IREO Private Limited v. Vibhor Home Developers Pvt Ltd

15. Since lengthy litigation was not found to be viable, therefore, the parties joined hands to commercially exploit the plots in question. Thus, the parties decided to enter into a collaboration agreement in respect of the alternate land owned by group/ associate company of petitioners. Further, respondent No. 1 requested the petitioner to treat the amount of Rs.28.10 crores deposited with PNB Housing Finance Limited as an interest free security deposit. Respondent No. 1 undertook to neither pursue the matter of auction purchase nor to take or initiate any legal proceedings or other action to challenge the quashing of the auction proceedings or the order dated 17.09.2020 passed by DRT, anytime in future.

16. Pursuant to the aforesaid Settlement Deed dated 01.12.2020, it was submitted before the DRT on behalf of PNB Housing Finance Limited that in respect of the property in question, the petitioner herein had agreed to pay an amount of Rs.28.10 crores paid by the auction purchaser i.e. respondent No. 1 herein and that they will directly settle the matter with the auction purchaser i.e. respondent No. 1 herein. Attention of this Court was drawn to order dated 23.12.2020 passed by DRT- II, Delhi wherein it was held as follows: “Debts Recovery Tribunal-II, Delhi S.A. No. 75 of 2020 IREO PVT LTD VS.

PNB HOUSING FINANCE LTD. 23.12.2020 Item no.09 Present: Mr. Sanjeev Bhandari, Ld. Counsel online appears for applicant. Mr. Sanjeev Singh, Ld. Counsel online appears for respondent FI. This matter has been taken up through video conferencing. Heard both sides, it is submitted that on 22.12.2020 the applicant approached the respondent FI and paid Rs.15.00 crores through three demand drafts of Rs.5.00 crores each and undertook to pay balance amount of Rs.19.62 crores on or before 31.01.2021 and also undertakes to pay Rs.1.21 crores towards interest for delayed period.from 21.11.2020 to 31.01.2021 and another Rs.20.00 lacs towards legal expenses. The Ld. Counsel for respondent FI further submits in respect of Item No.2 property the applicant agreed to pay an amount of Rs.28.10 crores paid by the auction purchaser and they will directly settle with the auction purchaser which is payable' by the PNB to the auction purchaser. In the facts and circumstances of the settlement the LA. No. 1708/2020 stand disposed of. Both parties submit that the obligations have to be completed by 31.01.2021 and the main S.A. may be posted in the month of February, 2021. The matter be listed on OS.02.2021 for further proceedings. (G.V.K. RAJU)

PRESIDING OFFICER DRT-II, DELHI”

17. Thus, it is the case of the petitioners that on the basis of the aforesaid order, by accepting the settlement between the petitioner and respondent No. 1, PNB Housing Finance Limited also was left with no rights qua the said property. The amount of Rs.28.10 crores paid by the respondent No. 1 to PNB Housing Finance Limited against the property in question, stood adjusted under the said Settlement Agreement dated 01.12.2020, as interest free security deposit. Neither PNB Housing Finance Limited nor the respondent No. 1 being the auction purchaser was left with any right, title or interest whatsoever in the property in question.

18. Subsequently, a simplified Settlement Deed dated 12.07.2021 was entered by and between the parties in continuation of settlement dated 01.12.2020. As per the Settlement Deed dated 12.07.2021, the parties mutually agreed that the sale conducted on 09.06.2020 and the sale certificate dated 31.08.2020 issued in favour of respondent No. 1 be declared as legal and valid, subject to the modalities as duly recorded in writing. Learned counsel for the petitioner referred to Clause 4 of the Settlement Agreement dated 12.07.2021, which is reproduced as under:

19. Immediately thereafter, in continuation of the Settlement Deed dated 12.07.2021 and 01.12.2020, the MOU dated 14.07.2021 was executed, wherein respondent No. 2 was introduced by respondent NO. 1. Attention of this Court was drawn to the following clauses of the Settlement Deed dated 14.07.2021: „WHEREAS: …..

(C) to recover its outstanding dues, the Lender had exercised its right under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ("SARFAESI Act"), and put the Premises on auction (Auction) wherein the Vibhor emerged as the highest bidder, and deposited an amount of Rs.28,00,00,000/- (Rupees Twenty Eight Crores only) with the Lender, pursuant to the terms of the Auction. …. (E) the Lender challenged the orders passed in the SA before the Hon'ble DRAT vide Misc. Appeal no.126 of 2020 and Misc. Appeal no. 56 of 2021 (jointly the "Appeals") wherein the above stay and all other stay orders got vacated and subsequently the Lender issued sale certificate ("Sale Certificate") in favor of Vibhor with regard to the Premises. (F) the matter is still pending before the DRAT bearing Misc. Appeal No. 126 of 2020 relating to the Auction and the Parties have understood and discussed that the matter will take very long time before it is finally decided after availing all the legal recourse and it will be beneficial to IREO, Land Owning Companies-1 and Vibhor, that the same is settled mutually and amicably. (G) thereafter, with the intervention of certain wellwishers, senior representatives of IREO and Vibhor had met, and it was agreed that IREO shall reimburse to Vibhor an amount of Rs. 28,00,00,000/(Rupees Twenty Eight Crores only) paid by Vibhor to the Lender pursuant to the Auction plus a sum of Rs. 15,50,00,000/- (Rupees Fifteen Crore and Fifty Lakhs only) as damages/compensation. Vibhor has agreed to sell its right in the Schedule-I land only on conditions mentioned hereinafter. (H) IREO to arrange funds for the amounts to reimburse/pay to Vibhor, as above, has approached various parties to collaborate with it for the land parcel admeasuring 2.09375 acres situated at Village Behrampur, Sector 58, Gurugram, Haryana (hereinafter referred to as "Schedule II Land", which is more particularly described in Schedule II hereof and marked in light blue color in the plan annexed as Annexure A) and is currently part of more than 100 acres of land licenced as a plotted colony licence (the "PC Licence") vide I,.icence NO. 107 of 2010 granted by Director Town & Country Planning, Haryana (DTCP). …… (K) after negotiations with various prospective parties, the offer of LLP being the most suitable, IREO has agreed to enter into a Collaboration Agreement (CA) with the LLP, for commercial license, on the terms and conditions as set below with the clear understanding that timely payment of IFRSD is the major reason IREO has agreed to enter into the CA for the Schedule II Land with it.” XXXXXXXXXX

6. Vibhor shall cease to have any right in the Schedule-I Land on receIving payment of Rs.43,50,00,000 (Rupees Forty Three Crores Fifty Lacs Only) as set out in this Agreement.

7. Notwithstanding anything to the contrary contained herein:

(i) In the event the LOI is not granted in favour of

LLP for Schedule II Land within the above mentioned period of 6 (six) months then IREO shall make available, within 30 (thirty) days of that, alternate parcel of licensable land admeasuring 5.[7] acres either in Sector-59 or Sector-63A of Gurugram or pay a sum of Rs. 43,50,00,0001- (Rupees Forty Three Crores Fifty Lacs Only) only to Vibhor failing which Vibhor shall proceed for registration of Sale Certificate and get the ownership and possession of Schedule-I Land. Provided always in the event IREO pays a sum of Rs. 43,50,00,000/- (Rupees Forty Three Crores Fifty Lacs Only) to Vibhor, as per preceding sentence, IREO shall pay an additional amount, if any, to Vibhor, being an amount equivalent to the interest @ 15% p.a. on the amount of Rs.28,00,00,000/- (Rupees Twenty Eight Crores only) only for the period of delay in grant of LOI solely due to reasons attributable to IREO.

(ii) In the event Vibhor gets the sale certificate registered for Schedule I Land in its favor for whatsoever reasons, LLP shall cease to have any right with respect to the Schedule II Land or under the CA or LOI that may be granted with respect to Schedule II Land. ………

8. Provided further in the event Sale Certificate for the Premises is registered in favor of Vibhor then: (A) IREO shall have the sole and absolute right and option, within 30 (thirty) days of the registration of the Sale Certificate, to: a) remove the building and structure constructed on the Schedule I Land,; and b) remove all items of equipment, DG Sets, furniture, fixtures, chairs, cabinets, conference tables, work stations, computers, printers, Air conditioning system and equipment, counters, audio visual equipment, communication system, telephones, water pumps, electrical switches and systems, cables, pipes, electrical transformers, and everything and every item installed lying at the Schedule I Land/Premises; and c) uproot and remove all plants and trees standing/planted/existing at the Schedule I Land/Premises, at its cost, risk and permissions (as required); and d) remove/surrender/transfer the electrical connection, water connection and other utility connections and shall be entitled to all the amounts, security deposits, etc. deposited/lying with the concerned departments and to get the same adjusted and or transferred and/or seek refund of the same, and Vibhor shall not interfere or obstruct with such removal, etc., and on expiry of the said 30 (thirty) days IREO and the Land Owning Companies-1 shall remove itself from the Premises and Vibhor shall be in sole possession of the same. …..

10. That Parties understand and have agreed that huge financial stake is involved and therefore timeline and commitments are to be adhered strictly. Parties hereby declare that the understanding as above is in their commercial interest and avoids uncertainty as to outcome of a potentially and costly long drawn legal battle. …..

14. In the event of any dispute arising out of this Agreement, the parties shall mutually decide the sole arbitrator for the resolution of dispute through arbitration proceedings under the Arbitration & Reconciliation Act and the decision of the Arbitrator shall be final and binding upon the Parties. The civil courts at New Delhi shall have exclusive jurisdiction for the said matter of this Agreement.”

20. Thus, referring to the aforesaid clauses of the Settlement Agreement dated 14.07.2021, it is contended on behalf of the petitioner that there were mutual obligations on the parties as per the said Settlement Agreement. Thus, it was agreed that the petitioner along with land owning companies and respondent No. 2 shall file an application for making auction sale of the property in question in favour of respondent No. 1 within 15 days of signing of the MOU. It is contended that as per Clause (G) of the MOU dated 14.07.2021, it was agreed that petitioner shall reimburse to respondent No. 1 an amount of Rs.28,00,00,000/- (Rupees twenty eight crores) paid by respondent NO. 1 to the lender pursuant to the auction, along with a sum of Rs.50 lakhs as damages/ compensation. Thus, respondent NO. 1 agreed to sell its right in the property in question to the petitioner. It is submitted that as per Clause 7 of the said MOU dated 14.07.2021, the petitioner is still ready to make payment of Rs.43,50,00,000/- (forty three crores fifty lakhs) to the respondent No. 1, along with additional amount equivalent to interest at the rate of 15% per annum on the amount of Rs.28,00,00,000/- (Rupees twenty eight crores) for the period of delay in grant of LOI. Thus, it is the case of the petitioner that the petitioner still has the right to make payment to respondent No. 1 and is willing to make payment of the said amount to the respondent No. 1. As per the petitioner, even though there is non-adherence of time lines as stipulated in clause 10, however, the said non-adherence will not be fatal to the contract and that the respondent No. 1 can be compensated with penalty in terms of Clause 7(1) of the MOU dated 14.07.2021.

21. It is the case of the petitioner that in terms of the MoU dated 14.07.2021, it was clearly agreed that respondent No.1 will not get the Sale Certificate registered for the said property or create any third party rights. Further, respondent No.1 will neither disturb the ownership or possession of the petitioner with respect to the said property.

22. Meanwhile, in the absence of any effective hearing before the DRAT in Appeal No. 126/2020, respondent No.1 filed a writ petition bearing no. W.P.(C) 2785/2022 before this Court. The said writ petition was disposed of vide order dated 14.02.2022 by Division Bench of this Court in terms of Settlement Deed dated 12.07.2021. The Division Bench set aside the order dated 17.09.2020 of the DRT by which order the DRT had set aside the auction sale dated 09.06.2020. Thus, the auction sale conducted in favour of respondent No.1 stood confirmed by way of order dated 14.02.2022 in W.P.(C) 2785/2022.

23. While passing the order dated 14.02.2022, the Division Bench of this Court directed all parties to take consequential steps to effectuate the settlement dated 12.07.2021 within a period of six weeks. It is to be noted herein that the MoU dated 14.07.2021was neither brought to the notice of the Hon‟ble Division Bench nor were any pleadings made in that respect.

24. Thereafter, after the passing of the order dated 14.02.2022 by Division Bench of this Court, a letter dated 14.02.2022 was issued by respondent No.1 to the petitioner, wherein respondent No.1 agreed to abide by the terms of the MoU dated 14.07.2021.

25. Subsequently, amended sale certificate dated 14.03.2022 was issued by PNB, which was registered before the Sub Registrar on 15.03.2022.

26. An application, Misc. Appl. 442 of 2021 in Misc. Appeal NO. 126 of 2020 came to be filed before the DRAT. The order dated 14.02.2022 was brought to the notice of DRAT. Thus, on the joint statement of the parties, the Misc. Appeal No. 126 of 2020 was disposed of by the DRAT vide order dated 07.04.2022, in terms of the directions as passed by Division Bench of this Court vide order dated 14.02.2022.

27. Subsequently, notices dated 24.05.2022 and 07.06.2022 were issued by respondent calling upon the petitioner and other land owning agencies to handover possession of the land in compliance with the order dated 14.02.2022. Thus, the present petition under Section 9 of the Arbitration and Conciliation Act, 1996 has come to be filed for restraining the respondent Nos.[1] & 2, and their members and affiliates from entering the premises, as described in Schedule I of the MoU dated 14.07.2021 at Village Behrampur, Tehsil Sohna, Gurugram.

28. On behalf of the petitioners, it is averred that the respondent No.1 has deliberately indulged in suppression and concealment of material facts, particularly in relation to the factum of existence of the MoU dated 14.07.2021. It is contended on behalf of the petitioners that even though the counsel for the petitioner was present on 14.02.2022 during the proceedings before the Division Bench in W.P.(C) 2785/2022, the fact of MoU dated 14.07.2021 could not be brought to the notice of this Court in view of the confidentiality provisions as existed in the MoU dated 14.07.2021.

29. The petitioner has relied upon the confidentiality clause as contained in clause 15 of the MoU dated 14.07.2021. The said clause relating to confidentiality is reproduced as below:

30. Thus, it is contended on behalf of the petitioners that in view of the aforesaid confidentiality clause, the factum of the MoU dated 14.07.2021 was not brought to the notice of the Division Bench. Further, it is contended that such confidentiality clause is legal and valid and that there is no bar to such a clause in terms of The Indian Contract Act, 1872.

31. It is further contended that the Division Bench order dated 14.02.2022 did not in any manner dilute the rights of the petitioner. Further, the Division Bench order did not in any manner make the MoU dated 14.07.2021 as non-est. Thus, for this purpose attention of this Court was drawn to letter dated 14.02.2022 issued by respondent No.1 to the petitioner, which is reproduced as below: “To: Dated: 14.02.2022[2] Ireo Private limited and other companies being Respondent Nos. 3 to 8 in the Writ Petition titled as “ Vibhor Home Developers Private limited Vs PNB Housing Finance limited & Ors" Dear Sirs, This is to confirm that not withstanding the statement that, may be suffered by you, before the Hon‟ble High Court of Delhi at New Delhi in the Writ Petition titled as “Vibhor Home Developers Private Limited Vs PNB Housing Finance Limited & Ors" listed before the Hon‟ble Justice Vipin Sanghi and Hon‟ble Justice Jasmeet Singh on 14 February 2022, to the effect that the Settlement Agreement dated 12 july 2021 is binding on Ireo Private Limited as well as on Respondent Nos. 3 to 8, we, i.e, Vibhor Home Developers Private Limited and yourselves shall continue to be bound by the terms and conditions contained in the Settlement Agreement /Memorandum of Understanding executed amongst us, Ireo Private Limited and Bottomline Realty LLP, with respect to exchange of land being the land admeasuring 5.70 Acres situated at Sector 59, Gurugram with respect to which the Sale Certificate has been issued in our favour by PNB Housing Finance Limited with land parcels as mentioned in the said Settlement Agreement /Memorandum of Understanding. Kind Regards Vibhor Home Developers Pvt. Ltd.”

32. In view of the aforesaid, it is contended on behalf of the petitioner that despite order dated 14.02.2022 passed by the Division Bench, the settlement between the parties dated 14.07.2021 is binding on the parties. The respondent Nos. 1 & 2 dishonestly and in deceitful manner, with ulterior motives never disclosed before this Court about the confidentiality of the MoU dated 14.07.2021, thereby causing wrongful loss and harassment to petitioner.

33. It is also contended on behalf of the petitioner that respondent No.2 is a nominee/sister concern of respondent No.1 Company and respondent No.2 LLP has common directors. Thus, it is alleged that respondent No.2 acting in collusion and connivance with respondent No.1, did not perform its contractual obligations under the MoU dated 14.07.2021. It is further contended on behalf of the petitioner that despite the Division Bench order dated 14.02.2022 and subsequent confirmation of the Sale Certificate, the petitioner still has the right to pursue independent case against the respondent for implementation of the MoU dated 14.07.2021. The petitioner is willing to pay the amount of Rs.43.50 crores to the respondent No.1.

34. In support of his case, ld. Senior Counsel for the petitioner relied upon the judgment in the case of Maharwal Khewaji Trust (Regd.), Faridkot Vs. Baldev Dass, reported as (2004) 8 SCC 488. The petitioner relied upon paragraph 10 of the said judgment in order to contend that court should not permit the nature of the property to be changed which may lead to loss or damage being caused to the party who may ultimately succeed and may further lead to multiplicity of proceedings. Paragraph 10 of the said judgment is reproduced as below:

35. On the other hand on behalf of the respondents it has been argued that the petitioners are attempting to indirectly overturn orders of the Division Bench of this Court through this petition. It is contended by the ld. Senior Counsel for the respondents that it is an admitted position that all the parties had entered into the settlement agreement dated 12.07.2021 inter alia confirming the sale dated 09.06.2020 of the subject property in favour of respondent no.1.

36. It is contended on behalf of the respondents that petitioner no.1 and its affiliate land holding companies had duly appeared before the Division Bench of this Court during the hearing in WP(C) 2785/2022 on 14.02.2022, and had duly given their consent to passing of the order in terms of the above settlement agreement dated 12.07.2021. The consent of the petitioners is duly recorded in the order dated 14.02.2022. It is contended that vide order dated 14.02.2022, Division Bench of this Court had categorically directed the petitioner and other land holding companies to take all consequential steps to effectuate the settlement agreement dated 12.07.2021 within six weeks from the date of the order. However, instead of handing over possession to respondent No.1, the petitioners are now seeking to overturn the consent order dated 14.02.2022 passed by Division Bench of this Court, by way of filing the present petition.

37. It is further contended that the petitioner moved a review application in W.P(C) 2785/2022, which was dismissed as withdrawn by the petitioner vide order dated 08.07.2022. Thus, it is contended that the order dated 14.02.2022 of the Division Bench has become final and binding on the parties. The petitioners are wrongly attempting to seek directions from this Court, which would be in direct contravention of the order dated 14.02.2022. The reliefs that are prayed for in the present petition are at complete odds with the directions given by Division Bench of this Court vide order dated 14.02.2022, therefore, the reliefs as sought in the present petition are wholly untenable.

38. It is further submitted on behalf of the respondents that the petitioners have no right to the subject property under the MoU dated 14.07.2021. It is thus argued that Clause 2 of the MoU dated 14.07.2021 itself stipulates that the auction sale dated 09.06.2020 of the subject property in favour of respondent No[1] would be confirmed and the parties would take all steps to make the same absolute and perfectly valid. Reliance is placed upon Clause 3 of the said MoU to argue that the said clause stipulates that respondent No.1 would not get the Sale Certificate registered and would not take possession of the subject property for a period of 8 months from the date o the MoU, i.e., until 14.03.2022. The said period is already over.

39. Further, clause 4 of the MoU dated 14.07.2021 stipulates that parties would execute a collaboration agreement for development of another land. This was never done. As per clause 4 (f), petitioners were required to get existing encumbrance created in favour of M/s L&T Housing Finance Ltd. over the land removed. However, petitioners did not get this encumbrance removed and thus Letter of Intent in respect of the proposed development was never issued. It is contended that none of the other stipulations as contained in Clause 4 were performed by the petitioners.

40. It is further contended on behalf of the respondents that Clause 6 of the MoU stipulates payment of Rs.43.[5] crores by the petitioners to respondent No.1. However this was never done. Further, clause 7 provides that in the event Letter of Intent is not granted in respect of Schedule II land, petitioners may within a period of six months from the date of the MoU, either give alternate land in Sectors 59 or 63 A, Gurugram to respondent No.1; or to pay Rs.43,50,00,000/- to respondent No.1. This six month period expired on 14.01.2022, but admittedly, neither any alternate land was given nor Rs.43.50 crores were paid by petitioners to respondent No.1.

41. It is the case of the respondents that clause 7 of the MoU dated 14.07.2021 provides that if the stipulation as given in Clause 6 of the said MoU is not done, then respondent No.1 would be entitled to get the Sale Certificate registered and take possession of the subject property. The eight month period as set out in Clause 3 of the MoU ended on 14.03.2022. Thus, an amended Sale Certificate for the subject property was accordingly registered on 15.03.2022. In view of the aforesaid, it is contended that even if the MoU is valid, the petitioners would have no rights whatsoever in the subject property under the said MoU. The petitioners have miserably failed to comply with their part of the obligations in terms of the MoU. Attention of this Court was drawn to clause 2, clause 4, clause 4 (g), clause 6 and clause 7 of the MoU dated 14.07.2021. It is thus contended that the petitioners have not followed the timelines as given in the MoU. Thus, the petitioners cannot seek enforcement of the said MoU.

42. It is next contended on behalf of the respondents that the MoU dated 14.07.2021 is not enforceable. It is contended that the MoU envisages a collaboration agreement to be entered. Thus, MoU dated 14.07.2021 is not a collaboration agreement, but an agreement to enter into a collaboration agreement. The MoU dated 14.07.2021 is in the nature of an agreement to enter into an agreement on future terms. Agreement to enter into a future agreement is never specifically enforceable and is barred by provisions of The Specific Relief Act,

1963. It is further contended that an agreement, performance of which involves performance of a continuous duty which the court cannot supervise, is not specifically enforceable under The Specific Relief Act, 1963. To make good this argument, respondents have relied upon the following judgments:

I. (2001) 5 SCC 101, Her Highness Maharani Shanti Devi P. Gaikwad Vs. Savjibhai Haribhai Patel and Ors.

II. (2010) 8 SCC 1, Vinod Seth Vs. Devinder Bajaj & Anr.

III. (2006) 1 SCC 751, Dresser Rand S. A. Vs. Bindal Agrochem Limited and Anr.

IV. 2012 SCC Online Del 4441, Davender Kumar Sharma Vs. Mohinder Singh and Ors.

43. It is further contended on behalf of the respondents that powers under Section 9 of the Arbitration & Conciliation Act, 1996 cannot be extended for directing specific performance of the contract itself. Reliance is placed upon judgment in the case of Pink City Expressway Pvt. Ltd. Vs. National Highways Authority of India and Anr., 2022 SCC Online Del 1816.

44. Respondents have further contended that in case of terminable contract, since the issue of the legality of the action of termination has yet to be determined, reliefs as prayed in the present petition ought to be declined. It is contended that scope and ambit of Section 9 does not envisage restoration of a contract which has been terminated. It is thus contended that in terms of clause 5 of the MoU dated 14.07.2021, the collaboration agreement shall stand automatically and irrevocably terminated and that LLP shall cease to have any right, interest, claim or title in the collaboration agreement or the Schedule II land. Thus, petitioners cannot seek restoration of a contract, which has been terminated. Reliance is placed upon the following judgments:

I. 2020 SCC Online Del 2093, Overnite Express Limited Vs. Delhi Metro Rail Corporation.

II. 2020 SCC Online Del 2485, Inter ADS Exhibition Pvt. Ltd. Vs. Busworld International Cooperative Vennootschap Met Beperkte Anasprakelijkheid.

45. I have given a thoughtful consideration to the submissions made on behalf of both the parties.

46. When the present petition was listed for hearing on 15.07.2022, the MoU dated 14.07.2021 which had been kept in a sealed cover, was opened in the court in the presence of all the parties. All the parties were directed to collect copy of the MoU dated 14.07.2021 from the

47. During the course of the hearing, the parties have confirmed that the MoU dated 14.07.2021 was entered into between the parties. None of the parties have denied the existence of the MoU dated 14.07.2021. Arbitration clause is contained in clause 14, which is reproduced as below: “14. In the event of any dispute arising out of this Agreement, the parties shall mutually decide the sole arbitrator for the resolution of dispute through arbitration proceedings under the Arbitration & Reconciliation Act and the decision of the Arbitrator shall be final and binding upon the Parties. The civil courts at New Delhi shall have exclusive jurisdiction for the said matter of this Agreement.”

48. Perusal of the MoU dated 14.07.2021 discloses that the said MoU pertains to land, description of which has been given in the Schedule attached to the said MoU. Schedule I pertains to the land qua which the respondent has a confirmed sale certificate in its favour, viz. land situated in Village Behrampur, Tehsil Sohna, Gurugram. Schedule II pertains to the land for which collaboration agreement was to be entered in terms of the MoU dated 14.07.2021.

49. It is seen from the MoU dated 14.07.2021 that the said MoU envisages firstly, transfer of land as described in Schedule I of the MoU to the petitioner after payment of amount of Rs.43,50,00,000/- (Rupees Forty Three Crores Fifty Lacs Only). Secondly, the said MoU envisaged entering into a Collaboration Agreement with respect to lands as described in Schedule II of the MoU. Thus, it has rightly been contended on behalf of the petitioners that the two aspects in the MoU can be severed. Thus, even though the MoU dated 14.07.2021 may not be tenable as regards the second part with respect to entering into a Collaboration Agreement qua lands as described in Schedule II, the said MoU is certainly tenable as regards the first part pertaining to transfer of land as described in Schedule I of the MoU. The sale/transfer of the land to the petitioners pertained only to the lands as mentioned in Schedule I of the MoU and the part relating to entering into Collaboration Agreement with respect to Schedule II of the land, was a totally separate aspect. The two aspects could be severed. In this regard attention of this Court was brought to the severability clause as contained in MoU dated 14.07.2021. Clause 13 of MoU dated 14.07.2021 is reproduced as below:

50. In view of the aforesaid, as rightly contended by ld. Senior Counsel for the respondents, the part of the MoU dated 14.07.2021 dealing with entering into Collaboration Agreement with respect to land described in Schedule II, is not tenable. The MoU dated 14.07.2021 envisaged entering into a Collaboration Agreement in future and agreement to enter into an agreement in future, is not enforceable. Thus, submissions made in this regard on behalf of the respondents are accepted. However, in view of clause 13 of the MoU relating to severability, it is held that the portion of the MoU dated 14.07.2021, pertaining to transfer of land to the petitioners, as described in Schedule I, is severable and is held to be tenable. Construction over the land in Schedule II after entering into Collaboration Agreement is one part of the agreement, which is severable from the other part of the agreement relating to transfer of land described in Schedule I of the MoU.

51. Reference in this regard may be made to Sections 57 & 58 of The Indian Contract Act, 1872, which are reproduced as below:

52. Reference may be made to the judgment in the case of Beed District Central Coop. Bank Ltd. Vs. State of Maharashtra and Ors., (2006) 8 SCC 514, wherein it has been held as follows:

53. It would also be fruitful to refer to the judgment in the case of Canara Bank Vs. K.L. Rajgarhia, 2009 SCC Online Del 310, wherein it has been held as follows:

54. Reference may also be made to the judgment in the case of M/s Forbes Gokak Ltd. Vs. Central Warehousing Corporation, reported as 2010 SCC Online Del 369, wherein it has been held as follows:

55. Prima facie, it has rightly been submitted on behalf of the petitioners that the petitioners still have the option of payment of Rs.43,50,00,000/- (Rupees Forty Three Crores Fifty Lacs Only) to the respondent No.1 in terms of clause 7 of the MoU dated 14.07.2021, which is a non-obstante clause. The same is reproduced as below: “7. Notwithstanding anything to the contrary contained herein:

(i) In the event the LOI is not granted in favour of LLP for Schedule II Land within the above mentioned period of 6 (six) months then IREO shall make available, within 30 (thirty) days of that, alternate parcel of licensable land admeasuring 5.[7] acres either in Sector-59 or Sector-63A of Gurugram or pay a sum of Rs. 43,50,00,0001- (Rupees Forty Three Crores Fifty Lacs Only) only to Vibhor failing which Vibhor shall proceed for registration of Sale Certificate and get the ownership and possession of Schedule-I Land. Provided always in the event IREO pays a sum of Rs. 43,50,00,000 (Rupees Forty Three Crores Fifty Lacs Only) to Vibhor, as per preceding sentence, IREO shall pay an additional amount, if any, to Vibhor, being an amount equivalent to the interest @ 15% p.a. on the amount of Rs. 28,00,00,000/- (Rupees Twenty Eight Crores only) only for the period of delay in grant of LOI solely due to reasons attributable to IREO.”

56. Attention of this Court was drawn to letter dated 14.02.2022 written by the respondent No.1 to the petitioner, which has already been reproduced in the preceding paragraphs. Thus, it was contended on behalf of the petitioners that by way of the letter dated 14.02.2022, the respondent No.1 had categorically agreed that it shall continue to be bound by the terms and conditions as contained in the settlement agreement/ Memorandum of Understanding executed between the parties. This letter dated 14.02.2022 was issued on behalf of respondent No.1 after passing of the order dated 14.02.2022 by the Division Bench in W.P.(C) 2785/2022. In this regard, attention of the court has been drawn to Section 63 of The Indian Contract Act, 1872, which provides as under:

57. In view of the aforesaid, it has thus been contended on behalf of the petitioners that the letter dated 14.02.2022 written on behalf of respondent No.1 to the petitioner is in the nature of the provision as envisaged in Section 63 of The Indian Contracts Act, 1872.

58. It has also been contended on behalf of the petitioners that with respect to contracts relating to sale of property, time is not the essence of the contract. In this regard reference has been made to the judgment in the case of N. Srinivasa Vs. Kuttukaran Machine Tools Limited, (2009) 5 SCC 182.The following paragraphs have been referred:

Going by the ratio of the abovementioned decision, it is clear that the VIth Additional City Civil Judge, Bangalore, was justified in directing the parties to maintain status quo in the matter of transferring, alienating or creating any third-party interest as prima facie it has been proved that the respondent was trying to sell the property in dispute to a third party thus alienating the rights of the property in dispute, which would have caused irreparable damage to the appellant. ………

31. As noted hereinearlier, one of the main issues for the purpose of deciding the application for injunction was whether time was the essence of the contract or not. By the impugned order, the High Court had failed to appreciate that in the contract relating to immovable property, time cannot [Ed.: The complete legal position as to time being of the essence in contracts for sale of immovable property is stated in para 27.] be the essence of the contract. In any event even in such a case the arbitration clause would survive and the dispute would be required to be resolved. That being the position, pending disposal of the arbitration proceeding, interim measure to safeguard the interest was required to be taken.

32. The High Court also, in our view, had failed to appreciate the material on record as the agreement and the correspondences produced by the parties to the effect that since the appellant was required to furnish the nil encumbrance certificate till the date of transaction to show that there was no charge over the property and further since the property was to be kept vacant at the time of the execution of the sale deed, time cannot be held to be the essence of the contract in the facts and circumstances of the case and accordingly, the interim measure was necessary to prevent irreparable loss and injury.

33. However, the question whether time was of the essence of the contract or not is to be decided by the arbitrator in the arbitration proceeding and for that reason only, the High Court had also left open such an issue to be decided by the learned arbitrator and in this connection, the High Court observed as follows: “As such the contentions with regard to survivability of the arbitration clause and the dispute as to whether time is the essence of the contract are issues which are within the realm of the arbitrator and accordingly, we do not wish to pronounce on the same and therefore, we do not see reason to refer to the arguments and case law referred in this regard.” Since the High Court had not at all gone into the question regarding whether time was the essence of the contract or not, it is not necessary for us to go into the question as the same shall be decided by the arbitrator while passing the award.

34. As noted hereinearlier, the respondent while opposing the application for grant of injunction, pleaded that the prayer of the appellant for grant of injunction in respect of the property in dispute should be refused because admittedly, the time to execute the deed by the appellant had expired in the meantime. ………

41. At the same time, considering the fact that some time would be required for the arbitrator to pronounce his award wherein the question whether time was of the essence of the contract or not would be required to be determined and if the parties are directed to maintain status quo in respect of the property in dispute till such award is passed, and for that reason, the respondent would not be entitled to transfer, alienate the property in dispute during the pendency of the arbitration proceeding and considering the balance of convenience and inconvenience of the parties, we feel it proper to direct the appellant to deposit the balance amount of Rs 4,99,03,829 (Four crores ninety-nine lakhs three thousand eight hundred twenty-nine) within a period of three months from the date of supply of a copy of this order to the VIth Additional City Civil Judge, Bangalore, in fixed deposit for a minimum period of six months initially in a nationalised bank in favour of the respondent and renew the same till the disposal of the dispute before the arbitrator. The original fixed deposit receipt shall be kept with the arbitrator.”

59. I am in respectful agreement with the aforesaid judgment of the Hon‟ble Supreme Court, wherein it has categorically been held that in a contract for sale of immovable property, normally it is presumed that time is not the essence of the contract. Even if there is an express stipulation to that effect, the said presumption can be rebutted.

60. Attention of this Court was also drawn to Section 16 of The Specific Relief Act, 1963 to contend that when a contract involves payment of money, it is not essential for the petitioner to actually tender to the respondent or to deposit in court any money, except when so directed by the court. However, the petitioner must prove performance of or readiness and willingness to perform the contract according to its true construction.

61. As regards the contention on behalf of the respondents that any order passed by this Court would have overriding effect on the order dated 14.02.2022 passed by Division Bench of this Court in W.P.(C) 2785/2022, the same is found to be totally untenable. The judgment dated 14.02.2022 passed by Division Bench in W.P. (C) 2785/2022 was premised on the settlement agreement dated 12.07.2021. The agreement dated 14.07.2021 was neither brought to the notice of the Hon‟ble Division Bench, nor was the subject matter of consideration before the Division Bench. Further, by order dated 08.07.2022, while dismissing the CM No. 28720/2022 filed on behalf of the petitioners, the Division Bench clarified that disposal of the said petition would not preclude the parties from raising such contentions as are otherwise available in law, in any other proceedings. Further, it was also clarified by the Division Bench by its order dated 08.07.2022 that the Division Bench has not rendered any opinion, prima facie or otherwise, on any of the averments made with respect to the MoU dated 14.07.2021.

62. Besides, this Court cannot lose sight of the fact that the signed copy of the MoU dated 14.07.2021 saw light of the day only on 15.07.2022, when the sealed cover containing the said MoU was opened in the open court in the presence of all the parties. It is also pertinent to mention here that the execution of MoU dated 14.07.2021 has been accepted by all the parties and no objection has been raised that the said MoU dated 14.07.2021 was not executed on behalf of the parties. In view thereof, in the proceedings before this Court, the court is required to assess the import of the said MoU dated 14.07.2021, as the present petition has been specifically filed with respect to implementation of the MoU dated 14.07.2021 and also especially when the execution of the said MoU has been admitted by all the parties.

63. It has been held in a catena of judgments that in a Section 9 petition, this Court is required to assess and decide which would be the most just and convenient route so as to prevent the ends of justice from being defeated. The intention behind Section 9 of the Act is preservation of the subject matter of an arbitration agreement. The scope of Section 9 of the Act is very broad and the court is empowered to grant various interim measures for preservation of the property, subject matter of dispute. Section 9 empowers the court to grant such interim measures as may appear to the court to be just and convenient.

64. The questions whether or not time was the essence of the MoU dated 14.07.2022, whether or not the petitioners still have the option to make payment of Rs.43,50,00,000/- (Rupees Forty Three Crores Fifty Lacs Only) to the respondents; whether is it the petitioners or the respondents who are at fault or are guilty of violating the terms of the MoU, are such questions which would essentially be decided in the arbitration proceedings. This Court cannot decide such questions in the present proceedings under Section 9 of the Act.

65. In view of the aforesaid, in the facts of the present case, the petitioner has made out a prima facie case and has proved balance of convenience in its favour. The petitioner has been able to prove that it is likely to incur irretrievable injury, if the possession of the property in question, which is with the petitioners, is not secured by this Court. In these circumstances I deem it appropriate to issue interim orders under Section 9 of the Act thereby directing the respondent Nos. 1 and 2 to maintain status quo as on today with respect to the possession, nature and character of the lands admeasuring 5.70 acres, situated in Village Behrampur, Sector 59, Tehsil Sohna, District Gurugram as described in Schedule I of the MoU dated 14.07.2021.

66. In the circumstances of the case, it is deemed expedient to issue directions to the petitioners to deposit the amount of Rs. Rs.43,50,00,000/- (Rupees Forty Three Crores Fifty Lacs Only) with the Registrar General of this Court within 3 days and the respondent No.1 shall have the liberty to move appropriate application for release of the said amount it its favour. The status quo order as granted is subject to the petitioners depositing the aforesaid amount within the time granted with the Registrar General of this Court, failing which the protection granted by way of this order, shall stand automatically vacated.

67. It is clarified that this order shall operate till such time the Arbitral Tribunal decides the petitioners‟ application under Section 17 of the Act, if so filed. If no application under Section 17 is filed by the petitioners within four weeks of the appointment of the Arbitral Tribunal, the interim order shall lapse.

68. It is further directed that the parties would be at liberty to approach the Arbitral Tribunal for variation or vacation of the above order. It is clarified that the Arbitral Tribunal, as and when constituted, is not precluded from passing any order either varying or vacating this order.

69. Accordingly, the present petition is allowed in the aforesaid terms. It is clarified that all rights and contentions of the parties are reserved. Further, it is also clarified that nothing stated in this order may be read as an expression of opinion on the merits of the disputes between the parties.

70. All the pending applications stand disposed off.

71. The next date fixed on 18.08.2022 stands cancelled.

JUDGE JULY 26, 2022/PB/au