BADAL MITTAL Vs. LAKADAWALA DEVELOPERS PRIVATE LIMITED

JUDGEMENT

(1.) By this petition filed under section 9 of the Arbitration and Conciliation Act, 1996, the petitioners seek an order against the respondent to deposit a sum of Rs.12.5 crores alongwith interest or such other solvent security to the extent of the said sum with interest and for appointment of the Court Receiver in respect of the property described in Ex.A and injunction in respect thereof. Some of the facts which emerge from the pleadings and documents filed by both parties are as under :-

(2.) On 29th July, 2011, the petitioners and the respondent entered into a Memorandum of Understanding. It was provided that the respondent would obtain all necessary permissions, including intimation of approvals, commencement certificates, occupation certificates and the completion certificates etc. and carry out works for all the rehabilitation buildings and free sale buildings. It was provided that the petitioners would carry out the construction of rehabilitation and free sale buildings. It is the case of the petitioners that under the said MOU, in consideration for carrying out the construction of the rehabilitation and free sale buildings at the costs and expenses of the petitioners, it was agreed that the petitioners would be entitled to 53% of the entire constructed area of the free sale buildings in the Franchisee property and entitled to 55% of the entire constructed area of the free sale buildings of all the other properties. The petitioners agreed to pay a sum of Rs.1.5 crores per month to the respondent to enable the respondent to finance the cost of the transit accommodation for the slum dwellers and obtain all permissions for development upto the stage of the Certificate of Commencement of the rehabilitation and free sale buildings to be constructed on the said building. The construction was to be carried out in three phases. Clause 6 of the said MOU provided that in the event of default on the part of the petitioners in making payment of the said amount of Rs.1.50 crores every month on or before the 7th day of every month then in that event, the respondent shall refund the entire amount received by the respondent from the petitioners and the costs of construction incurred by petitioners on the property till the date of default within 120 days from the date of respondent entering into agreement or arrangement with third party and respondent shall be entitled to enter into such agreement with third parties for development of the property. It is agreed that the respondent shall not be liable to pay any interest to the petitioners on the said entire amount to be refunded to the petitioners.

(3.) It is not in dispute that during the period between 18th July, 2011 and 4th January, 2012, the petitioner has paid Rs.12.10 crores to the respondent under the said MOU as set out in para 17(H) of the petition. It is the case of the petitioners that in addition to the said amount, the petitioners have also expended a sum of Rs.40 lacs as expenses towards costs of construction of site office and related expenses and administration and miscellaneous expenses. It is the case of the petitioners that there was exchange of drafts of the development agreement qua Panchsheel property between the petitioners and the respondent. However, the terms of the development agreement were not finalised. By a letter dated 13th September, 2011, the respondent informed the petitioners that final agreement in respect of the development and the construction of rehabilitation and free sale buildings on the Panchsheel property would be executed within 45 days from the date of execution of the MOU. It is the case of the petitioners that though the respondent has executed a possession letter on 20th October, 2011 in respect of the part of the property being land bearing CTS No. 7 (part) admeasuring 18,839.67 sq.mtrs., the respondent did not handover possession thereof to the petitioner. Vide an undated letter, time for executing the final agreement in respect of the Panchsheel property was further extended till 15th December, 2011. It is not in dispute that no final development agreement has been executed between the parties so far. It is the case of the petitioners that respondent did not obtain any commencement certificate for the construction of the rehabilitation and free sale buildings but had obtained only commencement certificate for construction of one rehabilitation building. It is the case of the petitioners that as the respondent was not interested on going ahead with the project, the petitioners decided to stop paying the monthly payment under clause 6 of the MOU. Accordingly w.e.f. February 2012, the petitioners stopped paying the said sum of Rs.1,50,00,000/- to the respondent payable for financing the cost of transit accommodation for the slum dwellers and obtaining all permissions for development upto commencement certificate stage of the rehabilitation and free sale buildings to be constructed on the property.