1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY & ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 2629 OF 2009 IN APPEAL NO. 645 OF 2005 IN ARBITRATION PETITION NO. 78 OF 2007 Shree Ram Mills Ltd., } (formerly known as Shree Ram Mills Ltd.) } a Company under the Companies Act, 1956,} having its Registered Office at Avadh Bldg. } Ganpatrao Kadam Marg, Lower Parel, } Mumbai – 400 013. } ... Appellant/ } Applicant } (Orig.Resp.No.1) V/s. 1. Kalpataru Constructions Pvt.Ltd. } (formerly known as Kalpataru } construction) Overseas Pvt. Ltd.) } a Company under the Companies } Act, 1956, having its Registered } Office at Maker Chambers – IV, } Nariman Point, Mumbai – 400021. } 2. Vijay Infrastructure Technologies } Pvt. Ltd., a Company under the } Companies Act, 1956, having its } Registered Office at Vithalwadi } Kalbadevi, Mumbai 400 002. } ... Respondents } (Resp. No.1 : Orig. } Petitioners) } (Resp. No.2 : Orig. } Respondent No.2. Mr. Ravi Kadam, Senior Advocate with Mr. Venkatesh Dhond with Mr. Pankaj Samant, Mr. Mohan Jayakar, Mr. Samsher 2 Garud, Ms. Komal Joshi, Mr. Lalit Kataria i/b. M/s. Khaitan and Jayakar for the Appellant. Mr. I.M. Chagla, Sr. Advocate with Mr. F. D’Vitre, Sr. Advocate with Mr. M.S.Doctor and Mr. Gautam Ankad i/b. Federal Rashmikant for Respondent No.1. Ms. Christina Reveare i/b. Little and Co. for Respondent No.2. CORAM : J.N. PATEL AND S.C. DHARMADHIKARI,JJ. RESERVED ON : 12th OCTOBER 2009. PRONOUNCED ON : 12th NOVEMBER 2009. ORAL JUDGMENT : (PER S.C. DHARMADHIKARI,J.) By this Notice of Motion, the Appellants/Applicants (Original Respondent No.1) are seeking the following reliefs :- “(a) That, this Hon’ble Court be pleased to permit the Appellants/Applicant to implement/give effect to the sanction order dated 18th June, 2009 passed by the Municipal Corporation of Greater Mumbai in so far as it relates to shifting/relocation/surrender of the reservation plots i.e. Plots for Municipal Primary School (M.P.), Play Ground (P.G.) and Recreation Ground (R.G.). (b) That this Hon’ble Court be pleased to modify/clarify its order dated 27th October, 2005 and vacate the status-quo/injunction in paras 91(A)(II) and (VI) of the Order dated 27th October, 2005 on the 3 following plots : (i) Plot No.3 (MP) being the plot originally earmarked for Municipal Primary School. (ii) Plot No.3A (MP) being the plot earmarked for shifting the Municipal Primary School. (iii) Plot No.4(PG) being the plot originally earmarked for Play Ground. (iv) Plot No.4A(PG) being the plot earmarked for shifting the Play Ground. (v) Plot No.7 (RG) (erroneously referred to as Plot No.6 in the earlier proceedings/order) being Plot originally earmarked for Recreation Ground. (vi) Plot No.8 (MHADA) being the plot earmarked for MHADA.” 2. It is the case of the Appellants that this modification is sought on account of subsequent developments and changed circumstances. 3. Respondent No.1 herein had filed Arbitration Petition No. 78 of 2005, seeking reliefs u/s. 9 of the Arbitration and 4 Conciliation Act, 1996. It is the case of Respondent No.1 that it is entitled to specific performance of a Memorandum of Understanding (MOU) dated 28th June 2004 whereby the Appellants/Applicants herein have allegedly agreed to transfer, assign and convey Plot No.5A to Respondent No.1. 4. The learned Single Judge had granted certain interim measures of protection in favour of Respondent No.1 herein (Orig. Petitioners) while disposing of the said Arbitration Petition No.78 of 2005. Being aggrieved by the said order dated 19th July 2005 passed by the learned single Judge, the Applicants had preferred an Appeal (Appeal No.645 of 2005) which was allowed by this Hon’ble Court by its order dated 27th October, 2005. The learned Division Bench found that the learned Single Judge had granted an injunction which affected the Appellants’ rights in respect of the larger property of which Plot No.5A was only a part. The Bench held that since specific performance was sought of an alleged Agreement to Purchase Plot No.5A, the injunction could only be in consonance therewith and that anything which is not falling within the obligations to be performed under the alleged Agreement, could not be covered by the order of injunction. On this reasoning, the learned Division Bench modified the injunction granted by the learned Single Judge and substituted it by restoring an ad-interim arrangement which had been made pursuant to a statement made by the Appellants on the first date of hearing of the Arbitration Petition. 5 5. Our attention is invited to the order of the Division Bench and it is contended that during the pendency of the Appeal before the Division Bench, an order dated 19th August 2005 was in force. 6. After the Appeal was disposed off by the Division Bench, the Appellants made an oral application on 28th October 2005 seeking to invite the attention of the Division Bench to certain developments with regard to re-location and surrendering of various plots. It is case of the Appellants that the Division Bench did not pass any order but permitted the Appellants to pursue their remedies in law. Against the order dated 27th October 2005, the Appellants also preferred a Review Petition in this Court so also a Special Leave Petition in the Hon’ble Supreme Court, both of which have been dismissed by orders dated 16th December 2005 and 1st December 2006. 7. It is contended that the basis of the arrangement made by the Division Bench is Agreement to Sell Plot No.5A, which is subject matter of the MOU dated 28th June 2004 between the Appellants and Respondent No.1 The rationale behind the Appellants agreeing to keep open the area for common access to Plot No.5 was also because of the MOU between parties. The same was the rationale behind the status-quo order. However, in order to have a proper development of the Mill premises, it was contemplated that reservations on Plot Nos.3 and 4 should be re-located to Plots 3A and 4A as shown on the plan. It is urged that even the status-quo order was to enable 6 the development of the reservations and handing them over to the MCGM/MHADA or to hand over the Plots themselves. That was necessary in order to obtain TDR for development of the entire Mill premises and not merely Plot No.5A. It is stated that the Appellants are Mill Company and development of Mill land is governed by Regulation 58 of the Development Control Regulations for Greater Bombay (for short, D.C. Rules). The Appellants are required to earmark and surrender area to MCGM for recreation ground and to MHADA for public housing. Accordingly, Plot No.7 and Plot No.8 were earmarked in the development plan for Recreation Ground and MHADA. However, the status-quo order did not prevent the Appellants from surrendering the Plots to MCGM and MHADA. None of the aforesaid plots except for plot No.5A are subject matter of the MOU dated 28th June 2004 of which the First Respondent is seeking specific performance before the Arbitral Tribunal. Plot No.3 - Municipal Primary School (MP) Plot No.4 Play Ground (PG), Plot No.7 Recreation Ground (RG) were the areas necessary to be developed/surrendered to MCGM/MHADA as per the applicability of the D.C. Regulations. For the purposes of development of the entire mill land, the Applicants/Appellants applied for re-location of Plot No.3, Plot No.4 from their earlier location to Plot No.3A and 4A of the proposed re-location as well as earmarking Plot No.7 (RG) and Plot No.8. All this was approved by MCGM and amendment to the lay out of the entire property relocating the Plot Nos.3 and 4, was approved by the MCGM on 24th May 2005. The Appellants have annexed as Annexure 8 to the affidavit in 7 support of the present Notice of Motion, a copy of the amended lay out dated 24th May 2005 alongwith the sanctioned plan. 8. Taking into account the larger requirement for the development of the mill premises, the Appellants applied to the MCGM for further re-location of the said plots reserved for M.P., P.G. And R.G. In or about February 2007, the First Respondent filed a Contempt Petition No.15 of 2007 against the Appellants and its Directors and one of the grounds mentioned therein was that the Applicants/Appellants submitted to the MCGM, an application for sanction to the proposed re-location of the larger property wherein the location of the reservations had been shifted to another place. The Application was made without the approval of this Court. It is stated that the Contempt Petition was disposed off by order dated 24th April 2007. However, undertakings were given on behalf of the Appellants on 12th March 2007 and 23rd April 2007. Against the order dated 9th April 2007, passed in the Contempt Petition, an Appeal was preferred being Appeal (Lodg.) No.403 of 2007 and it is stated that the Appeal is pending. 9. Thereafter, the Appellants filed a Notice of Motion being Notice of Motion No.995 of 2007 in Appeal No.645 of 2005 seeking modification/clarification of the Judgment dated 27th October 2005. It was pointed out to the Division Bench that an application for relocation had already been made to the 8 MCGM and the Division Bench made it clear that such application would have to be decided on its own merits and in accordance with law. The Bench clarified that if the Appellant was aggrieved by the decision of the MCGM, it could be free to challenge it. In view of this clarification, the Notice of Motion was withdrawn. 10. It is stated that now the MCGM has permitted re-location of reservations of Municipal Primary School, Pay Ground and Recreation Ground vide its letter of approval dated 18th April 2009. However, there is a condition imposed that the same will take effect only after this Court clarifies the order dated 27th October 2005 and also vacates the status-quo/stay, if any. 11. A copy of this letter is annexed as Annexure 11 to the affidavit in support. 12. It is in these circumstances that the Appellants are applying for the afore-reproduced reliefs. 13. It is stated in the affidavit in support that the purpose of maintaining status-quo and the order of injunction with regard to original Plot Nos.3,4,3A and 4A is now achieved and fulfilled. That was to ensure re-location of Plots in compliance with D.C. Regulations so that the permission obtained for development of Plot No.5A claimed by Respondent No.1, is not affected. The Appellants intend to develop the Plot reserved for Municipal Primary School and Play Ground In accordance 9 with applicable D.C. Regulations and therefore, the earlier order passed should now be vacated. 14. Mr. R.M. Kadam, learned Advocate General appearing in support of this Motion submitted that the order of the Division Bench granted liberty to pursue the request for re-location. It is for the appropriate authority to grant the permission/sanction. B.M.C. is the appropriate authority. It has permitted re-location after the parties were heard. Now, the order of the B.M.C. is to be implemented. Inviting our attention to paragraph 91 of the Division Bench order and more particularly, part A (II), (III), (IV) and (VI) thereof, Mr. Kadam submits that the modification is permitted and now the development of the Appellants’ property cannot be stopped. More so, as Respondent No.1 is only concerned with Plot No. 5A. It is that property which is subject matter of the MOU and Arbitration proceedings. The order of the Division Bench is restricted to that property and nothing more. Before the Division Bench, it was already clarified that the Appellants proposed to re-locate the reservations at site. Nowhere in the order of the Division Bench was there any prohibition with regard to re-location and seeking sanction from B.M.C. in respect thereof. The order of the Division Bench was only to facilitate preservation and protection of the First Respondent’s rights in the Plot covered by the MOU. It is that plot/property which is prohibited from being alienated and disposed of and transferred in any manner. The matter is exclusively between the Appellants and this Court. The First Respondent, 10 therefore, cannot object to the implementation of the Municipal permission/sanction contained in the letter dated 18th June 2009. More so, when they were heard by the B.M.C. Hence, appropriate modification be made and clarification issued so that the Appellants can develop the other plots in accordance with law. 15. On the other hand, Mr. D’Vitre, learned Senior Counsel appearing for the First Respondent has invited our attention to the prayers in the Notice of Motion and has contended that this Motion is not maintainable. He submits that Rule 904 of the Bombay High Court, Original Side Rules should be seen before this Court can consider the Notice of Motion. He submits that identical prayers were made in Notice of Motion No.995 of 2007 which has been withdrawn. Further, the Appellants are in contempt of this Courts order dated 27th October 2005 passed by the Division Bench. The Appellants without seeking any modification of the order or liberty from this Court straight away approached the B.M.C. and sought their permission for re-location of the reservations. That was a contempt of this Court’s order. Therefore, the Contempt Petition was moved. At the hearing of the Contempt Petition, undertaking was filed by the Appellants pursuant to the directions of the learned Single Judge. However, that undertaking was also not in-consonance with the order of the learned Single Judge and thereafter, a modified undertaking came to be placed on record. When the party is in contempt and has given undertakings to the Court that it would not 11 disturb the order of status-quo/injunction, then, it would not be proper to entertain any request from the Appellants to modify or vacate the order. More so, when the Division Bench Judgment dated 27th October 2005 was sought to be reviewed and even challenged in the higher Court. Both the challenge and the review has failed. In these circumstances, the Notice of Motion itself is not maintainable. 16. That apart, Mr. D’Vitre submits that the development of the remaining property (larger property) including the reservations has an impact on the rights of the First Respondent. This is a issue which is not wholly irrelevant to the arbitration proceedings. Both matters go together. He invited our attention to the order of the Division Bench and more particularly, paragraph 83 thereof and submits that both development go together. The Appellants have conferred rights in respect of 30,000 sq.ft. of land and about 3,00,000 sq.ft. of F.S.I. In favour of the First Respondent. He submits that re-location of reservations is not a subsequent or changed circumstances. The relocation was in contemplation of parties. Hence, that aspect is provided in the MOU and particularly clause 2(j) thereof. The first re-location was agreed one. Original reservation has been re-located by consent of the First Respondent. It is re-location of the agreed portions which is covered by the order of the Division Bench and in that regard, liberty is reserved to move the MCGM and nothing more. If at all, reservation has to be moved or shifted to an altogether new location that must be with consent of 12 the First Respondent. Clause 2(j) of the MOU must be seen in that light. The said clause cannot be read in two parts as suggested by Mr. Kadam. That clause must be seen in its entirety together with other clauses of the MOU. 17. Mr. D’Vitre invited our attention to the plan at page 109. The undertaking at page 112 and the order of the Division Bench dated 19th September 2007. Mr. D’Vitre submits that the Notice of Motion No.995 of 2007 had prayers with regard to re-location. However, that re-location was on the basis of a plan annexed to the affidavit in that Motion, which is now abandoned. In these circumstances, seeking very same reliefs but by presenting a new plan and some letter of the MCGM does not mean that the order should be modified or vacated. There is no consent of the First Respondent to this re-location and therefore, the Notice of Motion be dismissed. 18. With the able assistance of the learned Senior Counsel appearing for both sides, we have perused the Notice of Motion, the affidavit in support, reply and rejoinder so also all Annexures thereto. We have heard learned Counsel at some length. While considering such applications, we must bear in mind the following observations (State of Uttar Pradesh V/s. Shri Brahm Datt Sharma and Anr. reported in AIR 1987 S.C. 943) of the Hon’ble Supreme Court in the case of :- “10. The High Court’s order is not sustainable for yet another reason. Respondent’s writ petition 13 challenging the order of dismissal had been finally disposed of on 10.8.1984, thereafter nothing remained pending before the High Court. No miscellaneous application could be filed in the writ petition to revive proceedings in respect of subsequent events after two years. If the respondent was aggrieved by the notice dated 29.1.1986 he could have filed a separate petition under Art. 226 of the Constitution challenging the validity of the notice as it provided a separate cause of action to him. The respondent was not entitled to assail validity of the notice before the High Court by means of a miscellaneous application in the writ petition which had already been decided. The High Court had no jurisdiction to entertain the application as no proceedings were pending before it. The High Court committed error in entertaining the respondent’s application which was founded on a separate cause of action. When proceedings stand terminated by final disposal of writ petition it is not open to the Court to reopen the proceedings by means of a miscellaneous application in respect of a matter which provided a fresh cause of action. If this principle is not followed there would be confusion and chaos and the finality of proceedings would cease to have any meaning.” 19. This Judgment is followed subsequently in a recent 14 decision reported in AIR 2009 S.C. 472 (State of Haryana V/s. Babu Singh) (See paragraphs 17 to 19 at pages 476 and 477). Admittedly, the learned Single Judge had passed an order in a Arbitration Petition filed invoking Section 9 of the Arbitration and Conciliation Act, 1996. Aggrieved by that order, the Appellants preferred an Appeal under Section 37 of that Act read with Clause 15 of the Letters Patent, before the Division Bench. That Appeal was admitted and by consent of parties taken up for hearing. Prior to the said hearing in order to protect the rights of both sides and without prejudice to their contentions, interim arrangement came to be made and the Appellants were directed to maintain status-quo in respect of Plot No.5A which was shown on the re-location plan annexed to the Appeal paper-book (Annexure ‘T’). It was clarified that the demolition of the building ‘Avadh’ partly situated on the Plot No.5A shall continue without prejudice to their rights and contentions. The Division Bench also ordered on 19th August 2005 that status-quo should be maintained with regard to the Plot Nos. 3,4 and 6 reserved for Municipal Primary School, Play Ground, Recreation Ground and Plot No.8 (MHADA). Admittedly, we are not concerned in this Notice of Motion with Plot No.8 as it is stated to have been already surrendered to MHADA. All these Plots were shown on the relocation plan and they were designated and earmarked as above. Therefore, it was clarified that the status-quo be maintained but it will not prevent the Appellants from carrying out the relocation in the event of B.M.C. permitting the same. 15 20. The final Judgment and Order of the Division Bench dated 27th October 2005, while setting aside the Judgment of the Single Judge essentially maintains this order of status-quo and injunction. It is not in dispute that a Review Petition was filed [being Review Petition No.37 of 2005] which came to be dismissed. Thereafter, it appears that the Special Leave Petition preferred by the Appellants also came to be dismissed by the Hon’ble Supreme Court on 1st December 2006. It is pertinent to note that during the pendency of the Arbitration Petitiion and Appeal, the MCGM on 24th May 2005 had approved the amended lay out for Amalgamation, sub-division and re-location of M.P. And P.G. Reservations, subject to the terms and conditions, recorded in this letter. Therefore, Mr. D’Vitre is right in urging that there was a re-location which was proposed and which came to be approved in the year 2005 subject to certain terms and conditions and it is regarding that re-location and shifting that the Division Bench granted liberty of implementation and clarified its order. What has been placed before us now is a letter dated 18th June 2009 of the B.M.C. which is in pursuance of the Appellants Application dated 27th March 2009. The subject of the letter of approval dated 18th June 2009 reads as under :- “Subject :- Proposal for further relocation of Municipal Primary School (MP), Play Ground & 33% R.G. Of M.C.G.M. within Shree Ram Cotton Textile Mill Compound at Lower Parel Division, Mumbai. 16 Reference :- Your letter dated 27.3.2009.” 21. From a reading of the portion “subject and reference” it is apparent that what the B.M.C. was considering is a proposal for further re-location and that is something which is not envisaged in the order of the Division Bench. 22. It is clear from the affidavit in reply filed to this Motion that there is no agreement between parties with regard to this further re-location and that the First Respondent is not agreeable to the shifting/re-location as proposed by the Appellant. It is clear that the Appellant is the owner of twelve adjoining pieces and parcels of partly freehold land and partly perpetual leasehold land at Lower Parel, Mumbai admeasuring in aggregate 67,785.50 sq. mtrs. or thereabout with buildings and structures standing thereon. This is the larger property. By an agreement dated 28th June 2004 styled as a MOU read with the Addendum dated 10th December 2004, the Appellant agreed to grant, assign and convey to the First Respondent the land being a Plot admeasuring in aggregate 20,955.40 sq. mtrs. (referred to as a Plot No.5A) out of the larger property together with the exclusive right to develop and utilize net F.S.I, on this Plot on the terms and conditions contained in the agreement. There were disputes and differences and that is how the matter went to arbitration. Pending initiation of arbitral proceedings an application for interim measures was made, which was considered by the Single Judge and his order was under challenge before the Division Bench. It is an order 17 on that application. Paragraphs 4.7 and 4.8 of the affidavit in reply to this Motion read as under :- “4.7 No plan is annexed to the said Judgment and Order. I believe that the reference in the said order to “the relocation plan annexed hereto” is to the plan annexed to the Order of the Division Bench dated 19th August 2005 passed in the said Appeal and identified therein as being at Page 439 of the Appeal Paper Book. A copy of the said order dated 19th August 2005 together with the plan, is annexed as Exhibit “B” hereto. 4.8 On or about 28th October, 2005, the Appellant made an oral application before this Hon’ble Court for “clarifications” with regard to the said Order. The Division Bench of this Hon’ble Court did not pass any order on that application. By the Appellant’s Advocate’s letter dated 5th November 2005 the Appellant sent to Respondent No.1’s Advocate, a “revised amended layout as approved by the MCGM on 12th July, 2005”. Annexed hereto as Exhibit “C” is a copy of the said letter dated 5th November 2005 alongwith the annexures thereto. Respondent No.1 responded to the said letter by their Advocates letters dated 7th November 2005, 8th November 2005 and 14th November 2005 respectively. Copies of the said letters are annexed hereto as Exhibit “D” to 18 “F”.” 23.