AJN 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.228 OF 2008 IN ARBITRATION PETITION NO.219 OF 2008 Tohid Ashraf Furniturewala .... Appellant Vs. Abdul Haq Shaikh Maherbaksh & Ors. .... Respondents Mr. S.C. Naidu i/b M/s. C.R. Naidu & Co. for the appellant. Mr. D.H. Mehta i/b D.M. Legal Associates for respondent 3. CORAM : SMT. RANJANA DESAI & K.K. TATED, JJ. DATE ON WHICH THE ORDER IS RESERVED : 12TH DECEMBER, 2008. DATE ON WHICH THE ORDER IS PRONOUNCED : 17TH DECEMBER, 2008. P.C. :- 1. By the impugned order, the arbitration petition filed by the appellant under section 9 of the Arbitration & Conciliation Act, 1996 came to be dismissed. Consequently, prayers made by the AJN 2 appellant for an order of injunction restraining the respondents from disposing of or encumbering the immoveable property in question (for short, “the said property”) and for the appointment of Court Receiver came to be rejected. 2. The appellant's case is that in respect of the said property, a memorandum of understanding (for short, “the said MOU”) was executed between the appellant and the respondents. Under the said MOU, the said property was agreed to be sold to the appellant subject to the orders in Writ Petition No.1296 of 2004. The total agreed consideration was Rs.3.91 crores, out of which an amount of Rs.51 lakhs was paid on 25/7/2006. The balance of Rs.3.40 crores was to be paid within a period of 15 days of the respondents obtaining clearance as specified in Clauses 2, 3 and 4 of the said MOU. 3. In Clause 3, it was recited that there was an interim order passed by this court in Writ Petition No.1296 of 2004 restraining the respondents from creating any third party rights in respect of the said property. Clause 3 stated that the said MOU is subject to the said interim order being vacated within a period of 6 months AJN 3 from the date thereof and in the event of the said order not being vacated then, the said MOU would come to an end. Clause 3 further recited that, however, the appellant will have the option to extend the time. It was further stated that if within the stipulated time or within the extended time, the interim order passed by this court is not vacated then, the MOU will come to an end and the respondents shall return to the appellant the amount paid by him. Under clause 4, the respondents agreed to obtain a no objection certificate from the Wakf Board or, in the alternative, a legal opinion from a senior counsel clarifying that no such no objection certificate was required. This was also to be done within a period of six months. Clause 12 provided that upon all clearances being obtained under the abovementioned clauses, if the appellant defaulted in making the balance payment, it would be open to the respondents to terminate the said MOU by giving a notice of 15 days making time the essence of the contract for the balance payment. Clause 16 made provision for arbitration in case of disputes. The period of six months prescribed by Clause 3 of the said MOU expired on 2/2/2007. 4. It appears that on 11/9/2007, the respondents addressed a AJN 4 communication to the appellant recording that the interim order of this court was not vacated within six months and, therefore, the said MOU had come to an end. The respondents enclosed a cheque in the sum of Rs.51 lakhs being the money which was paid by the appellant on execution of the said MOU to the respondents. 5. In the petition, it is stated that being aggrieved by this action of the respondents, the appellant desires to invoke the arbitration clause. The appellant is apprehensive that the respondents will create third party interest in the said property and, hence, he has filed the instant petition praying for interim reliefs. 6. We have heard Mr. Naidu, learned counsel appearing for the appellant. He submitted that the respondents have arbitrarily terminated the said MOU. Under the said MOU, the respondents had no right to terminate the said MOU. Learned counsel submitted that under the said MOU, the appellant had the option to extend the time if the interim order passed by this court in Writ Petition No.1269 of 2004 was not vacated within a period of six months. The appellant exercised the said option. The appellant paid an amount of Rs.10 lakhs to the respondents. The AJN 5 respondents accepted the amount. The time was extended by conduct of the parties. However, the respondents wrongly and with ulterior motives, terminated the said MOU vide letter dated 11/9/2007. Learned counsel submitted that subsequently, the respondents entered into consent terms with the Custodian of Enemy Properties in Writ Petition No.1296 of 2004 on 13/12/2007. By the consent terms, the said property was declared as not being enemy property. As per the consent terms, the respondents were held to have right, title and interest in the said property and the petition was disposed of in terms of the consent terms. Learned counsel submitted that when the option to extend the period of the said MOU was with the appellant and the appellant had paid an amount of Rs.10 lakhs, it was not open to the respondents to wrongly terminate the said MOU. Clauses of the said MOU have been wrongly interpreted by the respondents with dishonest intention. He submitted that, therefore, learned Single Judge's order be set aside and interim protection be granted to the appellant or, at any rate, it may be ordered that any sale of the said property will be subject to the outcome of the arbitration proceedings. AJN 6 7. It is not possible for us to accept the submissions of learned counsel appearing for the appellant. The period of the said MOU expired on 2/2/2007. Prima facie, there is no evidence on record to show that immediately thereafter, the appellants expressed their desire to extend the period of the said MOU. Except the bare words of the appellant, there is nothing to establish that Rs.10 lakhs have been paid by the appellant to the respondents and the respondents have accepted it. Even after the respondents addressed letter dated 11/9/2007 terminating the said MOU, the appellant waited for over two months to address reply dated 23/11/2007 to the notice of termination. Learned Single Judge has rightly observed that in reply to the notice of termination, there is reference to payment of an amount of Rs.51 lakhs and further payment of Rs.15 lakhs. However, there is no reference to payment of Rs.10 lakhs on which the appellant is heavily relying to contend that he extended the period of the said MOU. The reference to this amount is found for the first time in paragraph 13 of the arbitration petition. Moreover, the arbitration petition was filed on 19/3/2008, nearly four months after the notice of termination. The case of the respondents is that on 29/10/2007, they have entered into an agreement to sell the said property with AJN 7 a third party. Any order passed by this court is likely to affect the third party, who is not before the court. In our opinion, learned Single Judge has rightly dismissed the petition by keeping all the contentions of the parties open. No interference is, therefore, necessary with the impugned order. We also make it clear that we have not expressed any final opinion on the merits of the case and the arbitral tribunal shall deal with the rival contentions of both parties independently and in accordance with law. Appeal is dismissed. [SMT. RANJANA DESAI, J.] [K.K. TATED, J.]