LOVELY PROMOTERS PRIVATE LIMITED Vs. MANOJ KUMAR BOTHRA

JUDGEMENT

(1.) Although an application under Sec. 9 of the Arbitration and Conciliation Act, 1996 filed by the appellant has been dismissed solely on the ground that the Memorandum of Understanding entered into between the parties is not a contract and, therefore, not a legally binding document, the respective Counsels appearing before us have digressed from the said point and argued the other points having a larger impact in relation to dealing with an application under Sec. 9 of the said Act, before the Commercial Court. The parties restricted the arguments on the nature and construction of the Memorandum of Understanding, in pursuit of understanding whether it is a concluded contract or mere signifying the intention of the parties to enter into further agreement. Before we proceed to decide the points urged before us it would be profitable to adumbrate the salient facts discerned from the respective pleadings of the parties which, in our opinion, are more or less undisputed. The respondent claimed absolute right, title and interest in respect of Flat no. 3702 measuring 5318 square feet on 37thfloor in tower 2 along with two car parking space in establishing NRI Complex situated at 783, Urbana NRI Complex, Anandpur, Kolkata. The said flat was in possession of a HUF through its Karta allegedly as a licensee on permission of the respondents for a period of 11 months which has admittedly expired. The said alleged permissive occupant filed Title Suit no. 114 of 2021 against the respondent and obtained an ad-interim order of injunction restraining from creating any disturbance in peaceful possession and from dispossession without due process of law. It is undisputed that the said order of injunction is still operative as the suit is pending. Subsequently, the parties herein entered into a MoU on March 2, 2021 containing a stipulation that the Respondent no. 2 shall sell, transfer and convey the said property in favour of the appellant for the total consideration of Rs.5.00 crores. The said MoU obligated the appellant to conduct and take care of the pending litigation between the respondent and the said alleged permissive occupant and all expenses would be treated as a part of the consideration. However, it is also contained in the said agreement that a sum of Rs.50.00 lakhs would be paid after vacating the injunction passed in the Title Suit no. 114 of 2021 and a fresh agreement for sale/transfer shall be entered into by and between the parties. The respondent subsequently cancelled the agreement on various allegations including that the appellant has not performed his obligation under the said MoU which raises a dispute and in view of the arbitration clause having incorporated in the said MoU, the appellant invited the respondent to refer the disputes to the arbitration. Pending reference, the approach is made to the Court with an application under Sec. 9 of the said Act seeking interim measures by way of injunction restraining the respondents from selling, transferring, encumbering, and/or dealing with the property with the 3rdparty pending the dispute to be resolved through arbitration.

(2.) As indicated above, by the impugned order the Trial Court dismissed the application under Sec. 9 of the Arbitration and Conciliation Act primarily on the ground that the moment one of the terms incorporated in the said Memorandum of Understanding contemplates further agreement for sale to be executed, it is not a concluded contract and, therefore, has no binding efficacy. The respective Counsels urged several points including the point decided in the impugned order pertaining to the nature and the construction of the said Memorandum of Understanding. The Counsels are at variance as to whether the said MoU reduced on a paper without the requisite stamp duty to be levied thereupon can be acted upon by the Court even at the stage of the interim measures contemplated under Sec. 9 of the said Act. The Counsels are also not ad idem on the proposition of law as to whether the Clauses contained in the said MoU constituted a valid contract capable to be enforced in the Court of law.

(3.) There is no dispute that the parties consciously entered into a MoU in respect of the flat in question but dissented on the score whether such MoU partakes the character of a concluded contract. It is no longer res integra that the nomenclature of an agreement is not a determinant factor nor is a guiding tool for ascertaining the intention of the parties. The intention of the parties can be gathered from the terms and conditions incorporated in various Clauses of the document. The reading of the said MoU would reveal that the said document was entered into by and between the parties in relation to the subject flat on disclosure of the consideration price to be paid on the basis of the modalities incorporated therein. Clause 5 of the MoU would reveal that the respondent is obligated to execute and register the deed of conveyance/transfer in respect of the subject flat along with two car parking spaces in favour of the appellant after the subject flat is vacated by the alleged permissive occupant and upon payment of the consideration price. Clause 7 thereof is divided into 2 compartments upon disclosure of the total consideration price. First compartment relates to a payment of 50 lakhs after deducting the TDS upon vacating the suit filed by the permissive occupant and entering into a fresh agreement for sale/transfer. The second compartment is relatable to the completion of the litigation and making the property free from encumbrances and the payment of the balance consideration price upon deducting the TDS. Clause 9 thereof provides for the legal expenses to be included in the consideration price as a part payment of the intention to purchase the said subject flat and further obligated the respondent to effect the transfer and sale of the subject flat in favour of the appellant or his nominee upon observing the legal formalities. The aforesaid 3 Clauses is projected to ascertain the nature of the said MoU for the purpose of a binding contract enforceable in law or a mere intention to enter into further agreement for sale of the property. It is manifestly seen from the said MoU that the consideration price has been mentioned and an obligation is cast upon the appellant to pay in order to effectuate the sale in its favour, subject to the other conditions to be complied with. Clause 5 and 7 are pitted against each other and according to the Trial court the later Clause incorporated in the MoU shall be considered as the final intention. In order to have a clarity Clause 5 in its unequivocal terms obligated the respondent to execute and register the deed of conveyance with 2 car parking space in favour of the appellant or its nominee upon vacating the property by the alleged permissive occupant and upon payment of the consideration money to the respondent. The first compartment of Clause 7 encompasses that upon payment of Rs.50.00 lakhs after deducting the TDS and vacating the title suit instituted by the alleged permissive occupant, a fresh agreement for sale/transfer shall be entered into between the parties.