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Judgment
S. Rajeswaran, J.—Original Application No. 129/2006 has been filed for an order of interim injunction restraining the respondents, their
men, servant, agent and any person claiming under the respondents, from in any manner, interfering with the possession of the property as shown in
schedule bearing S. No. 52 and 53/2 and bearing Plot Nos. 13 to 18, 31, 32, 37, 45 to 50, 57 to 59, 61 to 63, 65, 66, 72 to 77, 87, 87, 93, 94,
97, 98, 112, 118 and 125 at Sri Kumaran Nagar 1st Street, Seevaram Village, Chennai-96 measuring about 1 acre and 5 cents (45,885 sq.ft.)
including putting up any construction either by himself or through their agents, contractors or developers.
O.A. No. 130/2006 has been filed for an order of interim injunction restraining the respondents, their men, servant, agent and any person
claiming under the respondent, from alienating, selling, mortgaging, creating a charge or a lease, in any manner, or encumbering the property either
by himself or through an agent develop the property comprised in S. Nos. 52 and 53/2 as described in the schedule, measuring about 20,236 sq.ft.
(8.43 grounds) bearing Plot Nos. 126 to 131, 28-B, 29, 30 and 109 to 111 at Sri Kumaran Nagar 1st Street, Seevaram Village, Chennai-96
pending disposal of O.A. No. 129/2000.
O.A. No. 785/2006 has been filed for an order of attachment by creating a charge in respect of property comprised in S. Nos. 52 and 53/2 as
described in the schedule measuring about 20,236 sq.ft. (8.43 grounds) bearing Plot Nos. 126 to 131, 28-B, 29, 30 and 109 to 111 at Sri
Kumaran Nagar 1st Street, Seevaram Village, Chennai-96 pending disposal of O.A. No. 129/2006.
Application No. 1758/2006 in O.A. No. 129/2006 has been filed to vacate the order of interim injunction dated 22.2.2006 made in O.A. No.
129/2006.
Application No. 1759/2006 in O.A. No. 130/2006 has been filed to vacate the order of interim injunction dated 22.2.2006 made in O.A. No.
130/2006.
The brief facts leading to the above applications are as under:
The applicant is a Trust doing charitable work and the same is exempted from paying tax u/s 80G of the Income Tax Act. The Trust had
properties measuring about 5.06 acres in Seevaram village of Tambaram Taluk and these are unutilised lands. In order to augment the sources of
finance for the activities of the Trust, the Trust decided to sell and dispose of the above mentioned properties. On 1.3.1998 the Trust entered into
an agreement with the 1st respondent herein and according to which the applicant would get Rs. 45,000/- per cent, but it was stated in the
agreement that it would cease on 28.2.2001. By this agreement dated 1.3.98, the 1st respondent undertook to dispose of the property by
identifying the purchasers and provide all assistance to dispose of the Trust properties on or before 28.2.2001. However, the 1st respondent did
not complete the sale of the entire property before 28.2.2001.
The trustees now discovered that 1st respondent sold the land at a price much higher than what is stated in the sale deeds and between years
2001 to 2005, when 1st respondent sought to dispose of 38 grounds, he would have definitely made Rs. 2 crores secretly without the knowledge
of the trust. Further, in December 2004, 1st respondent sold 8 grounds in his name and also 2nd respondent''s name who is his wife. Till July 2005
the trustees did not know about the under-valuation of the property and it was only when the trustees noticed a sale deed which was registered at
a value of Rs. 20 lakhs per ground in the vicinity of the properties of the trust, they realised that huge profits were made surruptitiously by 1st
respondent and therefore on 28.7.2005 they informed 1st respondent that the sale of remaining 1.05 acres would not be available for sale and 1st
respondent would cease to have any connection with the trustees. Therefore, it is incumbent and mandatory on the part of 1st respondent to
disclose his earnings concerning the sale of 38 grounds of land between the years 2001-2005. It is stated by the applicant that the properties are
situated within 1000 metres of Old Mahabalipuram Road and leading Information & Technology companies are doing business in and around the
property. The applicant is referring the dispute arising out of the agreement dated 1.3.98 to an arbitrator as per Clause 16 and pending referring
the dispute to arbitration the applicant has filed O.A. Nos. 129, 130 and 785 of 2006 u/s 9 of the Act, 1996 for the aforesaid reliefs.
This court by order dated 22.2.2006 granted an order of interim injunction in G.A. Nos. 129 and 130 of 2006 and ordered notice in O.A. No.
785/2006.
The respondents entered appearance through their counsel and filed application Nos. 1758 and 1759 of 2006 to vacate the interim injunction
granted by this Court on 22.2.2006.
In their common counter affidavit, the respondents stated that the applicant is guilty of suppressing the agreement dated 1.4.1998 entered into
between the parties and in that agreement dated 1.4.98 there is no clause for referring the dispute for arbitration. According to the respondents, the
agreement dated 1.4.98 is the real agreement and the agreement dated 1.3.98 was obtained from 1st respondent surreptitiously on 10.2.2005
informing 1st respondent that they needed the signature from him in the agreement dated 1.3.98 for income tax purposes. It is stated by the 1st
respondent that the auditor is the same for both the agreements and applicant and the auditor misusing his position and in collusion with the
applicant made 1st respondent to sign agreement dated 1.3.98 on 10.2.2005. According to the respondents, as per sale agreement dated 1.4.98,
1st respondent was permitted to sell the entire property and remit a sum of Rs. 45,000/- per cent., to the Trust and any amount over and above
Rs. 45,000/- per cent, was legally entitled to towards 1st respondent''s consideration for developing and selling the plots. Prior to signing the
agreement on 1.4.1998, 1st respondent paid a sum of Rs. 5 lakhs as advance. It is pointed out by the respondents that 1st respondent would only
identify the purchaser and the sale deeds ought to be executed by the Power of Attorney agent of the Trust that too, after obtaining written
permission from the counsel of the Trust. According to the agreement dated 1.4.98, 1st respondent has been selling the plots and remitting the
agreed sale consideration of Rs. 45,000/- per cent, into the bank account of the Trust. The respondents stated that for 5.06 acres of the lands, at
the rate of Rs. 45,000/- per cent, 1st respondent is to pay a total sum of Rs. 2,27,70,000/- and as on date, a total sum of Rs. 2,20,81,500/- was
already paid. Therefore, the respondents prayed for dismissal of the three applications filed by the applicant''s trust.
The respondents have also filed additional common affidavit, wherein a comparative analysis of the agreement dated 1.3.1998 and the sale
agreement dated 1.4.98 have been given to contend that the agreement dated 1.3.98 has been obtained surreptitiously to nullify the original
agreement dated 1.4.98.
The applicant filed a reply affidavit reiterating the earlier stand, wherein in para 10, the applicant for the first time, mentioned about the sale
agreement dated 1.4.1998 by stating that since the area of property was large, another agreement was executed on 1.4.98 as the applicant had an
apprehension whether 1st respondent would be able to sell the land expeditiously.
An affidavit was filed by one R. Thiagarajan, Chartered Accountant, who is the auditor for 1st respondent and the applicant. In his affidavit,
the Chartered Accountant has stated that he has not advised 1st respondent to sign certain antedated agreement as alleged by 1st respondent.
Heard the learned Counsel for the applicant and the learned Counsel for the respondents. I have also perused the documents filed and the
judgments referred to in support of their submissions.
The learned Counsel for the applicant-trust submitted that a prima facie case has been made out by the trust as to how the trust properties
were sold by 1st respondent at a lesser price and how a huge profit was made by 1st respondent surreptitiously. Therefore, the learned Counsel
contended that until the entire arbitration proceedings are completed, the interim order already granted by this Court ought to be extended.
Per contra, the learned Counsel for the respondents submitted that by suppressing the sale agreement dated 1.4.1998 and obtaining interim
orders from this Court on the basis of the suppression, the applicant is not entitled to get the discretionary relief of injunction and on this ground
alone the interim orders ought to be vacated. He further added that even a cursory glance of the 2 agreements would reveal that the agreement
dated 1.3.98 is not a genuine agreement and as the agreement dated 1.4.98 does not have an arbitration clause, the application filed u/s 9 of the
Act, is not maintainable. At any event, the learned Counsel submits that 2nd respondent, the wife of 1st respondent is not a party to any agreement
and therefore no arbitration proceedings u/s 9 of the Act, 1996 could be initiated against her. The learned Counsel relied on the decisions of the
Supreme Court reported in M/s. Gujarat Bottling Co. Ltd. and others Vs. Coca Cola Company and others, and Sukanya Holdings Pvt. Ltd. Vs.
Jayesh H. Pandya and Another, in support of his submissions.
I have considered the rival submissions carefully with regard to facts and citations.
It is not in dispute that Section 9 applications were filed by the applicant on the basis of the agreement dated 1.3.1998, the original of which
has been produced before this Court. As per the agreement dated 1.3.98, 1st respondent agreed to undertake the disposal of lands measuring
5.06 acres at Thoraipakkam, Chennai by way of plotting out the same with or without any further development at his own cost and do all that is
necessary to make it marketable at his cost and the applicant-trust is entitled to an amount calculated at Rs. 45,000/- per cent. Under Clause 17 of
the agreement dated 1.3.1998 it is agreed that the jurisdiction of resolution of any dispute would be within the jurisdiction of courts in Chennai and
in the event of any dispute, the same would be resolved by conciliation and/or by arbitration under the Act, 1996. The agreement dated 1.3.98
was disowned by the first respondent by contending that he was made to sign the same under a false pretext on 10.2.2005 and the auditor also
hand in glove with the applicant in this regard. A perusal of the agreement dated 1.3.98 would clearly establish that it was executed on a ten rupee
stamp paper purchased on 20.10.1997. This agreement was signed on all pages by 1st respondent alone and only on the last page the trustee,
M.Ct. Pethachi of the applicant has put his signature that too, without affixing the seal of the trust. Therefore, in my opinion, at the stage of
disposing of Section 9 application for the interim reliefs, the applicant has not established a prima facie case of executing a valid agreement on
1.3.98 by both parties. Whether this agreement dated 1.3.98 was surreptitiously obtained or not is a question that would be gone into only in an
appropriate proceedings and not in this proceedings. It is suffice to establish that the agreement dated 1.3.98 was not signed by both the parties on
each page.
It is also not in dispute that in the affidavit filed in support of Section 9 application, there is not even a whisper about the second agreement
dated 1.4.98. Only after the counter affidavit was filed by respondents informing about the existence of sale agreement dated 1.4.98, only in their
reply, the applicant for the first time mentioned about the sale agreement dated 1.4.98. It is also not in dispute that this agreement dated 1.4.98
does not contain an arbitration clause. Therefore, I find force in the learned Counsel for the respondents'' submission that the applicant is guilty of
suppression of material facts namely, the sale agreement dated 1.4.98 and the injunction applications are liable to be dismissed on the principle
Suppressio veri suggestion falsi"". Needless to add that when a party approaches the court for getting the discretionary relief of injunction, should
come with clean hands and should not suppress any material which will have direct bearing on the orders passed by the court.
In their reply, the applicant stated that as they had an apprehension about the ability of 1st respondent to sell the land expeditiously, another
agreement was executed on 1.4.1998. A copy of the agreement dated 1.4.98 was enclosed in the typed book filed by the respondents. A perusal
of the same would reveal that there was not at all a mention, not even a remote reference to the earlier agreement dated 1.3.98. Not only there is
no arbitration clause in the agreement dated 1.4.98, but it is mentioned in Clause 10(a) that if the trust commits breach of any of the terms of the
agreement, 1st respondent could be entitled for specific performance of contract and vice versa. It is further stated in Clause 6 of the agreement
dated 1.4.98 that it is now agreed that as long as this agreement dated 1.4.98 is in force, except this agreement, no agreement is in force. A
combined reading of Clause 6 and Clause 10 would now establish that even if there is any other agreement, this agreement dated 1.4.98 alone
would prevail and in such circumstances, considering the fact that there is no arbitration clause in the agreement dated 1.4.98, the invocation of
Section 9 of the Act, 1996 itself is not in order and it is doubtful whether, in view of the admitted second agreement dated 1.4.98, there exists an
arbitration clause at all to initiate arbitration proceedings. Further, this agreement dated 1.4.98 was executed on a Rs. 20 stamp paper purchased
on 1.4.98 which was signed by both the parties on all the pages and the official seal of the trustee was affixed on all the pages which was not there
in the previous agreement dated 1.3.98. Apart from that, in both the agreements, 1st respondent alone was a party and therefore as rightly
submitted by the learned Counsel for the respondents, the Section 9 applications are not maintainable against 2nd respondent.
Further, the agreement dated 1.3.1998 only states that 1st respondent agreed to undertake the disposal of the property and the applicant-trust
is only entitled to an amount, calculated at Rs. 45,000/- per cent. The sale agreement dated 1.4.98 also stipulates that the applicant agreed to sell
and convey the property to 1st respondent or his nominee at the rate of Rs. 45,000/- per cent. A copy of the sale deed dated 11.7.2005 filed by
the respondents would also show that the same was executed by the Power of Attorney of the applicant and not by 1st respondent. In such
circumstances, the applicant has miserably failed to establish a prima facie case on factual aspects also.
In M/s. Gujarat Bottling Co. Ltd. and others Vs. Coca Cola Company and others, , the Hon''ble Supreme court while referring to the three
tests of prima facie case, balance of convenience and irreparable injury if injunction is not granted, held that the person who seeks an order of
injunction under Order 39 Rules 1 and 2 of C.P.C., should show that his conduct is fair, honest and free from blame. The relevant portions of the
judgment are as under:
The grant of an interlocutory injunction during the pendency of legal proceedings is a matter requiring the exercise of discretion of the court.
While exercising the discretion the court applies the following tests: (i) whether the plaintiff has a prima facie case; (ii) whether the balance of
convenience is in favour of the plaintiff; and (iii) whether the plaintiff would suffer an irreparable injury if his prayer for interlocutory injunction is
disallowed. The decision whether or not to grant an interlocutory injunction has to be taken at a time when the existence of the legal right assailed
by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. Relief
by way of interlocutory injunction is granted to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be
resolved. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be
adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such
protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having
been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against
another and determine where the ""balance of convenience"" lies. (See: Wander Ltd. and Another Vs. Antox India P. Ltd., , (SCC at pp.731-32).
In order to protect the defendant while granting an interlocutory injunction in his favour the court can require the plaintiff to furnish an undertaking
so that the defendant can be adequately compensated if the uncertainty were resolved in his favour at the trial.
In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted
earlier, to be vacated. Under Order 39 of the Code of Civil Procedure, jurisdiction of the court to interfere with an order of interlocutory or
temporary injunction is purely equitable and, therefore, the court, on being approached, will, apart from other considerations, also look to the
conduct of the party invoking the jurisdiction of the Court, and may refuse to interfere unless his conduct was free from blame. Since the relief is
wholly equitable in nature, the party invoking the jurisdiction of the court has to show that he himself was not at fault and that he himself was not
responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom
he was seeking relief. His conduct should be fair and honest. These considerations will arise not only in respect of the person who seeks an order
of in junction under Order 39 Rule 1 or Rule 2 of the Code of Civil Procedure, but also in respect of the party approaching the Court for vacating
the ad interim or temporary injunction order already granted in the pending suit or proceedings.
In the present case, not only the applicant has failed to establish a prima facie case, but also is guilty of suppressing the sale agreement dated
1.4.1998 and therefore the applicant is not entitled to the order of an injunction as the jurisdiction of the court to grant an order of injunction under
Order 39 Rules 1 and 2 C.P.C., is purely equitable. It is true that the provisions of C.P.C., 1908 will not apply to the conduct of arbitral
proceedings, but at the same time, while considering an application filed u/s 9 of the Act, 1996 for interim injunction, the principles governing the
field of granting injunction under Order 39 Rules 1 and 2 C.P.C., could be applied by the courts.
In Sukanya Holdings Pvt. Ltd. Vs. Jayesh H. Pandya and Another, , the Hon''ble Supreme Court held that there is no power conferred on
court to add parties who are not parties to the agreement in the arbitration proceedings.
Admittedly, 2nd respondent, the wife of 1st respondent is neither a party in the agreement dated 1.3.98, nor a party in the agreement dated
1.4.98 and therefore as already held by me, no arbitration proceedings could be initiated against her.
In the result, I find no merits in O.A. Nos. 129/2006, 130/2006 and Application No. 785/2006 and they are all dismissed. No costs.
Consequently, Application Nos. 1758/2006 and 1759/2006 are allowed and the orders of interim injunction already granted by this Court on
22.2.2006 are vacated.