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Section 9 in The Specific Relief Act, 1963
Section 14 in The Specific Relief Act, 1963
Section 10 in The Specific Relief Act, 1963
Section 23 in The Specific Relief Act, 1963
Section 20 in The Specific Relief Act, 1963

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Punjab-Haryana High Court
M/S Best On Health Ltd. And Others vs M/S Bestech India Pvt. Ltd on 30 June, 2014
                               IN THE HIGH COURT OF PUNJAB AND HARYANA AT
                                              CHANDIGARH

                     I.
                                                                       F.A.O. No.1620 of 2014
                                                                Date of Decision : 30.06.2014



                     M/s Best on Health Ltd. and others

                                                                              .....Appellant (s)

                                                       Versus

                     M/s Bestech India Pvt. Ltd.

                                                                             .....Respondent(s)

                     II.
                                                                        F.A.O. No.2383 of 2014

                     M/s Bestech India Pvt. Ltd.

                                                                              .....Appellant (s)

                                                       Versus

                     M/s Best on Health Ltd. and others

                                                                             .....Respondent(s)

                     III.
                                                                Civil Revision No.2837 of 2014

                     M/s Bestech India Pvt. Ltd.

                                                                              .....Petitioner (s)

                                                       Versus

                     M/s Best on Health Ltd. and others



                                                                             .....Respondent(s)



                     CORAM : HON'BLE MrJUSTICE RAJIV NARAIN RAINA

                     Present :      Mr.Puneet Bali, Sr. Advocate with
                                    Dr.Lalit Bhasin, Advocate,
                                    Ms.Nina Gupta, Advocate,
                                    Mr.Ranjan Jha, Advocate,
                                    Mr.Vibhav Jain, Advocate
Kumar Paritosh
                                    for the appellant(s).
2014.07.02 11:59
I attest to the accuracy and
integrity of this document
                      FAO No.1620 of 2014 and 2 connected cases                                 2


                                     Mr.Ashok Aggarwal, Sr. Advocate with
                                     Mr.Sanjay Vij, Advocate & Mr.Mukal Aggarwal, Advocate,
                                     for the respondent(s).

                               1. To be referred to the Reporters or not? Yes
                               2. Whether the judgment should be reported in the Digest? Yes

                     RAJIV NARAIN RAINA, J.

This order will dispose of three connected cases, i.e., FAO No.1620 of 2014, preferred by the appellants and CR No.2837 of 2014 and FAO No.2383 of 2014 filed by the respondent as common questions of law and facts are involved in all the three cases. The parties contesting and the subject matter are the same. The facts are taken from FAO No.1620 of 2014 for convenience.

2. This is an appeal under section 37 of the Arbitration and Conciliation Act, 1996 (for brevity the Act) against the order dated 12th February, 2014 passed by the learned District Judge, Gurgaon on an application filed under section 9 of the Act by respondent M/s Bestech India Private Limited (in short Bestech) against a consortium of five land owning companies of which one representing the rest for the purposes of this order is M/s Best on Health Limited/appellant No 1 (all five clubbed in short as 'BOHL') praying for vacation of interim measures of protection of the Project Land which is subject matter of a Term Sheet drawn and signed in a strictly private and confidential document executed between BOHL etc. and Bestech on 3rd September, 2012 to develop an integrated township over the Project Land. BOHL owns the land. Bestech is the developer of the Project Land inducted by BOHL to make a small kingdom for them in a township proposed in a part of Gurgaon where the land lies. They came together for common purposes for profit sharing @ 50:50 but have fallen apart in spiralling prices of realty leading to the present acrimonious litigation. The French anarchist Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 3 philosopher and economist Pierre-Joseph Proudhan in his 1840 book 'What is property? Or, an Inquiry into the Principle of Right and of Government" said "If I were asked to answer the following question: What is slavery? and I should answer in one word, It is murder, my meaning would be understood at once. No extended argument would be required to show that the power to take from a man his thought, his will, his personality, is a power of life and death; and that to enslave a man is to kill him. Why, then, to this other question: What is property! may I not likewise answer, It is robbery, without the certainty of being misunderstood; the second proposition being no other than a transformation of the first? Proudhon propounded the theory that the origin of property is theft- In its origin it is the right of first occupancy sanctioned by law but 'the modern legists dissatisfied with this brutal definition claim that property is based upon labour'. The owners of land in this case must be occupants either second or third hand if not further remote and claim absolute rights to property as they can and must as they are clear titleholders to the exclusion of rights of the rest of the world so long as not agreed to be shared or parted with to the limits agreed upon. But from which title deeds they have voluntarily and partially parted away certain rights and interest on the Project Land in terms of the Term Sheet, Agreement, Powers of Attorney and the Collaboration Agreement to the specialized labour of the respondent Bestech brought into the picture on developer's request offer to help them together erect a magnificent edifice, a proposed township for them to enjoy the usufruct from Project Land. This would be at the cost of the public presently not in sight, but are the future owners of villas, dwelling units, offices and shops on the Project Land. By-standers in a terrible war of attrition Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 4 fought on rapidly diminishing urban land. There is nothing morally or ethically wrong in the enterprise in the present day context. It is the business of the day especially in Gurgaon to make townships. Land is precious but labour is buyable at cheap cost, but both the warring parties appear committed to building a modern Nation. That is very good thinking. People need a shelter to live in, whatever it costs and wherever it lies, the means justifying the ends. To this end a large number of legal principles are pressed in this case on either side for the consideration of this Court which fairly accounts for the length of this order after five effective days spent hearing very fine arguments addressed by both the learned senior counsel assisted by a battery of learned counsel to press their respective cases on the narrow issue; whether or not should there be a protective stay on the disputed property injuncting BOHL from creating third party rights on the Project Land pending arbitration proceedings.

3. Leaving aside all that, the disputed Term Sheet in this case begins with the opening gambit:"This binding Term Sheet...outlines the terms and conditions of a proposed joint development agreement..." In the recital next following, the parties agree that "...This Term Sheet shall be followed by the execution of definitive agreements between the parties as more specifically enumerated in this Term Sheet". The words 'definitive agreement' or "definitive agreements" occur in twelve distinct recitals found at different places spread over 8 pages that make the Term Sheet followed by the 9th page where only signatures and stamps of the parties are found recorded in token of acceptance of the terms of agreement, which is the end sheet of the contract. BOHL says that it is not a contract but a contract to enter into a contract, on this I would come later. The Term Sheet, however, contemplates formation of definitive Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 5 agreements to be entered in the future to realize the Project dreamt. Many of the rights and liabilities which the parties wished to create for themselves are expressed and preserved in the document. The word 'agreement' has been used in different places in the Term Sheet either in the plural or in the singular depending on the context in which they are used. The total Project Land is approximately 108.713 acres situated at villages Harsaru and Hyatpur, in District Gurgaon in the State of Haryana.

4. The details of ownership of land of each of the 5 consortium companies is specified area-wise and tabulated on the opening page of the Term Sheet. The components of the project consist of Group Housing, Villas, and Commercial development etc. It was agreed between the parties that the specifications, pricing, timing, infrastructure, costing etc. of the project would be reviewed and approved with mutual consent at the time of execution of the definitive agreement and shall be annexed as an annexure to the Definitive Agreements and may be modified at the time of execution of the project as per mutual consent. In developing the project, Bestech shall be solely responsible for the construction and development of the project as per the specifications and standards mutually agreed between the parties. Bestech agreed to bear the cost of development of infrastructures for the project. The construction cost for the Villa, Group Housing, Commercial components of the township shall be borne by the parties in the ratio of their respective share of areas. It was agreed that BOHL would not fund the project. This was for the reason that it had ownership and title to the Project Land. The entire project was to be developed and built as a single project with similar quality of construction. Timelines were specified in the Term Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 6 Sheet for plots, group housing and for commercial development which were to run from the date of obtaining the change of land use license and all statutory clearances for the project. Bestech was free to add more land to the project at their own cost without any right of BOHL on the said additional land procured by Bestech and in this, no non-compete shall operate on Bestech if they wished to amalgamate any additional land contiguous to the Project Land for their own use. BOHL agreed to retain the possession of the land till the time Bestech obtains the Letter of Intent (LOI). The original title papers of the land were agreed to be handed over to the developer on issuance of LOI by the Director, Town and Country Planning, Haryana solely for the purpose of enabling the Bank to conduct a due diligence for debts sanctioning. Bestech was instructed in the Term Sheet not to directly or indirectly enter into any collaboration or joint venture agreement to develop any township within a 2 Km. radius of the Project Land without prior written consent of BOHL. There was an arbitration clause to settle disputes relating to the Term Sheet or any of the definitive agreements to be drawn in the future to be resolved by arbitration. The venue of arbitration would be in New Delhi. It was agreed that there will be three arbitrators, one nominated by BOHL, one by Bestech and the third to be decided by the first two arbitrators to be the Presiding Arbitrator. However, the last term in the Term Sheet, which has been strongly relied upon by BOHL to deny claims of Bestech, falls under the heading "Execution of definitive agreement". The moot clause reads :-

Execution The understanding in this Term Sheet is preliminary of in nature and shall be more detailed in the Definitive Definitive Agreement which shall be executed between the Agreement BOHL and the Bestech within 45 days of execution of this Term Sheet.

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 7

5. BOHL asserts in its address to this Court that with the failure of drawing up a definitive agreement within 45 days countable from 3rd September, 2012, when the Term Sheet was signed, the appellant is relieved of the Term Sheet and is free to deal with its land the way it likes without let or hindrance or claim by Bestech. To the contrary Bestech asserts that a cumulative reading of the recitals in the Term Sheet reveal that the project was a long drawn out concept to be executed through definitive agreements in 7 parts and thus, time was not the essence of the Term Sheet. Therefore, the 45 days period specified has to be read in the singular with the use of the words "definitive agreement" and not 'agreements'. In this way, the execution of definitive agreement lies spread across the entire development of an integrated township and the period specified cannot be read across all 7 projects which were yet to be defined through multiple definitive agreements with respect to each part of the proposed project taken up for creation. At the time of drawing up of the Term Sheet, each of the 5 owners of land received ` 1 crore from Bestech as a non-refundable and non-adjustable deposit calculated at the rate of ` 1 crore per acre of Project Land or in proportion thereof, falling within R-zone in the new Master Plan subject to a maximum of ` 100 crores. In the matter of obtaining a license, Bestech was responsible for obtaining licenses for the development of the conceptualized integrated township from the Director Town and Country Planning, Haryana and would pay all license fees, all the bank guarantees towards external development charges, infrastructure development works, infrastructure development charges required for obtaining license, conversion charges, scrutiny charges and other charges as may be required by law for obtaining the license/s. All the installments of Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 8 EC/IDC/IDW would fall on Bestech including renewal charges and other charges in order to maintain the license. Bestech agreed to apply for license over the Project Land within 14 days from the date of notification of Gurgaon-Manesar Master Plan 2031. Bestech would ensure that the license would be obtained within 18 months which was referred as the "Long Stop Date" from the date of execution of the definitive agreements between the parties or 12 months from the notification and implementation of the Master Plan. It is not disputed that the Master Plan has been drawn by the Government and notified on 15th November, 2012. However, it was agreed that the Long Stop Date shall be extended to the extent of any delay in the notification and implementation of Master Plan or any other legal, political and environmental issues which may be beyond the control of Bestech. These can be defined more elaborately during the making of the definitive agreement.

6. It is not disputed that Bestech applied for the license within the time specified, that is within 14 days of the Term Sheet. It is stated that DTCP, Haryana has rejected request for Group Housing licence on 2nd April 2014 on land measuring 14.4187 acres on the ground that the applied area exceeds the 20% Sector Area limit permitted for grant of license for Group Housing Colony in village Harsaru, Sector 89A, Gurgaon.

7. Bestech having paid ` 5 crores as non-refundable security deposit, the balance was agreed to be paid in the Term Sheet as follows: -

"(a) 35% of the total amount less Rs 5 cr. At the time of execution of the Definitive Agreements to be paid to the land owning companies in the ratio of their respective land share;

(b) The remaining 65% would be payable within 15 days from the date of issue of LOI (Letter of Intent issued Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 9 by DTCP for the township) to be paid to the land owning companies in the ratio of their respective land share;

(c) It is clarified that in case Bestech fails to procure License by the Longstop Date, then the following mechanism will prevail:

(i) Bestech will be given time extension for procuring the License. Such time period can be mutually decided.

(ii) If Bestech fails to procure the license, BOHL will be offered the responsibility to procure the license at the cost of Bestech.

(iii) If BOHL fails to procure the license within a period of 5 years from the date of this Term Sheet, then the entire initial deposit will be refunded to Bestech without any interest thereon.

                                         (iv)    On refund of initial deposit by Bestech to
                                         BOHL in terms of (iii) above, this Term Sheet
                                         would    terminate    with   immediate    effect   and

thereafter Bestech would have no right, title and interest of any manner whatsoever in or over the Project Land."

8. The third page of the Term Sheet indicates, and which in the view of Bestech is the life of the Term Sheet, a formula on sharing commercials and money, which signs off that the sanctioned FSI in the group housing component of the project would be shared between the parties in the ratio of 50:50. Similarly, the commercial component is also agreed to be shared in the ratio of 50:50 of sanctioned FSI. However, in the plotted component, the fully developed FSI on plotted/Villa's areas were to be shared between BOHL and Bestech in the ratio of 14:12 per acre. The other components included institutional area for schools, hospital and community centre. Those were agreed to be shared in half on the sanctioned FSI. Any balance FSI shall accrue to Bestech. It was clarified that BOHL shall have the right and Bestech shall be under an Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 10 obligation to sell on demand the areas demarcated for school and hospital development. The valuation was to be conducted by an International Property Consultant of international repute to be mutually decided if not pre-agreed in the definitive agreements. There were other terms which are not necessary to be gone into in any detail in the limited proceedings of this case while examining the correctness of the order passed by the learned District Judge, Gurgaon. However, they would be adverted to in the discussion only for the purposes of understanding the long drawn out arguments addressed by either side. Further still, it may be kept in the background that the total project was to be completed within 5 years in terms of Clause (iii) page 3 of the Term Sheet.

9. With time running out, on 16th October, 2012, BOHL and Bestech agreed to extend the period of 45 days in the Term Sheet which was due to expire on 18th October, 2012. The extension letter dated 16th October, 2012 was drawn two days before the expiration of the period extending the Term Sheet upto 18th December, 2012. It was stipulated that the Term Sheet shall automatically terminate by efflux of 45 days unless extension was agreed upon "in its sole discretion parties after due deliberation mutually agree to extend the term". The words 'definitive agreement' has been used in the plural in the extension letter and it is urged by Bestech that the extension letter relates to the proposed transaction. Three days later, the collaboration agreement (A-4) was drawn since the owners and confirming parties (consortium) were personally desirous of developing in the first instance the group housing complex on 14.4187 acres situated in village Harsaru, District Gurgaon on land described in the collaboration agreement bearing Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 11 Khewat/Khatauni/Rectangle and Killa numbers as fully described in the document.

10. It is the contention of Bestech that the commercials agreed upon in the Term Sheet, were agreed and confirmed in the collaboration agreement and matters which were not considered at the time of the Term Sheet, were introduced by virtue of accommodating the claims of economically weaker sections of society, shops, schools and/or any other amenities developed in the said Group Housing complex but the ratio of FSI share remained 50:50 between the owners and the developers. Time of 18 months for execution was to start from notification of the Master Plan. As said earlier, the Master Plan was notified on 15th November, 2012. The collaboration agreement contained an arbitration clause. In Clause 14 of the collaboration agreement, parties agreed and acknowledged that the Term Sheet signed on 3rd September, 2012 is a binding document as regards the proposed construction and development of villas, plots, group housing, commercial and institutional units on the Project Land as defined in the Term Sheet and this collaboration agreement was being executed solely for the purposes of detailing the terms and conditions of the Group Housing component of the project (see Sub Clause (e) of Clause (14). Sub Clause (c) put parties to due diligence and mutual cooperation keeping in view each others interest to give effect to the agreement. The agreement was followed by execution of general power of attorney authorizing persons named therein to act on behalf of the respective parties. The general power of attorney was drawn on 19th October, 2012. Since there was a clause of 45 days, the same was extended on 27th December, 2012 upto 28th February, 2013 with the Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 12 renewed term. This extension was granted with reference to drawing up second definitive agreement for the plotted colony.

11. Two days before the expiration of the period slated to close on 28th February, 2013, BOHL e-mailed Bestech a letter informing them that they have engaged another consultant that had opined that the agreement is pro-developer. This appears to have been the start of the process of BOHL to resile from the Term Sheet and which has escalated into disputes leading to the present situation. There has been a large exchange of e-mails, correspondence etc. between the parties where ultimately BOHL wanted to change their share ratio of 50:50 to 65:35 in their favour. I refrain from dealing with this correspondence or what it adds up to as that is a matter of pleadings to be exchanged by the parties before the Arbitral Tribunal for adjudication. The sequence of facts narrated thus far is for no other purpose except to understand whether the learned District Judge, Gurgaon was correct in making the order impugned. This is broadly where we stand on facts.

12. I have heard Mr. Puneet Bali, learned senior counsel appearing for BOHL in their appeal and Mr. Ashok Aggarwal, learned senior counsel appearing for Bestech in its cross-appeal and a revision under Article 227 of the Constitution of India questioning the correctness of the second order passed by the learned District Judge, Gurgaon rejecting Bestech's application for correction of the order praying that the words "whichever is earlier" was an accidental slip at the end of the impugned order which should be read as "whichever is later" in the context of the entire operative part of the order found at the end of the order in para. 28 which reads : -

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 13 "The present order of injunction shall be operative for a period of 3 months from today or till the decision of the arbitrator or whichever is earlier"

13. BOHL has appealed against both the directions issued by the learned District Judge, Gurgaon under section 9 restraining BOHL from creating any third party rights or interest over the Project Land which is the subject matter of Term Sheet dated 3rd September, 2012 or any portion thereof or from transferring, alienating or otherwise dealing with or disposing of or parting with possession of the same or any portion thereof to any third party and from raising any construction over the land in question or from changing its nature in any manner whatsoever. Bestech is in appeal against curtailing the life of interim stay order of protection to three months. They pray for directions in continuum till the arbitration proceedings culminate in an award so that the subject matter corpus is kept preserved.

14. Before this Court deals with the respective contentions of the parties, the narration of a few further facts may be necessary to more fully understand the disputes arising at the commencement of the arbitration proceedings in terms of section 21 of the Act in the legal context of grant of or denial of an injunction. The disputes between the parties have grown to full bloom when BOHL terminated their arrangement with consultant DTZ appointed for the project by mutual agreement and informed Bestech they had changed the international consultant by appointing on 6th August, 2013 a new consultant namely M/s Jones Lang LaSalle (JLL) for initiating, negotiating, finalizing and facilitating the execution of the terms and conditions of the definitive agreement to be entered with Bestech. This change-over has changed the entire complexion of the relationship between the parties. Bestech wrote Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 14 to BOHL on 28th February, 2013 that it has no objection to the engagement of M/s JLL but they were not willing to re-negotiate the commercial terms as forwarded by the new consultants by e-mail dated 21st August, 2013 to them. Bestech responded asserting that the commercial terms of the Term Sheet and the Collaboration Agreement with respect to Group Housing had attained finality and were not open to negotiations. BOHL responded on 28th April, 2013 that the next definitive agreement could not be signed as a collaboration agreement and the related documents have worked themselves out and admittedly, the Term Sheet has not been renewed. It was this that BOHL demanded for further negotiations for drawing fresh terms in respect of the Project Land. BOHL in its appeal urges that the attitude of the Bestech became hostile and oppressive but BOHL was open to dialogue in an amicable environment.

15. It was at this juncture that Bestech took its first major litigative and aggressive step forward by placing public notices in two national daily newspapers, i.e., Indian Express and Financial Express in their issues circulated on 2nd September, 2013 asserting their rights in the Project land informing third parties to know all the facts in case they deal with BOHL then it would be at their risk. The general public was cautioned to desist from entering into any transaction pertaining to the aforesaid land. There were meetings that followed between the parties after the public notices. The first on 19th September, 2013 where BOHL expressed their shock over the public notices and insisted that the Term Sheet had expired and there was no signed collaboration agreement between the parties and they were not willing to move forward on the old Term Sheet and Collaboration Agreement and Bestech was free to open Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 15 discussion with M/s JLL. This meeting appears to have been the last straw on the Camel's back and the consequential irretrievable break down of the relationship between the parties as owner and the developer of the Project Land.

16. Then, Bestech served a notice on BOHL on 16th December, 2013 and named its arbitrator Justice Deepak Verma (retired) of the Supreme Court to resolve the disputes through arbitration. BOHL responded to the legal notice and appointment of nominee arbitrator but while refuting the allegations in the notice, it informed Bestech that it had appointed Dr. Justice Mukundakam Sharma, a former Judge of the Supreme Court as their nominee arbitrator. The two Hon'ble Arbitrators in a meeting appointed Justice S.C.Aggarwal, a former Judge of the Supreme Court as the Presiding Arbitrator. This was manifested on 2nd January, 2014. The Arbitral Tribunal commenced proceedings on 7th January, 2014 and fixed 11th February, 2014 as the first date of sitting of the Arbitral Tribunal. However, Justice Deepak Verma named by Bestech expressed his Lordship's inability to continue to act as an Arbitrator and withdrew himself from the Arbitral Tribunal and withdrew all his consents. Justice Deepak Verma has been replaced by Bestech by Justice Mukul Mudgal, a former Chief Justice of the Punjab & Haryana High Court to be its nominee arbitrator.

17. It was in this background that Bestech filed an application under section 9 of the Act before the learned District Judge, Gurgaon for interim measures. The Court issued notice on the petition returnable on 10th January, 2014 when BOHL filed its reply. They questioned the maintainability of the petition and refuted rights asserted by Bestech. On the next date of hearing, a rejoinder was filed on 16th January, 2014. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 16 Parties were heard on 5th February, 2014 and the order was pronounced on 12th February, 2014 which is impugned by both the parties, one in full and one in part.

18. BOHL contends that the order is erroneous and should be set aside. Bestech in its appeal asserts that the order is erroneous only to the extent that it fixes the life of the interim direction by three months. It is urged that in the petition under Section 9, Bestech had informed the Court in its pleadings that the arbitration proceedings have commenced by their act of nominating Justice Deepak Verma as their nominee arbitrator.

16. Mr. Bali learned senior counsel submits that the Term Sheet is not a binding contract. It is only a contract to enter into a contract. He relies on many of the clauses of the Term Sheet to point out and submit that they are all governed by the clause which contains a period of 45 days to draw definitive agreement. Failing which the Term Sheet would run its length and stand frustrated. He submits that the extension letters were agreed upon but even there, the period of 45 days was stipulated though the extensions were mutually agreed to.

19. He submits that BOHL and company are the owners of Project Land and hold title deeds thereon and are free to deal with their property in the manner they wish to the exclusion of Bestech who can no longer be said to retain any right or interest in the Project Land since the boundaries of the prescribed period of 45 days stand overstepped thereby extinguishing rights, if any, of Bestech in absence of drawing up a master definitive agreement to spawn the remaining future agreements. He draws attention to the mechanism evolved in the payment schedule laid Kumar Paritosh down in the Term Sheet, under the heading; 'Non Refundable Security 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 17 Deposit'(NRSD), from where learned senior counsel asserts that Bestech was unable to fulfill its obligations. He refers to the fiat accompli created recently by the Director, Town and Country Planning, Haryana who has rejected the application for a license for Group Housing component in 14 odd acres vide order passed on 2nd April 2014. He relies on clause C (iv) of the Preliminary heading NSRD to suggest that on refund of initial deposit by Bestech to BOHL in terms of Clause (iii), the Term Sheet would terminate and thereafter, Bestech would have no right, title or interest in any manner, or rights whatsoever in or over the Project Land. Clause (iii) deals with a situation where Bestech fails to procure the license under Sub Clause (ii), then BOHL will be offered the responsibility to procure the license at the cost of Bestech and in breach thereof, if BOHL fails to procure the license within a period of 5 years from the date of the Term Sheet, then the entire initial deposit will be refunded to Bestech without any interest thereon. He points out that Sub Clause (iii) of Clause C of preliminary NSRD is not found in the definitive agreement/collaboration agreement and, therefore, the clause is rendered redundant, otiose and meaningless and now cannot be used against BOHL and to its detriment.

20. Mr. Bali then argues that Bestech having obtained an interim protection from the Civil Court has delayed the matter stymieing the arbitral proceedings by delaying nomination of arbitrator after Justice Deepak Verma withdrew his consents. Thus in order to prolong the matter Bestech tried to create a fiat accompli in its favour by efflux of time of 3 months to enable and help Bestech to pray for an extension of the protection granted beyond 3 months to defeat the claims of BOHL to act with its freedom sans the burdens of the Term Sheet and the Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 18 collaboration agreement. He has taken this Court to the correspondence with respect to formation of the Arbitral Tribunal of the Hon'ble Judges and that their nominee Arbitrator Justice Mukandakam Sharma is still in position. He points out to Annexure R-12 being a letter of Bestech dated 28th March, 2014 threatening to litigate before the High Court after Justice S.C.Aggarwal had expressed his reluctance on 26th March, 2014 to continue as Presiding Arbitrator.

21. Mr. Bali argues that when Justice Deepak Verma refused to continue as Arbitrator, and withdrew all his consents the foundations of the commencement of arbitration proceedings stand vacated and are of no consequence and, therefore, the arbitration proceedings itself deserve to be dropped and the order granting temporary injunction though bad in law should not be permitted to continue to run against BOHL even in case this Court is of the view that the disputes are arbitrable.

22. He then proceeds to his principal argument that in case of breach of contract, the Term Sheet or collaboration agreement, and such breach could only sound in damages but not in an award of an injunction, temporary or otherwise to run through the life of the arbitration proceedings. The Term Sheet was followed by an agreement signed on 4th October, 2012 (A-2). Under the agreement, parties recognized that the developer is to undertake the work of conceptualization, planning, development and promotion of a plotted colony over the land holdings owned by the land owners No.1 to 5 in terms of the aforesaid Term Sheet and the developer shall also be constrained to incur substantial investment for performing the aforesaid obligations and in acquisition of other land situated in the vicinity of the land owned by the owners collectively.

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 19

23. However, this proposition was responded to and recognized by BOHL being conscious and aware that the project is of such magnitude which involves mobilization of extremely substantial funds and resources both infrastructural as well as of human resources on the part of the developer that Bestech should be left free to plan its corporate business strategy and to refrain from considering other proposals of real estate development. Clause 3 of the agreement is of paramount importance in the words of Mr. Bali who argues that para. 3 of agreement dated 4th October, 2012 (A-2) lays down the mechanism in case BOHL resiles, backs out, and refrains from abiding by the covenants incorporated in the Term Sheet, then in that event, the developer shall be entitled to estimated/liquidated compensation equivalent to ` 30 crores etc. and in case of breach of such payment within one month, the sum will carry 18% interest per annum. In case, owners still do not pay the amount within 6 months, the developer shall be entitled to become the lawful owner of 10 acres of Project Land situated in the revenue estate of Harsaru, Tehsil and District Gurgaon out of the land holdings of BOHL covering 108.73 acres. Therefore, the mode and manner of foreclosure of the Term Sheet and the definitive agreement viz. collaboration agreement executed in piecemeal stands ordained by consent of the parties and nothing more can be given to Bestech other than sums specified and calculated per acre which is not only reasonable compensation but stands agreed to be paid by BOHL and duly accepted by Bestech. The liability of BOHL extends no further to support specific performance of the contract which in any case has outlived its life beyond 45 days fixed in the Term Sheet and such covenant expiring in the collaboration Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 20 agreement that followed with no master definitive agreement in sight or in hand or agreed to or signed by the parties.

24. Mr. Bali for BOHL supports his forcefully argued case with exhaustive and detailed written submissions, to urge that the Term Sheet dated 3rd September, 2012 does not constitute a binding contract between the parties and the Collaboration Agreement dated 19th October, 2012 stands frustrated. He marshals his submissions thus:-

(a) The Term Sheet was a preliminary document and only captured the intention of the parties to enter into a binding agreement at a later date.
(b) The fact that the Term Sheet is not a binding document is evident from the material differences between the Term Sheet dated 3rd September, 2012 and the Collaboration Agreement dated 19th October, 2012 (pg
101). Perusal of both the documents reveal that the Term Sheet was not a sacrosanct agreement or a binding contract as contended by the Respondent. If this was the understanding between the parties then several clauses between the Term Sheet and the Collaboration Agreement dated 19th October, 2012 would not have been at variance with each other.

If Term Sheet was a binding document then there was no need for the parties to have entered into a Collaboration Agreement or envisage entering a Definitive Agreement as the respondent could then have applied for Licenses on the strength of the Term Sheet alone. However, the parties were aware that the Term Sheet was only a preliminary document with no binding effect. Thus the parties had contemplated executing a detailed Definitive Agreement within 45 days of the execution of the Term Sheet. Since the detailed Definitive Agreement could not be executed within 45 day, the parties decided to extend the Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 21 Term Sheet for purposes of entering into a detailed binding agreement in relation to the Proposed Transaction for development of the entire township Project.

(c) Term Sheet was not a binding agreement between the parties. Term Sheet had to be followed by execution of "the binding definitive agreement". As per the Term Sheet dated 3rd September, 2012, the said definitive agreement which was to be entered within 45 days from the date of the Term Sheet had to be a master agreement which would have contained all the modalities such as specifications, pricing, timing, infrastructure, costing etc. of the whole project and the said definitive agreement was to be annexed as Annexure with other definitive agreements. This was so as for development of Group Housing component the application for license was required to be moved before the concerned authorities on priority basis as the same is accepted in accordance with the applicable group housing policy on first come first basis. Agreement for development of Group Housing part of the entire development Project was executed between the parties on 19th October, 2012 in relation to only 14.4187 acres of Project Land as the Master Plan for Gurgaon was expected any time and therefore respondent was urgently required to apply for the Group Housing licence which is issued by the Authorities as stated above on first come first basis subject to eligibility. In the meanwhile the extended period of the Term Sheet also expired and admittedly not renewed by the respondent.

(d) Term Sheet specifically provided that the entire Project on the 108.713 acres of land belonging to the appellants shall be developed and built as a single Project. As such, the Collaboration Agreement dated 19th October, 2012 for development of Group Housing on a limited area of approx. 14 acres of the Project Land by itself had no legs to stand on in the absence of execution of the Definitive Agreement with regard to development of plotted land, villas, institutional and commercial areas etc. Even Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 22 otherwise, the said Collaboration Agreement dated 19th October, 2012 stands frustrated as a result of failure on the part of the respondent to obtain the license for Group Housing. (Admitted by the respondent in its Appeal FAO No. 2383/ 2014 at page 32 and the order dated 2nd April, 2014 was handed over by the appellants during the course of arguments before this Court on 8th May, 2014)

(e) That otherwise also all the clauses of the Term Sheet dated 3rd September, 2012 have to be harmoniously reconciled. By just mentioning the word "binding", the other words contained in the Term Sheet such as "proposed" and "preliminary" cannot be ignored.

25. "The Definitive Agreement" as mentioned in this clause relates to the following narration in the Term Sheet:-

"Bestech undertakes that the Project will be the best development (Highest specifications, quality and Luxury segment) from Bestech in Gurgaon at the time. There will be a Signature feature and Iconic development for the Project to be mutually agreed between the parties. The specifications, pricing, timing, infrastructure, costing etc.of the Project to be reviewed and approved with mutual consent at the time of the execution of the Definitive Agreement and shall be annexed as annexure to the Definitive Agreements and may be modified at the time of execution of Project as per the mutual consent."

26. The above mentioned clauses as per learned senior counsel clearly indicate that "the definitive agreement" would be a master agreement which would contain all the modalities and the same has to be attached as an annexure with other definitive agreements and this is vitally important. Meaning thereby, that for all intents and purposes the Term Sheet cannot independently be construed as a definitive agreement. It is urged that the above reproduced paragraphs of the Term Sheet also clearly indicate that the Term Sheet was an agreement to enter into an Kumar Paritosh agreement and the document contains so many uncertainties as are not 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 23 enforceable by virtue of section 14(1)(a)(b)(c) and (d) of the Specific Relief Act, 1963. Learned senior counsel contends that in any case there cannot be granted any relief of specific performance in this case. He urges that:-

A. When monetary relief can be granted there cannot be specific performance re. (b) sub clause of S. 14. Thus, Term Sheet dated 3rd September, 2012 cannot be specifically enforced and therefore in the facts of the present case no injunction can be granted in favour of the respondent:-

27. Continuing the thread of his argument he submits that assuming arguendo that the Term Sheet was a binding agreement, yet the same could not be enforced at the insistence and instance of respondent Bestech since the parties had already agreed to quantify the maximum liquidated damages admissible to the tune of ` 30 crores that would become payable by appellants (BOHL) in the event of any breach of the Term Sheet by the landowners. A specific agreement to this effect was executed by the parties on 4th October, 2012 (at pages 101-108) and the same was to remain in operation till the issuance of LOI by the authorities for development of the Project Land (see clause 7 at page

107). This Agreement provided further that in the event of failure of the appellants to pay the liquidated damages as agreed to within the period of 6 months the respondent could then claim ownership rights with respect to 10 acres of land belonging to the appellants in the residential zone. (Clause 3 at pages 105/106). It was no where mentioned in the said Agreement or even in the Term Sheet that monetary compensation would not be adequate relief and that the Term Sheet could only be or had to be specifically enforced. Accordingly, the only remedy that could be available to Bestech was by way of a money claim to the extent of agreement and any further subject to proof of damages. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 24

28. At this juncture, Mr. Bali refers to the agreement dated 4th October, 2012 (which starts at Page 101 of the paper book) to assert that the parties knew that the developer except for paying a sum of ` 5 Crores, had not paid anything more to the owner in such a mega project proposed. As per the case of the developer (Page 176 of the paper book) the entire expenditure incurred by Bestech was about ` 15 crores. Out of that ` 15 crores, ` 10 crores were utilized in purchasing land in the name of Bestech and about ` 43,00,000/- were spent towards payment of licence fee to Government for consideration of the grant. The licence having been rejected in 2nd April 2014 during the pendency of these cases, the said money has to be refunded back to Bestech. The owner (BOHL) has no right, title or interest in the land purchased by the developer was for its own use and purchased on its free will for its own purpose. The parties had executed an agreement dated 4th October, 2012 and had specifically agreed that the said agreement would continue till the issuance of the Letter of Intent. In the present case, no Letter of Intent has been issued till date. Paragraph 8, at page 107, makes the intentions of the parties manifest that in case of failure to abide by the Term Sheet or any of its covenants, which would include any further agreement signed between the parties, the parties had amicably decided that the loss to the developer has been suitably quantified as ` 30 crores or 10 acres of land in lieu thereof. In fact, the parties were clear enough that the agreement dated 4th October, 2012 would be enforced through Court in case the owner does not go ahead with the Term Sheet. Even in the said agreement dated 4th October, 2012 by a deliberate intention of the parties, the parties did not mention about enforcement of the Term Sheet, dated 3rd September, 2012, for whatever may happen before grant Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 25 of Letter of Intent. The developer with conscious mind and the parties with an amicable resolution had decided what would be the fate of the parties on the appellants/owner resiling from the Term Sheet dated 3rd September, 2012 (see Clause 8 of agreement dated 4th October, 2012, page 107-108 of the paper book).

29. BOHL thus seriously objects to the allegation that they resiled from the Term Sheet. It complains that in fact, it is the developer who did not sign the second extension letter; did not initiate the formalities which in terms of the Term Sheet had to be finalized and now recently have even got the licence rejected because of failure to pursue the matter in right earnest before the DTCP, Haryana.

30. Mr. Bali says that when the matter goes to arbitration it will be the arbitrators who will take a final call on who is responsible for non-execution of the covenants of the Term Sheet or in the facts and circumstances of the case, whether the execution of the Term Sheet is an impossibility. It is within the Arbitral Tribunal's call to see in terms of the agreement dated 4th October, 2012, whether the developer will be entitled to ` 30 crores or in case of its non-payment enforce execution of the sale deed of 10 acres of land. It follows admittedly that the issue remains in the exclusive domain of the high-powered multi-member Arbitral Tribunal constituted.

31. Continuing with his submissions Mr Bali submits that the parties have not specifically decided on the mode of resolution of disputes. There is no occasion for the developer now to plead or to pray that it is entitled to anything more than what was decided on 4th October, 2012. The learned District Judge while partly allowing the application under section 9 of the 1996 Act, totally ignored the document of 4th Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 26 October, 2012, inasmuch as, even if the final relief has to be granted to the developer, it cannot be more than what is envisaged under the agreement dated 4th October, 2012. However, for a measly amount of ` 5 crores, which is paid as a token advance on the basis of an agreement to enter into an agreement, which is not enforceable in law, the land valuing approximately ` 500 crores has been put at stake. Mr Bali would then take this Court on an overview of the Specific Relief Act, 1963 an its provisions which are so vital for this case limited in its examination of the stay matter and nothing more. He says :

32. Section 41 (e) of The Specific Relief Act, 1963, states that an injunction cannot be granted to prevent the breach of a contract, the performance of which could not be specifically enforced. Section 41(e) reads as under:-

"41. Injunction when refused.- An injunction cannot be granted-
                                  (a) to (d)     xxx             xxx               xxx
                                  (e)     to prevent the breach of a contract the performance
of which would not be specifically enforced;"

33. Section 14(1) of the said Act provides for contracts which cannot be specifically enforced. Section 14(1) of the Act reads as under:-

"14. Contracts not specifically enforceable.-
                                         (1)     The    following      contracts    cannot   be
                                 specifically enforced, namely:--
                                  (a)     a contract for the non-performance of which
compensation in money is an adequate relief;
(b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;
(c) a contract which is in its nature determinable;

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(d) a contract the performance of which involves the performance of a continuous duty which the court cannot supervise."

34. The present case according to BOHL squarely falls within the four corners of the sub-clauses (a) to (d) of the section 14(1) of The Specific Relief Act, 1963 inasmuch as (i) compensation in money for alleged non-performance of Term Sheet is adequate relief which the parties had agreed upon vide Agreement dated 4th October, 2012; (ii) Term Sheet by its very nature is a document which is incapable of being specifically enforced by a court order; (iii) Term Sheet by its very nature had a limited life span of 45 days within which the Definitive Agreement had to be executed. Admittedly the Term Sheet was not renewed by the respondent; and (iv) performance of Term Sheet involved performance of continuous duty and personal volition of the parties which the Court cannot supervise such as obtaining licenses and sanction from various government authorities, adhering to specifications, timelines, pricing and several crucial issues necessary for Development of the Project as the parties had yet to reach a binding Definitive agreement etc.

35. At this stage it is submitted that even if it is presumed, although not admitted for any intent and purposes, that the Term Sheet dated 3rd September, 2012, is a binding contract, even for the purposes of granting an injunction or final relief of specific performance, the Court has to be guided by the principles of balance of convenience and equity. In the concept of equity, the concept of 'comparative hardship' is engrained. The Supreme Court in the case of Her Highness Maharani Shantidevi P. Gaikwad v. Savjibhai Haribhai Patel and others, (2001) 5 SCC 101, set aside the orders of the High Court as well as the trial Court in granting specific performance. This was also a development Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 28 agreement. Due to further change in circumstances and the very fact that the agreement was hit by the provisions of section 14(1)(d) of the Specific Relief Act, the Court refused to grant specific performance. The relevant paragraphs of the judgment are 28, 29, 33, 48, 49, 57, 58 and

59. In para. 60 of the said judgment, the Supreme Court relied upon its earlier judgment in the case of K. Narendra v. Riviera Apartments (P) Ltd., (1995) 5 SCC 77. In this case, by virtue of an agreement to sell, transfer and assign executed on 25th July, 1972, all rights, title and interest in the property, the owner contracted with the builder. In this case also various permissions had to be taken by the builder from the competent authority. Like in the present case, the licence had been rejected in the said case as well and the sanction granted by the L&DO for making construction was withdrawn. Some part of the land had also come under acquisition. The Supreme Court discussing the scope and ambit of section 20 of the Specific Relief Act held that the doctrine of comparative hardship has been statutorily recognized in India and the Court ultimately held that the jurisdiction to decree specific performance is discretionary and the Court is not bound to grant such relief merely because it is lawful to do so. The discretion of the Court is not arbitrary but based upon sound and reasonable judicial principles and capable of correction by a Court of appeal. The hardship can be seen even after the conclusion of the contract from circumstances which arise thereafter. Even though in the said case time was not the essence of the contract, the Court refused specific performance and allowed the appeals. Paragraphs 15, 20, 29 and 34 are important. Paragraph 35 of the above mentioned judgment is reproduced as under:-

"35. In our opinion, there has been a default on the part Kumar Paritosh of the respondents in performing their obligations under the 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 29 contract. The period lost between 25.7.1972 (the date of the agreement) and the years 1979 and 1980 when the litigation commenced, cannot be termed a reasonable period for which the appellant could have waited awaiting performance by the respondents though there was not a defined time limit for performance laid down by the agreement. The agreement contemplated several sanctions and clearances which were certainly not within the power of the parties and both the parties knew it well that they were the respondents who were being depended on for securing such sanctions/clearances. Part of the land forming subject matter of the agreement was an excess land within the meaning of ULCRA and hence could not have been sold. Part of the land has been acquired by the State and to that extent the agreement has been rendered incapable of performance. The feasibility of a multi-storeyed complex as is proposed and planned by the respondents appears to be an impracticality. If the respondents would not be able to construct and deliver to the appellant some of the flats as contemplated by the novated agreement how and in what manner the remaining part of consideration shall be offered/paid by the respondents to the appellant is a question that defies answer on the material available on record. Added to all this is the factum of astronomical rise in the value of the land which none of the parties would have forecontemplated at the time of entering into the agreement. We are not in the least holding that the consideration agreed upon between the parties was inadequate on the date of the agreement. We are only noticing the subsequent event. Possession over a meagre part of the property was delivered by the appellant to the respondents, not simultaneously with the agreement but subsequently at some point of time. To that extent, the recital in the agreement and the averments made in the plaint filed by the respondents are false. On a major part of the property, the appellant has continued to remain in possession. As opposed to this, the respondents have neither pleaded nor brought material on record to hold that they have acted in such a way as to render inequitable the denial of specific performance and to hold that theirs would be a case of greater hardship over the hardship of the appellant. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 30 Upon an evaluation of the totality of the circumstances, we are of the opinion that the performance of the contract would involve such hardship on the appellant as he did not foresee while the non performance would not involve such hardship on the respondents. The contract though valid at the time when it was entered, is engrossed into such circumstances that the performance thereof cannot be secured with precision. The present one is a case where the discretionary jurisdiction to decree the specific performance ought not to be exercised in favour of the respondents. During the course of hearing the learned senior counsel for the respondents time and again emphasized and appealed to the court that respondents were builders of repute and in the event of the specific performance being denied, they run a grave risk of loosing their reputation as their proposed building plan "Girnar" would not materialize and they will not be able to show their face to their prospective flat buyers. This is hardly a consideration which can weigh against the several circumstances which we have set out herein above. If a multi-storeyed complex cannot come up on the suit property, the respondents' plans are going to fail in any case."

36. The present stage of consideration is of grant of an interlocutory relief and most of the ingredients of section 9 of the 1996 Act or under Order 39 Rules 1 and 2 would apply, thus, the Court would have to see prima facie case, balance of convenience, irreparable loss and injury as well as equity for granting such a relief. In the present case, at best the parties have decided to enforce the agreement on 4th October, 2012, which is for liquidated damages of ` 30 crores or execution of a sale deed of 10 acres of land. In view of what has been mentioned above, and the law laid down by the Supreme Court in the cases of Her Highness Maharani Shantidevi P. Gaikwad (supra) and K. Narendra (supra), the property of 108 acres and odd valuing at about ` 500 crores, for which an advance token amount of only ` 5 Crores has been paid, has Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 31 been put in grave jeopardy when otherwise the Court to balance equities could have told the owner to furnish an indemnity in relation to the agreement dated 4th October, 2012, keeping in view what the Supreme Court has held in K. Narendra's case (supra), especially in para 35 which has been reproduced above.

37. Furthermore, even in cases of concluded contracts of agreements to sell where the buyer has paid only token money which is substantially less than the actual value of the contract, the Courts have consistently held that no injunction can be granted in such cases in view of the principle of 'comparative hardship', which is embedded in equity. The judgment passed by the High Court of Delhi in the case of Anant Raj Agencies Pvt. Ltd. v. Shri Sudershan Soni and others, MANU/DE/0013/2006, elucidates the aforesaid proposition of law (paras 15, 18 and 19 are referred to).

38. Mr. Bali then refers to and relies on the following case law in support of his case for setting aside of the order of the learned District Judge, Gurgaon in toto:-

i) Maytas Infra Ltd. vs Utility Energy Tech and Engineers pvt Ltd., 2009 vol. 4 Bom CR pg. 143, relevant paras 8, 9, 11 & 13.
ii) Rajasthan Breweries Ltd. vs Stroh Brewery Company, AIR 2000 Delhi 450, relevant paras 14, 18 & 20.
iii) Ravindran Consructions Company Pvt Ltd vs Kalinga Mining Corporation, (2007) 6 SCC 798, relevant paras 4, 5, 7, 8, 13 & 14.
iv) Dewan Chand Sabbarwal vs Union of India & another, AIR 1951 Punjab 426 relevant paras 11, 13, 15 & 19.
v) PVR Pictures Ltd. vs Studio 18, 2009 vol.41 PTC 70, relevant paras 10, 11, 27, 28, 29 & 30.

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 32

vi) Percept D'Mark (India) (P) Ltd. vs Zaheer Khan & another.

(2006) 4 SCC 227, relevant paras 58, 59, 64 & 68.

39. It is further submitted that both the Term Sheet and the Collaboration Agreement dated 19th October, 2012 were contingent in nature and were dependent on the happening of certain events in the future and as such are not enforceable as per Section 32 of Indian Contract Act, 1872.

40. It is further submitted that no interest and/or right could have passed in favour of respondent in the absence of grant of LOI as per the Term Sheet as also the Collaboration Agreement. It is submitted that the sharing of FSI over the Group Housing and plotted colony were also contingent upon the fact that respondent secures license from the authorities within a specified time, which the respondent failed to do and thus frustrated the Collaboration Agreement. B. Term Sheet dated 3rd September, 2012 was terminable by efflux of time unless the Definitive Agreement containing all the details was executed by the parties within 45 days from the date of execution of the Term Sheet:-

41. The relevant clause to examine this issue pointed out by Mr Bali reads as under:-

'The understanding in this Term Sheet is preliminary in nature and shall be more detailed in the Definitive Agreement which shall be executed between BOHL and the Bestech within 45 days of execution of this Term Sheet'

42. In the present case, it is an admitted position that the Term Sheet dated 3rd September, 2012 would have lapsed on 18th October, 2012. Accordingly, the parties executed an Extension Letter dated 16th October, 2012 (page 109) extending the Term Sheet up till 18th December, 2012. On the expiry of the extended time the parties decided to execute another Letter of Extension of the Term Sheet. The said Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 33 Extension Letter dated 27th December, 2012 (page162) was executed for extension of the Term Sheet only up till 28th February, 2013. The said Extension Letter was signed by the appellants and given to the respondent for their signatures. The Respondent admittedly did not sign the second extension and their signed copy was never sent back to the appellants BOHL. Accordingly, the Term Sheet lapsed on 18th December, 2012, however, the appellants under an impression that the Term Sheet was extended continued to negotiate the terms of the Draft Definitive Agreement till 28th February, 2013. As per the then understanding of the appellants there was no extension of the Term Sheet after 28th February, 2013, however, admittedly the Term Sheet did not get extended after 18th December, 2012. In view of Term Sheet having lapsed, on 1st March, 2013, the appellants as recorded minutes vide email dated 3rd March, 2013 of DTZ (page 167) communicated to the Respondent Bestech that they would be willing to move forward with respondent only if fresh commercials are negotiated. Accordingly, assuming though not admitting, for the sake of an argument that the Term Sheet was binding the appellants were not under a legal obligation to enter into a Definitive Agreement with the respondent on the lines of and or in accordance with the Term Sheet as the same was not renewed by the respondent. C. Extension/renewal of the Term Sheet dated 3rd September, 2012 was mandatory for the Term Sheet to have survived:-

43. This is evident from the fact that the parties had to renew the Term Sheet on 16th October, 2012 as by the said time they were aware that they would not be able to execute the Definitive Agreements prior to the expiry of the 45 days period ending on 18th October, 2012. It was only after the extension of the period of 45 days that the parties executed the Collaboration Agreement on 19th October, 2012 only limited to the Group Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 34 Housing part of the development Project and for the remaining components of the Project and all other details the Definitive Agreement had to be negotiated, finalized and executed within the extended period of the Term Sheet. However, no Definitive Agreement could be executed during the extended and validity period of the Term Sheet.

44. Term Sheet dated 3rd September, 2012 has lapsed as result of its non-renewal by the respondent and the Collaboration Agreement dated 19th October, 2012 stands frustrated and incapable of performance as a result of failure on the part of the respondent to obtain the License from the appropriate authorities to develop the group housing Project. D. Breach of the Term Sheet and Collaboration Agreement by the respondent:-

45. Mr Bali contends that the respondent Bestech breached the confidentiality clauses of the Term Sheet and also the Collaboration Agreement dated 19th October, 2012. Respondent released public Notices in the newspapers (page182) in breach of the confidentiality agreement between the parties. Apart from this the contents of the public notice were incorrect and intended to bring down the market and reputation of the appellants.

46. The respondent further breached the Collaboration Agreement dated 19th October, 2012 by failing to obtain the License from the appropriate authorities to develop group housing Project. E. Respondent can at the most claim back only ` 5 crores towards non refundable and non adjustable deposit paid to the appellants at the time of execution of the Term Sheet which claim would be subject to the counter claim of the appellants:-

47. As per the case of the respondent the said Agreement dated 4th October, 2012 had ceased to be in operation and binding after the parties entered into the Collaboration Agreement dated 19th October, Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 35 2012. It is submitted that although the said Agreement dated 4th October, 2012 was to remain in operation till the issuance of LOI, the respondent having taken the stand that the said Agreement dated 4th October, 2012 has ceased to be in operation and binding after the parties entered into the Collaboration Agreement dated 19th October, 2012 cannot now make monetary claim to the extent covenanted in the Agreement dated 4th October, 2012. The respondent would now be required to prove their alleged damages which as per the statement annexed to its Petition under section 9 which happens to be ` 15,81,82,750/- (at page 176). Out the said amount of Rs. 15,81,82,750/-, the respondent has paid a sum of ` 5,00,00,000/-(` five crores only) towards security deposit and ` 32,37,000/- (` thirty two lakhs thirty seven thousand only) and ` 10,22,000/-(` ten lakhs twenty two thousand only) towards license and security fee respectively for Group Housing. The balance amount of ` 10,39,23,750/- (` ten crore thirty nine lakhs twenty three thousand seven hundred and fifty only) has been allegedly spent by the respondent for purchase of additional Land in its name and the name of its directors.

48. It is submitted that as per the Term Sheet the appellants were required to add 20 acres of land to the Project. However, the respondent had the freedom to add more land at their own cost in their own name with no right or claim over the said land by the appellants. Accordingly ` 10,39,23,750/- being the alleged cost of land purchased by the respondent in its own name cannot be claimed as damages from the appellants. Further in the event the license is refused to any Applicant then it is open for the said Applicant to claim refund of the license and security fee and a substantial part of the same is refunded back by the authorities. In the present case the respondents would be entitled to Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 36 substantial refund out the amounts of towards ` 32,37,000/- and ` 10,22,000/- towards license and security fee respectively. Accordingly, the respondent at the most can claim back only ` 5 crores towards non refundable interest free security deposit paid to the appellants at the time of execution of the Term Sheet and the said refund would be subject to and adjustable against the counter claim of the appellants. F. No injunction can be granted in favour of respondents with regard to 108.713 acres of land belonging to and in the possession of the appellants and value of which as on date is over ` five hundred crores:-

49. When money compensation has already been accepted by the parties as the appropriate and adequate means of compensating the party aggrieved by the breach of the other as provided in the Agreement dated 4th October, 2012 then assuming though not admitting that there has been any breach by the appellants, grant of any injunction against the appellants from using the Project Land would be a matter of grave injustice to the appellants as their land valued at over 500 crores would be at stake as against only 5 crores paid by the respondents to the appellants as non-refundable deposit. Principles of equity and fair play and balance of convenience do not warrant grant of any injunction in favour of the respondent.

G. Conduct of the respondent Bestech in consciously delaying the Arbitration proceedings to their unfair advantage:-

50. It is submitted that as per section 41 (i) of the Specific Relief Act, 1963 an injunction cannot be granted when the conduct of the Party seeking injunction has been such as to disentitle it to the assistance of the Court. Further, Petition under section 9 of Arbitration and Conciliation Act, 1996 is maintainable only in the event the Petitioner Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 37 shows his readiness to continue with the arbitration proceedings after its commencement.

51. It is pointed out by BOHL that the respondent Bestech has pleaded before this Court that:-

1. The Term Sheet dated 3rd September, 2012 mentions the term 'Definitive Agreement' and 'Definitive Agreements' at several places which reflects that the parties intended to execute at least 12 Definitive Agreements pursuant to the Term Sheet dated 3rd September, 2012.
2. The Term Sheet as per its last clause contemplated execution of only one Definitive Agreement within 45 days of execution of the Term Sheet dated 3rd September, 2012 or within the extended period of the Term Sheet vide extension letter dated 16th October, 2012 and that as the parties were able to enter into Collaboration Agreement dated 19th October, 2012, the requirement of execution of Definitive Agreement as stated in the last clause of Term Sheet stood complied with.
3. The Term Sheet constitutes a binding agreement between the parties and is a magna carta and that Definitive Agreements required to be entered between the parties were only with a view to amplify the Term Sheet.
4. The corpus i.e. the Project Land which is the subject matter of Arbitration should be preserved and that respondent was not interested in claiming any damages and/or compensation and that a specific statement was made by the counsel for respondent across the bar during the course of hearing on 9th May, 2014 that the Hon'ble Court may record this statement.

52. In response to point nos. 1 and 2 as raised by the respondent it is submitted by Mr Bali that respondent Bestech cannot be permitted to plead a new case especially on facts before this Court when admittedly no such arguments as made by the respondent before this Court were either advanced and/or pleaded by the respondents before the District Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 38 Court in section 9 Petition or pleaded in the FAO No. 2383 of 2014 of the respondents or in the Reply Affidavit of the respondent dated 7th April, 2014 (page 421) in FAO No. 1620 of 2014. Reference may be made to the judgment delivered by the Supreme Court in the case of Ram Sarup Gupta (dead) by L.Rs. v. Bishun Narain Inter College & Ors., AIR 1987 SC 1242 wherein the Court held that:

"It is well settled that in the absence of pleading, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to meet..."

53. It is submitted that the argument of the respondent that as per the last clause of the Term Sheet, the parties were required to execute any one of Definitive Agreement within 45 days of the execution of the Term Sheet has no basis whatsoever. It is submitted that the entire clause has to be read as a whole for culling out its correct meaning and interpretation justified on totality of facts presented. It is categorically mentioned in the said clause that 'The Definitive Agreement' which has to be executed within 45 days has to be a detailed agreement. It is submitted that by no stretch of imagination, the Collaboration Agreement dated 19th October, 2012 could be construed to be a detailed agreement for the entire project as contemplated in the said clause. Assuming though not admitting that the Collaboration Agreement dated 19th October, 2012 was the detailed Definitive Agreement as contemplated by the Term Sheet then as per the Term Sheet itself the respondent was liable to pay a further amount equivalent to 35% of ` 100 crores less ` 5 Kumar Paritosh crores toward non-refundable Security Deposit at the time of execution 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 39 of the said Collaboration Agreement. In this regard reference is also made to the Extension Letter dated 16th October, 2012 executed between the parties. It is categorically mentioned in the said Extension Letter that the parties have "mutually agreed to extend the term of the Term Sheet up to December 18, 2012. In the event the parties fail to execute a binding definitive agreement in relation to the Proposed Transaction on or before December 18, 2012 the parties shall mutually extend the term of the Term Sheet". It is evident from this that the parties had contemplated execution of "The Definitive Agreement" within 45 days which would have dealt with the Proposed Transaction in detail. It is submitted that the Proposed Transaction contemplated was development of the entire township on the Project Land and not development of Group Housing Project alone on the limited area of approx 14 acres of land belonging to 3 land owning companies out of the 5 land owning companies which had executed the Term Sheet.

54. It is therefore, submitted that the parties were required to execute a detailed Definitive Agreement for the entire Proposed Transaction being development of township comprising of not only Group Housing Project but also development of plotted land, villas, hospital, educational institution, temple and commercial project.

55. From the above it emerges that the parties had to execute one consolidated agreement in respect of the entire project land which has not been done. In view of this, it is submitted that the parts of "The Definitive Agreement" had to be signed within 45 days of the Term Sheet or within the time frame mentioned in the Extension Letter. However, it is pertinent to mention that the collaboration agreement dated 19th October, 2012 was executed between the parties only with a view to Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 40 ensure that the application for licence of group housing was not delayed as the same is granted on first come first basis in accordance with the policy of the State Government and such requests cannot brook delay.

56. It is submitted that with regard to point no. 3 of the submissions made by the respondent, the case of the appellants as stated in the foregoing paragraphs is that the Term Sheet does not constitute a binding agreement between the parties. It is submitted that Term Sheet was not sacrosanct as it is evident from the fact that Collaboration Agreement dated 19th October, 2012 was at variance with Term Sheet on several material issues. A comparative chart showing the differences is placed alongside.

57. With regard to point no. 4 of the respondents, it is submitted that this is not a fit case where this Court is required to preserve the corpus i.e. the Project Land which is the subject matter of Arbitration. Keeping in view that only a sum of ` 5 crore has been paid by the respondent, it would be against the principles of justice, equity and fair play, if land worth over ` 500 crores is blocked pursuant to any injunction order of this Court. The appellants have already dealt with implications of section 41 and 14 of the Specific Relief Act, 1963 and accordingly, this is not a fit case where any injunction can be granted in favour of the respondents.

H. Sections of the Specific Relief Act and case law cited by the respondent are not applicable to the facts of the present case.

58. In countering the stand of Bestech Mr Bali urges that the submission made on behalf of the respondent that section 14(a) of Specific Relief Act, 1963 is subordinate to sections 10 and 23 of Specific Relief Act, 1963 is erroneous. This is apparent from the reading of the Kumar Paritosh key expressions used in section 10, section 14 and section 23 of the 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 41 Specific Relief Act,1963, relevant portions of which for are reproduced for easy of reference highlighted as under:

59. Section 10 of Specific Relief Act, 1963: Cases in which specific performance of contract enforceable.-

"10. Cases in which specific performance of contract enforceable- Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced-
(a) When there exists no standard for ascertaining actual damage caused by the nonperformance of the act agreed to be done; or
(b) When the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.
X X X "

60. Section 23 of Specific Relief Act, 1963: Liquidation of damages not a bar to specific performance.-

"(1) A contract, otherwise proper to be specifically enforced, may be so enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the court, having regard to the terms of the contract and other attending circumstances, is satisfied that..."

61. It is therefore apparent that the contracts have to pass the test of section 14 before the application of other sections viz. Section 10 and 23 which are general sections and are subject to other provisions in the Act meaning section 14 of the Specific Relief Act, 1963.

62. The reliance placed on behalf of the respondent Bestech upon the judgments of Mohini Kapoor v. Deepak Uppal, 2006 (142) PLR 584 of this Court and M.L. Devender Singh v. Syed Khaja, 1973 (2) SCC 515 of the Supreme Court are not applicable to the present cases as the said cases themselves state that the those judgments were passed in Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 42 the context of facts and circumstances of the said cases which are quite different from the facts of the present case.

63. The judgments in the two cases were passed in the context of disputes involving enforcement of agreements of sale of property which does not involve any transfer of right in rem but creates only a personal obligation unlike a development agreement. Therefore an agreement to sell cannot be compared with agreement involving development of huge integrated township over a 108 acres of land.

64. In the judgment Bharat Petroleum Corporation Ltd. v. N. R. Vairamani, 2004 (8) SCC 579, the Supreme Court has held that "Courts should not place reliance on decisions, without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of a statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not be construed as statutes."

65. In view of the above the appellants respectfully submit that the Appeal No. FAO No. 1620 of 2014 of the appellants herein be allowed and Appeal No. FAO No. 2383 of 2014 be dismissed along with Civil Revision No. 2837 of 2014 filed by the respondents.

66. On the grant of injunction, the developer Bestech has referred to the following collection of judgments:-

1. Mohini Kapoor v. Deepak Uppal and others, 2006 (1) PLR 584;
2. M.L. Devender Singh and others v. Syed Khaja, (1973) 2 SCC 515;
3. Prakash Chandra v. Angadlal and others, AIR 1979 SC 1241;
4. Manzoor Ahmed v. Gulam Hassan, AIR 2000 SC 191;

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 43

5. Wander Ltd. And another v. Antox India P. Ltd., 1990 Supp. (1) SCC 727;

6. Skyline Education Institute (Pvt.) Ltd. v. S.L.

Vaswani and another, (2010) 2 SCC 142;

7. The Printers (Mysore) Private Limited v. Pothan Joseph, 1960 (3) SCR 713;

8. Partha Sarathi Ghosh v. Maa Construction, AIR 2008 Calcutta 171;

9. KSL & Industries Ltd. v. National Textile Corporation Ltd., 2012 (3) ArbLR 470 (Delhi);

10. N. Srinivasa v. Kuttukaran Machine Tools Ltd., (2009) 5 SCC 182;

11. Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125;

12. NHAI v. China Coal Construction Group Corporation, AIR 2006 Delhi 134;

13. Kollipara Sriramalu v. T. Aswatha Narayana, AIR 1968 SC 1028;

14. Trimex International FZE Ltd. v. Vedanta Aluminium Ltd., (2010) 3 SCC 1; and

15. Reva Electric Car Company Private Limited v. Green Mobil, (2012) 2 SCC 93.

67. Out of the above selection of case law, some of the judgments relied upon by the developer are on injunctions granted in the matters of Trademark and Copyrights. The law relating to granting of such like injunctions is totally different according to BOHL from the principles enshrined under Order 39 Rules 1 and 2 CPC. The other set of judgments relied upon by the developer are based upon a specific agreement to sell in respect of a particular property. The present case being of a Development Term Sheet including many imponderables, details and contingencies of future happenings like obtaining licence/s, fixing prices, dimensions, specifications etc., are totally different and, therefore, those judgments are not relatable to the facts and circumstances of the present case.

68. The case mentioned at Sr. No. 10 above, relied upon by the respondent was a case of allotment of an industrial plot by the Industrial Development Corporation. In this case, the Supreme Court held that in Kumar Paritosh case a plot allotted is re-allotted to somebody else, then the arbitration 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 44 would become futile. The Supreme Court in the Constitution Bench judgment in the case of Padma Sundara Rao (Dead) and others v. State of T.N. and others, (2002) 3 SCC 533, has put a word of caution on reference to judgments in judgments as under:-

"9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v. British Railways Board, (1972) 2 WlR 537. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases."

69. Even otherwise, if the argument of the developer has to be accepted that if the tangible corpus of the litigation has gone and the arbitration would become futile, then in every case in relation to property, injunction will have to be mandatorily granted and the principles enshrined for granting injunctions under Order 39 Rules 1 and 2 CPC as well as section 9 of the 1996 Act would become redundant. This Court while even coming to a prima facie opinion in relation to grant of injunction, would look into the totality of facts and circumstances of the present case, especially in wake of the fact that the application for grant of licence has been rejected by order dated 2nd April, 2014. Could any Court in the present case grant an injunction for execution of the terms of the Term Sheet dated 3rd September, 2012 when requisite Government permission has been rejected asks the learned senior counsel. Reliance on judgments passed by the Supreme Court in relation to injunctions for infringement of Trademarks/Copyrights is totally misconceived because law in relation to injunctions in those kind of cases, i.e. where there is an Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 45 infringement of trade mark or copyright, injunction normally must follow, as held by the Supreme Court in the case of Midas Hygiene Industries (P) Ltd. And another v. Sudhir Bhatia and others, (2004) 3 SCC 90.

70. That here also one important aspect for the purposes of granting injunction cannot be overlooked, i.e. the developer does not have possession over an inch of land and the injunction is being granted against a true owner and title holder of the land which is contrary to law.

71. In the case of Speech and Software Technologies (India) Private Limited v. Neos Interactive Limited, (2009) 1 SCC 475, the Supreme Court has categorically held that an agreement to enter into an agreement is not enforceable (See para 22 of the judgment).

72. That heavy reliance placed by the developer on the Full Bench judgment of Calcutta High Court in the case of Ashok Kumar Jaiswal v. Ashim Kumar Kar (CO No. 1358 of 2010, decided on 13.2.2014), is totally misconceived it is said in rebuttal arguments. Rather the said judgment supports the case of the appellants BOHL according to Mr Bali. Section 41 of the Specific Relief Act especially manifests that injunction cannot be granted to prevent the breach of a contract, the performance of which would not be specifically enforced. Section 14 relates to non-enforceability of contracts. The circumstances under which certain contracts can be enforced are contained in section 14 (3)(a)(b) and (c). If by virtue of the said Full Bench judgment the case of the developer is that section 14(3)(c) does not apply to the present case, then the present claim for enforcement is squarely hit by section 14(1)(a)

(b)(c) and (d) read with section 41(e) of the Specific Relief Act. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 46

73. Reference in this regard may be made to paragraphs 51 and 52 in which the Full Bench has categorically held that the provisions contained in section 14(3)(c) of the Specific Relief Act permits, subject to compliance with all the conditions therein, the specific performance of a contract at the behest of the owner of the land against the person responsible for the construction. Meaning thereby if an exception has to be carved out under section 14(3) for specific performance de hors what is mentioned in section 14(1), the same can be only at the behest of the owner. Since by virtue of the agreement of the developer, it has excluded itself from the provision of section 14(3), then the present case is clearly hit by section 14(1) and section 41(e) of the Specific Relief Act. The Full Bench has not discussed or dealt with the provision of section 14(1) while deciding the above mentioned case. The question of law have been specifically referred to in paragraph 2 of the judgment and the ratio of the judgment will depend upon the questions of law which are referred and cannot be read for any other purpose, especially for section 14(1)(a)(b)(c) and (d).

74. That heavy reliance has also been placed on the judgment rendered in the case M.L. Devender Singh v. Syed Khaja; (1973) 2 SCC 515 by Bestech. The said judgment is with regard to specific performance of an agreement to sell a house, dated 9th October, 1962, for a sum of ` 60,000/-. In the aforesaid context, it is relevant according to Mr Bali to refer to the judgment of the Supreme Court in the case of Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18, wherein it has been held as under:-

"37. The reality arising from this economic change cannot continue to be ignored in deciding cases relating to specific performance. The steep increase in prices is a Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 47 circumstance which makes it inequitable to grant the relief of specific performance where the purchaser does not take steps to complete the sale within the agreed period, and the vendor has not been responsible for any delay or non- performance. A purchaser can no longer take shelter under the principle that time is not of essence in performance of contracts relating to immovable property, to cover his delays, laches, breaches and 'non-readiness'. The precedents from an era, when high inflation was unknown, holding that time is not of the essence of the contract in regard to immovable properties, may no longer apply, not because the principle laid down therein is unsound or erroneous, but the circumstances that existed when the said principle was evolved, no longer exist. In these days of galloping increases in prices of immovable properties, to hold that a vendor who took an earnest money of say about 10% of the sale price and agreed for three months or four months as the period for performance, did not intend that time should be the essence, will be a cruel joke on him, and will result in injustice. Adding to the misery is the delay in disposal of cases relating to specific performance, as suits and appeals therefrom routinely take two to three decades to attain finality. As a result, an owner agreeing to sell a property for Rs.One lakh and received Rs.Ten Thousand as advance may be required to execute a sale deed a quarter century later by receiving the remaining Rs.Ninety Thousand, when the property value has risen to a crore of rupees.
38. It is now well settled that laws, which may be reasonable and valid when made, can, with passage of time and consequential change in circumstances, become arbitrary and unreasonable. In Rattan Arya v. State of Tamil Nadu - (1986) 3 SC 385, this Court held:
"We must also observe here that whatever justification there may have been in 1973 when Section 30(ii) was amended by imposing a ceiling of Rs. 400 on rent payable by tenants of residential buildings to entitle them to seek the protection of the Act, the passage of time has made the ceiling utterly unreal. We are entitled to take judicial notice of the enormous multifold increase of rents throughout the country, particularly in urban areas. It is common Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 48 knowledge today that the accommodation which one could have possible got for Rs. 400 per month in 1973 will today cost at least five times more. In these days of universal day to day escalation of rentals any ceiling such as that imposed by Section 30(ii) in 1973 can only be considered to be totally artificial and irrelevant today. As held by this court in Motor General Traders v. State of A.P. (1984) 1 SCC 222, a provision which was perfectly valid at the commencement of the Act could be challenged later on the ground of unconstitutionality and struck down on that basis. What was once a perfectly valid legislation, may in course of time, become discriminatory and liable to challenge on the ground of its being violative of Article 14."
I. Even if it is presumed though not admitted that Term Sheet is a binding agreement then also the same cannot be executed in terms of Section 32 of the Contract Act.

75. It would also be relevant to refer to sections 31 and 32 of the Contract Act, which are reproduced as under:-

"31. "Contingent contract" defined.-
A "contingent contract is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen."
"32. Enforcement of contracts contingent on an event happening.-
Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void."

76. After rejection of the licence dated 2nd April, 2014, the present Term Sheet even if presumed to be a contract, cannot be enforced. Reference at this stage may also be made to the observations of Delhi High Court in the case of M/s PVR Pictures Ltd. v. Studio 18 , 2009 vol.41 PTC 70, in which the Court has held that the Term Sheet Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 49 cannot be enforced, even though enforced for four items out of five contained in the Term Sheet and then the High Court held that even if it is presumed that the Term Sheet was a binding contract, the Court cannot monitor the same. Reference is made to para 29, which is reproduced as under:-

"29. The Court also finds merit in the submission that even if, for arguments' sake, it were to be assumed that there was a contract, the Court would be unable even then, by virtue of Section 14(1) (b) and (c) of the SP Act to grant the reliefs claimed. Section 14 (1) (b) and (d) which spell out what kinds of contracts cannot be specifically enforced, read as follows:
"(b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the court cannot enforce specific performance of its material terms;

                                          xxx

                                          (d)      a contract the performance of which
involves the performance of continuous duty which the court cannot supervise."
The court would necessarily have to, in this case, involve itself in the exercise of implementing the contract, particularly in relation to payments, release of prints, payment of additional consideration, the manner of calculating receipt and profit sharing, etc. For this reason, both Sections 14 (1) (b) and (d) constitute a bar on granting the kind of reliefs sought for are inadmissible, in the facts of this case."

77. The last argument raised by the counsel for the respondent Bestech Mr. Bali continues was to the effect that this Court cannot interfere in the discretion exercised by the learned District Judge. Even if Kumar Paritosh it is assumed, though not admitted that the legal proposition relied upon 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 50 by the counsel for the respondent is correct, then the appeal filed by the developer, bearing FAO No. 2383 of 2014, is also liable to be dismissed.

78. In light of the aforementioned submissions Mr. Bali prays that BOHL appeal deserves to be allowed the present appeal accepted in terms of the prayers made.

The case of Bestech.

79. Mr. Ashok Aggarwal, learned senior counsel appearing for Bestech on the other hand submits that the fiscal arrangement agreed to was for compelling due performance of the contract but that does not mean that Bestech has no right for specific performance of the contract. Clause 3 of the agreement reads : -

"3. That therefore, it has been mutually decided by the Owners and Developers that in no event shall the Owners resile/backout/refrain to abide by covenants incorporated in the Term Sheet referred to above. In case the Owners resile/back out/refrain from abiding by contractual covenants incorporated in the Term Sheet referred to above or does any act, deed or thing aimed at avoiding the transaction subject matter of the Term Sheet referred to above. In that event the Developer shall be entitled to estimated/liquidated compensation equivalent to Rs.30 crores. This amount shall be payable by the Owners to the Developer within one month of intimation by the Developer to the Owner regarding breach of terms and conditions of the Term Sheet on part of the Owners. In case the Owners fail to pay this amount during the period of one month, the Owners shall be liable to pay interest @ 18% per annum on an amount of Rs.30 crores from the date of Breach till the date of actual payment. However, in case the Owners fail to pay this amount for a period of 6 months from the date of breach, the Developer shall be entitled to become the lawful owner of 10 acres of land situated in revenue estate of Harsaru, Tehsil and District Gurgaon out of the total land holdings of the Owners. The Developer shall have the right to ownership of the land forming part of Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 51 the Residential Zone out of the total land holding. Over and above the said compensation, the developer shall also be entitled to refund of any amount made by the Developer with the Owner. However, in case the Developer backs out from the contract, the Owners shall not be liable to pay Rs.30 cr to the Developer."

80. Mr. Aggarwal in his illuminating address to the Court began by reading out every word of the Term Sheet and explaining from back and forth the text and the context and what the parties meant for their mutual benefit and has taken me through each part of it synthesizing organically the real intention of the parties in creating contractual obligations by lifting all veils. He contends that the Term Sheet itself declares in plain words that it would be a binding agreement governing the rights and liabilities of the parties and that it outlines the terms and conditions of the proposed joint development project of a very high magnitude to create a township in partnership for the mutual benefit of both the signatories. The Term Sheet was agreed to be 'followed' but not replaced or substituted or modified by the execution of the 'definitive agreements'. Here, in the opening part of the Term Sheet, agreements are contemplated and such agreements would be executed in 7 definitive agreements or component parts of the project as more specifically enumerated in the Term Sheet. He submits that the Term Sheet contains all the commercials agreed to by the parties and all subsequent recitals in the collaboration agreements in addition but not in derogation of the commercials as are set out in the Term Sheet. The Term Sheet is the working blue print of the project to be fashioned on the drawing boards of times to come with both parties minutely working them out with a spirit of mutuality with each of them acting according to the recitals in the Term Sheet. With both of them resting sanguine on many Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 52 imponderables for them to cross the bridges as they come in a long drawn out project which to the ordinary eye looks massive in its dimensions; humongous in its proportions for which the parties put their heads together consciously and symbiotically depending on each other to fulfill the conception of a dream project. According to him, the Term Sheet is the living tissue of the project which depends, for obvious reasons, on a licence issued by the competent authority i.e. Department of Town and Country Planning, Haryana when according change of land use, otherwise, the project would inevitably fail. He submits that in the matter of grant of license, there could possibly be no absolute assurances and that is why, the Term Sheet talks of legal, political, and environment issues which may be beyond the control of Bestech or even BOHL. The initial burden of obtaining the license was on Bestech within 18 months being the long stop date but this was to run from the date of execution of the definitive agreements executed between the parties or 12 months from the notification and implementation of the Master Plan. It is nobody's case that on the date of signing of the Term Sheet, the Master Plan of Gurgaon-Manesar area was notified. The notification came in November, 2012 while the Term Sheet was executed on 3rd September, 2012. However, the Term Sheet dealt with failure of Bestech to procure a license by Long Stop Date. Consequently, a mechanism was agreed upon to prevail, the steps of which were; (1) Bestech will be given time extension for procuring license as mutually agreed; (2) If Bestech fails to procure license, BOHL will be offered responsibility but at the cost of Bestech; (3) If BOHL fails to procure license within a period of 5 years from the date of the Term Sheet i.e. September, 2017, then the entire initial deposit will be refunded to Bestech without any interest; and (4) Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 53 on refund of initial deposit by Bestech to BOHL, the Term Sheet would terminate and, thereafter, Bestech would have no right, title or interest in the Project Land. If licence has been declined by DTCP the order is appealable.

81. Mr. Aggarwal submits that the Term Sheet itself confers right and interest on Bestech, if not title. It is his contention that what was agreed to be developed in a symbiotic relationship was not a building or a high rise tower but a township and for this, one could not talk in hours and days and therefore, the period of 45 days mentioned in the Term Sheet has to be read in its text and context in the place it finds in the 'Preliminary' heading thereof and under which it falls and that is 'Execution of definitive agreement', in the singular and not in the plural. It follows a priori that the Term Sheet talks of one agreement because wherever parties intended to use agreement in the singular or in the plural, they have said so. At any rate, 45 days was an understanding and the understanding in the Term Sheet has to be read across the entire length and breadth of Term Sheet to understand the true intention of the parties. In fact, the entire project would remain dependent on so many imponderables which could not even be reasonably contemplated in the Term Sheet as to conditions which might prevail and dominate future consents to which both the parties were alive in the very beginning. He submits that there could well be change of Government policy, making and amendments to and of rules, regulations, by-laws, declarations and restrictions of controlled areas, loss of interest in future buyers of properties developed for the project, the nature and quality of construction and newer materials in the market etc. All of which at the time of signing the Term Sheet was in a hazy blue print and some Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 54 unforeseeable at present. But what is certain were the commercials in the Term Sheet because after all, it was a pure and simple business collaboration entered for mutual financial benefits to develop not just a building but a township. Therefore, time could never be the essence of such a contract on an understanding of the kind entered into. He submits that period of 45 days specified was extended by mutual agreement and in the collaboration agreement but drawn within the extended period of time. Therefore, the period of 45 days stands fulfilled when the last Preliminary clause is read in the singular even though each of the 7 projects were either meant to start together or one by one successively. When the collaboration agreement in Group Housing was drawn, it was on the BOHL's desire since it is recorded therein that owners are desirous to start the Group Housing project to start with.

82. It is then argued by Mr. Aggarwal that the Term Sheet in sub clause (iv) of Clause c, reveals that the preliminary NRSD itself confers right and interest on Bestech but in the background where Bestech fails to obtain a license though this clause speaks of all three rights to property i.e. right, title and interest. This right stands modified in the collaboration agreement in para. 1.7 thereof at page 120 of the appeal paper book which reads in its relevant part as below: -

"1.7 That 50% of the saleable (built/unbuilt) area in respect of aforesaid Complex with proportionate, undivided, indivisible or impartible ownership rights in the land underneath the said complex as also in common areas and common facilities shall belong to and be owned by the OWNERS (herein referred to as 'Owners' allocation) and the remaining 50% built/unbuilt area of the said complex together with proportionate undivided, indivisible or impartiable ownership rights in the land underneath the said Kumar Paritosh Complex as also in the common areas and common 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 55 facilities (herein referred to as the Developer's allocation) shall fall to the share of the Developer in consideration of the obligations undertaken by it under these presents and shall belong to and be owned by the Developer."

83. What were then conferred by mutual agreement were indivisible or impartible ownership rights in the land underneath the said complex and common areas and common facilities as a part of developer's allocation.

84. Mr. Aggarwal next submits that this clause alone demolishes the interim arrangement in its impugned part, since this appeal arises in the narrow compass of jurisdiction under a section 9 application that Bestech can have no right in property and therefore, could be dealt with in terms of Clause 3 of the agreement dated 4th October, 2012 (A-2) by payment of money or grant of land, in case the owners back out of the deal. Clause 3 cuts both ways. BOHL says that it can be relieved of the contract by backing out on payment of the amount of ` 30 crores and by return of ` 5 crores deposited by Bestech in the beginning or by parting with 10 acres of land. Mr. Aggarwal asserts on the authority of the Specific Relief Act, 1963 and its provisions in the Explanation to section 10 and the presumption therein read with section 23 that such a term in the agreement was meant only to compel due performance of the contract and such a term will not be read as depriving Bestech of its rights in land developed by mutual consent viewed in the same way on the same thing.

85. Specific relief can be granted only for enforcement of individual civil rights and for to call upon the defendants to perform the obligations under a contract then such obligations includes every duty enforceable by law. Section 10 of the Specific Relief Act, 1963 deals Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 56 with cases in which specific performance of contracts are enforceable. The provisions read : -

"10. Cases in which specific performance of contract enforceable Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced-
(a) when there exists no standard for ascertaining actual damage caused by the non-performance of the act agreed to be done; or
(b) when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief.
Explanation: Unless and until the contrary is proved, the court shall presume-
(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and
(ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases:
(a) where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market;
(b) where the property is held by the defendant as the agent or trustee of the plaintiff."

86. Thus, the relief which may be granted by the Court is discretionary but discretion has to be exercised judicially, reasonably and in accordance with law. Mr. Aggarwal submits that in the present case, mere payment of ` 30 crores or offering ` 10 acres of land without partition or with identifying the khasra numbers, from which, clause 3 of the agreement can be satisfied, then there can be no judicially manageable standards for ascertaining readily the actual damage which may be occasioned or caused by non-performance of the act or acts agreed to be done if BOHL were relieved of the burden of the contract. In a long term project like building a township with the share of FSI in the ratio of 50:50 duly determined in the Term Sheet, and which was sought to be unilaterally changed to the ratio 65:35 by BOHL to the detriment of Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 57 Bestech, then to determine liquidated or unliquidated damages in the presence of only one definite agreement and 6 yet to be born on which depend many imponderable things which are beyond the control of man or the parties, would itself present a Herculean task which is calculable only on future events which are best left to the Arbitral Tribunal to determine when called upon consequentially or in the alternative to consider doing so. BOHL after all admits of the high magnitude of developing the Project Land and the free flow given in the financial joints of Bestech should be left with them and in that background incorporates clause 3 in the agreement. This is a stringent condition accordingly to Mr. Aggarwal to compel performance of contract.

87. Therefore, in this case, compensation in money for non- performance would not provide adequate relief. The Explanation in section 10 of the Specific Relief Act, 1963 is of crucial signification on the presumption of law. There is an absolute presumption there that "Unless and until the contrary is proved" the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in terms of money, the contract is enforceable by performance. Unless and until the contrary is proved, is itself a matter of evidence which cannot be decided in section 9 proceedings and has to go to the appropriate Forum for adjudication and this Court would have no jurisdiction in appeal to express any opinion thereon.

88. Section 14 of the Contract Act deals with contracts which cannot be specifically enforced. Section 14 in full text reads as follows :-

"Section 14. Contracts not specifically enforceable-- (1) The following contracts cannot be specifically enforced, namely : -

a) a contract for the non-performance of which Kumar Paritosh compensation in money is an adequate relief:

2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 58

b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such that the Court cannot enforce specific performance of its material terms;

c) A contract which is in its nature determinable;

d) A contract the performance of which involves the performance of a continuous duty which the Court cannot supervise.

(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.

(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the Court may enforce specific performance in the following cases : -

(a) where the suit is for the enforcement of a contract-

(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once;

Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract; or

(ii) to take up and pay for any debentures of a company;

                                  (b)     where the suit s for--
                                  (i)     the execution of a formal deed of partnership, the

parties having commenced to carry on the business of the partnership; or

(ii) the purchase of a share of a partner in a firm;

(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:

Provided that the following conditions are fulfilled, namely : -

(i) the building or other work is described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work;

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 59

(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non- performance of the contract is not an adequate relief; and

(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.

89. Paragraphs 51 and 52 of the Full Bench in Ashok Kumar Jaiswal v. Ashim Kumar Kar shed great light on the construction of proviso (iii) of sub-section (c) of clause (3) of section 14 of the Specific Relief Act, 1963 and to answer as to who is the "defendant" who has "obtained possession" under sub-section (iii) supra and which was exhaustively debated before this Court till midway the judgment was produced as delivered recently on 13th February, 2014 overruling previous verdicts of the same court on the point. Paragraphs 51 and 52 read significantly:

"51. The key to understanding what is intended by Section 14(3)(c) of the 1963 Act is in sub-clause (iii) thereof. It may be more profitable to attempt to comprehend such provision by reading it bottom-up rather than by arriving at the last sub-clause from the beginning of the section. Simply put, Section 14(3)(c) of the 1963 Act provides that a suit for specific performance of a contract may be allowed by a court if the contract is for the construction of any building or the execution of any other work on land subject to all three conditions under (i), (ii) and (iii) of the clause being fulfilled. Thus, if sub-clause
(iii) is not fulfilled, the clause itself is not complied with and specific performance of the contract may not be granted. But sub-clause (iii) requires the defendant to the suit to have obtained possession, in pursuance of the contract, of the whole or any part of the land on which the building is to be constructed or other work executed. The operative expressions in the sub-clause are "in pursuance of Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 60 the contract" and "obtained possession". That would imply that the possession must not be in usual course as would ordinarily be of an owner; but that the possession has been obtained not by virtue of the defendant being naturally entitled thereto but only in pursuance of the contract of which specific performance is sought. Far from the word "defendant" mistakenly appearing in the sub-clause - there have been some murmurs to such effect in course of the submission of the developers herein - the deliberate reference to the defendant in such provision indicates the nature of the suit and the status of the claimant in the suit. And, this discussion has to be perceived in the backdrop of the expression "contract for the construction of any building or the execution of any other work on land" that figures in clause (c) and restricts the suit to a contract which is merely for such purpose and for none other. If the nature of the contract does not strictly fall within clause (c), as to whether such contract may be specifically enforced or not has to be assessed on the basis of the law on the subject covered by Chapter II of the 1963 Act, but the grant of its specific performance will not depend on the compliance of the three conditions enumerated in the sub-clauses.
52. Section 14(3)(c) of the 1963 Act permits, subject to compliance with all the conditions therein, the specific performance of a contract at the behest of the owner of the land against the person responsible for the construction. The second sentence in paragraph 11 of the report in Vipin Bhimani considers only a facet of the provision, in the context of a development agreement. The provision permits the owner of the land to seek specific performance of the agreement for construction of a building simpliciter and is an exception to the general rule that an agreement of such nature may not be specifically enforced. To repeat, a development agreement of the kind that is considered in this judgment is not an agreement simpliciter for the construction of any building or for the execution of any work on any land; it is much more than that in it also being an agreement for sale of a part of the land to the developer."
(underscoring & bold for emphasis) Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 61

90. This ruling appears to be the only judgment on the point. The judgment was read word by word by Mr. Aggarwal since I had at a previous hearing expressed my doubts in understanding sub-clause (iii) and what was meant by "defendant" therein when confronted by the Calcutta High Court DB in Vipin Bhimani relied upon by BOHL to claim that a Development agreement is per se not specifically enforceable. The search of the learned counsel yielded Ashok Kumar Jaiswal (FB) which is an illuminating intrepretation of sub-clause (iii) of section 14 (3) of the Specific Relief Act, 1963 which is well worth following in our jurisdiction.Vipin Bhimani stands overruled and declared bad law. Development agreements are amenable to specific performance provided other factors are met and keeping in mind the presumption in section 10 that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money unless the contrary is proved by the defendant as explained in M.L. Devender Singh v. Syed Khaja; (1973) 2 SCC 515 to which case further discussion will follow hereafter to more fully understand its ratio.

91. It is thus the contention of Mr. Aggarwal, learned senior counsel that money is not an adequate relief in this case to relieve the owner of the contract. Further still, the contract which runs into such minute and numerous details are also dependent on the volition of the parties then it can be specifically enforced.

92. It is now the turn of examining section 23 of the 1963 Act relied upon which lays down that liquidation of damages would not be a bar to specific performance. The provisions read : -

23. Liquidation of damages not a bar to specific performance--(1) A contract, otherwise proper to be specifically enforced, may be so enforced, though a sum be Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 62 named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if the Court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for the purpose of securing performance of the contract and not for the purpose of giving to the party in default an option of paying money in lieu to specific performance.
(2) When enforcing specific performance under this Section, the Court shall not also decree payment of the sum so named in the contract."

93. Section 10 of the Act contains positive realities of rights contemplated and on the other hand, section 23 places negative realities of rights of due performance. The Court is persuaded to think that section 14(1) and 14(3)(c) carves out exceptions by explanations just like section 23 of the Act does with respect to section 14(3)(c)(ii), to wit, the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non- performance of the contract is not an adequate relief.

94. Mr. Aggarwal next submits that the period contemplated for making of the township on the Project Land was an extensive 5 years. There may be so many infinitesimal and imponderable factors arising in the near and remote future which are insufficiently precise to know of their exact nature today in working out damages or compensation payable on breach of contract. There can be no precision or mathematical exactitude involved in this to enable the Court to determine the exact nature of the work to be executed in the money sharing ratio.

95. I should think that working out adequate relief or damages, as the case may be, will itself become an analysis of algorithms the complexity of which is best left within the jurisdiction and wisdom of the Arbitral Tribunal and most certainly well outside the domain of sections Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 63 9 and 37 of the Arbitration and Conciliation Act, 1996. In the Term Sheet there is no description and details of the projects which have to be gone into through execution of definitive agreements yet to come but the Term Sheet appears final on commercials subject to mutual agreements settled bipartite. This is the essence of the contract.

96. Mr. Aggarwal has placed reliance on M.L.Devender v. Syed Khaja; (1973) 2 SCC 515: AIR 1973 SC 2457 which is case specific to interpretation of the Explanation in section 10 and of the provisions of section 23 of the Act and their interconnectivity. He has read out the judgment word for word in Court to support his argument. In this first of its kind case the Supreme Court dealt with the provisions of the Specific Relief Act, 1877 together with the re-enactment of 1963 and the meaning of the Explanation to old section 12 which stands transported in its essence to present section 10 when Parliament employs the presumption in its statutory words in the following manner... "Explanation.- Unless and until the contrary is proved, the Court shall presume- (i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money". Section 12 and 20 of the old Act are in pari materia with corresponding sections 10 and 23 of the 1963 Act. The Supreme Court writing its opinion through M. H. Beg, J. sitting with K.K.Mathew, J. in a case argued by legal stalwarts M.C.Chagla for the appellants and C.K. Daphtary for the respondents, in the judgment which needs to be read in extenso and carefully understood so that the links and nuances of the judicial thought processes are not broken in the brilliant analysis, and are therefore reproduced next following cheek by jowl :-

" The principles embodied in Section 12 of the old Act Kumar Paritosh have been incorporated in Section 10 of the Specific Relief 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 64 Act of 1963 (hereinafter referred to as the Act of 1963") which runs as follows :

"10. Except as otherwise provided in this Chapter, the specific performance of any contract may, in the discretion of the court, be enforced-

(a) when there exists no standard for ascertaining the actual damage caused by the non-performance of the act agreed to be done; or

(b) when the act agreed to be done is such that compensation in money for its non- performance would not afford adequate relief.

Explanation.-Unless and until the contrary is proved, the court shall presume-

(i) that the breach of a contract to transfer immovable property cannot be adequately relieved by compensation in money; and

(ii) that the breach of a contract to transfer movable property can be so relieved except in the following cases :-

(a) Where the Property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market;

(b) where the property is held by the defendant as the agent or trustee of the plaintiff".

The term of the contract of 9-10-62 which, according to Mr Chagla, attracts the explanation of Section 12 of the old Act reads as follows :

"It is agreed that should I fail to comply with the terms of this agreement, I shall be liable not only for the refund of the advance, of Rs. 20,O00/- (Rupees twenty thousand only) received by me but I shall also be liable to pay a similar amount of Rs. 20,000/- (Rupees twenty thousand only) as damages to the said Syed Khaja".

There is no mention anywhere in the contract that a party to it will have the option to either fulfil the contract to buy or sell or to pay the liquidated damages or penalty of Rs. 20,000/- stipulated for a breach, as an alternative to the Kumar Paritosh performance of the contract to buy or to sell. Section 21 of 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 65 the old Act, to which Section 14 of the Act of 1963 corresponds, enacts, inter alia, that "a contract for the nonperformance- of which a compensation of money is adequate relief' cannot be specifically enforced. Hence, it is contended that, once the presumption contained in Explanation to Section 12 is rebutted, by proof that the, parties themselves contemplated a certain amount as liquidated damages for a breach of contract, the bar under Section 21 of the old Act must be, given effect to because it must be deemed to be proved that the non-performance complained of can be adequately compensated by money. The assumptions underlying the superficially attractive arguments an behalf of the Defendants-appellants are two : firstly, that the mere existence of a clause in a contract providing for liquidated damages or a penalty for a breach is sufficient to rebut the presumption raised by the explanation to Section 12; and, secondly, that, if the presumption is rebutted, the bar contained in Section 21 of the old-Act will ipso facto become operative. We now proceed to deal with each of the two assumptions mentioned above.

The answer to the 1st assumption is provided by Section 20 of the old Act. It reads :

"20. A contract, otherwise proper to be specifically forced, may be thus enforced, though a sum be named in it as the amount to be paid, in case of its breach, and the party in default is willing to pay the same".

If the Legislative intent was that the mere proof that a sum is specified as liquidated damages or penalty for a breach should be enough to prove that a contract for the transfer of immovable property could be adequately compensated by the specified damages or penalty Section 20 of the old Act will certainly become meaningless. It is true that Section 20 of the old Act does not mention the case of an express contract giving an option to a promiser to either carry out the contract to convey, or, in the alternative, to pay the sum specified, in which case the enforcement of the undertaking far g to make the payment would. be an enforcement of the contract itself and no occasion for rebutting the presumption Kumar Paritosh in the explanation to Section 21 would arise. In such cases 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 66 the contract itself is specifically enforced when payment is directed in lieu of the conveyance to be made.

It may be mentioned here that the Principles contained in Section 20 of the old Act are reenacted in Section 23 of the Act of 1963 in language which makes it dear that a case where an option is given by a contract to a party either to pay or to carry out the other terms of the contract falls outside the purview of Section 20 of the old Act, but, mere specification of a sum of money to be paid for a breach in order to compel the performance of the contract to transfer property will not do. Section 23 of the Act of 1963 may be advantageously cited here. It runs as follows :

"23(1) A contract, otherwise, proper to be specifically enforced, may be so_ enforced, though a sum be named in it as the amount to be paid in case of its breach and the party in default is willing to pay the same, if-the court, having regard to the terms of the contract and other attending circumstances, is satisfied that the sum was named only for, the purpose of securing performance of the contract and not for the purpose of giving to the party in default adoption of paying money in lieu of specific performance.
(2) When enforcing specific performance under thissection, the court shall not also decree payment of the sum so named in the, contract".

We think that section 23 of the Act of 1963 contains a comprehensive statement of the principles on which, even before the Act of 1963, the presence of a term in a contract specifying a sum of money to be paid for a breach of the, contract has to be construed Where payment is an alternative to carrying out the other terms of the contract, it would exclude, by the terms of the contract itself, specific performance of the contract to convey a property. The position stated above is in conformity with the principles found stated in Sir Edward Fry's "Treatise on the Specific Performance of Contracts" (Sixth Edn. at p. 65). It was said there:

Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 67 "The question always is : What is the contract ? Is it that one certain act shall be done, with a sum annexed, whether by way of penalty or damages, to secure the performance of this very act ? Or, is it that one of the two things shall be done at the election of the party who has to perform the contract, namely, the performance of the act or the payment of the sum of money? If the former, the fact of the penal or other like sum being annexed will not prevent the court's enforcing performance of the very act, and thus carrying into execution the intention of the parties; if the latter, the contract is satisfied by the payment of a sum of money, and there is no ground for proceeding against the party having the election to compel the performance of the other alternative.

From what has been said it will be gathered that contracts of the kind now under discussion are divisible into three classes :- (i) Where the sum mentioned is strictly a penalty-a sum named by way of securing the performance of the contract, as the penalty is a bond :

(ii) Where the sum named is to be paid as liquidated damages for a breach of the contract,

(iii) Where the sum named is an amount the payment of which may be substituted for the performance of the act at the election of the person by whom the money is to be paid or the act done.

Where the stipulated payment comes under either of the two first-mentioned heads, the Court will enforce the contract, if in other respects it can and ought to be enforced, just in the same way as a contract not to do a particular act, with a penalty added to secure its performance or a sum named as liquidated damages, may be specifically enforced by means of an injunction against breaking it. On the other hand, where the contract comes under the third head, it is satisfied by the payment of the money, and there is no ground for the Court to compel the specific performance of the other alternative of the contract".

Sir Edward Fry pointed out that the distinction between a strict penalty and liquidated damages for a breach of contract was important in common law where liquidated Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 68 damages were considered sufficient compensation for, breach of contract, but, sums stipulated by way of penalty stood on a different footing. He then said:

"But as regards the equitable remedy the distinction is unimportant: for the fact that the sum named is the amount agreed to be paid as liquidated damages is, equally with a penalty strictly so called, ineffectual to prevent the Court from enforcing the contract in specie".

The equitable principles which regulated the grant of specific performance by the separate Court of Equity which existed in England at one time have been given statutory form in India. It is, therefore, immaterial that the stipulated payment under the, terms of the contract under consideration before us could be viewed as one for payment of liquidated damages. The question would still remain whether the Courts are relieved by the agreement between the parties of the duty to determine, on the facts of a particular else, whether damages, specified or left unspecified, would really afford adequate compensation to the party which wants a conveyance of immovable property as agreed upon.

A reference to Section 22 of the old Act, (the corresponding provision is Section 20 of the Act of (1963), would show that the jurisdiction of the Court to decree specific relief is discretionary and must be exercised on sound and reasonable grounds "guided by judicial principles and capable of correction by a Court of appeal". This jurisdiction cannot be curtailed or taken away by merely fixing a sum even as liquidated damages. We think that this is made perfectly clear by the provisions of Section 20 of the old Act (corresponding to Section 23 of the Act of 1963) so that the Court has to determine, on the facts, and circumstances of each case before it, whether specific performance of a contract to convey a property ought to be granted.

The fact that the parties themselves have provided a sum to be paid by the party breaking the contract does not, by itself, remove the strong presumption contemplated by the use of the words Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 69 "unless and until the contrary is proved". The sufficiency or insufficiency of any evidence to remove such a presumption is a matter of evidence. The fact that the parties themselves specified a sum of money to be paid in the event of its breach is, no doubt, a piece of evidence to be considered in deciding whether the presumption has been repelled or not. But, in our opinion, it is nothing more than a piece of evidence. It is not conclusive or decisive.

The second assumption underlying the contentions on behalf of the Defendants-appellants is that, once the presumption, contained in explanation to Section 12 of the old Act, is removed, the, bar contained in Section 21 of the old Act, against the specific enforcement of a contract for which compensation in money is an adequate relief, automatically operates, over-looks that the condition for the imposition of the bar is actual proof that compensation in money is adequate on the facts and circumstances of a particular case before the Court. The effect of the presumption is that the party coming to Court for the specific performance of a contract for sale of unmovable property need not prove anything until the other side has removed the presumption. After evidence is led to remove the presumption, the plaintiff may still be in a position to prove, by other evidence in the case, that payment of money does not compensate him adequately.

In the instant case, both sides have led evidence. But, there is no evidence as to the extent of loss of prospective gains to the plaintiff-Respondent, who carries on a Bakery business, from the depreciation of a site so valuable as one in front of the Secundrabad Junction Railway Station. In fact, there is no standard for judging the loss from such a depreciation either to the Plaintiff- Respondent or to the partners of the Alpha Hotel who are the real contending parties. No attempt was even made to gauge the value of future prospects of such a site to businessmen in the position of Plaintiff Respondent and those Defendants- appellants who are partners of the Alpha Hotel. It is clear that the property has got no such value for the first De- fendant, who is a businessman fully occupied Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 70 with a number of businesses at Delhi where he had been residing for 19 years in 1963. it is evident that he could not conveniently look after the property situated in Secunderabad.

The Defendants-appellants had miserably failed to prove their cases. The attempt to prove either fraud or misrepresentation or " an unfair advantage" over the first Defendant, so as to bring his case within Section 22(1) of the old Act, was totally unsuccessful. The courts commented adversely on incorrect assertions made by the first Defendant who could not show anything beyond the penalty or damages clause in the contract for sale dated 9- 10-1962. It is strange that the first Defendant, while willing to pay Rs. 20,000/ as damages to the Plaintiff-Respondent, will only get Rs. 10,000/- more in price over Rs. 60,000/- if his contract of sale to the partners of the Alpha Hotel were to stand. It is, therefore, clear that the first Defendant must have some ulterior motive in being prepared to suffer an ostensible loss of Rs. 10,000/- even if his sale of 16-10- 1962 for Rs. 70,000/- to the partners of the Alpha Hotel could be upheld. The plaintiff himself had stated that financial considerations do not really determine his stand. We are unable to accept this profession of unconcern for financial gain on the part of an astute businessman like the first Defendant. It is more likely that there, is some undisclosed understanding between him and the partners of Alpha Hotel who are also co- appellants with him before us.

The result in that we think that the presumption contained in the explanation to Section 12 of the old Act was not rebutted here. In such cases Equity helps honest plaintiffs against defendants who break solemnly given undertakings. The High Court had rightly decreed the suit for specific performance of the contract.

Lastly it was urged before us that the High Court should not have lightly interfered with the exercise of its discretion by the Trial Court to grant or not to grant specific performance on the facts and circumstance of this case. It is clear that the discretion, as laid down in Section 22 of the old Act (corresponding to Section 20 of the Act of 1963), is Kumar Paritosh not to be exercised arbitrarily but on sound and reasonable 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 71 grounds "guided by judicial principles- so that it is capable of correction by a court of appeal". It appeared, quite rightly, to the High Court that the Trial Court had gone completely astray in the exercise of its discretion on the footing that the Plaintiff Respondent enjoyed an "unfair advantage" over the first Defendants, whereas, on the facts and circumstances of the case, it was the first Defendant who was placed in a position to exploit the need of the plaintiff and the plaintiffs allegedly insecure position under the first agreement. It is clear that the Plaintiff-Respondent had dealt very fairly and squarely with the first Defendant- Appellant. The Trial Court's error in the exercise of its discretion on an utterly untenable, fanciful and unsound ground was rightly corrected by the High Court." (underscored for emphasis).

97. The presumption may be rebuttable like all presumptions are but is extremely strong under section 10 of the Act and is evidence based. Thus, it is clearly a matter of trial before the chosen Forum. A. The salient features of the Term Sheet and the obligations in Bestech's view are grouped as under:

98. To obtain licences for development of an Integrated Township; to furnish bank guarantees for EDC, IDC, Infrastructure Development Charges for obtaining licence, conversion charges, scrutiny fee and any other charges required for obtaining licences and to pay the same in timely manner; to apply for license for project land within 14 days from the date of Notification of Gurgaon-Manesar Master Plan 2031; to obtain license within a period of 18 months (long stop date) from the date of execution of Definitive Agreements or 12 months from the notification and implementation of the Master Plan; Long Stop Date to be extended if there is delay in notification or implementation of Master Plan or any other legal, political and environment issues; Plotted development, group housing, commercial and institutional development Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 72 to be undertaken in the Township.Commercial development component not be less than 4% over the project land less the land for group housing. Security deposit :

99. ` 1 crore per acre non-refundable and non-adjustable deposit to be paid by the Appellant subject to a maximum of ` 100 crores out of which ` 5,00,00,000/- was paid. The Balance to be paid as under:-

(i) 35% less of ` 5 crores at the time of execution of Definitive Agreements.
(ii) 65% within 15 days from the date of issuance of Letter of Intent.

100. In the event of failure on the part of the Appellant to obtain licence upto the Long Stop Date the following mechanism provided in the Term Sheet:-

(i) The Appellant to be given extension of time for procuring licence.
(ii) If the Appellant fails to procure licence, the respondents to obtain licence at the Appellant's cost.
(iii) If the respondents fail to obtain licence within a period of 5 years then the entire initial deposit to be refunded to the Appellant.
(iv) On refund of deposits to the Appellant, the Term Sheet would be terminated and the Appellant Bestech would have no right of any nature in the project.

101. The sanctioned FSI in the project to be shared between the Appellant Bestech and the respondents BOHL in the following manner:-

                                              (i)       In the group housing: 50:50.
                                              (ii)      In the commercial component: 50:50.
                                              (iii)     In the plotted component: 14/12 per acre.
                                              (iv)      institutional   area   for   schools,   hospital   and
                                                        community centre: 50:50

Kumar Paritosh
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                                         (v)      for the purpose of demarcation of shares upon

sanctioning of plan the parties would alternatively identify lots of 25 apartments/plots/commercial units etc. with the respondents getting the first choice.

(vi) a place to be earmarked for the development of Jain Asthanak (a religious place) and the Appellant shall develop the same

102. Other Commercials agreed to in the Term Sheet are:

i) entire infrastructure of project to be completed by Appellant within 30 months of the grant of licence.
ii) cost of raising of construction of Villa /Group Housing /commercial components to be borne by the parties in the ratio of their respective shares.
iii) Appellant to be responsible for obtaining all approvals.
iv) structures in the project to be sold phase wise.
v) shares of the respondents as well as the Appellant would be sold as one project.
vi) brokerage component for Appellant quantified at 8% on gross revenues after deduction of External Development Charges/Infrastructure Development Charges.
vii) the revenues from the sale of built up space from the share of each party shall be deposited in their respective bank accounts. The amounts to be deposited in the bank account of the respondents from revenues from the respondent's share of built up space to be net of all construction expenses, External Development Charges/Infrastructure Development Charges and brokerage fees applicable on the respondent's share of built up space.

viii) Appellant would be entitled to a development management services fees of 6% of gross revenues in addition to the construction cost on the respondent's Kumar Paritosh share of the area.

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ix) Appellant to be liable to maintain the project.

respondents liable to pay maintenance charges on their shared of FSI from the date of handover of the developed FSI.

103. The following timelines for development would come into effect from the date of obtaining the Licence and other statutory provisions -

a) For Plots -Development should start within 6 months
b) For Group Housing -development should start within 24 months; could be extended mutually based on market conditions
c) For Commercial -development should start within 30 months; could be extended mutually based on market conditions. Appellant was to complete the infrastructure works within 30 months from the date of obtaining the License and all statutory clearance related to the Project.

104. The following modalities were provided in the Term Sheet insofar as construction finances are concerned:-

(a) The Appellant not to create any mortgage on the Land up to the stage of License.
(b) Process for obtaining the sanction for construction finance to commence from the date of receipt of Letter of Intent.
(c) Mortgage could be allowed for construction finance and statutory EDC/IDCpayments upto a maximum amount of INR 2,000 million. However, the interest cost and repayment liability to be borne by the Appellant.
(d) The respondents not liable to give any guarantee for the service of debt. The same to be sole liability of the Appellant.

(e) Respondents would buy and add upto 20 acres of land to the Project. Sharing of FSI for additional land to be procured by the respondents, same as Term Sheet. The deposit payments laid out in the Non-Refundable Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 75 Security Deposit section of the Term Sheet not to apply to any such addition of Land by the respondents.

(f) at the stage of execution of the Definitive Agreements, the respondents shall execute a General Power of Attorney ("GPA"), which shall provide limited rights to the Appellant, for obtaining the Letter of Intent for development of the Project

(g) on receipt of the Letter of Intent, the respondents to execute an overriding General Power of Attorney, to provide rights to the Appellant for development, marketing, sales etc.

(h) till the completion of sale of 80% of the Project, the Appellant would not directly or indirectly enter into any collaboration or joint venture to develop any Township within 2 km radius of the Project Land without prior written consent of the respondents.

(i) All Disputes relating to the Term Sheet or any of the Definitive Agreements to be resolved by arbitration in accordance with the Arbitration and Conciliation Act, 1996. Any such arbitration would take place in New Delhi. Tribunal to comprise of three arbitrators, one designated by the respondents, one designated by the Appellant and the third to be decided by the first two arbitrators.

105. Mr. Aggarwal draws attention to the opening lines of the Term Sheet which clearly state that the same is binding in nature and outlines the terms and conditions of a proposed joint development agreement between the parties. It is clearly mentioned in the first paragraph of the Term Sheet that the Term Sheet shall be followed by the execution of definitive agreements between the parties as more specifically enumerated in this Term Sheet.

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106. From a bare perusal of the above, it is crystal clear that not only the commercials with respect to the township were clearly defined in the Term Sheet, but the Term Sheet also envisioned the manner in which the township would be developed to fruition. The Term Sheet in itself is an exhaustive contract binding the parties. Definitive agreements were agreed to be executed only for limited purpose of working out the modalities.

107. It is delineated by Bestech that the points that were agreed to be defined more elaborately in definitive agreements included:

i) Long stop date to be extended in case of delay in notification and implementation of the Master Plan, 2031.
ii) IPC of an international repute to be decided for Valuation of institutional areas for school, hospital and community centre
iii) Specifications, pricing, timing, infrastructure, costing etc. of the project. However it was also agreed that the same may be modified at the time of execution of the project as per mutual consent
iv) format of MIS for construction and sales progress
v) method of appointment of team to monitor and audit the sales of the project
vi) marketing, advertising, sales, handling of distribution channels, collection management, host sales customer management,etc.
vii) structure to be formulated by tax consultants/chartered accountants and separate accounts for appellant and respondents
viii) infrastructure works and their costing
ix) penalties to kick in for appellant if there are delays in executed and delivery of the project
x) business plan
xi) area and timelines for including 20 acres by the respondents in the project.

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108. Agreement dated 4th October, 2012 (Annexure 6 pages 119-

122) was executed between the parties within a period of 30 days from the execution of Term Sheet for a limited purpose of safeguarding the investments and mobilisation of funds. The salient features of the agreement dated 4th October, 2012 were:

i) that the owners shall in no event back out/resile/refrain to abide by the covenants incorporated in the Term Sheet.
ii) In case the owners resile/back out/refrain from abiding by contractual covenants incorporated in the Term Sheet, or does any act deed or thing aimed at avoiding the transaction subject matter of the Term Sheet, in that event the developer shall be entitled to estimated/liquidated compensation equivalent to ` 30 crores or the appellant shall be entitled to become the lawful owner of 10 acres of land falling in the residential zone.

109. Mr. Aggarwal submits that this agreement was executed between the parties for the limited purposes of safeguarding the substantial investments and mobilization of funds that had already been made by the appellant towards development of the project consequent to the execution of the Term Sheet. The Agreement dated 4th October, 2012 was in the nature of a stop gap arrangement to safeguard the interests of both parties to the Term Sheet. The Agreement dated 4.10.2012 was intended to operate for a limited period only is evidenced from clause 7 of the same which provides that the said Agreement shall cease to have effect upon issuance of Letter of Intent by DTCP, Haryana.

(i) Extension letter dated 16th of October 2012 extending the term of the Term Sheet up to 18th of December 2013. (Annexure 3 pages 94 and 95).

(ii) Within the extended period, Collaboration Agreement dated 19th October, 2012 (annexure 4 pages 96-108) was Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 78 executed and registered before the Sub registrar, Gurgaon between the appellant and the respondents with respect to development of group housing complex over land measuring 14.4187 acres out of total land holding of 108 acres. B. The commercials and other terms as agreed in the Term Sheet were incorporated in the collaboration agreement.

110. Clause 1.7 of the collaboration agreement (page 101) read as under :

"That 50% of the saleable build/unbuilt area in respect of the complex with proportionate, undivided, indivisible or impartial able ownership rights in the land underneath the said complex as also in common areas and common facilities shall belong to and be owned by the owner (BOHL) and the remaining 50% build/unbuilt area of the said complex together with proportionate undivided, indivisible or impartial ownership rights in the land underneath the said complex as also in the common areas and common facilities shall fall to the share of the developer (Bestech) in consideration of the obligation undertaken by it under these presents and shall belong to and be owned by the developer. It is further agreed that the area allocated for economically weaker sections (EWS) , shops, school and/or any other amenities developed in the said group housing complex shall also be shared in the ratio of 50: 50 between the owner and developer".

111. Simultaneously, General Power of Attorney dated 19th October 2012 (Annexure 5 page 109-118) was also executed and registered by the respondents in favour of the Appellant for carrying out the intents and objects of the collaboration agreement dated 19th October 2012, thus creating rights/interest in favour of the Appellant in the said land.

112. In clause 14 (e) of the collaboration agreement (Page 108) it is specifically acknowledged by the parties that the Term Sheet executed Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 79 on 3rd September, 2012 is a binding document as regards the proposed construction and development of villas, plots, group housing, commercial and institutional units to be constructed on the Project land as defined in the Term Sheet. Thus the term of the Term Sheet was mutually extended by the parties.

(i) On 29th of October 2012 an application for grant of license for a group housing complex was submitted before DTCP. (Annexure 23 pages 169-173)

(ii) On February 6, 2013 M/s DTZ (IPC appointed by the appellant) forwarded the draft of the collaboration agreement (for plotted, Villas, commercial, institution etc.) shared by the respondents. (page 123)

(iii) Vide email dated 25 February 2013 the appellant sent its comments to the draft ( Second) collaboration agreement (for plotted, Villas, commercial, institution etc.) shared by the respondents on 6th of February.

113. It is evident that by forwarding the draft of the 2nd collaboration agreement in terms of the Term Sheet dated 3rd September, 2012, the respondents were conscious and aware that the Term Sheet was alive and had not expired. The respondents argument is that due to non- extension of the Term Sheet beyond 18th December, 2012, the Term Sheet had expired. In case it is presumed that the Term Sheet had expired on 18th December, 2012, there was no occasion for the respondents to send the draft of the 2nd collaboration agreement for the plotted, Villas, commercial, institutional etc. portion of the township on 6th of February 2013. The draft of the 2nd collaboration agreement sent by the respondents clearly signifies that the said collaboration is in pursuance of the Term Sheet dated 3rd September, 2012. Thus, the term of the Term Sheet was extended by the parties through their conduct. Moreover, the Term Sheet does not have any termination clause. The mechanism for Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 80 termination of the Term Sheet has been clearly set out under the head "non-refundable security deposit" (internal page 2 and 3 of the Term Sheet). The reading of the entire clause signifies that the Term Sheet would terminate only under the following circumstances:

i) failure on part of the appellant to procure the licence
ii) responsibility offered to respondents to procure the licence at the cost of appellant
iii) failure on part of respondents to procure license within 5 years from the date of the Term Sheet
iv) on refund of initial deposit by respondents to the appellant, the Term Sheet would terminate and appellant would have no right, title and interest of any manner in or over the Project land.

114. Thus it can be seen that the Term Sheet has not expired. Execution of the Term Sheet created rights in favour of the appellants which would terminate only after i) respondents failed to procure license and ii) refund of initial deposit. The Term Sheet continues to be binding between the parties. In pursuance and furtherance to the Term Sheet the parties have signed, executed and got registered collaboration agreement dated 19th of October 2012. The said collaboration agreement also reiterated that the terms and conditions of the Term Sheet shall remain binding between the parties.

(i) Vide email dated March 3rd, 2013 M/s DTZ circulated the minutes of the telecon with the respondents and the appellant. The respondents had the conveyed that they feel that they had mistakenly agreed with some points mentioned in the Term Sheet due to their limited knowledge of real estate business. (Page 138). It was bluntly conveyed by the respondents to the appellant that they were receiving more lucrative offers from 3rd parties for joint development of the Project land and until and unless Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 81 the appellant could improve the said offer, the respondents would proceed to enter into joint development agreement with such 3rd parties.

(ii) Vide email dated 21st August 2013 M/s Jones Lang LaSalle (newly appointed property consultants for respondents) sent a fresh Term Sheet shared by the respondents. (Page 179-183)

(iii) In the meanwhile the appellant has purchased land measuring 32 kanal and 5 marlas in the vicinity of the Project land for a total consideration of 10 crores (approx.) Annexures 18, 19, 20 and 21)

(iv) On 16th December, 2013 the appellant filed the petition under section 9 of the Arbitration and Conciliation Act, 1996Act before the District Judge, Gurgaon for adjudication of disputes in accordance with the Term Sheet. The appellant had already sent legal notice dated 16th of December, 2013 (Annexure 31 page 197-225) invoking arbitration and appointing Hon'ble Mr. Justice Deepak Verma its nominated arbitrator for adjudication of disputes among the parties. In response the respondents had nominated Hon'ble Justice Dr. M K Sharma as their arbitrator and both the arbitrators appointed Hon'ble Mr. Justice S C Aggarwal as the Presiding Arbitrator. Hon'ble Mr. Justice Deepak Verma vide its letter dated 7th of January 2014 (annexure 34 page 231) withdrew from the proceedings and withdrew all the consents given by him. Vide letter dated 10th January 2014 (annexure 35 page 232) Hon'ble Mr. Justice S C Aggarwal informed the parties that the tribunal will have to be reconstituted and the 1st hearing for 11th February, 2014 was cancelled.

115. On 6th of March, 2014 the appellant nominated Hon'ble Mr. Justice Mukul Mudgal as their nominated arbitrator and conveyed the same to the respondents vide letter dated it 18th of March 2014. As on date both the nominated arbitrators have expressed their inability to reach Kumar Paritosh to a consensus regarding appointment of the presiding arbitrator as 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 82 Hon'ble Mr. Justice S C Aggarwal has also withdrawn from the arbitration proceedings

116. The Learned District Judge passed an order dated 12th of February 2014 (Annexure 1) allowing the petition filed by the appellant with observation that the appellant was entitled to ad- interim injunction as per provisions of section 9 of the Arbitration and Conciliation Act, 1996 Act. However, the learned District Judge having rightly come to the conclusion that the appellant was entitled to ad interim injunction erroneously mentioned in the said order that the order of injunction would remain operative for a period of 3 months or till the date of decision by the arbitrator, whichever is earlier.

117. The appellant filed an application before the learned District Judge, Gurgaon for correction of the order dated 12th of February 2014 and prayed for correction to the extent that instead of the words "whichever is earlier" the same may be substituted by "whichever is later". However, the learned a District Judge has surprisingly dismissed application of the appellant by his order dated 4th of April 2014. (Annexure 50).

118. The appellant filed the present appeal on 5th of May 2014 challenging the order dated 12th February, 2014 passed by the learned District Judge, Gurgaon challenging the limited period of injunction for 3 months granted in the application filed under section 9 of the Arbitration and Conciliation Act, 1996 Act.

119. That the respondents have also filed an appeal challenging the order dated 12th of February passed by the learned a District Judge. The Appeal filed by the respondents for setting aside the order dated 12th February, 2014 is not maintainable and is liable to be dismissed. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 83

120. The contentions raised by the respondent in their appeal is that since Tribunal had already been constituted, the Appellant could have moved the Tribunal under section 17 of the Arbitration and Conciliation Act, 1996 for consideration of its prayer for interim protection, if any.

121. In M/s Sundram Finance Ltd. Vs NEPC India Ltd. AIR 1999 SC 565 the Supreme Court has held (Para. 10, 11 and 13) that under section 9 of the arbitration act, the court has power to pass interim orders before, during or after the arbitral proceedings. It was further held that orders by an Arbitral Tribunal cannot be enforced, and that the legislation provides specific powers to the Court alone under section 9 to pass such orders. The court dealt with material words occurring in section 9 of the Act, viz., "before or during the arbitration proceedings"

122. In M. D. Army Welfare Housing Organization v. Samangal Services Pvt. Ltd.; AIR 2004 SC 1344, the Supreme Court in Para. 58 observed that under section 17 of the 1996 Act the power of the arbitrator is limited one as it cannot issue any direction which would go beyond the reference or arbitration agreement. Moreover, the interim order under section 17 cannot be addressed to other parties and there is no power with the tribunal to enforce its order. Thus, no power is conferred upon the Arbitral Tribunal to enforce its order nor does it provide for judicial enforcement thereof.

123. In Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd.; (2007) 7 SCC 125 the Supreme Court in Para 11, 16, 17, 21 and 24 has held that the grant of an interim prohibitory injunction or an interim mandatory injunction are governed by well-known rules and it is difficult to imagine that the legislature while enacting section 9 Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 84 of the Act intended to make a provision which was de hors the accepted principles that govern the grant of an interim injunctions. The concluding words of the section, "and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it" also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision.

124. Another contention raised by the respondents in their appeal is that the Term Sheet dated 3rd September, 2012 was in the nature of a preliminary understanding and was subject to parties entering into proper and final agreement. The respondents have alleged that there was no binding contract between the parties.

125. The admitted position is that there is a Term Sheet dated 3rd September, 2012 (Annexure 2) which itself creates an interest in the land in favour of the Bestech by sharing of the FSI in various components of the proposed township. The opening lines of the Term Sheet clearly state that the same is binding in nature and and the remaining outlines broadly the terms and conditions of a proposed joint development agreement between the parties. It is clearly mentioned in the first paragraph of the Term Sheet that the Term Sheet shall be followed by the execution of definitive agreements between the parties "as more specifically enumerated in this Term Sheet."

126. The commercials, for example, sharing of FSI in various components, manner of identification of allocation of parties, sharing of additional FSI, mechanism for entire infrastructure of project and its completion date, sharing of cost of raising of construction of Villa / Group Housing /commercial components and their respective EDC/IDC, obligations of parties, brokerage component and development Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 85 management fees, mechanism for maintenance of the project, deposit of revenues in bank accounts, timelines for development of various components, mechanism for obtaining finance, obligations of the parties to buy additional land, timelines for execution of general power of attorneys, dispute resolution etc. in the Term Sheet itself it was agreed that the shares of the parties in the project shall be sold as one project and in a phased manner.

127. The Term Sheet has created an interest in favour of the appellant in the said land, which fact has been duly recorded in the Term Sheet itself by specifying that only upon termination of the Term Sheet, return of security deposit etc., shall the appellant cease to have any right, title or interest, in the said land.

128. A bare perusal of the entire Term Sheet clearly indicates that not only the commercials but also responsibilities/obligations of the parties had been clearly defined in the Term Sheet. All essential conditions that bind the parties had been agreed upon and are contained in the Term Sheet. Therefore, the appellant is entitled to relief under section 9 of the arbitration act.

129. The respondents have relied on PVR Pictures Ltd. v. Studio 18 MIPR 2009 (3) 0153 wherein a Term Sheet agreement was executed between the parties wherein it was agreed that appellant would be the exclusive licensee for distribution rights in respect of 5 movies. The Term Sheet was to be followed by a License Agreement. The dispute was with regard to one movie namely Short Kut for which licence agreement was not executed. The appellant had prayed that defendant by not entering into an agreement with the plaintiff/appellant regarding the film Short Kut has infringed where exclusive distribution license as per Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 86 the distribution terms sheet agreement. The defendants had contended that the Term Sheet agreement was a mere desire to enter into contractual relationship and does not evidence a binding contract amounting to distribution ship license, under the Copyright act. It was held that the license in respect of any copyright, as to be in writing and a document in question i.e. the Term Sheet, must clearly reflect the intention to grant the license assigned the particular copyright. The claim of the plaintiff/appellant for interim injunction was rejected on the ground that a license in respect of copyright, has to be in writing and the document in question must clearly reflect the intention to grant the license or assign the particular copyright.

130. The facts applicable in the case and relied upon by the respondents are different from the present case.

131. In PVR Pictures Ltd the parties had executed 4 separate license agreements with respect to 4 different movies and two of these agreements showed significant departure from the Term Sheet agreement conditions. Whereas in the present case the terms and conditions of one of the definitive/collaboration agreement executed on 19th October 2012, pursuant to the Term Sheet, are in tune with the terms and conditions as defined in the Term Sheet.

132. In PVR Pictures Ltd it was agreed in the Term Sheet agreement that an advance of 90 lakhs (for one of the movies out of 5) was payable 21 days before the agreed date however no amount was paid by the plaintiff/appellant to the defendant. Whereas the respondents have admittedly received an amount of ` 5 crores from the appellant in terms of the Term Sheet dated 3rd of September, 2012. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 87

133. It has been held in PVR Pictures Ltd. that "the document in question must clearly reflect the intention to grant the license or assign the particular copyright". In the present case development and implementation of a township comprised of various components , for example, group housing, villas, plotted development, institutional component namely schools, community centre, Jain Asthanak, was envisaged by the parties. It was agreed that the Term Sheet is binding and shall be followed by execution of definitive agreements. Obligations/ responsibilities/ undertakings/of parties was clearly defined in the said Term Sheet. The document had created rights in favour of the respondent. All essential conditions that bind the parties were agreed, finalised and the parties had accordingly started mobilising their resources in terms of the Term Sheet. Furthermore, PVR Pictures case did not deal with creation of rights over immoveable property as in the present case. The provisions of section 202 of the Indian Contract Act have not been taken into consideration in the PVR case. Section 202 is reproduced herein below for ready reference:

"202. Termination of agency, where agent has an interest in subject-matter.--Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest."
Illustrations:
(a) A gives authority to B to sell A's land, and to pay himself, out of the proceeds, the debts due to him from A. A cannot revoke this authority, nor can it be terminated by his insanity or death."
(b) A consigns 1,000 bales of cotton to B, who has made advances to him on such cotton, and desires B to sell the cotton, and to repay himself out of the price the amount of his own advances. A cannot revoke this authority, nor is it terminated by his insanity or death."

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134. Thus, the reliance placed by the respondent BOHL is distinguishable on the facts from the facts of the present case. C. The contention of the respondents is that the Term Sheet is not a binding contract. The same is incorrect. Various courts including the Supreme Court has observed in a catena of judgments that Term Sheet is binding contract.

135. In K. Sriramulu (dead) v. T Aswatha Narayana, AIR 1968 SC 1028, the Supreme Court in Para. 3 observed:

"We proceed to consider the next question raised in these appeals, namely whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed. We do not accept this argument as correct. It is well-established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract."

136. In Trimex International FZE Ltd. v. Vedanta Aluminium, 2010 (3) SCC 1 the Supreme Court has held that mere fact that a formal contract is yet to be prepared and initiated by parties, would not affect their acceptance of contract or its implementation, even if formal contract has never been initiated.

137. The Delhi High Court in KSL Industries Ltd. v. NTC, 2012 (3) ARB. LR 470 (Delhi) was dealing with a memorandum of understanding which contemplated execution of a definitive agreement. The Hon'ble High Court granted the injunction and dealt with the question as of the contentions raised by the respondent herein regarding Kumar Paritosh expiry of the Term Sheet and also the contention that the agreement itself 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 89 was determinable. In paragraphs 15, 16, 32 and 34 contentions regarding section 41 and 14 of the Specific Relief Act, 1963 were also dealt with. In paragraphs 41 and 43 the contention raised was that the said Memorandum of Understanding (MOU), by its very nature, was determinable. In paragraph 57 the judgment cited by the respondent delivered in Rajasthan Breweries Ltd. v. Stroh Brewery Company, AIR 2000 Delhi 450 was noticed. The question of compensation was raised in paragraph 52 and the same was rejected. In paragraph 62, it was held that such agreements were enforceable as the essential terms are already agreed to between the parties. The court relied upon the Supreme Court judgment in Killipara Sriramulu (dead) v. T. Aswatha Narayana, AIR 1968 SC 1028 cited above. In paragraph 69, the Court dealt with the question whether damages would be an adequate remedy or specific performance will be more perfect and complete justice. Relying upon a judgment in paragraph 73 it was held that section 14 and 41 of the Specific Relief Act, 1963, would have no bearing. In paragraph 75 the Hon'ble Judge dealt with the question of agreements being determinable in their very nature. In paragraph 87 specific performance of the MOU and granting injunction were dealt with, holding that the petitioner therein would suffer irreparable loss and injury if the textile mill which was the subject matter of case was not preserved during the pendency of the arbitral proceedings as alienation or disposal of the said textile mill and or assets thereof would destroy the subject matter and the petitioner's claim and therefore, allowed the petition filed under section 9. Facts of the present case are identical to the same.

D. The respondents (in Bestech's cross appeal) have alleged in their appeal that the Term Sheet was not extended therefore stood terminated:

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138. In the last clause of the Term Sheet it was mentioned that the understanding in the Term Sheet is preliminary in nature and shall be more detailed in the Definitive Agreement which shall be executed between the appellant and the respondents within 45 days of execution of the Term Sheet. Significantly, the consequences of non -execution of definitive agreements within the time frame so provided, do not entail termination of the Term Sheet. The contention of the respondents is that the appellant has not signed the 2nd extension letter (27th December, 2012) sent by them. The contention raised by the respondents is not correct. And admitted position that within the extended period, Collaboration Agreement dated 19th October, 2012 (annexure 4 pages 96-

108) was executed and registered between the appellant and the respondents with respect to development of group housing complex over land measuring 14.4187 acres out of total land holding of 108 acres. The respondents had also proceeded to execute and got registered general power of attorney on the even date in favour of the appellant. The commercials as agreed in the Term Sheet were incorporated in the collaboration agreement. As discussed above rights/interest in favour of the Appellant were created in the said land. Moreover, there was no occasion for the appellant to sign the 2nd extension letter sent by the respondents more so, when in clause 14 (e) {Page 108) of the collaboration agreement it was specifically acknowledged by the parties that the Term Sheet executed on 3rd September, 2012 is a binding document as regards the proposed construction and development of villas, plots, group housing, commercial and institutional units to be constructed on the Project land as defined in the Term Sheet. On 6th February, 2013 respondents had sent draft of the 2nd collaboration Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 91 agreement (for plotted, Villas, commercial, institution etc.) to M/s DTZ and the same was forwarded to the appellant. Vide email dated 25th February 2013 the appellant sent the draft collaboration agreement (for plotted, Villas, Commercial, institution etc.) for clarification to the respondents.

139. It is evident that by sending the draft of the 2nd collaboration agreement in terms of the Term Sheet dated 3rd September 2012, the respondents were conscious and aware that the Term Sheet was alive and had not expired. The respondent's argument is that due to non-extension of the Term Sheet beyond 18th of December 2012, the Term Sheet had expired. In case it is presumed that the Term Sheet had expired on 18th December, 2012, there was no occasion for the respondents to send the draft of the 2nd collaboration agreement for the plotted, Villas, commercial, institutional etc. portion of the township on 6 of February 2013. The draft of the 2nd collaboration agreement sent by the respondents clearly states that the said collaboration is in pursuance of the Term Sheet dated 3rd September 2012. Thus, the term of the Term Sheet was extended by the parties through their conduct. Moreover, the Term Sheet does not have any termination clause.

140. A similar argument was noticed and dealt with by the Supreme Court in N Srinivasan v. KuttukaranMachine Tools Ltd., (2009) 5 SCC 182 where a sale deed was to be executed within 60 days which was not done and the matter was referred to arbitration. The contention was that since the time has expired the arbitration clause also perishes. This was rejected by the Supreme Court. It was held in paragraphs 25 to 37 that if an order restraining the respondent from creating any third-party interest or from transferring the property in Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 92 dispute is not granted till an award is passed, the appellant shall suffer irreparable loss and injury and the entire award if passed in his favour, would become totally negated. It was further held that if an agreement ceases to exist, the arbitration clause remains in force in any dispute pertaining to the agreement and ought to be resolved according to the conditions mentioned in the arbitration clause. Therefore, the High Court was not justified in setting aside the order of the trial court directing the parties to maintain status quo in the matter of transferring or creating any third-party interest in the same till the award is passed by the sole arbitrator. It is further held in para 27 that even if there is an express stipulation with respect to time being the essence of contract; the said presumption though is rebuttable by proof. It is well settled that when called upon to find out whether time was the essence of the contract, it is better to refer to the terms and conditions of the contract itself before foorming any definitive judicial opinion.

E. The contention of the respondents is that the appellant is at the maximum entitled for liquidated damages as per agreement dated 4th of October 2012.(Annexure 6)

141. This agreement was executed between the parties for the limited purposes of safeguarding the substantial investments and mobilization of funds that had already been made by the appellant towards development of the project consequent to the execution of the Term Sheet. The Agreement dated 4th October, 2012 was in the nature of a stop gap arrangement to safeguard the interests of both parties to the Term Sheet. The Agreement dated 4th October, 2012 was intended to operate for a limited period only is evidenced from clause 7 of the same which provides that the said Agreement shall cease to have effect upon issuance of Letter of Intent by DTCP (Annexure 6 pages 119-122). It has Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 93 been held by various courts that merely because of clause for payment of damages have been incorporated in the agreement, this would not constitute a ground to refuse specific performance of the agreement. Breach of contract cannot be adequately relieved by compensation money. Mr Aggrawal submits that the appellant Bestech in its appeal is more than willing to perform the contract.

142. A similar argument was dealt by the Supreme Court in M L Devender v. Syed Khaji, (1973) 2 SCC 515 and followed by this Court in Mohini Kapoor v. Deepak Uppal, 2006(1) RCR 807 in paras 4, 5, 6 and 8 that merely because a clause for payment of damages has been incorporated in the agreement to sell, the same would not constitute a ground to refuse specific performance of the agreement. Such clauses are incorporated for securing the performance of the contract.

143. The more stringent such clauses are for payment of damages I prima facie think the more there is the likelihood that both parties really intended and were anxious that the contract does not fall apart and parties stick to due performance of the agreement which was mutually beneficial to the interests of both. BOHL was conscious of the magnitude of the project, conscious that by itself it was incapable to execute it, conscious that financial free play would have to be left to Bestech to resource finance for such a huge project and then introduced clause 3 in the agreement dated 4th October, 2012 to goad and spur Bestech to travel the road ahead.

144. In Prakash Chandra v. Angadlal, AIR 1979 SC 1241 the Supreme Court has observed even if a sum has been named in the contract for sale as the amount to be paid in case of a breach, the appellant is entitled in law to enforcement of the agreement. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 94

145. In paragraphs 5, 6, 7 and 9 of Manzoor Ahmed v. Ghulam Hasan, AIR 2000 SC 191, the Supreme Court has held:-

"From a reading of the aforesaid clause in the agreement, it can be stated that it is strictly a penalty clause for securing the performance of the contract. It only provides that if any party violates the terms and conditions of the agreement, he would be liable to pay a penalty of Rs. 10,000 . This would not mean that contract is not to be performed. It would only mean that if there is breach of some terms and conditions of the contract, the defaulting party has to pay the penalty specified therein. The said clause, also, does not provide that in case a sale deed is not executed, damages to the tune of Rs. 10,000 are to be awarded."

F. The respondents have alleged that the Appellant had failed to appoint an Arbitrator even though 28 days had lapsed from 7.1.2014 i.e. the date of withdrawal of the nominee Arbitrator of the Respondent from the Tribunal.

146. The appellant had nominated Hon'ble Mr. Justice Deepak Verma as their nominated Arbitrator and the same was conveyed to the respondents vide Notice dated 16th December, 2013 (Annexure 31) simultaneously with invocation of the Arbitration clause. Hon'ble Mr. Justice Deepak Verma vide letter dated 7th January, 2014 (Annexure 34) had withdrawn his consent to act as the Arbitrator and had further withdrawn all his consents given by him including the appointment of Hon'ble Mr. Justice S. C. Agarwal as the Presiding Arbitrator. The respondents have conveyed to the appellants regarding appointment of their Arbitrator vide letter dated 1st January, 2014. After withdrawal of consent by Hon'ble Mr. Justice Deepak Verma, the appellants appointed Hon'ble Mr. Justice Mukul Mudgal as its nominated Arbitrator and the same was conveyed to the respondents vide letter dated 18th March, 2014. Kumar Paritosh As on date the two nominated Arbitrators have not reached to a 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 95 consensus and have not appointed the Presiding Arbitrator and the same is beyond the control of the Appellant. Thus, no delay can be attributed on to the Appellant for nomination or constitution of the Arbitral Tribunal.

147. The contention of the respondents is that developer cannot sue the owner for specific performance of the contract as the same is barred by section 14 (3) (c) of the Specific Relief Act. The allegation raised by the respondents is devoid of merits and in contravention to the settled principles of law as held in Ashok Kumar Jaiswal v. Asim Kumar Kar MANU/WB/0052/2014 (para 50, 51 and 52) passed by the Full Bench of the Calcutta High Court which has been extensively read out before me by Mr Aggarwal. The respondents BOHL have heavily relied on Vipin Bhimani v. Sunanda Das, AIR 2006 Cal 2009 which has not only been set aside by the aforesaid Full Bench but has also held to be not a good law.

148. Mr. Ashok Aggarwal submits that the intention of the respondents is to wriggle out of the transaction in the following ways:

a) Through their email dated 1st of March 2013, the appellants were informed by M/s DTZ that the respondents BOHL had mistakenly agreed with some points as mentioned in the Term Sheet due to their limited knowledge of real estate business. (Annexure 13 at page 136)
b) The respondents BOHL were desirous of renegotiating the commercial terms as agreed in the Term Sheet.

c) Instead of coming forward to execute the 2nd collaboration agreement in furtherance of the Term Sheet, BOHL appointed M/s JLL, property consultants as their real estate advisor to initiate, Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 96 negotiate, finalise and facilitate the terms and conditions favourable and in interest of the respondents.

d) On August 21, 2013 the respondents through M/s JLL sent a fresh Term Sheet to the appellant Bestech. (Annexure 26, page 179)

149. Thus, in view of above, it is argued that the intention of the respondents BOHL is to wiggle out of the transaction seeking greener pastures and more lucrative terms.

G. Appellate Court not empowered to interfere with lower court unless discretion has been exercised arbitrarily.

150. The Supreme Court has laid down in The Printers (Mysore) Pvt.Ltd. v. Pothan Joseph, AIR 1960 SC 1156 observing in para. 9 that ordinarily, appellate court cannot substitute its own discretion for that of a trial judge but if it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts and has not adopted a judicial approach then it would certainly be open to the appellate court to interfere with the trial courts exercise of discretion.

151. In Wander Ltd. v. Antox India Pvt.Ltd., 1990 (Supp) SCC 727 it was held by the Supreme Court that the appeals before the division bench were against the exercise of discretion by the single judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitutes own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely on where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions.

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152. In Mohd.Mehtab Khan v. Khushnuma Ibrahim Khan, (2013) 9 SCC 221 the Supreme Court held, that, Trial Court on consideration that entitlement of Plaintiffs to order of interim mandatory injunction was in serious doubt then Appellate Court could not have interfered with exercise of discretion by Trial Judge unless such exercise was found to be palpably incorrect - Further reasons that weighed with Trial Judge did not indicate that said view taken was not a possible view. Thus, Appellate Court should not have substituted its views in the matter merely on ground that in its opinion facts of the case call for a different conclusion and that was not a correct parameter for exercise of jurisdiction while hearing an appeal against a discretionary order. However, if discretion had been exercised by the Trial Court reasonably and in judicial manner then fact that Appellate Court would have taken a different view might not justify interference with the Trial Court's exercise of discretion. Thus the High Court was not correct in interfering with order passed by the Trial Judge and therefore the order passed by the High Court was set aside and the order of Trial Judge was restored and appeal was disposed of.

H. Appellate Court will not reassess material and seek to reach conclusion different from Court below if order reached by that Court is reasonably possible on material.

153. In the present case the learned District Judge, Gurgaon has allowed the petition filed by the appellant with the observation that the appellant was entitled to ad-interim injunction as per provisions of section 9 of the Act. However, the learned District Judge having rightly come to the conclusion that the appellant was entitled to an ad interim injunction erroneously mentioned in the said order that the order of injunction would remain operative for a period of 3 months or till the Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 98 date of decision by the arbitrator, whichever is earlier, had no reason, rationale or logic to limit the period of interim relief for a period of 3 months only. Though the impugned order has been passed in favour of the appellant, yet it is becomes non-existent due to passage of time to the benefit of the respondents BOHL. The petition under section 9 which was filed and accepted under the order dated 12th February 2014 would automatically be rendered infructuous and shall have no meaning in law. Thus, the perversity in the order passed by the learned District Judge, Gurgaon is to the extent of limiting the period of injunction to three months without assigning any reason for doing so. By no stretch of imagination can it be presumed that a complex matter of the present nature can be decided by a tribunal comprising of retired judges of the Supreme Court and a former Chief Justice of this Court in a span of three months moreso when on the date of the passing of the impugned order the tribunal was not even constituted. The impugned order has been cast in favour of the appellant yet at the same time the benefit of the same is accruing to the respondents BOHL. No prejudice would be caused to the respondents in case the appeal of the appellant is allowed whereas on the other hand the appellant will suffer irreparable loss not only in terms of money but also reputation. It is stoutly contended that the appellant shall be deprived of their legal and valid rights in case the respondents are allowed to create third-party rights in the land forming part of the Term Sheet dated 3rd September 2012. The appellant's are praying for modification of the order dated 12th February 2014 to be made absolute in favour of the appellant till the decision of the arbitrators is rendered. I. Rights have been created in favour of the appellant in the project land.

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154. As discussed, signing and execution of the Term Sheet dated 3rd of September 2012 and collaboration agreement and general power of attorney dated 19th of October 2012 rights and interest of the appellant have been created in the land. Thus, the appellant is entitled to preservation of the corpus for adjudication by the arbitral tribunal.

155. In Bimal Ghosh v. Kalpana, AIR 2007 Cal 293 the division bench of the Calcutta High Court has reserved its comments on the ratio of Vipin Bhimani, AIR 2006 Cal 209 relied upon by the respondents BOHL. In Parthsarthi Ghosh v. Maa Construction, AIR 2008 Cal 171 (the same bench of the Calcutta High Court as in Bimal Ghosh Vs Kalpana) developers were praying to restrain owners of land by passing injunction from entering into any agreement for development of said property by creating 3rd party rights. It was held that the said agreement creates rights in disputed property in favour of the developer. Hence direction to parties to maintain status quo cannot be interfered with. J. Distinction between order 39 rule 1 and 2 CPC and section 9 Arbitration Act.

156. For an injunction under Order 39 Rule 1 and 2, the suit has to be filed before the civil court where the pleadings lie and trial takes place. However, application under section 9 is maintainable, before, after or during the pendency of the matter before the Tribunal. As such material placed before the Judge in an application under section 9 of the Act seeking interim measures of protection are not strictly pleadings as in the Code of Civil Procedure. Pleadings of the parties will be exchanged in arbitration in the shape of claims and counter claims and form the basis of adjudication. Therefore, strictly speaking there are no pleadings in an appeal under section 37 (1) (a) of the Act against an order passed Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 100 under section 9 of the Act. The examination in appeal can only be prima facie to consider interim protection or not.

K. Judgements relied upon by the respondents BOHL, distinguished by Bestech:

157. Re: Percept D'Mark (India) Pvt. Ltd. v. Zaheer Khan, AIR 2006 SC 3426 it is urged that this judgment deals with contract of personal, confidential and fiduciary services and the appellants were seeking at the interlocutory stage restraint of trade during the post- contractual period. The appellants were seeking to enforce negative covenants. Thus, the ratio arrived at in the said Judgment is not applicable in the present case.

158. BOHL's reliance on Dadarao v. Ramrao, (1999) 8 SCC 416 is misdirected since the decision has been held to be rendered per incurium in P. D'souza v. Shondrilo Naidu, (2004) 6 SCC 649. Therefore, Mr. Bali can derive no advantage from law which has been declared bad by the Supreme Court in a subsequent declaration of the law.

159. To sum up and to conclude, this Court is inclined to think at this moment in time that it is far safer and more equitable and expedient in the interest of justice in order to serve the cause of justice better between the parties to protect and preserve the corpus of the dispute by ordering maintaining of the status quo rather than to allow rights prima facie created in land by BOHL in favour of Bestech, and as were agreed upon mutually for each other's benefit in terms of the Term Sheet and in the Definitive Agreement of Collaboration that followed between the parties, to be squandered before those rights are adjudicated, determined and declared by the Arbitral Tribunal, the composition of which is in progress pending decision for appointment of a Presiding Arbitrator. Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 101 Indisputably, both parties are agreed by their acts and conduct in naming their nominee arbitrators that the disputes which have arisen would be settled by arbitration law, subject to objection as to jurisdiction raised by BOHL which remains in the domain of the Tribunal. They have both worked the arbitration clause and nominated their arbitrators. The clock cannot be reversed by intervention in appeal. The view broadly taken by the learned District Judge, Gurgaon is a good one and appears to be the best possible workable solution in the circumstances in balancing out for the time being the rights, interests and equities pending arbitration by way of an interim arrangement injuncting temporarily BOHL from creating third party rights on the Project Land. The names emerging are of pre-eminence and from that alone there could be no greater assurance to the appeal Court that justice and only justice would be done and delivered to the parties as soon as practicable. It would, however, be expecting too much from such a high-powered tribunal on such a contentious matter, realistically speaking, that an arbitration of such magnitude could ever be concluded in three months for an interim measure granted by the learned District Judge, Gurgaon to be curtailed by time. It is there, in the view of this Court, where the grave error was committed in the section 9 order impugned by both the parties, in whole and in part. A cup of milk was served but with a drop of poison added to it.

160. If the principal civil Judge is correct in limiting interim protection by time then Mr. Ashok Aggarwal, learned senior counsel may be right in reasoning that if it were allowed then what would be the use of an arbitration itself. What would be left for the arbitrators to do in case the corpus of subject matter land is lost for Bestech or is allowed to be Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 102 changed in character, style and content by BOHL so drastically that it may be difficult, if not impossible, for the arbitral tribunal to make an effective award or to grant real relief conveniently or to deny it as it thinks appropriate in its wisdom to dispense. The balance of convenience thus clearly lies in favour of Bestech. Denying interim protection by not extending the order of the principal civil court at this crucial stage would to the mind of this Court amount to denial of justice virtually and effectively foreclosing or obstructing the future result of the arbitration restricting it quite possibly to payment of damages alone, as contemplated by clause 3 of the agreement, to Bestech even if it were to succeed in specific performance, and which BOHL wants to achieve by denial of interim protection of property under section 9 of the Act. If third parties are allowed to step into the shoes of the respondent Bestech or to exclude it altogether in a proposed township project of such an admitted magnitude then to the mind of this Court it would needlessly disturb the golden equilibrium and unnecessarily complicate matters so inextricably and irremediably that it is not be worth limiting the interim stay by time, and that too, with no powers conferred on the Arbitral Tribunal by law to deal with and execute any orders which it may wish to pass by way of interim measures, if such prayers are pressed before it under section 17 of the Act. It cannot be forgotten that the provisions of section 17 have been judicially described by the Supreme Court as a toothless Tiger. Any orders of interim measures passed by the arbitral tribunal under section 17 though not enforceable by themselves are yet open to appeal under section 37 (2) (b) leading to a situation of another round of litigation which can be easily taken care of at present. Here is no simple or ordinary works contract with a risk and cost clause invoked by Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 103 employer for lack of due performance by the contractor affecting public interest for which reason he needs to be replaced to carry out the balance work which the Court may not protect by temporary injunction in plaintiff's favour. On the other hand, it may seem a travesty of justice if an absolute freedom is given carte blanche to BOHL to deal with the Project Land as it pleases and that too before an adjudication on the respective claims of the parties by the Forum has taken place. Bestech cannot be given a raw deal at an interim stage by the appeal Court without just cause or legal justification by simply throwing out its accompanying appeal from the high window of the proposed township conceptually spread over 108 acres of prime land in Gurgaon-Manesar owned by BOHL and its four partners but bound prima facie by the terms of the Term Sheet. Most definitely both parties have an arguable case which is not for this Court presently to express any definitive opinion on the aggressive and divergent stands taken.

161. However, prima facie it appears that the Term Sheet is a binding contract because it says as much; it does not ex facie appear to be a contract to enter into a contract; rights in Project Land prima facie appear to be created in the Term Sheet to actionable degrees in favour of Bestech; the proposed project is of great magnitude and time does not seem as though it is of the essence of the contract; at first sight it seems clear on a review of the Explanation to section 10 of the Specific Relief Act read with section 23 thereof appearing to lean in favour of the developer on the question whether clause 3 of the agreement would relieve defendant as adequate compensation in exchange of due performance of contract, which issue remains subject to further debate before the Arbitral Forum for its findings on law and facts; further, it is Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 104 also debatable whether the clause of 45 days is a sunset clause or the dawn of a single definite agreement (not plural) and whether a Master Definitive Agreement was at all contemplated in the Term Sheet to be drawn within 45 days or any period extended thereafter to be annexed with the Definitive Agreements to follow as urged by BOHL etc. All these issues remain widely open to final opinion of the Arbitral Tribunal on an adjudication based on pleadings, evidence and the applicable legal principles canvassed extensively on either side as recorded above.

162. For the reasons recorded above, the appeal of BOHL is dismissed. The appeal of Bestech is accepted. The order of the learned District Judge, Gurgaon is upheld when it grants interim protection as ordered but stands modified to the extent that the ad interim stay/interim protection/interim measures taken would not be curtailed by time and would continue to operate till the award is passed but before it is enforced. In view of this no orders are required to be passed in the revision petition filed by Bestech which is rendered infructuous and is accordingly dismissed without going into its maintainability, which was an objection raised and pressed vehemently by Mr. Puneet Bali, in his forceful style, in motion hearing and thereafter during the hearing of the appeals and the revision. Mr.Bali submits that in case BOHL is not indemnified and is unable to use the project land pending arbitration, then in case of any supervening events or changed circumstances, it should be left free to apprise the Hon'ble Arbitral Tribunal of such circumstances and pray for any modification/directions. The parties would remain at liberty to make such prayers pendente lite.

163. Before parting, it may be added that this Court cannot conceive of or suggest that anything said in this rather copious order, its Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document FAO No.1620 of 2014 and 2 connected cases 105 length resting on exhaustive arguments addressed by the learned senior counsel on the stay matter beyond court hours, could ever affect the deliberations that would take place at the level of such a high-powered Arbitral Tribunal as was in the making and has now been constituted. This Court is informed that on an intervention request under Section 11 of the Act by Bestech, Hon'ble the Chief Justice on 28th May 2014 has appointed Hon'ble Mr. Justice G.S.Singhvi, a former Judge of the Supreme Court of India to be the Presiding Arbitrator of the Arbitral Tribunal.

164. All the three cases accordingly stand disposed of in terms of this order. However, the parties are left to bear their own costs.

(RAJIV NARAIN RAINA) JUDGE June 30, 2014 Paritosh Kumar Kumar Paritosh 2014.07.02 11:59 I attest to the accuracy and integrity of this document