the Act. Thus, it could be seen that Section 45 of the Act is wider in scope than
Section 8 of the said Act. As such, it could be inferred that the power of the court concerned u/s 9 of the Act, to grant interim relief, even against a
third party, is wide in scope and application.
In M.S. Madhusoodhanan and Another Vs. Kerala Kaumudi Pvt. Ltd. and Others, , the supreme court had held that the shares in question
were movable properties and that they were transferable in nature. The shares in a private limited company would come within the phrase not
easily obtainable in market. A holder of shares in a private company, may agree to sell his shares to a person of his choice. Such an agreement is
specifically enforceable, u/s 10 of the Specific Relief Act, 1963, which corresponds to Section 12 of the Specific Relief Act, 1877.
While deciding the issue as to whether the leave, under clause 12 of the Letters Patent, was necessary for the filing of an application before the
High Court, u/s 9 of the Arbitration and Conciliation Act, 1996, where only a part of the cause of action had arisen within the jurisdiction of the
High Court, a division bench of this court had held that no leave was required to initiate the proceedings, u/s 9 of the Arbitration and Conciliation
Act, 1996, to invoke the jurisdiction of the court.
Mr. A.L. Somayaji, the Advocate General, appearing on behalf of the respondents 1 to 3, in O.S.A. Nos. 1 to 4 of 2013, had submitted that
the value of the shares of the Gordon Woodroffe Limited (now known as GWL Properties Limited) cannot be based on the immovable properties
described in the schedule forming a part of the Share Purchase Agreement, dated 21.12.2005. He had further submitted that the intention of the
parties to the Share Purchase Agreement, dated 21.12.2005, could be gathered only from the said agreement. When the terms of the agreement
are clear there is no need to rely on the other documents to interpret the same, including the Information Memorandum, issued in the month of
September, 2005. The appellants in the original side appeals, in O.S.A. Nos. 1 to 4 of 2013, cannot invoke the exceptions provided u/s 10 of the
Specific Relief Act, 1963, in respect of movable properties. The Share Purchase Agreement, dated 21.12.2005, entered into for the purpose of
transfer of shares cannot be taken to be an agreement relating to the immovable properties possessed by Gordon Woodroffe Limited (now known
as GWL Properties Limited).
The learned counsel had further submitted that the fact that there was an order of interim injunction in favour of the appellant, in the original side
appeals, in O.S.A. Nos. 1 to 4 of 2013, for a considerable length of time, cannot be taken as an advantage by the said appellant, for obtaining
such interim reliefs, at this stage. This court ought to consider all the relevant factors before interim reliefs are granted, as prayed for by the
appellant, in the present appeals.
Further, in view of the fact that the appellant in the original side appeals, in O.S.A. Nos. 1 to 4 of 2013, had prayed for the alternative relief of
damages, before the arbitral tribunal, the relief of specific performance cannot be granted in its favour. The grant of the relief of specific
performance is discretionary in nature. Hence, this Court ought not to grant such a relief in favour of the appellant in the present facts and
circumstances of the case. Therefore, the original side appeals, in O.S.A. Nos. 1 to 4 of 2013, are liable to be dismissed, as they are devoid of
merits.
The learned counsel for the respondents had relied on the following decisions in support of his contentions:
48.1. In Rajasthan Breweries Ltd. Vs. The Stroh Brewery Company, , the Delhi high court had held that ""the effect of breach of a contract, by a
party seeking to specifically enforce the contract, under the Indian Law is enshrined in section 16(c), read with section 41(e) of the Specific Relief
Act, 1963. Clause (e) of Section 41 of the Specific Relief Act, 1963, provides that injunction cannot be granted to prevent the breach of contract,
the performance of which would not be specifically enforced. Clause (c) of section 41 enumerates the nature of contracts, which could not be
specifically enforced. Clause (c) to sub-section (1) of Section 14 says that a contract which is in its nature determinable cannot be specifically
enforced.
48.2. In Indian Oil Corporation Ltd. Vs. Amritsar Gas Service and Others, , the Supreme Court had held as follows:
The arbitrator recorded finding on Issue No. 1 that termination of distributorship by the appellant-Corporation was not validly made under
clause 27. Thereafter, he proceeded to record the finding on Issue No. 2 relating to grant of relief and held that the plaintiff-respondent I was
entitled to compensation flowing from the breach of contract till the breach was remedied by restoration of distributorship. Restoration of
distributorship was granted in view of the peculiar facts of the case on the basis of which it was treated to be an exceptional case for the reasons
given. The reasons given state that the Distributorship Agreement was for indefinite period till terminated in accordance with the terms of the
agreement and, therefore, the plaintiff-respondent 1 was entitled to continuance of the distributorship till it was terminated in accordance with the
agreed terms. The award further says as under:
This award will, however, not fetter the right of the defendant Corporation to terminate the distributorship of the plaintiff in accordance with the
terms of the agreement dated April 1, 1976, if and when an occasion arises.
This finding read along with the reasons given in the award clearly accepts that the distributorship could be terminated in accordance with the terms
of the agreement dated April 1, 1976, which contains the aforesaid clauses 27 and 28. Having said so in the award itself, it is obvious that the
arbitrator held the distributorship to be revocable in accordance with clauses 27 and 28 of the agreement. It is in this sense that the award
describes the Distributorship Agreement as one for an indefinite period, that is, till terminated in accordance with clauses 27 and 28. The finding in
the award being that the Distributorship Agreement was revocable and the same being admittedly for rendering personal service, the relevant
provisions of the Specific Relief Act were automatically attracted. Sub-section (1) of Section 14 of the Specific Relief Act specifies the contracts
which cannot be specifically enforced, one of which is `a contract which is in its nature determinable. In the present case, it is not necessary to refer
to the other clauses of sub-section (1) of Section 14, which also may be attracted in the present case since clause (c) clearly applies on the finding
read with reasons given in the award itself that the contract by its nature is determinable. This being so granting the relief of restoration of the
distributorship even on the finding that the breach was committed by the appellant-Corporation is contrary to the mandate in Section 14(1) of the
Specific Relief Act and there is an error of law apparent on the face of the award which is stated to be made according to `the law governing such
cases. The grant of this relief in the award cannot, therefore, be sustained....
The question now is of the relief which could be granted by the arbitrator on its finding that termination of the distributorship was not validly
made under clause 27 of the agreement. No doubt, the notice of termination of distributorship dated March 11, 1983 specified the several acts of
the distributor on which the termination was based and there were complaints to that effect made against the distributor which had the effect of
prejudicing the reputation of the appellant-Corporation and such acts would permit exercise of the right of termination of distributorship under
clause 27. However, the arbitrator having held that clause 27 was not available to the appellant-Corporation, the question of grant of relief on that
finding has to proceed on that basis. In such a situation, the agreement being revocable by either party in accordance with clause 28 by giving 30
days notice, the only relief which could be granted was the award of compensation for the period of notice, that is, 30 days. The plaintiff-
respondent 1 is, therefore, entitled to compensation being the loss of earnings for the notice period of 30 days instead of restoration of the
distributorship. The award has, therefore, to be modified accordingly. The compensation for 30 days notice period from March 11, 1983, is to be
calculated on the basis of earnings during that period disclosed from the records of the Indian Oil Corporation Limited.
48.3. In Sri Krishnasamy Reddiar Educational Trust Vs. The Official Liquidator and Others, , the Division Bench of this Court had held that no
litigant could derive any benefit from a mere pendency of a case in a court of law, as interim orders would always merge with the final order to be
passed in the case. A party who had succeeded, ultimately, was to be placed in the same position in which it would have been if the court had not
passed the interim order. As such, this court ought not to be pleased to grant the interim reliefs prayed for by the appellant in the original side
appeals, in O.S.A. Nos. 1 to 4 of 2013, merely for the reason that the appellant had the benefit of an interim order of injunction, during the
pendency of the matter before the learned single Judge.
48.4. In Amarjeet Singh and Others Vs. Devi Ratan and Others, , the Supreme Court had held that no litigant can derive any benefit from the mere
pendency of a case before a court of law, as the interim orders would merge with the final order to be passed in the case. A party cannot be
allowed to take benefit of his own wrongs, even if an interim order is granted in his favour. The supreme court had relied on the maxim Actus
curiae neminem gravabit, which means that the act of the court shall prejudice no one while arriving at his conclusions.
48.5. In South Eastern Coalfields Ltd. Vs. State of M.P. and Others, the Supreme Court had referred to the decision reported in Executive
Engineer, Dhenkanal Minor Irrigation Division, Orissa, Vs. N.C. Budharaj (Dead) by Lrs. etc. etc., , wherein it has been held that the controversy
relating to the power of an arbitrator (under the Arbitration Act, 1940), to award interest for pre-reference period, has been settled at rest by the
Constitution Bench. The majority, speaking through Doraiswamy Raju, J., has opined that the basic proposition of law that a person deprived of
the use of money, to which he is legitimately entitled to, has a right to be compensated for the deprivation, by whatever name it may be called, viz.,
interest, compensation or damages, and this proposition is unmistakable and valid. The efficacy and binding nature of such law cannot be either
diminished or whittled down. It was held that, in the absence of anything in the arbitration agreement, excluding the jurisdiction of the arbitrator to
award interest on the amount due under the contract, and in the absence of any other prohibition, the arbitrator can award interest.
In view of the contentions raised on behalf of the parties concerned and on a perusal of the records available, and on considering the decisions
cited supra, it could be noted that the learned single Judge had passed the common order, dated 12.12.2012, in the original applications in O.A.
Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, dismissing the same, holding that the applicant, which is not entitled to claim the relief of
specific performances, is not entitled to obtain the interim relief of injunction, by way of interim measures.
The learned single Judge had held that clause 12.3 of the Share Purchase Agreement, dated 21.12.2005, specifically provides that the
agreement is determinable in nature. The learned single Judge had held that the remedy available to the party for an act of breach of a contract is
not by way of specific performance of the agreement. As such, no prayer for the grant of an order of injunction could be maintained, pending
determination of the dispute by the arbitral tribunal in question. She had further held that the remedy available to the party is to seek damages, even
if a prima facie case is made out and the balance of convenience is also in favour of such a party.
The learned single Judge had relied on the various decisions cited before her, including the decision of the Delhi High Court, in Rajasthan
Breweries Ltd. Vs. The Stroh Brewery Company, , wherein, it had been held that a contract, which is in its very nature determinable cannot be
specifically enforced and no order of injunction could be granted in respect of such a contract as it is statutorily prohibited. It is also noted that the
learned single Judge had held that no interim orders could be granted in favour of the applicant against the cancellation of the contract in question,
pending arbitration proceedings, as per sections 14(1)(a) and (c) and 41(e) of the Specific Relief Act, 1963, especially, when the agreement grants
a clear right to the parties concerned to terminate the agreement, by way of a notice, without assigning any reason for such termination.
The learned single Judge had also noted, relying on the decision of Kishorsinh Ratansinh Jadeja Vs. Maruti Corp. and Others, , that the courts
ought not to grant temporary reliefs of injunction when the plaintiff had claimed damages as an alternative relief. However, the learned single Judge
had held that the power of the court to grant interim reliefs, u/s 9 of the Arbitration and Conciliation Act, 1996, would extend to third parties who
are not parties to the arbitration clause in the agreement. Aggrieved by the said findings, the appellant, namely, GWL Properties limited, had filed
the original side appeals, in O.S.A. Nos. 155 to 158 of 2013.
Even though various contentions had been raised on behalf of the appellant in the said appeals, the main contention of the appellant therein is
that no interim orders could be granted by this Court against the appellant, when it is not a party to the arbitration clause in the Share Purchase
Agreement, dated 21.12.2005. The appellant could not be considered to be a party to the agreement, even though it is a signatory to the said
agreement.
Taking into consideration the rival contentions and the principles underlined the decisions of the various courts of law, we are of the considered
view that the appellant, in O.S.A. Nos. 1 to 4 of 2013, is entitled to the interim relief prayed for by it in the original applications, in O.A. Nos. 452
to 455 of 2006 and O.A. No. 731 of 2009. We are of the view that the power of this court, u/s 9 of the Arbitration and Conciliation Act, 1996, is
wide in scope and it would extend even to third parties in whom the properties or goods are vested, even though such parties may not be a party
to the arbitration clause in an agreement. Even though section 9 of the Arbitration and Conciliation Act, 1996, could be invoked only by a party to
the arbitration agreement, the interim relief could be granted by this court even against the third parties. Unless such a power is available, u/s 9 of
the Arbitration and Conciliation act, 1996, the parties to the arbitral agreement could be frustrated even if they succeed in the arbitral proceedings
before the Arbitration Tribunal concerned.
It could be noted that section 9 is enacted only with the intention of preserving and protecting the subject matter of the arbitral proceedings,
even if it is in the hands of third parties. However, it could be seen that there should be some nexus between the parties to the agreement and the
subject matter of such an agreement. It is also found that the applicant, in O.A. Nos. 452 to 454 of 2006 and O.A. No. 731 of 2009, the
appellant in the O.S.A. Nos. 1 to 4 of 2013, had shown that a prima facie case is in existence to grant of the interim relief, as the balance of
convenience is in its favour.
It could also be noted that irreparable injury would be caused to the appellant, in O.S.A. Nos. 1 to 4 of 2013, if the interim relief prayed for
by it is not granted. Even though the appellant in the said appeals had prayed for the relief of damages before the Arbitral Tribunal, as an alternative
relief, it cannot be said that the appellant is not entitled to the interim relief, by invoking the powers of this court, u/s 9 of the Arbitration and
Conciliation Act, 1996.
Whether the agreement in question is determinable in nature and whether the appellant, in O.S.A. Nos. 1 to 4 of 2013, is entitled to specific
performance of the Share Purchase Agreement, dated 21.12.2005, are core issues to be decided by the Arbitral Tribunal before which the arbitral
proceedings are pending. In such circumstances, we are not inclined to render a final finding on such issues. However, we are convinced that there
is a prima facie case made out by the appellant, in O.S.A. Nos. 1 to 4 of 2013, that there is a nexus between the Share Purchase Agreement and
the immovable properties vested in the company, namely, GWL Properties Limited (earlier known as Gordon Woodroffe Limited).
By reading the Information Memorandum of the month of September, 2005 and from the other relevant communications, amongst the parties
concerned, it could be inferred, prima facie, that the parties to the Share Purchase Agreement, dated 21.12.2005, had intended to convey the
immovable properties prescribed in the relevant schedule, which forms a part of the agreement. It could also be seen that the appellant, in O.S.A.
Nos. 155 to 158 of 2013, namely GWL Properties Limited, is not doing any business, at present. Further, it has been stated that the shares of the
GWL Properties Limited (earlier known as Gordon Woodroffe Limited) had been delisted from the share market. There is no doubt that the value
of the shares of the said company would depend, primarily, on the immovable properties possessed by it, at Zamin Pallavaram, Chennai, morefully
described in schedule B, which is shown as an annexure to the Share Purchase Agreement, dated 21.12.2005. Even if it could be accepted that
GWL Properties Limited (earlier known as Gordon Woodroffe Limited) is not a party to the arbitration clause found in 13.2 of the Share Purchase
Agreement, dated 21.12.2005, we are of the view that this court has sufficient powers to grant interim relief, as per the provisions of Section 9 of
the Arbitration and Conciliation Act, 1996, to preserve and protect the subject matter of the arbitral proceedings, pending on the file of the Arbitral
Tribunal concerned. In such view of matter, we are inclined to grant the interim relief, as prayed for by the appellant, in O.S.A. Nos. 1 to 4 of
2013. Accordingly, the original side appeals, in O.S.A. Nos. 1 to 4 of 2013, stand allowed. Consequently, the appeals in O.S.A. Nos. 155 to
158 of 2013, stand dismissed. We make it clear that all the issues raised before the Arbitral Tribunal are left open to be decided by the said
Tribunal, on merits and in accordance with law, without being influenced by the observations made by this Court, in this order. There shall be no
order as to costs. Consequently, connected miscellaneous petitions are closed.