1 Spb/- IN THE HIGH COURT JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL SIDE JURISDICTION APPEAL NO. 39 OF 2009 IN ARBITRATION PETITION NO. 396 OF 2007 Zoom Trade and Reality Ltd., .. Appellants. (Org.Petitioners) V/s. 1. M/s. Sai Lee Developers .. Respondents. And others. (Org.Respodents) --- Mr.Janak Dwarkadas, Senior Counsel with a/with Snehal Shah i/by Nivit Srivastava for the Appellants. Mr. Ravi Kadam, Advocate General with Vishal Kanade i/by Rohit Shetty for Respondent Nos. 1 to 3. Mr. V.B.Naik i/by Sachin Mhatre for Respondent No.4. Ms. Prachi D. i/by M.P.Vashi & Associates for Applicant in Chamber Summons No. 1860 of 2009. --- CORAM: D.K.DESHMUKH AND V.R.KINGAONKAR,JJ. DATED: 31st MARCH, 2010 P.C.: 1. Heard the learned counsel for both the sides. 2. Admit. 2 3. By consent of the parties, the Appeal is heard finally and disposed of. 4. By this appeal, the appellant challenges the order dated 06th January, 2009 passed by the learned single Judge of this court, rejecting the application made under section 9 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as the  Act ) by the appellants/petitioners. The appellants had filed that petition, claiming certain interim reliefs. It was the case of the appellants that the respondent nos. 1 to 4 had entered into an agreement, assigning their rights to develop the property, a part of which was for slum dwellers, in favour of the appellants. It was their case that respondent nos. 1 to 4 have created breach of those terms of the agreement. Dispute arose between the parties. According to the appellant there is an arbitration clause in the agreement and, therefore, an application under section 9 was filed, claiming interim reliefs. The defence of the respondent nos. 1 to 4 was that the said agreement is a sham and 3 bogus document and it was never entered into between the parties and that the transaction between the parties was a money lending transaction. When the matter was heard by the learned single Judge, the issue regarding existence of the arbitration clause in the agreement was raised. It also appears from the order that it was also contended that the issue regarding existence of the arbitration clause has to be finally decided by the learned single Judge while deciding the application under section 9 of the Act. The learned single Judge after referring to two judgments, one of the Supreme Court in the case of SBP and Company vs. Patel Engineering Ltd., [2005] (8) SCC page 618] and other of the Division Bench of this court in the case of Oberoi Construction Pvt. Ltd., vs. Worli Shivshahi Co-op. Housing Society Ltd., observed that though he has jurisdiction, it is not necessary for him to decide the issue of existence or otherwise of the arbitration clause in every application filed under section 9 of the Act, where dispute about existence of the arbitration clause is raised. 4 5. The learned counsel appearing for the appellants has relied on the judgment of the Division Bench of this court in Appeal No. 457 of 2007 decided on 07.04.2008 in the case of Nasir Husain Films Pvt. Ltd., vs. Saregama India Ltd., and submitted that the Division Bench has taken a clear view that whenever in application under section 9, an issue as to the jurisdiction of the court or as to existence of the arbitration clause is raised that issue has to be finally determined by the court hearing application under section 9 of the Act. 6. We have heard the learned counsel appearing for the both the sides on the question as to whether in view of the judgment of the Division Bench in the case Nasir Husain Films Pvt. Ltd., vs. Saregama India Ltd., the finding recorded by the learned single Judge that it is not necessary for him to decide the issue of existence or otherwise of the arbitration clause finally and that he has to take merely a prima facie view of the matter is correct or not. In our opinion, the observations made by the 5 Division Bench in paragraph 7 of the judgment in the case of Nasir Husain Films Pvt. Ltd., leaves one in no manner of doubt that the Division Bench has taken a clear view that if in an application filed under section 9 of the Act, an issue as to existence of the arbitration clause is raised that issue has to be finally decided by the court. In this view of the matter, therefore, we will have to set aside the order passed by the learned single Judge and remand the application back to the learned single Judge for de novo consideration and decision in accordance with law. 7. The learned counsel appearing for the appellant at this stage requested that ad-interim order which is operating, directing the parties to maintain status quo should be continued. The request was opposed on behalf of the respondents. Therefore, we have heard the learned counsel appearing for both the sides in detail on that aspect of the matter. Of course we have heard the learned counsel on the question whether there is a case for granting 6 interim relief in favour of the appellant or not on the assumption that there exists arbitration agreement between the parties. The learned counsel appearing for the appellants submitted that if it is assumed that there is an agreement between the parties, showing that the development rights are assigned to the appellant, then, according to the learned counsel in order to protect the rights of the petitioners, an interim injunction, restraining the respondents from carrying out construction and creating third party rights has to be granted. 8. The learned counsel appearing for the respondents on the other hand submits that even assuming that the agreement between the parties exists, the court will have to consider whether on the face of the material which is present before the court, prima facie, can it be said that the arbitrator would make a decree of specific performance of the agreement in favour of the petitioners. We examined the matter from that point of view. We find that what was assigned by the 7 agreement in favour of the petitioners is a right to carry on development and sell a part of the built up area. It was also an obligation of the petitioners to construct a building for housing slum dwellers. Admittedly, except for paying the amount Rs. 2,00,00,000/-, the appellants have not done anything. Admittedly, it is the respondents who have carried out the construction of the building necessary for housing the slum dwellers. What is further to be seen here is that the learned single Judge has found, as a fact, as can be seen from his order that the respondents had paid an amount of Rs. 2,18,87,000/- towards payment to the ULC Authorities in the year 2006 and 2007. Further, expenditure was incurred by the respondents to the tune of Rs. 24.84 crores on the project. They have also constructed one building for the slum dwellers, consisting of 160 flats, each admeasuring 225 sq.ft.. The learned single Judge has also noted that as per the agreement entered into between the respondents and M/s. Chandiwala Enterprises in relation to the same project net worth of the project 8 is mentioned at Rs.440 crores and therefore, the learned single Judge concluded that it is hard to believe that in this situation development rights will be assigned by the respondents to the petitioners only for Rs.5 crores. We have not been shown anything which will make us doubt the correctness of the observations made by the learned single Judge referred to above. In our opinion, considering the above aspects, that total consideration to be paid was only Rs.5,00,00,000/- (Rs. Five crores) which appears to be extremely low; considering that even after making the provisions for all other things, a free salable area of 3,50,000/- sq.ft.would be available to the developer. Further considering that the building which was required to be constructed for housing the slum dwellers, which was an essential part of the project has been constructed by the respondents and not the appellant and except for paying an amount of Rs.2 crores to the respondents, the petitioners have done nothing in relation to the project, we find that it cannot be said that the petitioners have made out a strong 9 prima facie case that they are likely to get decree of specific performance of the agreement at the hands of the arbitrator, specially considering that the grant of decree for specific performance of a contract is in the discretion of the court. In our opinion, therefore, taking a prima facie view of the entire material on the record it will not be proper to grant any interim injunction in favour of the appellants save and except to say that any development that may be carried out by the respondents including creation of the third party rights shall be subject to the decision by the learned single Judge. The Appeal is disposed of on the above terms. 9. At this stage, a request is made that the operation of the order of status-quo should be continued for a period of four weeks. The request is opposed on behalf of the Respondents. In view of the opposition and after having found that the appellants do not have a prima facie case, in our opinion, it will not be proper to continue the operation of the 10 interim order. Hence, request is rejected. 10. Chamber summons No. 1860 of 2009 and Notice of Motion No. 449 of 2009 are also disposed of. (D.K.DESHMUKH,J.) (V.R.KINGAONKAR,J.)