Malika Housing Private Limited vs Sankar Lal Saha

The present revisional application has been directed against an order whereby the appellate court granted ad interim injunction.

The learned counsel for the defendant/ respondent/petitioner submits that without serving upon the petitioner any copy of the plaint, it was communicated to the petitioner from the end of the opposite party that the opposite party has filed a suit and had obtained an ad interim order of injunction in connection with the miscellaneous appeal from the suit. Apparently, the suit was filed for permanent injunction restraining the petitioner from selling, transferring, assigning, letting out or otherwise dealing with the suit property. In the said suit, the plaintiff/opposite party filed an application for temporary and ad interim order of injunction in the same tune. Upon the prayer for ad interim order of injunction being refused by the trial court, the plaintiff/opposite party preferred a miscellaneous appeal, in which an ad interim order was granted, restraining the petitioner from transferring or otherwise disposing of the suit property, as mentioned in the schedule to the injunction application, to any third party till the next date.

Subsequently, another injunction application was filed by the opposite party praying for an injunction restraining the petitioner from handing over physical possession of any portion of the schedule property to any third party. Upon the trial court having refused ad interim order of injunction on such petition also, another miscellaneous appeal was preferred by the opposite party, in which also an ad interim order was granted restraining the present petitioner and its men and/or agents from handing over physical possession of any portion of the schedule property to any third party till the next date.

The present two revisional applications have been filed by the developer/petitioner against the said two orders of injunction passed in the aforesaid miscellaneous appeals.

Learned counsel for the petitioner, upon placing reliance on the averments made in the injunction application by the opposite party, argues that the specific stand of the opposite party in the present suit is that there is no agreement in the eye of law and the agreement, if any, is void. Learned counsel for the petitioner also relied upon a communication dated December 12, 2018, apparently by the opposite party to the petitioner, which was annexed to the injunction application of the opposite party, wherein it was also reiterated that in view of an arbitral award passed previously, the agreement, as a whole, became invalid, inactive and void in the eye of law.

Placing reliance on the relevant portion of the arbitral award in question, dated November 25, 2017, learned counsel for the petitioner submits that it was held therein that since arbitration clause is also an integral part of the instrument, that is, the development agreement, the arbitration clause could not be looked into for the purpose of reference as the document was not properly stamped. It was further recorded in the arbitral award that the counsel for the claimant had not sought any relief to get the agreement stamped and registered and thereafter to produce the same before the arbitrator to enable the arbitrator to look into the arbitration clause and continue with the reference. It was also recorded that the respondent as well as claimant therein conceded to the fact that the documents had not been registered. In the opinion of the arbitrator, the document-in-question was required to be registered. Accordingly, it was held that the arbitration agreement could not be looked into by the arbitrator at all in absence of the document being properly stamped.

In such view of the matter, an objection taken by the present petitioner under Section 16 of the Arbitration and Conciliation Act, 1996 was allowed by the arbitrator, thereby dropping the arbitral proceeding.

As such, it is argued on behalf of the petitioner that the arbitration agreement was not rendered void or invalid by the arbitral award but, procedural law merely impeded the arbitrator to look into the same for any purpose in the absence of adequate stamp and registration.

In such view of the matter, it is argued by the petitioner that the opposite party had no prima facie case in the said injunction applications as well as miscellaneous appeals, in which the ad interim orders, impugned in the two revisions, were passed.

Learned counsel for the plaintiff/opposite party, on the other hand, argues that the petitioner itself had admitted in the application under Section 16 of the 1996 Act that the development agreement forming the sole foundation of the reference before the arbitrator had neither been registered nor properly stamped and, as such, the said agreement was not tenable in law and consequently, the arbitration clause contained in such agreement also could not be construed to be a valid or enforceable agreement as is defined under the said Act. Since there is no valid or enforceable arbitration agreement in between the parties to the present reference, the reference itself was bad.

As such, the opposite party argues that it was the petitioner itself which had canvassed before the arbitrator that there was no valid agreement enforceable in the eye of law. Thus, the petitioner cannot have any legal right to transfer, alienate and/or hand over possession in respect of the suit property in the absence of any valid arbitration agreement.

It is further submitted that the opposite party has subsequently terminated the development agreement and as such, the petitioner does not have any present right to deal with the suit property in any manner. Hence, it is argued that the appellate court was justified in passing both the impugned orders.

A perusal of the arbitral award, reveals that the entire scope of consideration, while upholding the objection of the opposite party and dropping the proceeding, was that the development agreement containing the arbitration clause was not sufficiently stamped and/or registered. As such, the arbitrator as well as any other authority and/or court was precluded from looking into the said agreement or arbitration clause by the operation of the Stamp Act as well the Registration Act. Hence, the said observations were not an adjudication of the agreement being rendered void or otherwise invalid in any manner.

In the present context, the development agreement, which was very much relied on by the opposite party in taking out the arbitration proceeding, exists, as was admitted by the opposite party itself. However, the same could not be looked into for the purpose of any adjudication or for any other purpose by any judicial or other authority merely because the same was not properly stamped and registered. There is always scope of the document being impounded and/or for any authority to look into the agreement and the insufficiency of stamp and/or registration does not render the agreement void altogether, as sought to be canvassed by the opposite party.

In view of the above discussion, in the present case the opposite party does not have a prima facie triable issue to go for trial, nor is the balance of convenience and inconvenience in favour of grant of injunction, just as the opposite party would not suffer any irreparable injury if no injunction order is passed. As far as urgency is concerned, the opposite party obviously did not come with clean hands, waiting for the construction of the multi-storied building to be completed by the petitioner upon clearing all obstacles and taking necessary permissions from several authorities and investing huge sums of money and materials and closing in with a prayer for injunction just as the constructed flats were going to be transferred by the petitioner.

The attempt of the opposite party to obtain an injunction appears to be a "dog in the manger policy" and, as such, patently mala fide.

In such view of the matter, the appellate court acted without jurisdiction in granting ad interim injunction in both the matters.

Accordingly, C.O. No.940 of 2019 as well as C.O. No.944 of 2019 are allowed on contest, thereby setting the orders impugned in both the said revisional applications. The trial court is requested to dispose of the pending injunction applications as expeditiously as possible.