1 arbp1303-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.1303 OF 2010 M/s.V.K. Developers ....Petitioner V/s. Hemant A. Desai ....Respondent Mr.Chirag Balsara i/b Mr.A.C. Mahimkar for the Petitioner. Mr.Madhusoodan Nair i/b KPMC Legal for the Respondent. CORAM : S.J. VAZIFDAR, J. DATE : 27TH OCTOBER, 2010. P.C. :- 1. The petition has been filed under section 9 of the Arbitration and Conciliation Act, 1996. 2. The parties had entered into a joint development agreement dated 21.7.2006. The respondent is the lessee of the said property for ninety nine years. The petitioner had no interest in the property except to the extent of the said agreement. Clauses 3, 5, 13 and 14 read as under :- “3) The ratio for sharing the said saleable area between the Owner and the Developers shall be equal i.e. 50% each of the total saleable F.S.I. In the event any further F.S.I. or T.D.R. Is granted in future than the same shall be utilised upon the said building between the parties hereto also in equal proportion (i.e. 50% + 50% each) it is agreed that the charges for procuring TDR and construction shall be borne and paid by the owner and Developers jointly in equal proportions i.e. (50% + 50%) each. The additionally constructed saleable area shall also be shared in equal proportions (i.e. 50% + 50%) each. 2 arbp1303-10 5) The Developers do hereby agree that the list of the Flats available for disposal to the Owner is setout in Annexure “2” herein and duly marked upon the provisional plan hereto annexed and shown by Red Colour Strips be allotted to the said Owner and/or his nominees by the Developers free of charge on Ownership basis and appropriate Agreements be executed with the said Ownership and/or his nominees by the Developers herein. 13) In addition to the said constructed area or the total F.S.I. and/or sellable presently available to the Developers, the Developers shall also deposit with the Owner a sum of Rs.30,00,000/- (Rupees Thirty Lakhs Only) with the Owner herein who shall refund the said deposit of Rs.30,00,000/- after the completion of the entire construction. In the event the said amount is not refunded by the Owner to the Developers then the Developers shall sell the Flats coming to the Shares of the Owner to any person or persons on Ownership basis and on the consideration based upon the prevailing market value and shall enter into in Agreements with the prospective Purchasers and receive the consideration amount in respect thereof and to get the said Agreement registered with the Registration Authorities and the amount of Rs. 30,00,000/- paid herein be adjusted therein and the surplus if any, shall be paid to the Owner herein. 14) It is agreed that the Agreements for allotment of Flats on Ownership basis as per the Maharashtra Ownership Flats Act in respect of the constructed areas to be allotted to the Owner and/or his nominees herein shall be executed by the Developers herein and duly confirmed by the Owner as Confirming Party. It is agreed that the entire purchase price shall be recovered and appropriated by the said Owner only after the due compliance of the adjustments to be made and shall be on his account. However, the said nominees shall be liable to bear and pay the deposits to the Developers as provided for in the said usual Agreements.” 3. The petitioner had admittedly sold all the flats which came to its share. The respondent admittedly has sold only one flat for a consideration of about Rs.40,00,000/-. Seven flats were sold by the petitioner on behalf of the respondent in exercise of the powers under clause 5 of the said agreement. There is a serious dispute whether these 3 arbp1303-10 sales were conducted bona-fide or not. According to the petitioner, the respondent was paid the amounts from time to time in respect of the said sales. According to the respondent, the sales were contrary even to the procedure prescribed under clause 14, in as much as the alleged sales were not executed by the respondent as a confirming party. 4. The petitioner claims refund of a sum of Rs.30,00,000/- referred to in clause 13 of the agreement. The cheque payment however is admittedly only in the sum of Rs.5,00,000/-. There is an alleged receipt of Rs.25,00,000/- in cash. The plaintiff also claims a sum of Rs.90,00,000/- towards the respondent’s share of the costs of procurement of additional T.D.R. and construction in respect thereof in terms of clause 3. 5. The respondent however paid Rs.60,80,156/- in two installments in the year 2008 and 2009. 6. Although it is not stated on affidavit, it is alleged by the petitioner that this was merely a book entry to accommodate the respondent. It is for this reason, it is stated by the petitioner, that the alleged payment of Rs.60,00,000/- towards the consideration of the additional T.D.R. has not been reflected in the pleadings. 7. On the record as it stands, I am inclined to grant the petitioner only limited protection. Out of the claim of Rs.1,30,00,000/-, Rs. 25,00,000/- is alleged paid in cash and Rs.60,00,000/- was admittedly paid by the respondent. Thus the case regarding payment of Rs.25,00,000/- in cash and the absence of credit of Rs.60,00,000/- must be held in the respondent’s favour at this stage. Further admittedly atleast strictly the 4 arbp1303-10 provisions of clause 14 were not complied with by the petitioner in selling the flats purportedly on behalf of the respondent. 8. The parties have agreed to refer the disputes and differences between them to sole arbitration of Mr.Justice V.G. Palshikar (Retd.) in terms of the arbitration agreement contained in paragraph 25 of the said agreement. 9. In the circumstances, the arbitration petition is disposed of by restraining the respondent from selling, alienating, encumbering, parting with possession of or creating any third party rights in respect of one flat admeasuring not less than 720 sq.ft. which shall be identified by the respondent on or before 2.11.2010 in writing to the petitioner’s advocate. This injunction shall operate till the learned arbitrator disposes of an application under section 17 of the said Act provided that the application is made on or before 15.12.2010. In the event of the petitioner not making such an application on or before 15.12.2010, this injunction shall stand vacated without further orders. It is made clear that as this was an ad- interim application, the pleadings even in respect of the ad-interim order are not complete. The petitioner shall be entitled to claim further reliefs than the one granted by this order before the learned arbitrator. The contentions of the parties are kept open. It is obvious in view thereof that the above observations are only prima-facie, at the ad-interim stage and without the benefit of all the facts.