P.V.S.Diwakar VsT.N. Vishwamber

This Appeal is filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) challenging the order dt.30-03-2021 in

A.O.P.No.621 of 2019 of the II Additional District Judge, Ranga Reddy District at L.B. Nagar allowing the application filed under Section 9 of the

Act filed by respondent and granting injunction against the appellant from alienating or disposing of the schedule property to others pending disposal of

C.M.A.No.496 of 2015 on the file of this Court.

The Background facts

The land in an extent of Ac.10.00 situated in Sy.Nos.251/4 and 252/4 situated at Wattinagulapally village, Rajendranagar Mandal, Ranga Reddy

District originally belonged to the paternal grandmother of the appellant and she had bequeathed the same to the appellant and his two brothers under

a registered Will dt.22.09.1982.

The respondent along with P.Kishan Prasad had come forward to purchase an extent of Ac.5.00 of land out of the total extent of Ac.10.00 and

paid Rs.30.00 lakhs under a receipt-cum-sale commitment.

The said land is allegedly affected under G.O.Ms.No.111 issued by the State Government restricting constructions within a particular radius of

Osman Sagar and Himayathsagar water bodies; and having come to know the same and after several rounds of deliberations, the respondent and his

associate entered into an Agreement of Mutual Benefit Settlement dt.06.09.2006 with the appellant and his brothers.

Under the said agreement, the parties have agreed to sell the subject land to the third parties and to share the proceeds thereof and it was also

agreed that any unsold part of land at the end of 9 months from the date of the Agreement may be registered in favour of the parties of the second

part at a price upto Rs.3.20 crores per acre.

O.P.No.568 of 2007

It was contended by appellant that the terms of the Agreement of Mutual Benefit Settlement did not workout and no sales to the third parties have

taken place nor the respondent and his associate have come forward for getting the land registered in their name at the price as agreed upon in the

Agreement; and so the respondent and his associate invoked Section 9 of the Act, and filed O.P.No.568 of 2007 before the I Additional District Judge,

Ranga Reddy District at L.B.Nagar for an interim measure by way of injunction restraining the respondents therein from alienating the subject land.

The said Court passed orders directing maintenance of status quo.

Thereafter the respondent approached the High Court under Section 11(6) of the Act for appointment of an Arbitrator and accordingly, Justice

P.L.N. Sarma (Retd) was appointed as an Arbitrator.

The arbitral award

The Arbitrator passed an award dt.10.10.2009 rejecting the claim of the respondent for specific performance of the agreement dt.06.09.2006 and

merely directed refund of the amount with interest to the respondent and his associate by the appellant and his brothers.

A.O.P.No.55 of 2010

The respondent and his associate challenged the Award by way in A.O.P.No.55 of 2010 under Section 34 of the Act before the II Additional

District Judge, Ranga Reddy at L.B. Nagar and the same was allowed by order dt.08.04.2015 setting aside the award, and holding that the respondent

and his assocaite are entitled to claim specific performance of the contract on depositing the Government value with goodwill as offered by them.

C.M.A.No.496 of 2015

The appellant and his brothers questioned the order dt.08.04.2015 in A.O.P.No.55 of 2010 in C.M.A.No.496 of 2015 before the High Court ; and

an interim order was passed on 27.07.2015 in C.M.A.M.P.No.1002 of 2015 staying the order under Appeal, and the said order is still in force and the

said Appeal is pending.

O.P.No.621 of 2019

The respondent again filed O.P.No.621 of 2019 invoking Section 9 of the Act seeking an injunction restraining the appellant from alienating the

schedule lands pending disposal of C.M.A.No.496 of 2015.

He pleaded that there were certain transactions during the years 2010 and 2013 by way of Gift Deeds/sale deeds by the appellant and his brothers

and that certain sale deeds were executed by the brothers of the appellant in his favour in the year 2018, and that there were some enquiries by third

parties for purchase of the schedule land and so it is necessary to restrain the appellant from making any alienations.

The stand of the appellant

The Appellant opposed A.O.P.No.621 of 2019 raising several contentions.

It was contended therein that Section 9 of the Act is not maintainable since the Arbitration was over long back and the petition filed under Section

34 of the Act was also over in 2015 itself, and the matter is sub judice in C.M.A.No.496 of 2015 and hence any relief to be sought for is to be sought

only in the said C.M.A. and not by way of an application under Section 9 of the Act. He stated that there is no cause of action for the filing the

application merely on the basis of alleged enquiries by third parties. It was also pleaded that the respondent has collusively purchased certain extents

of land from the brothers of the appellant and was trying to harass the appellant by way of present application, which is not maintainable.

The order in AOP NO.621 of 2019

By order dt.30.03.2021, the Court below allowed A.O.P.No.621 of 2019.

It held that after entering into the Agreement of Mutual Benefit Settlement dt.30.08.2006, the two brothers of the appellant compromised the issue

with the respondent and his associate and in consequence thereof, the two brothers of appellant executed Exs.P-7 to P-9 registered sale deeds

dt.27.12.2018; in view of the same, the dispute is settled among the respondent and his associate and two brothers of the appellant; and consequently,

no cause of action survives for the respondent to sue the two brothers of appellant and also join his associate as a petitioner in A.O.P.No.621 of 2019.

It also rejected the contention of the appellant that the compromise or settlement between the respondent and his associate on onside and the two

brothers of the appellant on another side will make the Agreement of Mutual Benefit Settlement dt.30.08.2006 unexecutable against the appellant. It

relied on Section 44 of the Indian Contract Act, 1872. It also held that the doctrine of frustration contained in Section 56 of the said Act is not

applicable.

The Court below also referred to Ex.P-5 registered gift settlement deed dt.01.02.2010 executed by appellant in favour of his wife, which showed

that specific extent of Ac.1.06½ gts and another land was alienated; that the said land was part of the land which was the subject matter of

Agreement of Mutual Benefit Settlement dt.30.08.2006; that such an execution of gift deed indicates that there must have been a partition among the

appellant and his brothers, and that was why even the brothers of the appellant executed Exs.P-7 to P-9 registered sale deeds on 27.12.2018 in favor

of respondent and his associate.

It also took note of the fact that O.P.No.568 of 2007 had got dismissed for default and the status quo granted therein no longer survives and the

respondent cannot be faulted in filing A.O.P.No.621 of 2019 in seeking interim relief on a new and different cause of action which accrued on him

later i.e. pendency of C.M.A.No.496 of 2015 in this Court.

The Court below also noted that in violation of the interim status quo order granted in O.P.No.568 of 2007, appellant had executed the registered

gift settlement deed Ex.P-5 dt.01.02.2010 in favour of his own wife, Ex.P-6 registered sale deed dt.27.12.2013 and Ex.P-10 registered sale deed

dt.01.11.2014 to third parties and so there is justification for respondent in filing A.O.P.No.621 of 2019.

Challenging the same, this Appeal is filed.

The present Appeal

Heard Sri V.Srinivas, learned Senior Counsel for Ms.V.Chitralekha, leaned counsel for appellant and Sri I.V.Radhakrishna Murthy, learned

counsel for respondent.

Learned counsel for appellant contended that the Court below ought not to have granted interim injunction restraining the appellant from alienating

‘A’ and ‘B’ schedule properties since the basis of the pleading of the appellant is merely an allegation of respondent that appellant was

trying to alienate his share of the property to third parties and that a neighbouring land ower K.Pratibha had approached the respondent on 30.10.2019

and made enquiries. He alleged that even the affidavit of the said neighbouring land owner has not been filed by respondent to substantiate the said

pleading and there is no basis for the apprehension of respondent that appellant is alienating the subject property.

Learned counsel for respondent refuted the said contention and supported the order passed by the Court below.

The consideration by the Court

We have noted the contentions of both sides.

There is no dispute that the property transaction which is subject matter of Agreement of Mutual Benefit Settlement dt.30.08.2006 was subject

matter of an arbitral award dt.10.10.2009 and the learned Arbitrator had rejected the claim of respondent for specific performance of the said

agreement and merely directed refund of the amount to the respondent and his associate by the appellant and his brothers with interest; that the said

award has been challenged in A.O.P.No.55 of 2010 by the respondent and his associate under Section 34 of the Act in the Court of the II Additional

District Judge, Ranga Reddy at L.B. Nagar; and the said Court had passed an order on 08.04.2015 allowing the O.P. and setting aside Award and

holding that respondent and claimants are entitled to specific performance of award contract on depositing the Government value with goodwill as

offered by them.

It is also an admitted fact that the appellant and his brothers have questioned the order dt.08.04.2015 in A.O.P.No.55 of 2010 in C.M.A.No.496 of

2015 and this Court had passed an interim order in C.M.A.M.P.No.1002 of 2015 on 27.07.2015 staying the order passed in A.O.P.No.55 of 2010.

So, the dispute between the appellant and respondent has not yet attained finality and it would have to be adjudicated in C.M.A.No.496 of 2015

pending before this Court for the last 6 years.

If before adjudication of C.M.A. the appellant is allowed to make alienations of the subject property, certainly there would be serious prejudice to

the respondent and his associate.

The fact that the appellant had executed Ex.P-5 registered gift settlement deed dt.01.02.2010 in favour of his wife, Ex.P-6 registered sale deed

dt.27.12.2013 and Ex.P-10 registered sale deed dt.01.11.2014 in favor of third parties shows that in spite of interim order granted in A.O.P.No.568 of

2007, the said alienations had been made by the appellant. Merely because a third party affidavit of K.Pratibha, neighbouring land owner had not been

filed, it cannot be said that the respondent cannot be granted any relief .

In fact the very filing by the appellant of the appeal against the order dt.30.03.2021 in A.O.P.No.621 of 2019 challenging such a restraint indicates

that the appellant has an intention to sell the subject property, for otherwise there was no necessity for filing of this appeal at all.

In our considered opinion, preservation of the property pending disposal of C.M.A.No.496 of 2015 is necessary, and the appellant cannot be

allowed to create third party interests on the subject property without the dispute being adjudicated in the said CMA.

We therefore do not find any merit in the appeal and it is accordingly dismissed. No costs.

Consequently, miscellaneous petitions, pending if any, shall stand closed.