IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29.03.2010 CORAM: THE HONOURABLE MR.JUSTICE V.PERIYA KARUPPIAH OA.210 of 2010 And OA.211 of 2010 ORDER : O.A. Nos.210 and 211 of 2010 V.PERIYA KARUPPIAH,J., O.A. No.210 of 2010 : This is an application filed by the applicant seeking for an order of interim injunction restraining the respondent, their men or agents, from licensing, dealing with or parting over possession in any manner whatsoever of the schedule mentioned property pending disposal of the arbitration proceedings. O.A. No.211 of 2010 : 2. This is an application filed by the applicant seeking for an order of interim injunction restraining the respondent, their men or agents, from carrying out any alterations or interior works in the schedule mentioned property pending disposal of the arbitration proceedings. 3.The case of the applicant put forth in both applications are briefly stated as follows:- 3(1) The respondent is in the process of developing the property known as Express Avenue, at No.2, Club House Road, Chennai 600 002 and was evincing interest in including proposed licencees in the Food Court to be set up as a part of the development. Upon coming to know about the expression of interest by the respondent, the applicant herein sent their profile to the respondent, under the applicants e-mail dated 16.12.2008. 3(2) It is a high quality vegetarian food and catering restaurant ever since the year 1948 and is one of the most reputed and popular vegetarian food restaurants in the city of Chennai, having five branches, as on date. Apart from the above, the applicant also has a Kiosk at Central Railway Station, Chennai, and in the Tata Consultancy Service Building at Siruseri. The applicant has also been figured in many articles written in National Newspapers and also has been covered by a number of Television Channels, including NDTV and CNBC. 3(3) In response to the e-mail dated 16.12.2008 sent by the applicant, the respondent herein sent a e-mail on 20.06.2009, agreeing to offer Kiosk No.4 in the Food Court as well as a space for setting up a fine dining restaurant in the Food Court. The details of the terms and conditions for the said offer were also mentioned in the e-mail. This was followed by another e-mail dated 22.06.2009 from the respondent, changing Kiosk No.4 to Kiosk No.7, while retaining the space for the Find Dining Restaurant situate in the Mezzanine Floor between the third and fourth floors. Both these e-mails were accompanied with the lay-out of the Food Court. 3(4) The respondent sent another e-mail dated 25.06.2009, restricting the allotment only to Kiosk No.7 and informing the applicant that the space for the Fine Dining Restaurant will be allotted later. As per the terms and conditions contained in this e-mail dated 25.06.2009, the licence period in favour of the applicant was to be for two terms of three years each, with escalation of 15% at the end of the first three year term. The lock-in-period prescribed was 24 months and the applicant was obliged to pay an interest-free security deposit equivalent to 10 months licence fee. licence Fee itself was fixed at Rs.75/- per sq.ft. of the super built up area or 10% of the net sale value, whichever was higher. That apart, the applicant was also required to pay the common area maintenance charges and other utility charges, as mentioned in the e-mail. The agreed date for handing over of the Kiosk to the applicant was set for August 2009. 3(5) This was followed by another e-mail dated 29.06.2009 from the respondent, where under the applicant was informed that the allotment of Kiosk No.7 stood confirmed and the request was made to the applicant to send to the respondent, the menu, they were planning to serve in the Kiosk. The respondent also sent another e-mail on 29.06.2009, attaching the MOU to be entered into between the parties, for perusal by the applicant. This was followed by yet another e-mail dated 01.07.2009 from the respondent, requesting certain other details from the applicant, viz. partnership deed, TIN number, Sales Tax number, Proof of Address etc. 3(6) They immediately furnished all the documents and information, as required by the respondent and thereafter a Memorandum of Understanding was entered into between the applicant and the respondent, on 03.07.2009. As per the terms of this MOU, Kiosk No.7 in the third floor of the Food Court at Express Avenue, having a plinth area of 207 sq.ft. and a super built-up area of approximately 1345.50 sq.ft. including the common area, was allotted to the applicant on a licence basis. The said licence was to be for a period of 72 months i.e. initial period of 36 months with an option of a further 36 months. The applicant was required to pay a security deposit equivalent to 10 months licence fee. The licence fee for the first three years was stipulated as Rs.75/- per sq.ft. of the super built up area per month, amounting to R.1,00,913/- as a minimum guarantee or 10% of the net sale value, whichever is higher. The licence fee for the next three years was fixed at Rs.86.25 per sq.ft. of super built up area, per month, amounting to Rs.1,16,050/- as a minimum guarantee or a 10% of the net sale value, whichever is higher. The applicant was also liable to pay common area maintenance charges calculated at Rs.15/- per sq.ft. of the super built up area and also a charge known as Food Court Charges on actual basis. The MOU stipulated that the respondent will handover the Kiosk to the applicant for a period of 60 days, free of charge, to enable the applicant to carry out the necessary interior works. As per the terms of this MOU, the applicant made initial payment of Rs.5,04,565/- towards part of the security deposit amount, as demanded by the respondent, vide cheque bearing No.415359 dated 03.07.2009 drawn on Canara Bank. This cheque was also encashed by the respondent. 3(7) The MOU dated 03.07.2009 was entered into between the parties only after detailed negotiations and only after both the parties were fully satisfied about their respective rights and obligations. The entering into of a licence agreement in furtherance to the MOU, was only a formality and was not intended to contain anything contrary to the MOU. The applicant states that this MOU dated 03.07.2009 was a concluded contract between the parties, crystallizing all the rights and obligations between the parties and the licence agreement was only meant to be complementary to the MOU and not an independent agreement. 3(8) The MOU dated 03.07.2009, the respondent sent an e-mail to the applicant on 10.07.2009, attaching the plan and lay-out of the Food Court, specifying the Kiosk allotted to the applicant. Thereafter, in addition to allotting Kiosk No.7 to the applicant, the respondent sent an e-mail to the applicant on 30.07.2009, also proposing to handover space for setting up of a Fine Dining Restaurant admeasuring about 1,460 sq.ft. in the mezzanine floor between the third and the fourth floors of the Food Court. Terms and conditions for the said allotment were also contained in the e- mail. Thereafter, respondent sent another e-mail to the applicant on 12.10.2009, inviting the applicant to an Open House Meeting in the Express Avenue building on 25.10.2009, between 4.00 and 5.00 P.M, to enable the applicant to meet the entire team of the respondent, including all the persons involved in Projects, Marketing, Leasing and Operations etc. It was also informed by the respondent in this e-mail that the applicant should visit the Kiosk as well as the Fine Dining space and discuss the fit-out plan with the respondents team, to coincide with the opening of the building in February 2010. The applicant also confirmed their participation for the said meeting and attended the meeting. 3(9) The respondent sent e-mail to the applicant on 19.10.2009, offering both Kiosk No.6 and Kiosk No.7 which is third floor of the Food Court, along with the Find Dining Space. As per the terms contained in this e-mail, the respondent proposed a minimum guarantee of 15% of the revenue or Rs.3,74,752.95, whichever was higher. In effect, the respondent sought to increase the minimum guarantee from 10% as contained in the MOU, to 15%. The applicant states that the deponent herein immediately requested for an one-to-one meeting with Mr.Kim Culley of the respondent, who is the person in-charge of the entire project. After negotiations took place, the respondent sent another e- mail to the applicant on 02.11.2009, reiterating the increase in minimum guarantee from 10% to 15%. Under this e-mail, the respondent once again offered Kiosk No.6 and Kiosk No.7 along with Fine Dining Space. In reply to the above, the applicant sent an e-mail dated 02.11.2009 to the respondent, requesting for adherence to the 10% minimum guarantee as stipulated in the MOU dated 03.07.2009. However, the respondent sent an e-mail on 10.11.2009, insisting upon the minimum guarantee of 15%. 3(10) The respondent sent his final offer dated 23.11.2009 to the applicant offering Kiosk Nos.6 and 7 as well as the mezzanine floor for the Fine Dining Restaurant, stipulating a minimum guarantee of Rs.3,06,616.05 per month or 15% revenue share of the net sales value, whichever was higher. Left with no other option, the applicant sent e-mail dated 24.11.2009 to the respondent, agreeing for the minimum guarantee of Rs.3,06,616.05 per month or 15% revenue share of the net sales value, whichever was higher. This was followed by another e-mail dated 24.11.2009 from the respondent to the applicant, informing the applicant that the MOU already signed between the parties on 03.07.2009 will be retained as it is. But a separate Leave and licence Agreement will be sent to the applicant by the end of the week. The respondent also requested the applicant to handover the applicants fit-out drawings to enable the respondent to approve the same. This e-mail would leave no doubt in the minds of either parties that the MOU dated 03.07.2009 was final and binding, with only three changes viz. one being the minimum guarantee of 15%, as against the 10% specified in MOU; the second being the confirmation of allotment of Kiosk No.6 as well as space for Find Dining Restaurant in the mezzanine floor between the third and fourth floors, as against only Kiosk No.7 stipulated in the MOU and the third being increase in monthly licence fee. 3(11) They sent an e-mail dated 24.11.2009 to the respondent, requesting the respondent to first provide detailed floor plan for the Kiosks allotted as well as for the Fine Dining Space, to enable the applicant to consult their Architect and prepare the fit-out drawings. It would be pertinent to point out that unless the detailed floor plans showing the exact location of the Kiosks and Fine Dining Space allotted to the applicant, was handed over by the respondent to the applicant, it would be impossible for the applicant to prepare the fit-out drawing at its end. However, in spite of repeated requests and reminders by the applicant in this regard, the respondent never forwarded the detailed floor plan showing the exact location of the Kiosks and the Fine Dining Space, as mentioned in their e-mail dated 23.11.2009. Likewise, the respondent also never forwarded the draft of the legal licence agreement to be executed between the parties, in pursuance to the MOU dated 03.07.2009 and the e-mail of the respondent dated 23.11.2009. 3(12) The applicant states that the respondent once again went back on their assurance as well as their own e-mail dated 23.11.2009 and Mr.Kim Culley of the respondent orally informed the deponent herein that only Kiosk No.7 will be handed over to the applicant and that Kiosk No.6 as well as the Fine Dining Restaurant Space will not be given to the applicant. The various requests and pleas made by the deponent herein to the said Mr.Kim Culley, to stick to the e-mail dated 23.11.2009, did not find favour with them. Left with no other option, the applicant sent an e-mail dated 09.01.2010 to the respondent, agreeing to take only Kiosk NO.7, as per the MOU dated 03.07.2009. When the applicant was expecting a favourable response from the respondent, it was shocked and surprised to receive an e-mail dated 11.01.2010 from the respondent, under which the applicant was informed that Kiosk No.7 was also not available and agreeing to offer Kiosk No.14. Immediately thereafter, the deponent herein personally contacted Mr.Kim Culley of the respondent, who orally informed the deponent herein that there was confusion at the respondents end and what was allotted to the applicant was only Kiosk No.7. This was followed by an e-mail dated 11.01.2010 from the applicant to the respondent, protesting about the respondents conduct in going back on their promise. In reply thereof, the respondent sent an e-mail dated 11.01.2010 to the applicant, confirming allotment of Kiosk No.7 and regretting for the confusion and inconvenience. This was followed by yet another e-mail on 11.01.2010 itself to the applicant, informing the applicant that the said Mr.Kin Culley has specific confirmation from Mrs.Singhania of the respondent, that the applicant will be given Kiosk No.7 as well as the Fine Dining Restaurant in the mezzanine floor. However, the respondent did not mention anything about Kiosk No.6. 3(13) They sent an e-mail dated 12.01.2010 to the respondent, once again informing the respondent that what was allotted to the applicant as per the respondents e-mail dated 23.11.2009 was both Kiosk No.6 and 7 as well as Fine Dining Restaurant Space. The applicant once again requested the respondent for the floor plan, to enable the applicant to prepare its fit-out drawings. Since the drawings were not forthcoming, the applicant sent reminders under its e-mail dated 19.01.2010 and 21.01.2010. In reply to the same, the applicant received an e-mail dated 21.01.2010 from Mr.Kim Culley of the respondent, informing the applicant that he has asked his co-ordinating department to send the required drawings to the applicant. Thereafter, the required floor-plan drawings were sent by the respondent to the applicant, as an attachment, under the respondents e-mail dated 22.01.2010. By a further e-mail dated 22.01.2010, the respondent also sent the Leave and licence Agreement and the Facilities and Utilities Agreement and Common Area Maintenance Agreement to the applicant, as attachments. 3(14) The Leave and licence Agreement and other connected Agreement for Kiosk Nos.6 and 7 as well as for the Fine Dining Restaurant in the mezzanine floor, the applicant was shocked and surprised to receive an e-mail dated 30.01.2010 from the respondent, informing the applicant that Kiosk No.6 will not be available as the same has already been offered to another client. Shocked by this revelation, the applicant herein sent an e-mail dated 01.02.2010 to the respondent, requesting for a personal appointment with Mr.Kim Culley, in order to discuss the matter and sort out the confusion created by the respondent. In reply to the about, the respondent sent an e-mail to the applicant on 01.02.2010, confirming a meeting on 03.02.2010 at 4.00 P.M, to close all issues. The deponent personally went to the office of Mr.Kim Culley on 03.02.2010 at 4.00 P.M. But however, the meeting stood postponed to 04.02.2010. 3(15) On 04.02.2010, the deponent herein met Mr.Kim Culley of the respondent personally and at this point in time, the said Mr.Kim Culley profusely apologized for all the confusion and requested that the applicant make payments of the security deposit, as stipulated in the MOU dated 03.07.2009 and e-mail dated 23.11.2009. Pursuant thereto, the applicant states that under the covering letter dated 04.02.2010, the applicant enclosed a cheque bearing No.719438 dated 04.02.2010 for Rs.23,12,210/- drawn on Canara Bank, Teynampet Branch towards the balance advance payable, since the applicant had already paid a sum of Rs.5.04,565/- to the respondent on 03.07.2009 itself. 3(16) A confirmation from the respondent regarding the date of signing the Leave and licence and other Agreements, the applicant was taken aback to receive a letter dated 08.02.2010, blaming the applicant for not signing and delivering the Leave and licence Agreement, Utilities and Facilities Agreement and Common Area Maintenance Agreement along with the balance security deposit, despite repeated reminders allegedly made by the respondent. There was also a reference made to an e-mail dated 08.02.2010 allegedly sent by the respondent to the applicant, receipt of which the applicant denies. Under this letter, the respondent expressed its inability to accept the cheque for a sum of Rs.23,12,210/- issued by the applicant. It is stated as though the said cheque was returned along with the letter but the applicant has not received the said cheque from the respondent. It is mentioned in this letter that after discussions and mutual consent, the allotment of space in favour of the applicant will be mutually decided and only thereafter, the respondent will receive the cheque issued by the applicant. 3(17) The above conduct of the respondent in seeking to go back on the MOU dated 03.07.2009 and their e-mails dated 23.11.2009, 24.11.2009 and 11.01.2010, is totally arbitrary and is against the concluded contract between the parties and amounts to not only a breach of contract but also tantamount to a fraud being perpetrated by the respondent upon the applicant. The respondent has repeatedly reassured the applicant that their allotment of Kiosk Nos.6 and 7 as well as the Fine Dining Area Space in the mezzanine floor between the third and fourth floors in the Food Court at Express Avenue, stood confirmed of the Leave and licence Agreement, Facilities and Utilities Agreement and the Common Area Maintenance Agreement. In fact, all the essential terms necessary for establishing a concluded contract between the parties, find a place in the MOU dated 03.07.2009, including the monthly payments to be made, escalation, minimum guarantees etc. This stood confirmed under the respondents e-mail dated 23.11.2009, where there was a minor change on three aspects as already pointed out hereinabove and also the e-mail dated 24.11.2009 from the respondent, categorically stating that a fresh MOU need not be signed between the parties. This was again reiterated in the respondents e-mail dated 11.01.2010. Thus, going by all the above, the parties hereto have indeed entered into a concluded contract, which cannot be resiled form by the respondent. 3(18) The respondent had already accepted an advance payment of Rs.5,04,565/- from the applicant even as early as on 03.07.2009, towards part payment of the security deposit and the applicant has also sent a cheque for Rs.23,12,210/- to the respondent on 04.02.2010, towards balance security deposit payable. The applicant states that only pursuant to the MOU dated 03.07.2009 and after having been assured by the respondent that the allotment in favour of the applicant is confirmed, the applicant has gone ahead to finalise purchase of new kitchen equipment with M/s.Micro Engineering Industries and has also paid an advance to them. That apart, the applicant has appointed M/s.RSP Associates, Commercial Kitchen Designer and Consultant, for making out the kitchen equipment drawings and service point drawings. In addition to the above, the applicant has also appointed new staff for commencing catering in the Kiosks as well as the Fine Dining Restaurant and has also kept 5 employees on stand-by for the said purpose. But the applicant has materially altered its position by not only paying a portion of the security deposit to the respondent on 03.07.2009 but also by incurring expenditure at his end to ready itself for commencing restaurant and catering activities in the Kiosks and Fine Dining Restaurant Space allotted to it by the respondent. Hence, the applicant is left with no other option, but to file the present applications under section 9 of the Arbitration and Conciliation Act, 1996. Prima facie case and balance of convenience lie entirely in favour of the applicant in granting the interim reliefs, as prayed for. Unless the interim reliefs as prayed for is not granted, the applicant will be put to grave prejudice and irreparable hardship, for the reason that the respondents may some other party in possession of the Kiosks and the Fine Dining Area allotted to the applicant or deal with the said property in a manner which will be in violation of the MOU dated 03.07.2009 and the e-mail as referred to hereinabove. 3(19) For all the reasons aforementioned, the applicant prays the following reliefs:- a)To pass an order of ad-interim injunction restraining the respondent, their men, servants, agents, employees, or any person(s) claiming under or through them from licensing, dealing with or parting with possession in any manner whatsoever of the schedule mentioned property, pending disposal of arbitrary proceedings; b)To pass an order of ad-interim injunction restraining the respondent, their men, servants, agents, employees, or any person(s) claiming under or through them from carrying on any alterations, or interior works in the schedule mentioned property, pending disposal of the arbitrary proceedings. 4.The brief facts of the case of the respondent as stated in the counter affidavit would be as follows:- 4(1) The schedule mentioned property is not vacant as on date and has been given on licence in favour of third party namely M/s.Southern Cusine under a leave and licence agreement dated 03.02.2010, for the purpose of running a vegetarian restaurant in Kiosk No.7 in the food court and restaurant No.6 at Mezanine floor, and are put in possession as early as 04.02.2010. They have also paid the entire security deposit amount and has taken possession and are carrying on the fit out work for the post one month. They have also issued a letter dated 26.02.2010 stating that they will be completing the fit out in the first week of April 2010 and will be ready for operation at the time when there is an inaugural function of the mail. 4(2) The applicant had not derived any right or interest even as a licence under the Memorandum of Agreement entered in to on 03.07.2009.Under the MOU, Koisk No.7 on the food court, 3rd floor of Express Avenue for the brand Ratna Cafe having a plinth area of 207 sq.ft. and super built up area of 1345.5 sq.ft. was given. But it was specifically stated that the area is tentative and subject to change. Further under clause 28 it has been stated that this MOU creates no interest in the proposed user vis-`-vis the proposed licenced area. Under clause 27, it has been specifically stated that in case this MOU does not culminate into a leave and licence agreement the liability of the owner is limited only to the refund of the security deposit without any interest, and the owner shall not be liable in any other manner. If at all the proposed user namely the applicant has got any grievance under the MOU, the same has to be resolved by arbitration. 4(3) The MOU also specifically states and denotes the parties as owner and proposed user and not as a licensor and licencee which itself would got to prove that there is no concluded contract and no legal relationship between the applicant and the respondent and no right flows to the applicant herein. After entering into MOU the understanding has not reached any finality since after 03.07.2009, the date of MOU, there was continuous changes in respect of the area as well as the measurement of the space to be allotted and taken over by the applicant herein. There were number of discussions by way of offer and counter offer taking place by E-Mail as well as person regarding some area. Since there were competition for the area to be occupied in the prestigious forth coming complex by many industrialist and businessmen, negotiations were going on with other persons also. One, Southern Cusine offered to take a larger area for a competitive rent, and since the applicant declined at the first instance to take mezzanine floor along with Kiosk No.7, and were not sure of the area they required in the Express Avenue, and the respondent also accepted the said offer and finalised by entering into a leave and licence agreement on