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2017 Supreme(Kar) 629

2017 4 AIR(Kar)(R) 500 ; 2018 1 KCCR 5

IN THE HIGH COURT OF KARNATAKA

B. VEERAPPA, J.
M/s. Vaswani Estates Developers Private Limited, Represented by its General
Manager-Liaison Lava Kumar - Appellant
Versus
M/s. Bangalore Baptist Church, Represented by its Chairman & Pastor Rev. A. Daniel
Bhasm & Others - Respondents
Miscellaneous First Appeal No. 10331 of 2013 (CPC)
Decided On : 01-09-2017

Subject: Injunction - TEMPORARY INJUNCTION

MEMORANDUM OF UNDERSTANDING - JOINT DEVELOPMENT AGREEMENT -

TEMPORARY INJUNCTION - ARBITRATION - SPECIFIC PERFORMANCE - CANCELLATION
- MAINTAINABILITY OF SUIT - PRIMA FACIE CASE - BALANCE OF CONVENIENCE -
IRREPARABLE LOSS OR DAMAGE - ALIENATION OF PROPERTY - MULTIPLICITY OF
PROCEEDINGS - NON-EXISTENCE OF MOU - DOUBTFUL CASE - PERVERSITY -
SECTION 52 OF THE TRANSFER OF PROPERTY ACT

Act Referred :ARBITRATION ACT : S.11(6)

ARBITRATION AND CONCILIATION ACT : S.9
CIVIL PROCEDURE CODE : R.39 R.1, R.39 R.2, O.43 R.1(r)

ARBITRATION AND CONCILIATION ACT, 1996 – Section 9 & C.P.C. Order 39,
Rules 1&2 – Injunction – Plaintiff seeking relief of restraining defendants
and their agents from alienating or entering into suit property to
detriment of plaintiff on basis of MOU – Grant of interim order in arbitral
proceedings – Arbitral proceedings pending for adjudication – Parallel
relief sought in suit and arbitration proceedings on same cause of action
and against same parties – Relief of injunction, is impermissible.

CODE OF CIVIL PROCEDURE, 1908 – Order 39, Rules 1 & 2 & Arbitration
and Conciliation Act (26 of 1996), Section 9 – Injunction – Plaintiff seeking
relief of restraining defendants and their agents from alienating or
entering into suit property to detriment of plaintiff on basis of MOU –
Grant of interim order in arbitral proceedings – Arbitral proceedings
pending for adjudication – Parallel relief sought in suit and arbitration
proceedings on same cause of action and against same parties – Relief of
injunction, is impermissible.

CODE OF CIVIL PROCEDURE, 1908 – Order 39, Rules 1 & 2 – Temporary

injunction – Suit for specific performance on basis of non-existing MOU –
Plaintiff seeking relief of restraining defendants and their agents from
alienating or entering into suit property to detriment of plaintiff on basis

Page No. 1 of 14
of MOU – Cancellation of MOU vide cancellation letter which does not
confer legal rights in favour of plaintiff – Non-existence of MOU on date of
filing of suit – Failure of plaintiff in making out prima facie case for grant
of temporary injunction – Relief of temporary injunction, cannot be
granted.

CODE OF CIVIL PROCEDURE, 1908 – Order 39, Rules 1 & 2 – Temporary

injunction – Consideration of equitable principle in grant of – Interim order
passed in arbitration proceedings still in force – Suit for specific
performance and injunction instituted during subsistence of interim order
– MOU on basis of which plaintiff seeking injunction, not in existence –
Maintainability of suit for injunction, found doubtful – Equitable order of
temporary injunction, cannot be granted.

Cases Referred:
Anand Prasad Agarwalla vs. Tarakeshwar Prasad and Others reported in AIR 2001 SC
2367 - Referred
City of Prince George v. A.L. Sims & Sons Ltd., , (1998) 23 YCA 223 - Referred
Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., , (2013) 1 SCC
641 : (2013) 1 SCC (Civ) 689 - Referred
Heritage Lifestyle and Developers Ltd., , vs. Cool Breeze Co-Operative Housing
Society Limited and Others reported in 2014(3) Mh.LJ 376
Krishna Moorthy vs. Bangalore Turf Club & Others reported in (1975)2 Kar.LJ 428-
Referred
Lakshminarasimhiah and Others vs. Yalakki Gowd reported in AIR 1965 Mysore
310Affirmed - Referred
M. Chidambaram vs. N. Sargunam reported in ILR 1989 KAR 1357- Referred
Maharwal Khewaji Trust (Regd.), , Faridkot vs. Baladev Dass reported in AIR 2005 SC
104 - Referred
Purple Medical Solutions Private Limited vs. Miv Therapeutics Inc. and Another
reported in (2015)15 SCC 622 - Referred
Sukanya Holdings Private Limtied vs. Jayesh H. Pandya reported in AIR 2003 SC
2252 - Referred
Star Apparels Private Limited vs. Parmpreet Singh Bindra @ King Bindra and Others
reported in 2009(2) Mh.LJ 76 - Referred

Advocates Appeared:
For the Appellant : G.L. Vishwanath
For the Respondents: J. Ravichandran, Padmanabha Mahale, Naveen Ahmed, S.S.
Naganand, Sriranga, Bipin Hegde

JUDGMENT :

1. This is the plaintiff's Miscellaneous First Appeal against the order dated 5.9.2013
on I.A. No. 2 in O.S. No. 1884/2013 on the file of the 5th Additional City Civil Judge,
Bangalore city dismissing the application - I.A. No. 2 filed by the plaintiff under Order
XXXIX Rules 1 and 2 of Code of Civil Procedure, 1908.

I. BRIEF FACTS OF THE CASE

2. The appellant - plaintiff filed the suit for declaration that the defendant Nos.8 to
16 have no manner of right, title or interest to deal, transact or meddle in respect of
the suit schedule property and for specific performance directing the defendant

Page No. 2 of 14
Nos.1 to 7 to execute a Joint Development Agreement in favour of the plaintiff in
respect of the schedule property in terms of the Memorandum of Understanding
dated 2.9.2011 and for Permanent Injunction restraining the defendant Nos.1 to 16,
their agents etc., from entering, alienating, dealing or otherwise encumbering the
schedule property to the detriment and exclusion of the plaintiff's rights as per the
Memorandum of Understanding dated 2.9.2011 and for Permanent Injunction
restraining the defendant No.17 from interfering or developing the suit schedule
property in collusion with the defendant Nos.1 to 16 and to direct the defendants to
pay the costs of litigation expenses.

3. It is the case of the plaintiff that it is a private limited company incorporated

under the provisions of the companies Act, 1956 and it is a reputed builder and
developer of real estate in Bangalore and certain other cities in India. The defendant
Nos.2 to 7 represented to the plaintiff that one Rev. Edmund Marasden had
purchased the property bearing Old No. 97, New No. 11 situated at Commissariat
Road, Bangalore more fully described in the schedule to the plaint from the
Government of Mysore in the year 1854 for a sale consideration of Rs.900/-. The
said property was purchased to establish a place for worship known as Ebenezer
Chapel and accordingly church building was constructed.

4. It is further case of the plaintiff that defendant Nos.2 to 7 had also represented
that 1st defendant is a registered Trust formed and established on 12.12.1867 by
Pastor Rev. Edmund Marasden and the suit schedule property was transferred to the
said trust and the same became the property of the Trustees. The trust deed came
to be registered on 12.12.1867. It is further case of the plaintiff that defendant
Nos.2 to 7 had further represented that 2nd to 7th defendants are the Trustees of
the 1st defendant and that the 1st defendant is the absolute owner of the schedule
property and the title of the 1st defendant to the suit schedule property is good,
valid, subsisting, clear and marketable and that no one else has right, title or
interest or share in the suit schedule property. Defendant Nos.2 to 7 on behalf of
defendant No.1 had further represented that they were desirous of developing the
schedule property on a joint development basis and hence arrived at an
understanding with the plaintiff. Consequently defendant Nos.2 to 7 offered the
schedule property for joint development on a lease basis for a period of 99 years.
Accordingly a resolution came to be passed on 21.8.2011 to develop the suit
schedule property through the plaintiff and the 2nd defendant was authorized to act
on behalf of defendant No.1 and defendant Nos.3 to 7.

5. It is further case of the plaintiff that the plaintiff and defendant Nos.1 to 7 had
entered into Memorandum of Understanding ('MoU' for short) on 2.9.2011. As per
clause 2(i) of the MoU dated 2.9.2011, on the execution of a Joint Development
Agreement, the plaintiff shall pay an amount of Rs.3,00,00,000/- (Rupees three
crores only) to the 1st defendant as interest free refundable security deposit. Out of
the said Security Deposit, the plaintiff has paid Rs.10,00,000/- (Rupees ten lakhs
only) on 5.9.2011 by way of Pay Order and the same was acknowledged by
defendant NOs.1 to 7. As per Clause 3 of the MoU, the plaintiff was entitled to take
out a public notice regarding the proposed transaction and in the event of any
objections, claims or demands being received, the same would have to be fully
satisfied and rectified by defendant Nos.1 to 7. Accordingly the public notice was
issued in "Times of India", an English Daily newspaper on 10.9.2011 informing the
general public about the plaintiff's intention of going ahead with the aforesaid
transaction. In reply to the same, certain objections were raised by the 8th

Page No. 3 of 14
defendant. Subsequently certain payments were made by the plaintiff to the
defendant no.1, totaling a sum of RS.18,95,814/-. The plaintiff has patiently waited
for resolution of certain objections raised by the 8th defendant. When things stood
thus, the 2nd defendant issued a letter dated 25.9.2012 on behalf of the 1st
defendant purporting to cancel the MoU dated 2.9.2011 citing false and flimsy
reasons and the plaintiff was shocked to receive the said letter and was unable to
fathom the reasons for seeking cancellation.

6. The plaintiff further contended that as per Clause 13 of the MoU dated 2.9.2011,
the parties are bound to submit all disputes and differences arising out of or in
connection with the agreement to arbitration in terms of the provisions of the
Arbitration & Conciliation Act, 1996. The plaintiff was intended to refer the dispute to
arbitration in terms of the said clause. Since the conduct of defendant Nos.1 to 7 in
making illegal attempts to unilaterally terminate the said contract was wholly illegal,
the plaintiff was constrained to take recourse to the provisions of Section 9 of the
Arbitration & Conciliation Act. Accordingly, the plaintiff had filed Arbitration
Application No. 755/2012 and the City Civil Court was pleased to grant an exparte
order of status-quo on 17.10.2012 in respect of the suit schedule property and same
was extended from time to time and the defendant Nos.1 to 7 have violated the said
order and permitted the 17th defendant to place his name plate on the temporary
structures in the suit schedule property. Defendant Nos. 9 to 12 alongwith late Mr.
A.J. Rathnam Philip claim to have resolved on 6.7.2005 to review the terms and
conditions of the original trust deed of 1867 and thereafter defendant Nos.13 to 16
have colluded with defendant Nos.9 to 12 and appear to have been inducted into the
fake trust deed. It is further contended that defendant Nos.1 to 16 have colluded
among themselves and joined hands with the 17th defendant, a real estate
developer and attempting to alienate or encumber the suit schedule property to the
determinant of the plaintiff's contractual rights. Therefore the plaintiff was
constrained to file the suit for the relief’s sought for.

7. The plaintiff also filed I.A. No.2 for Temporary Injunction restraining the 17th
defendant from changing the nature of the suit schedule property and from
developing the schedule property and putting up any construction till the disposal of
the suit, reiterating the averments made in the plaint. The defendants, much-less
defendant No. 17 has not filed the objections to I.A. No.2.

8. The trial Court considering the application and the material documents produced
by the plaintiff by the impugned order dated 5.9.2013 dismissed I.A. No.2 for
Temporary Injunction filed by the plaintiff under Order XXXIX Rules 1 and 2 of Code
of Civil Procedure. Hence the present Miscellaneous First Appeal is filed.

II. RIVAL CONTENTIONS OF LEARNED COUNSEL FOR THE PARTIES

9. I have heard the learned counsel for the parties to the lis.

10. Sri G.L. Vishwanath, learned counsel for the appellant vehemently contended
that the impugned order passed by the trial Court rejecting the application for
Temporary Injunction is erroneous and contrary to the material on record. He further
contended that the plaintiff filed the suit for specific performance of contract dated
2.9.2011 wherein defendant Nos.1 to 7 have specifically agreed to develop the
property with the appellant-plaintiff and share the built up area on lease basis for a
period of 99 years and the defendant Nos.1 to 7 have unilaterally terminated the
MoU without any valid grounds. The trial court ought to have to granted Temporary

Page No. 4 of 14
Injunction. He further contended that the 17th defendant has not filed either the
written statement or the objections. Inspite of the same, the trial Court proceeded to
reject the application erroneously. He further contended that the relief sought in the
suit is to declare that defendant Nos.8 to 16 have no manner of right, title and
interest to deal, transact or meddle in respect of the suit schedule property and for
specific performance directing the defendant Nos.1 to 7 to execute the Joint
Development Agreement in favour of the plaintiff. The trial Court has not considered
the material documents produced while rejecting the application filed for Temporary
Injunction erroneously. He further contended that Clause 10.3 of the MoU states that
upon execution of and registration of the JDA and GPA, the first party aggress to
grant license to the developer to enter upon the schedule property to develop the
same. During the interregnum, the developer will be entitled to do soil testing,
installation of bore-well, excavation of land and site preparatory work so that there
is less loss of time. He would further contend that Clause 13.1 of the MoU states that
in the event of any dispute or difference between the parties related to the terms of
the MoU or any part thereof, the same shall be resolved through arbitration under
the provisions of the Arbitration and Conciliation Act, 1996. Clause 14 of the MoU
deals with regard to specific performance. He further contended that defendant
Nos.1 to 7 have colluded with defendant Nos. 8 to 16 to deprive the rights of the
plaintiff. Therefore plaintiff filed Arbitration Application No. 755/2012 against
defendant Nos.1 to 7 and there is an interim order granted by the Court below. He
further contended that the trial Court while considering the application for
Temporary Injunction has decided the rights of the plaintiff which is impermissible in
law. The trial Court without considering the prima-facie case made out by the
plaintiff has proceeded to reject the application for Temporary Injunction
erroneously.

11. In support of his contentions, the learned counsel for the appellant-plaintiff
relied upon the judgment of this court in the case of KRISHNA MOORTHY vs.
BANGALORE TURF CLUB & OTHERS reported in (1975)2 Kar.LJ 428 wherein this
Court observed that the traditional theory underlying the grant or refusal of
interlocutory injunctions has always been that the Court abstains from expressing
any opinion upon the merits of the case until the hearing, but acts merely to
minimize the sum total of irreparable damage to the litigants.

12. Learned counsel for the appellant further relied upon the judgment of the
Hon'ble Supreme Court in the case of MAHARWAL KHEWAJI TRUST (REGD.),
FARIDKOT vs. BALADEV DASS reported in AIR 2005 SC 104. In the said judgment, the
Hon'ble Supreme observed as under:

10. Unless and until a case of irreparable loss or damage is made out by a party to
the suit, the Court should not permit the nature of the property being changed
which also includes alienation or transfer of the property which may lead to loss or
damage being caused to the party who may ultimately succeed and may further
lead to multiplicity of proceedings. In the instant case no such case of irreparable
loss is made out except contending that the legal proceedings are likely to take a
long time, therefore, the respondent should be permitted to put the schedule
property to better use. We do not think in the facts and circumstances of this case,
the lower appellate Court and the High Court were justified in permitting the
respondent to change the nature of property by putting up construction as also by
permitting the alienation of the property, whatever may be the condition on which
the same is done. In the event of the appellant's claim being baseless ultimately, it

Page No. 5 of 14
is always open for the respondent to claim damages, or in an appropriate case, the
Court may itself award damages for the loss suffered.

13. Learned counsel for the appellant further relied upon the judgment of the
Hon'ble Supreme Court in the case of ANAND PRASAD AGARWALLA vs.
TARAKESHWAR PRASAD AND OTHERS reported in AIR 2001 SC 2367 wherein the
Hon'ble Supreme Court held that it may not be appropriate for any Court to hold
mini trial at the stage of grant of Temporary Injunction.

14. Therefore Learned counsel for the appellant sought to set aside the impugned
order passed by the trial Court by allowing the present appeal.

15. Per contra, Sri S.S. Naganand, learned senior counsel appearing for the 17th
respondent - 17th defendant sought to justify the impugned order passed by the
trial Court and contended that admittedly the alleged MoU entered into between
defendant Nos.1 to 7 and the plaintiff on 2.9.2011 is an unregistered document. The
17th defendant has entered into JDA with 8th defendant on 27.10.2011. Later it was
submitted for registration on 27.6.2012. However, it was registered only on
27.2.2015 due to non-payment of the stamp duty within time. He further contended
that as on the date of filing of the suit, the very alleged MoU relied upon by the
plaintiff dated 2.9.2011 was not existing as admitted by the plaintiff in paragraph-19
of the plaint averments. In paragraph-19 of the plant, it was admitted that MoU was
cancelled on 25.9.2012. Therefore the very suit filed by the plaintiff is not
maintainable and hence question of granting Temporary Injunction does not arise.
Learned senior counsel further contended that in view of the arbitration clause
included in the MoU dated 2.9.2011, the plaintiff also initiated proceedings under
Section 9 of the Arbitration and Conciliation Act, 1996 before the City Civil Court,
Bangalore in AA No. 755/2012 and sought for injunction and the said Court has
directed the parties to maintain status-quo as regards title of the suit schedule
property. Hence the plaintiff cannot maintain parallel proceedings for the same
relief simultaneously and the same is impermissible. The learned senior counsel
further contended that admittedly the plaintiff has not sought to set aside the letter
dated 25.9.2012 issued by the 2nd defendant on behalf of the 1st defendant
canceling the MoU dated 2.9.2011 and therefore the plaintiff has no locus standi to
file the suit. Therefore the trial court was justified in rejecting the application for
Temporary Injunction. Therefore he sought to dismiss the present appeal.

16. In support of his contentions, the learned senior counsel appearing for the
Respondent No.17 relied upon the judgment of this Court in the case of M.
CHIDAMBARAM vs. N. SARGUNAM reported in ILR 1989 KAR 1357 wherein this held
that the suit filed for specific performance of contract to enforce the agreement of
sale does not create a right in the property, it creates a personal right to demand
specific performance.

17. The learned senior counsel further relied upon the Judgment in the case of STAR
APPARELS PRIVATE LIMITED vs. PARMPREET SINGH BINDRA @ KING BINDRA AND
OTHERS reported in 2009(2) Mh.LJ 76 wherein it is observed that: "Since there were
no legal rights that the plaintiffs could seek to enforce under their initial MoU with
defendant No.1 or upon the MoU between defendant NO.3 and defendant NO.1, the
acts that culminated into the final contract between the defendant NO.1 and
defendant No.7 need not be considered by the Court. The fact remains that the
negotiations did not culminate into an agreement in favour of the plaintiffs."

Page No. 6 of 14
18. The learned senior counsel appearing for the respondent further relied upon the
judgment in the case of HERITAGE LIFESTYLE AND DEVELOPERS LTD., vs. COOL
BREEZE CO-OPERATIVE HOUSING SOCEITY LIMITED AND OTHERS reported in
2014(3) Mh.LJ 376 wherein it is observed at paragraphs 36 and 37 as under:

"36. At this stage it would be appropriate to refer to one of the arguments advanced
by the learned counsel appearing for the petitioner that the said MOU would not
require payment of any stamp duty as the same did not grant any development
rights but provided that the development agreement would be entered in future. No
rights had been created in favour of the petitioner till conditions set out in the said
MOU were satisfied. At the same breath the petitioner also submits that nothing is
left for negotiation or to be agreed upon between the parties in future. In my view,
the argument of the petitioner that all the terms and conditions are already agreed
upon in the MOU and nothing further was to be agreed upon by entering into a
development agreement is self destructive and is contrary to the submissions of the
petitioner that under the said MOU, no development rights are created in favour of
the petitioner but it provided that the development agreement would be entered
into in future and no rights had been created in favour of the petitioner till
conditions set out in the MOU were satisfied.

37. xxx xxx, the said MOU at the most could be considered as an agreement to
enter into an agreement in future subject to various contingencies set out therein. In
my prima-facie view such MOU thus cannot be specifically enforced. In my prima
facie view specific performance of an agreement to enter into an agreement cannot
be granted."

19. Learned senior counsel appearing for the Respondent No. 17 further relied upon
the Judgment of the Hon'ble Supreme Court in the case of PURPLE MEDICAL
SOLUTIONS PRIVATE LIMITED vs. MIV THERAPEUTICS INC. AND ANOTHER reported in
(2015)15 SCC 622 wherein the Hon'ble Supreme Court held as under:

"xxx xxx it becomes abundantly clear that reference of even non-signatory parties
to an arbitration agreement can be made. It may be the result of implied or specific
consent or judicial determination. Normally, the parties to the arbitration agreement
calling for arbitral reference should be the same as those to the action. But this
general concept is subject to exceptions which are that when a third party i.e., non-
signatory party, is claiming or is sued as being directly affected through a party to
the arbitration agreement and there are principal and subsidiary agreements, and
such third party is signatory to a subsidiary agreement and not to the mother or
principal agreement which contains the arbitration clause, then depending upon the
facts and circumstances of the given case, it may be possible to say that even such
third party can be referred to arbitration."

20. Learned senior counsel appearing for Respondent No.17 lastly relied upon
judgment of this Court in the case of LAKSHMINARASIMHIAH AND OTHERS vs.
YALAKKI GOWD reported in AIR 1965 Mysore 310 wherein it is held that injunction
cannot be granted in doubtful cases.

21. Sri Padmanabha Mahale, learned senior counsel appearing for Respondent No.
8; Sri J. Ravindran, learned counsel appearing for Respondent No. 2 and Sri Bipin
Hegde, learned counsel appearing for Respondent NOs. 11, 15 and 16 sought to
justify the impugned order and also supported the arguments of the learned senior
counsel appearing for the respondent No.17 and sought for dismissal of the appeal.
Page No. 7 of 14
III. POINTS FOR DETERMINATION

22. In view of the aforesaid rival contentions urged by the learned counsel for the
parties, the points that arise for consideration in the present Miscellaneous First
Appeal are:

1. Whether the trial Court is justified in passing the impugned order dismissing the
application for Temporary Injunction filed under Order XXXIX Rules 1 and 2 of Code
of Civil Procedure?

2. Whether the appellant has made out any prima-facie case for interference by this
Court exercising the powers of the appellate jurisdiction under Order XLIII Rule 1(r)
of Code of Civil Procedure?

IV. CONSIDERATION

23. I have given my anxious consideration to the arguments advanced by the

learned counsel for the parties and perused the materials available on record
carefully.

24. It is an admitted fact that the present appellant who is the plaintiff before the
trial Court filed the suit for declaration that defendant Nos.8 to 16 have no manner
of right, title or interest to deal, transact or meddle in respect of the suit schedule
property and for specific performance directing the defendant Nos.1 to 7 to execute
a Joint Development Agreement in favour of the plaintiff with respect to the suit
schedule property in terms of the MoU dated 2.9.2011 and for Permanent Injunction
restraining the defendant Nos.1 to 16 from entering or, alienating, dealing or
otherwise encumbering the suit schedule property and also for Permanent Injunction
restraining the defendant No.17 from interfering or developing the suit schedule
property, contending that the plaintiff has entered into MoU with the defendant
Nos.1 to 7 on 2.9.2011 and paid a sum of Rs.18,95,814/- to the defendants 1 to 7
pursuant to the MoU. It is further case of the plaintiff that though the plaintiff was
awaiting to pass a resolution to enter into an agreement in terms of the MoU, the
2nd defendant issued letter on 25.9.2012 on behalf of the 1st defendant purporting
to cancel MoU dated 2.9.2011 citing false and flimsy reasons.

25. It is further case of the appellant-plaintiff that defendant Nos.1 to 16 have

colluded among themselves and have joined the hands with 17th defendant, a real
estate developer and attempting to alienate/encumber the schedule property to the
detriment and exclusion of the plaintiff's contractual rights. The plaintiff initially
intended to resolve the dispute with defendant Nos.1 to 7 through arbitration.
However, since defendant Nos.1 to 7 have colluded with defendant Nos.8 to 17 with
whom the plaintiff does not have an arbitration agreement, the plaintiff has filed
comprehensive suit seeking specific performance of its rights under the MoU dated
2.9.2011 and for Permanent Injunction against defendant Nos.1 to 17. It is also
stated in the plaint that plaintiff would take steps to withdraw the arbitration
application pursuant to the suit.

26. The trial Court considering the application as well as the documents produced by
the plaintiff has recorded a finding on scrutiny of the entire I.A. and the affidavit that
it is not clear as what is the document executed by defendant Nos.1 to 7 in favour of
defendant Nos.8 to 16 or what is the document executed by defendant Nos.1 to 7 in
collusion with defendant Nos.8 to 16 in favour of defendant No.17; It is only the

Page No. 8 of 14
apprehension of the plaintiff that the 17th defendant has displayed the Board for
developing the property and therefore it has sought for Temporary Injunction
without showing any hardship, prima-facie case and balance of convenience in its
favour; On reading each and every line in the MoU, the right of the plaintiff is
uncertain; The plaintiff will get right only after execution of the JDA between the
plaintiff and defendant Nos.1 to 7. The trial Court further recorded a finding that the
plaintiff has already approached the arbitration Court and the lis is pending for
adjudication. It is settled law that no party can accrue two causes of action to file the
suit as well as the Arbitration Proceedings. Therefore the trial Court was of the
specific opinion that the application for Temporary Injunction is not maintainable in
view of the dictum of the Hon'ble Supreme Court in the case of SUKANYA HOLDINGS
PRIVATE LIMTIED vs. JAYESH H. PANDYA reported in AIR 2003 SC 2252. The trial
Court also recorded a finding that the plaintiff has utterly failed to establish prima-
facie case, balance of convenience and that if the order of the Temporary Injunction
is not granted, he will be subjected to greater hardship. Therefore the trial Court
rejected the application.

27. On plain reading of the averments made in the plaint, it is clear that the plaintiff
has entered into MoU with defendant Nos.1 to 7 on 2.9.2011 and the 2nd defendant
on behalf of the 1st defendant has cancelled the MoU on 25.9.2012 and same is
admitted by the plaintiff in the plaint averments. Admittedly the plaintiff has not
sought for setting aside the said cancellation letter dated 25.9.2012 issued by
defendant Nos.1 and 2. Therefore as on the date of filing of the suit i.e., 7.3.2013
the MoU dated 2.9.2011 was not existing.

28. It is also not in dispute that as per the terms and conditions of the MoU dated
2.9.2011 i.e., in view of Clause-13 of the MoU, the appellant - plaintiff already
approached the Prl. City Civil & Sessions Judge in AA No. 755/2012 against
defendant Nos.1 to 7. The trial Court by the interim order dated 17.10.2012 directed
defendant Nos.1 to 7 to maintain status-quo as regards title of the suit schedule
property and the order of status-quo was extended until further orders on merits of
the main matter on 18.11.2015 and admittedly the said Arbitration Application
between the parties is now posted for orders on I.A. by 14.9.2017.

29. The plaint averments clearly depict that since defendant Nos.1 to 7 have
colluded with defendant Nos.8 to 17 and defendant Nos.8 to 17 are not parties to the
MoU, the comprehensive suit is filed. The fact remains that in respect of the very
property in question, the plaintiff already filed AA No. 755/2012 and obtained an
order directing the defendant Nos.1 to 7 to maintain status-quo till further orders on
merits on main matter. In view of the same, there is no prohibition to implead the
defendant Nos.8 to 17 in the said arbitration case. Normally, the parties to the
arbitration agreement calling for arbitral reference should be the same as those to
the action. But this general concept is subject to exceptions which are that when a
third party i.e., non-signatory party, is claiming or is sued as being directly affected
through a party to the arbitration agreement and there are principal and subsidiary
agreements and such 3rd party is signatory to a subsidiary agreement and not to
the mother or principal agreement which contains the arbitration clause, it may be
possible to say that even such third party can be referred to arbitration. Admittedly
in the present case, it is the specific case of the plaintiff that subsequent to the MoU
entered into between the plaintiff and defendant nos.1 to 7, the defendant Nos.1 to
7 executed a subsequent deed/agreement in favour of defendant Nos.8 to 16 and in
turn defendant Nos.8 to 16 executed an agreement/document in favour of the 17th

Page No. 9 of 14
defendant. Therefore the plaintiff ought to have impleaded the subsequent
agreement holders who stepped into the shoes of the original defendants in the
arbitration proceedings pending between the plaintiff and defendant Nos.1 to 7.

30. My view is fortified by the dictum of the Hon'ble Supreme Court in the case of
CHLORO CONTROLS INDIA (P) LIMITED vs. SEVEN TRENT WATER PURIFICATION INC.
reported in (2013)1 SCC 641 and the same is reiterated in the latest judgment of the
Hon'ble Supreme Court in the case of PURPLE MEDICAL SOLUTIONS PRIVATE
LIMITED vs. MIV THERAPEUTICS INC. AND ANOTEHR reported in (2015)15 SCC 622
wherein at paragraphs 12 and 14, the Hon'ble Supreme Court held as under:

12. According to the petitioner, the second respondent is an alter ego of the first
respondent. The first respondent is merely a corporate veil of the said respondent.
All acts/deeds/transactions on behalf of the first respondent were performed by the
second respondent including signing of the two agreements; the representations
made; and the commitments and undertakings furnished. It is, therefore, submitted
that the appointment of an arbitrator to be made by the Court should not only be on
behalf of the first respondent but also on behalf of the second respondent. To
support the above, reliance has been placed on the decision of this Court in Chloro
Controls India (P) Ltd. v. Severn Trent Water Purification Inc. [ (2013) 1 SCC 641 :
(2013) 1 SCC (Civ) 689] The relevant paragraphs placed before the Court may be
extracted hereinbelow: (SCC pp. 694-95, paras 102-04 & 107).

"102. Joinder of non-signatory parties to arbitration is not unknown to the arbitration

jurisprudence. Even the ICCA's Guide to the Interpretation of the 1958 New York
Convention also provides for such situation, stating that when the question arises as
to whether binding a non-signatory to an arbitration agreement could be read as
being in conflict with the requirement of written agreement under Article I of the
Convention, the most compelling answer is 'no' and the same is supported by a
number of reasons.

103. Various legal bases may be applied to bind a non-signatory to an arbitration

agreement:

103.1. The first theory is that of implied consent, third-party beneficiaries,

guarantors, assignment and other transfer mechanisms of contractual rights. This
theory relies on the discernible intentions of the parties and, to a large extent, on
good faith principle. They apply to private as well as public legal entities.

103.2. The second theory includes the legal doctrines of agent-principal relations,
apparent authority, piercing of veil (also called 'the alter ego'), joint venture
relations, succession and estoppel. They do not rely on the parties' intention but
rather on the force of the applicable law.

104. We may also notice the Canadian case of City of Prince George v. A.L. Sims &
Sons Ltd. [(1998) 23 YCA 223] wherein the Court took the view that an arbitration
agreement is neither inoperative nor incapable of being performed if a multi-party
dispute arises and not all parties are bound by the arbitration agreement: the
parties bound by the arbitration agreement are to be referred to arbitration and
court proceedings may continue with respect to the other parties, even if this
creates a risk of conflicting decisions.

***

Page No. 10 of 14
***

107. If one analyses the above cases and the authors views, it becomes abundantly
clear that reference of even non-signatory parties to an arbitration agreement can
be made. It may be the result of implied or specific consent or judicial
determination. Normally, the parties to the arbitration agreement calling for arbitral
reference should be the same as those to the action. But this general concept is
subject to exceptions which are that when a third party i.e. non-signatory party, is
claiming or is sued as being directly affected through a party to the arbitration
agreement and there are principal and subsidiary agreements, and such third party
is signatory to a subsidiary agreement and not to the mother or principal agreement
which contains the arbitration clause, then depending upon the facts and
circumstances of the given case, it may be possible to say that even such third party
can be referred to arbitration."

14. A perusal of the relevant clauses of the agreements providing for arbitration and
the facts set out herein adequately satisfies the Court that disputes and differences
between the petitioner and the respondents have arisen which require resolution by
a process of arbitration as contemplated in the agreements between the parties.
The petitioner had appointed its arbitrator (Mr. Justice S.H. Kapadia, a former Chief
Justice of India) and despite notice, the respondents have failed to make the
requisite appointment. The said lapse/failure would confer jurisdiction under Section
11(6) of the Arbitration Act to appoint an arbitrator on behalf of the respondents.
The facts stated in the present applications showing the involvement of the second
respondent and the decision of this Court in Chloro Controls India (P) Ltd. v. Severn
Trent Water Purification Inc., [ (2013) 1 SCC 641 : (2013) 1 SCC (Civ) 689], in my
considered view, would justify appointment of an arbitrator on behalf of both the
respondents and permit the process of arbitration to be conducted by lifting the
corporate veil to ascertain the role of the second respondent in the transactions in
question as claimed by the petitioner.

31. It is also not in dispute that as on the date of filing of the suit by the plaintiff on
7.3.2013, the alleged MoU dated 2.9.2011 was not existing as the same was
terminated by defendant Nos.1 to 7 on 25.9.2012 as admitted in the plaint at
paragraph-19, which reads as under:

19. Whenever the Plaintiff confronted the Defendant Nos.2 to 7 regarding the
clearance of objections and litigations, the reply was that it would be done at the
earliest. The Plaintiff has patiently waited for the resolution of the same. When
things stood thus, the 2nd Defendant issued a letter dated 25.09.2012 on behalf of
the 1st Defendant purporting to cancel the MoU dated 02.09.2011 citing false and
flimsy reasons. The letter dated 25.09.2012 states that the members of the Church
have decided not to develop the property since there have been issues and has
hence purported to cancel the MoU dated 25.09.2012.

32. In view of the cancellation letter dated 25.9.2012 stated supra cancelling MoU
entered into between the plaintiff and defendant Nos.1 to 7, there were no legal
rights to the plaintiff to seek to enforce the initial MoU dated 2.9.2011 entered into
with defendant Nos. 1 to 7. The fact remains that negotiations between the plaintiff
and defendants did not culminate into agreement in favour of the plaintiff and have
culminated into the registered joint agreement between the defendant Nos.1 to 7
and defendant Nos.8 to 16. Therefore the very maintainability of the suit filed by the
plaintiff on the basis of the non- existing MoU dated 2.9.2011 is doubtful.
Page No. 11 of 14
33. On reading of the entire MoU entered into between the plaintiff and defendant
Nos.1 to 7 dated 2.9.2011, it is clear that it would not require any payment of stamp
duty as the same did not grant any development right and it only provides that the
development agreement would be entered in future. No rights had been created in
favour of the plaintiff till the conditions set out in the said MoU were satisfied.
Admittedly in the present case as on the date of filing the suit, the alleged MoU was
not existing. Therefore prima-facie such MoU cannot be enforced.

34. According to the learned counsel for the appellant- plaintiff, none of the
defendants have filed objections to I.A. no.2 for Temporary Injunction before the trial
Court. The documents produced 1st time before this Court by the learned counsel
for the defendants cannot be looked into. It is well settled principles of law that the
plaintiff who approaches the Court for specific performance and other reliefs has to
establish his case independently and he cannot succeed on the weakness of the
case of the defendants. So far as non-filing of the objections, is immaterial while
considering I.A. for Temporary Injunction. It is for the plaintiff to prove prima-facie
case for grant of Temporary Injunction sought for by him. The plaintiff himself
admitted in the plaint that MoU dated 2.9.2011 was cancelled by defendant Nos.1 to
7 on 25.9.2012 and suit filed on 7.3.2013. Therefore the plaintiff's right is uncertain
in view of the non-existing MoU as on the date of filing the suit. The plaintiff has not
made out any prima-facie case to grant an order of Temporary Injunction exercising
the powers under Order XXXIX Rules 1 and 2 of Code of Civil Procedure restraining
the defendants or their agents, servants from changing nature of the schedule
property or from developing the schedule property and not to put up any
construction. The trial Court has recorded a finding that the plaintiff has failed to
prove prima-facie case and balance of convenience in his favour and therefore
dismissed the application for Temporary Injunction.

35. For the reasons stated above, the 1st point raised in the present appeal is
answered in the affirmative holding that the trial Court is justified in passing the
impugned order dismissing the application filed by the plaintiff for Temporary
Injunction under Order XXXIX Rules 1 and 2 of Code of Civil Procedure.

36. It is further contention of learned counsel for the appellant-plaintiff that in view
of the MoU dated 2.9.2011, the defendant Nos.1 to 7 have taken payments out of
the security deposit from the plaintiff stating reasons like security, investigation,
new year and Christmas parties etc., in all a sum of Rs.18,95,814/-. The present
appeal arises out of the order dated 5.9.2013 dismissing I.A. No. 2 filed under Order
XXXIX Rules 1 and 2 of Code of Civil Procedure for Temporary Injunction. Therefore
this Court desists to observe anything on payment made by the plaintiff to
defendant Nos.1 to 7. It is for the plaintiff to take proper steps against defendant
Nos.1 to 7 to recover the said amount.

37. It is relevant to state at this stage that the plaintiff in the plaint averments has
specifically stated that since the present suit is filed against all the defendants as a
comprehensive suit seeking consolidated reliefs, the plaintiff would take steps to
withdraw Arbitration Application No. 755/2012 pursuant to the suit. Admittedly AA
No. 755/2012 was filed on 27.9.2012 and obtained an order directing the defendant
Nos.1 to 7 to maintain status-quo as regards title of the schedule property till filing
of the objections by an order dated 17.10.2012 and the said interim order continued
from time to time and ultimately on 18.11.2015 it was extended till further orders

Page No. 12 of 14
on merits on main matter and admittedly now the matter is posted for orders on I.A.
to 14.9.2017. Therefore it is clear from the material on record and as per theorder
sheet maintained in AA No.755/2012 that the said arbitration proceedings are also
pending for adjudication and admittedly the plaintiff has not withdrawn the said
arbitration proceedings as stated in paragraph-32 of the plaint in the present suit.
The interim relief sought under Order XXXIX Rules 1 and 2 in the said AA No.
755/2012 is for restraining the defendant Nos.1 to 7 or their agents or nominees or
anybody claiming through or under them from encumbering or alienating or in any
way parting with the possession of the schedule property or part thereof, or
inducting any third parties into the schedule property. In the present suit, the
plaintiff is seeking Permanent Injunction against defendant Nos.1 to 17 and in I.A.
No.2 filed in the present suit, the plaintiff is seeking an order of Temporary
Injunction restraining the 17th defendant, its agents, henchmen, representatives
and assigns or any persons claiming under or through it from changing the nature of
the schedule property, from developing the schedule property and not to put up any
construction in any manner. On perusal of the reliefs sought in the suit and in the
arbitration proceedings, it clearly indicates that the appellant is seeking parallel
remedies simultaneously on the same cause of action and against defendant Nos.1
to 7 in arbitration proceedings and defendant Nos.1 to 17 in the present suit and
same is impermissible in law.

38. It is further contention of the learned counsel for the appellant - plaintiff that the
trial court while considering the application for Temporary Injunction has decided
the same on merits of the suit, which is impermissible. There is no quarrel with the
said contention raised by the learned counsel for the appellant. It is well settled
principle of law that while deciding the I.A. for Temporary Injunction, the trial Court
cannot decide the same on the merits of the suit and further observations made by
the trial Court while deciding I.A. for Temporary Injunction shall not come in the way
of either of the parties to establish their case independently based on the oral and
documentary evidence to be adduced and produced by the parties.

39. The learned counsel for the appellant further relied upon the dictum of the
Hon'ble Supreme Court in the case of MAHARWAL KHEWAJI TRUST (REGD.)
FARIDKOT vs. BALDEV DASS reported in AIR 2005 SC 104 wherein the Hon'ble
Supreme Court while dealing with the powers of the appellate Court under Order
XLIII Rule 1 and Order XXXIX Rules 1 and 2 of Code of Civil Procedure has observed
that unless and until a case of irreparable loss or damage is made out by a party to
the suit, the Court should not permit the nature of the property being changed
which also includes alienation or transfer of the property which may lead to loss or
damage being caused to the party who may ultimately succeed and may further
lead to multiplicity of proceedings. In those circumstances, it was observed that the
appellate Court and the High Court were not justified in permitting the respondent
therein to change the nature of the property by putting up construction or
permitting the alienation of the property. There is no quarrel with regard to law laid
down by the Hon'ble Supreme Court to the facts and circumstances of the said case.
Admittedly in the present case, the very maintainability of the suit filed by the
plaintiff is doubtful in view of non-existence of the MoU dated 2.9.2011 entered into
between the plaintiff and defendant Nos.1 to 7 as on the date of filing the suit.
Therefore the dictum relied upon by the learned counsel for the appellant in the
case of MAHARWAL KHEWAJI TRUST (REGD.), FARIDKOT vs. BALADEV DASS reported
in AIR 2005 SC 104 has no application to the facts and circumstances of the present
case.
Page No. 13 of 14
40. For the reasons stated above, the 2nd point raised in the present appeal is
answered in the negative holding that the appellant has not made out any case for
interference by this Court exercising the powers of the appellate jurisdiction under
Order XLIII Rule 1 of Code of Civil Procedure.

CONCLUSION

41. The material on record clearly depicts that admittedly the appellant - plaintiff
filed Arbitration Application No. 755/2012 against defendant Nos.1 to 7 and obtained
an interim order and same is still in force and during the subsistence of the said
interim order, the present suit is filed for specific performance, injunction etc., and
as on the date of filing of the suit, the alleged Memorandum of Understanding
entered into between the plaintiff and defendant Nos.1 to 7 dated 2.9.2011 was not
existing and that the same was cancelled by the 2nd defendant on 25.9.2012 as
admitted by the plaintiff in the plaint averments. Therefore, the very maintainability
of the present suit filed by the plaintiff is doubtful. In such circumstances, the grant
of equitable order of Temporary Injunction would not arise. My view is fortified by
the dictum of this Court in the case of LAKSHMINARASIMHIAH AND OTHERS vs.
YALAKKI GOWD reported in AIR 1965 MYSORE 310. Therefore the trial Court is
justified in rejecting the application for Temporary Injunction and no interference is
called for exercising the powers of this Court under Order XLIII Rule 1 of Code of Civil
Procedure in the absence of any perversity made out from the impugnedorder by
the appellant.

42. In view of the peculiar facts and circumstances of the present case, it is
needless to observe that any observations made by the trial Court while deciding
the application for Temporary Injunction filed under Order XXXIX Rules 1 and 2 of
Code of Civil Procedure and this Court while deciding the present appeal, shall not
come in the way of either of the parties to establish their respective case
independently after adjudication. It is also relevant to observe at this stage that the
defendant Nos.8 to 17 who alleged to have entered into subsequent Joint
Development Agreement with defendant Nos.1 to 7 shall not claim any equity and
any development made shall be always subject to the result of the original suit
pending between the parties.

43. Further, alienation, if any by any of the defendants during the pendency of the
suit is always hit by the provisions of Section 52 of the Transfer of Property Act and
the defendants shall not claim any equity in case the plaintiff succeeds in the suit.

44. Since both the parties are agitating the legal battle for the rights in respect of
the immovable valuable suit schedule property and the suit was filed in the year
2013, I hope and trust that the trial Court will decide the suit expeditiously subject to
cooperation of the parties to the lis.

With the above observations, Miscellaneous First Appeal is disposed of.

Page No. 14 of 14