Equivalent Citation: AIR2009SC2217, 2009(4)AWC3837(SC), JT2009(4)SC440, 2009(4)KarLJ623, 2009(6)MhLJ331(SC),

2009(3)SCALE762, (2009)5SCC182
IN THE SUPREME COURT OF INDIA
Civil Appeal No. 1098 of 2009 (Arising out of SLP (C) No. 7939 of 2007)
e!i"e" #n$ 18.02.2009
Appellants$ N. Srinivasa
Vs.
%espon"ent$ Kuttukaran Machine T!s "t#.
Hn$%!e &u#'es( Tarun Chatterjee an" Dalveer Bhandari& ''.
Cunse!s(
(or Appellant)Petitioner)Plaintiff$ R.F. Nariman& Sr. A"v.& Joseph Pookkatt& Nikhil Majithia& Prashant
Kumar& A"vs. an"AP * ' C+e,-er
(or %espon"ents)efen"ant$ Dushyant . Dave& Sr. A"v.& T. Raja an" !opal "in#h& A"vs.
Su%)ect( Pr*ert+
Acts,Ru!es,Or#ers(
Ar-itration an" Con!iliation A!t& 199. / Se!tions 9& 11 an" 30(1)1 Civil Pro!e"ure Co"e (CPC) / Se!tion
121 / #r"er 39& %ules 1 an" 2
Cases Re-erre#(
3a+ar4al 5+e4a6i 7rust (%eg".)& (ari"8ot v. 9al"ev ass MN$%"C%&'()%)&&*
Prir Histr+(
(ro, t+e 'u"g,ent)#r"er "ate" 1./00/2007 passe" -: t+e ;on<-le ;ig+ Court of 5arnata8 at 9anglore in
3.(.A. No. 12010)200. (AA) 4+erein t+e ;on<-le ;ig+ Court partl: allo4e" t+e appeal
Dis*sitin(
Appeal allo4e"
Citin' Re-erence(
3a+ar4al 5+e4a6i 7rust (%eg".)& (ari"8ot v. 9al"ev ass MN$%"C%&'()%)&&* is!usse"
Case Nte(
Cntract . Pr*ert+ . In)unctin . Sectin / - the Ar%itratin an# Cnci!iatin Act0 1//2 . Or#er
3/ an# sectin 141 - the Civi! Prce#ure C#e0 1/56 . Res*n#ent 7ner - suit *r*ert+ .
A**e!!ant entere# int a'ree8ent -r sa!e - suit *r*ert+ 7ith Res*n#ent . A**e!!ant *ai#
a#vance t Res*n#ent at e9ecutin - a'ree8ent -r sa!e . :a!ance a8unt - cnsi#eratin t
%e *ai# t Res*n#ent at re'istratin - Sa!e Dee# . Sa!e Dee# *rvi#e# -r re-erence t
Ar%itratin in case - #is*utes . A**e!!ant rea!i;e# intentin - Res*n#ent #ishnest 7hen he
-un# Res*n#ent tr+in' t se!! suit *r*ert+ t s8e ther *art+ at 8uch hi'her *rice .
Res*n#ent re-use# t *er-r8 its *art - cntract an# in-r8e# a**e!!ant its un7i!!in'ness t
e9ecute the sa!e #ee# t a**e!!ant unti! an# un!ess he a'ree# t *a+ hi'her sa!e cnsi#eratin
ver an# a%ve as a'ree# %et7een the8 7hen a**e!!ant inti8ate# his 7i!!in'ness t *er-r8 his
*art - cntract t e9ecute sa!e #ee# . A**e!!ant -i!e# a**!icatin un#er sectin / - Act - 1//2
an# Or#er 3/ Ru!e 1 an# < rea# 7ith sectin 141 - CPC -r in)unctin restrainin' Res*n#ent
-r8 a!ienatin'0 a!terin' r creatin' an+ thir# *art+ interest in res*ect - suit *r*ert+ . Cit+ Civi!
&u#'e a!!7e# a**!icatin -i!e# %+ a**e!!ant . A**ea! -i!e# %+ Res*n#ent un#er sectin 3=>1? -
Act - 1//2 %e-re Hi'h Curt . Hi'h Curt a!!7e# a**ea! . Hence0 *resent a**ea! . He!#0
a**e!!ant 8a#e ut *ri8a -acie case -r 'rant - in)unctin . Civi! &u#'e )usti-ie# in #irectin'
*arties t 8aintain status @u in 8atter - trans-errin'0 a!ienatin' r creatin' an+ thir# *art+
interest as *ri8a -acie *rve# that Res*n#ent tr+in' t se!! suit *r*ert+ t thir# *art+ causin'
1
irre*ara%!e #a8a'e t a**e!!ant . Ti8e nt t %e essence - cntract in cntract re!atin' t
i88vea%!e *r*ert+ . Dis*utes raise# %+ *arties n!+ %e #eter8ine# %+ s!e Ar%itratr .
Res*n#ent nt %e entit!e# t trans-er0 a!ienate suit *r*ert+ #urin' *en#enc+ - ar%itratin
*rcee#in's . Directin t a**e!!ant t #e*sit %a!ance a8unt . Decisin - Hi'h Curt set asi#e
. Decisin - Civi! &u#'e restre# . A**ea! a!!7e#.
&UDAMENT
Tarun Chatter)ee0 &.
1. Leave grante".
2. 7+is appeal +as -een file" at t+e instan!e of t+e appellant -: spe!ial leave against t+e 6u"g,ent an"
final or"er of t+e ;ig+ Court of 5arnata8a at 9angalore in 3.(.A No. 12010)200. (AA)& "ate" 1.
t+
of April
2007& setting asi"e t+e or"er "ate" 23
r"
of Septe,-er& 200. passe" -: t+e => A""itional Cit: Civil 'u"ge&
9angalore& an" va!ating t+e or"er of status ?uo grante" on !on"ition t+at t+e respon"ent s+all "eposit a
su, of %s. 2&20&000&00)/ @%upees t4o !rores fift: la!sA 4it+in t+e ti,e spe!ifie" in t+e i,pugne" or"er.
3. 7+e fa!ts lea"ing to t+e filing of t+is appeal ,a: -e su,,ariBe" as follo4s$
7+e respon"ent -e!a,e t+e o4ner of Plot No. 19/A& >> P+ase& >n"ustrial Area& (!arve" Surve: No. 00 an"
01& C+o88asan"ra =illage& Ces+4ant+pur ;o-li& 9angalore Nort+ 7alu8)& ,easuring a-out 102.8 s?uare
,eters (+ereinafter referre" to as t+e Dpropert: in "ispute<) -: a sale/"ee" "ate" 11
t+
of Nove,-er 2001
eEe!ute" -: t+e 5arnata8a >n"ustrial Area evelop,ent 9oar". 7+e appellant an" t+e respon"ent
entere" into an agree,ent for sale of t+e propert: in "ispute on 21
st
of e!e,-er 2002 for a su, of %s.
.&99&00&079)/ in 4+i!+ an a"van!e of %s. 2&00&00&220)/ (74o Crore 74o ;un"re" (ift: #nl:) 4as pai" to
t+e respon"ent at t+e ti,e of eEe!uting t+e agree,ent for sale. #ne of t+e stipulation in t+e agree,ent for
sale 4as t+at t+e -alan!e a,ount of t+e !onsi"eration ,one: s+all -e pai" to t+e respon"ent at t+e ti,e
of registration of t+e Sale ee" 4+i!+ s+all -e eEe!ute" 4it+in siEt: "a:s fro, t+e "ate of eEe!ution of t+e
agree,ent for sale. 7+e agree,ent for sale spe!ifi!all: ,entione" t+at it 4as t+e o-ligation of t+e
respon"ent to 8eep t+e title goo" till t+e eEe!ution an" registration of t+e sale "ee" an" furt+er to 8eep
t+e propert: in "ispute free fro, all en!u,-ran!es or !+arges. >t 4as also agree" t+at t+e respon"ent
s+all pa: all rates& taEes an" !esses in regar" to t+e propert: in "ispute upto t+e "ate of sale an" all "ues
prior to t+e Sale ee". >t 4as furt+er agree" t+at in !ase of "ispute& t+e sa,e s+oul" -e referre" to
Ar-itration un"er t+e provisions of Ar-itration an" Con!iliation A!t& 199. (in s+ort t+e DA!t<). 7+e
respon"ent -orro4e" fun"s fro, 5S>>C an" various ot+er finan!ial institutions for installation of various
8in"s of ,a!+ineries in t+e fa!tor: t+ere-: !reate" e?uita-le ,ortgage -: 4a: of "eposit of title "ee"s
4it+ various finan!ial institutions. >t 4as !learl: un"erstoo" t+at at t+e ti,e of registration of t+e sale "ee"&
va!ant an" pea!eful p+:si!al possession of propert: in "ispute 4oul" -e "elivere" -: t+e respon"ent to
t+e appellant an" t+at t+e respon"ent 4oul" -e -oun" to re,ove all plants an" ,a!+ineries fro, t+eir
fa!tor: in or"er to "eliver possession to t+e appellant after !learing all its "ues to t+e various finan!ial
institutions an" 8eep t+e title "ee" rea":. (or t+e purpose of eEe!ution of t+e sale "ee"& t+e appellant
starte" "ou-ting its -ona/fi"e an"& t+erefore& -: a letter)noti!e "ate" 18
t+
of (e-ruar: 200. !alle" upon
t+e respon"ent to eEe!ute t+e sale "ee" so t+at t+e va!ant possession of t+e propert: in "ispute !oul" -e
"elivere" to +i,. #n 20
t+
of (e-ruar: 200.& t+e appellant re!eive" a letter fro, t+e respon"ent as8ing +i,
to !o,plete t+e sale transa!tion on t+e ver: neEt "a: i.e. on 21
st
of (e-ruar: 200.. After t+e re!eipt of t+e
letter ,entione" a-ove& t+e appellant approa!+e" t+e respon"ent an" re?ueste" t+e respon"ent to
perfor, t+eir part of t+e o-ligation. 7+e respon"ent assure" t+e appellant t+at t+e: 4oul" re?uire so,e
,ore ti,e to re,ove t+e ,a!+ineries fro, t+e propert: in "ispute as t+e: 4ere in large nu,-ers an" ver:
+uge in siBe. 7+e: also infor,e" t+e appellant t+at t+e: re?uire" so,e ,ore ti,e to ,a8e alternative
arrange,ent of ot+er pre,ises 4+ere t+eir plants an" ,a!+ineries !oul" -e 8ept as t+e: 4ere ver:
eEpensive an" involve" a lot of ,one:. As t+e appellant +a" alrea": pai" an a,ount of %s. 2&00&00&220)/
to t+e respon"ent& +e +a" no !+oi!e -ut to 8eep ?uiet. 7+e appellant& +o4ever& +aving -elieve" t+e
version of t+e respon"ent t+at t+e: +a" "iffi!ult: in s+ifting all t+e ,a!+ineries 4it+in a s+ort noti!e 8ept
?uiet till +e realiBe" t+at t+e intention of t+e respon"ent 4as not +onest as +e foun" t+at t+e respon"ent
4as tr:ing to sell t+e propert: in "ispute to so,e ot+er part: at a ,u!+ +ig+er pri!e. ;aving foun" t+at t+e
respon"ent 4as not intereste" to eEe!ute t+e sale "ee" as agree" upon& +e approa!+e" t+e respon"ent
on 21
st
of 'une& 200. to eEe!ute t+e sale "ee"& 4+en +e also inti,ate" t+e respon"ent t+at +e 4as rea":
an" 4illing to perfor, +is part of t+e !ontra!t to eEe!ute t+e sale "ee"& t+e respon"ent refuse" to perfor,
its part of t+e !ontra!t an" infor,e" t+at t+e: 4oul" not eEe!ute t+e sale "ee" until an" unless t+e
appellant agree" to pa: a +ig+er sale !onsi"eration over an" a-ove 4+at 4as agree" to -et4een t+e
parties. ;aving foun" t+at t+e respon"ent 4as tr:ing to sell t+e propert: in "ispute to a t+ir" part: at a
2
+ig+er pri!e& t+e appellant file" an appli!ation un"er Se!tion ' of t+e A!t on 23
r"
of 'une 200.& -efore t+e
Cit: Civil 'u"ge& 9angalore& for in6un!tion restraining t+e respon"ent fro, alienating& altering or !reating
an: t+ir" part: interest in respe!t of t+e propert: in "ispute. Fit+ t+e appli!ation& t+e appellant also file"
an appli!ation un"er #r"er 39 %ule 1 an" 2 rea" 4it+ Se!tion (+( CPC for te,porar: in6un!tion
restraining t+e respon"ent fro, transferring& alienating or !reating an: t+ir" part: interest in t+e sa,e.
0. 7+e respon"ent entere" appearan!e an" "enie" t+e ,aterial allegations ,a"e in t+e appli!ation for
in6un!tion. >t 4as t+e spe!ifi! !ase of t+e respon"ent t+at sin!e ti,e 4as t+e essen!e of t+e !ontra!t an"
t+e appellant +aving faile" to perfor, +is part of t+e o-ligation of t+e !ontra!t& t+e respon"ent 4as not
-oun" to eEe!ute t+e sale "ee" an" t+erefore& t+e agree,ent for sale 4as !an!elle" -: t+e respon"ent.
A!!or"ingl:& it 4as allege" -: t+e respon"ent t+at t+e appli!ation for in6un!tion ,ust -e re6e!te".
2. 7+e A""l. Cit: Civil 'u"ge at 9angalore -: +is or"er "ate" 23
r"
of Septe,-er 200. allo4e" t+e
appli!ation file" -: t+e appellant& inter alia& on a fin"ing t+at Gt+ere are serious issues to -e trie" -efore
t+e ar-itrator an" t+at t+e appellant +as su!!essfull: ,a"e out a pri,a fa!ie !ase for grant of in6un!tion in
t+e ,anner pra:e" for in t+e appli!ation.G 7+e learne" A""l. Cit: Civil 'u"ge& 9angalore& 4+ile "isposing
of t+e appli!ation for in6un!tion& !a,e to a fin"ing pri,a fa!ie t+at t+e respon"ent inten"e" to sell t+e
propert: in "ispute to so,e ot+er persons at a +ig+er pri!e as it 4as foun" t+at t+e inten"ing pur!+asers
4ere fre?uentl: visiting for t+e purpose of pur!+asing t+e propert: in "ispute. 7+e A""l. Cit: Civil 'u"ge&
9angalore& t+erefore& +el" pri,a fa!ie t+at t+e respon"ent 4as li8el: to sell t+e propert: in "ispute an" if it
4as sol"& it 4oul" ,a8e t+e a4ar" of t+e learne" Ar-itrator infru!tuous for 4+i!+& t+e appellant s+all
suffer irrepara-le loss an" in6ur:. A!!or"ingl:& upon t+e aforesai" fin"ings& t+e A""l. Cit: Civil 'u"ge&
9angalore "ispose" of t+e appli!ation for in6un!tion "ire!ting t+e parties to ,aintain status ?uo in t+e
,atter of transferring& alienating an" !reating an: t+ir" part: interest in respe!t of t+e propert: in "ispute.
.. >t is against t+is or"er of A""l. Cit: Civil 'u"ge& 9angalore& an appeal 4as file" -: t+e respon"ent un"er
Se!tion ,*-(. of t+e A!t -efore t+e ;ig+ Court.
7. 9efore pro!ee"ing furt+er& it ,a: -e 8ept on re!or" t+at in t+e ,eanti,e& an appli!ation 4as file" un"er
Se!tion (( of t+e A!t -: t+e appellant -efore t+e ;ig+ Court for appoint,ent of an Ar-itrator. 7+e ;ig+
Court -: its or"er "ate" 27
t+
of (e-ruar: 2007 appointe" a retire" 'u"ge of t+e ;ig+ Court as t+e sole
Ar-itrator to "e!i"e t+e "isputes raise" -: t+e parties.
8. 7+e appeal file" -: t+e respon"ent against t+e or"er of t+e A""l. Cit: Civil 'u"ge& 9angalore "ire!ting
t+e parties to ,aintain status ?uo& 4as ta8en up for +earing -: t+e ;ig+ Court an" t+e ;ig+ Court& -: its
i,pugne" or"er& set asi"e t+e or"er of t+e A""l. Cit: Civil 'u"ge& 9angalore an" ,a"e a final or"er in t+e
follo4ing ,anner$
1.Appeal is allo4e" in part.
2. 7+e or"er "ate" 23.9.200. passe" -: t+e => A""l. Cit: Civil 'u"ge& 9angalore Cit: in A.A. No. 08)0. is
set asi"e su-6e!t to t+e !on"ition t+at t+e appellant "eposits a su, of %s. 2&20&00&000)/ (%upees t4o
!rores an" fift: la8+s) onl: in fiEe" "eposit for a ,ini,u, perio" of siE ,ont+s initiall: in a nationaliBe"
-an8 an" rene4 t+e sa,e till t+e "isposal of "ispute -efore t+e Ar-itrator. 7+e original fiEe" "eposit
re!eipt s+all -e surren"ere" to t+e ar-itrator.
3. >n t+e fa!ts an" !ir!u,stan!es& t+ere s+all -e no or"er as to !osts.
9. >t is t+is or"er of t+e ;ig+ Court& 4+i!+ 4as !+allenge" -: 4a: of a Spe!ial Leave Petition& 4+i!+ on
grant of leave& 4as +ear" in t+e presen!e of t+e learne" Counsel for t+e parties.
10.Fe +ave +ear" t+e learne" Counsel for t+e parties an" eEa,ine" t+e i,pugne" or"er as 4ell as t+e
or"er of t+e trial !ourt an" also t+e allegations ,a"e in t+e appli!ation for in6un!tion an" t+e o-6e!tions
t+ereto in "ept+ an" in "etail. 7+e i,pugne" or"er of t+e ;ig+ Court 4oul" s+o4 t+at if t+e respon"ent
"eposits a su, of %s. 2&20&00&000)/& t+e or"er of status ?uo grante" -: t+e A""l. Cit: Civil 'u"ge&
9angalore in t+e ,atter of transferring& alienating& altering an" !reating an: t+ir" part: interest& s+all stan"
va!ate" an" t+e appli!ation for in6un!tion file" -: t+e appellant s+all stan" re6e!te".
11. >n our vie4& t+e appellant& in t+e fa!ts an" !ir!u,stan!es of t+e !ase& +a" su!!essfull: ,a"e out a
pri,a fa!ie !ase for grant of in6un!tion in t+e ,anner grante" -: t+e A""l. Cit: Civil 'u"ge& 9angalore. >t
is not in "ispute t+at t+e appellant an" t+e respon"ent +a" entere" into an agree,ent for sale of t+e
3
propert: in "ispute inter alia on t+e ter,s an" !on"itions alrea": ,entione" +erein earlier. 7+e
respon"ent +as not "enie" su!+ agree,ent for sale. 7+e onl: groun" ta8en -: t+e respon"ent is t+at
sin!e ti,e 4as t+e essen!e of t+e !ontra!t an" t+e appellant +a" faile" to perfor, +is part of t+e !ontra!t
4it+in t+e ti,e spe!ifie" in t+e sai" agree,ent for sale& t+e ?uestion of grant of in6un!tion fro,
transferring& alienating or !reating an: t+ir" part: interest in respe!t of t+e propert: in "ispute 4oul" not
arise at all. At t+e sa,e ti,e& it ,ust -e 8ept in ,in" t+at it 4oul" -e open to t+e respon"ent to transfer&
alienate or !reate an: t+ir" part: interest in respe!t of t+e propert: in "ispute -efore passing t+e a4ar" -:
t+e sole Ar-itrator in 4+i!+ one of t+e ,ain issues 4oul" -e 4+et+er ti,e 4as t+e essen!e of t+e !ontra!t
or not. >t is evi"ent fro, t+e i,pugne" or"er of t+e ;ig+ Court t+at -: va!ating t+e or"er of status ?uo
grante" -: t+e trial !ourt& pra!ti!all:& t+e ;ig+ Court +a" li,ite" t+e s!ope of t+e ar-itration to t+e eEtent
t+at t+e rig+t of t+e appellant to re!eive -a!8 t+e a,ount 4it+ or 4it+out !o,pensation 4oul" -e ta8en
a4a:& if ulti,atel: +is allegations are foun" to -e true. 7+oug+& t+e appellant +as -een "enie" t+e -enefit
of in6un!tion -ut sin!e t+e appli!ation 4as un"er Se!tion ' of t+e A!t for interi, ,easure& to se!ure t+e
interest of t+e appellant in t+e event of +is su!!ee"ing to an a4ar" -efore t+e ar-itrator& it 4oul" -e in t+e
interest of 6usti!e to put t+e appellant on ter,s. >t is also evi"ent fro, t+e i,pugne" or"er t+at t+e ;ig+
Court +as ,a"e it !lear t+at t+e o-servations in t+e sa,e s+all not -e un"erstoo" to +ave li,ite" t+e
po4er of t+e ar-itrator to !onsi"er t+e "isputes on all its aspe!ts in!lu"ing grant of spe!ifi! perfor,an!e of
t+e !ontra!t& -ut -: va!ating t+e interi, relief to t+e appellant& t+e ;ig+ Court +a" ,a"e t+e entire
ar-itration pro!ee"ing infru!tuous an" -: "int of va!ation of t+e interi, or"er of t+e trial Court& t+e
respon"ent s+all -e in a position to transfer& alienate t+e propert: in "ispute to a t+ir" part: -: 4+i!+ t+ir"
part: rig+t s+all -e !reate" an" t+e appellant s+all suffer enor,ous in6ur:. (urt+er,ore& if& at t+is stage&
t+e respon"ent is per,itte" to transfer& alienate or !reate an: t+ir" part: interest in respe!t of t+e propert:
in "ispute& t+en t+e a4ar"& if passe" in favour of t+e appellant -: t+e Ar-itrator& 4oul" -e!o,e nugator:
an" it 4oul" -e "iffi!ult for t+e appellant to as8 t+e respon"ent to eEe!ute t+e sale "ee" 4+en a t+ir"
part: interest +as alrea": -een !reate" -: sale of t+e propert: in "ispute an" -: possession "elivere" to
t+e t+ir" part:. >n a !ontra!t for sale of i,,ova-le propert:& nor,all: it is presu,e" t+at ti,e is not t+e
essen!e of t+e !ontra!t. Hven if t+ere is an eEpress stipulation to t+at effe!t& t+e sai" presu,ption !an -e
re-utte". >t is 4ell settle" t+at to fin" out 4+et+er ti,e 4as essen!e of t+e !ontra!t& it is -etter to refer to
t+e ter,s an" !on"itions of t+e !ontra!t itself. (urt+er ,ore& t+e ;ig+ Court& in our vie4& +as faile" to
appre!iate t+at -: t+e i,pugne" or"er t+e: +ave also li,ite" t+e s!ope of ar-itration if ulti,atel: t+e
allegations ,a"e -: t+e appellant are foun" to -e true. 7+at is to sa:& if an or"er restraining t+e
respon"ent fro, !reating an: t+ir" part: interest or fro, transferring t+e propert: in "ispute is not grante"
till an a4ar" is passe"& t+e appellant s+all suffer irrepara-le loss an" in6ur: an" t+e entire a4ar" if passe"
in +is favour& 4oul" -e!o,e totall: negate". >n t+is !onne!tion& it is i,perative to refer to a 6u"g,ent of
t+is Court in t+e !ase of Maharwal Khewaji Trust (Regd.), Faridkot v. Baldev Dass
MN$%"C%&'()%)&&* $ A>%2002SC100 & 4+i!+ o-serve" as follo4s$
Un!"" an# $n%& a 'a"! () &rr!*ara+! ("" (r #a,a-! &" ,a#! ($% +. a *ar%. %( a "$&%, %h! '($r% "h($#
n(% *!r,&% %h! na%$r! () %h! *r(*!r%. +!&n- 'han-!# /h&'h a"( &n'$#!" a&!na%&(n (r %ran")!r () %h!
*r(*!r%. /h&'h ,a. !a# %( ("" (r #a,a-! +!&n- 'a$"!# %( %h! *ar%. /h( ,a. $%&,a%!. "$''!!# an#
,a. )$r%h!r !a# %( ,$%&*&'&%. () *r('!!#&n-"0 In %h! &n"%an% 'a"! n( "$'h 'a"! () &rr!*ara+! ("" &"
,a#! ($% !1'!*% '(n%!n#&n- %ha% %h! !-a *r('!!#&n-" ar! &2!. %( %a2! a (n- %&,!, %h!r!)(r!, %h!
r!"*(n#!n% "h($# +! *!r,&%%!# %( *$% %h! "'h!#$!# *r(*!r%. %( +!%%!r $"!0 W! #( n(% %h&n2 %ha% &n %h!
)a'%" an# '&r'$,"%an'!" () %h&" 'a"!, %h! (/!r a**!a%! '($r% an# %h! 3&-h C($r% /!r! 4$"%&)&!# &n
*!r,&%%&n- %h! r!"*(n#!n% %( 'han-! %h! na%$r! () %h! *r(*!r%. +. *$%%&n- $* '(n"%r$'%&(n a" a"( +.
*!r,&%%&n- %h! a&!na%&(n () %h! *r(*!r%., /ha%!5!r ,a. +! '(n#&%&(n" (n /h&'h %h! "a,! &" #(n!0
12. Ioing -: t+e ratio of t+e a-ove,entione" "e!ision& it is !lear t+at t+e => A""l. Cit: Civil 'u"ge&
9angalore& 4as 6ustifie" in "ire!ting t+e parties to ,aintain status ?uo in t+e ,atter of transferring&
alienating or !reating an: t+ir" part: interest as pri,a fa!ie it +as -een prove" t+at t+e respon"ent 4as
tr:ing to sell t+e propert: in "ispute to a t+ir" part:& t+us alienating t+e rig+ts of t+e propert: in "ispute&
4+i!+ 4oul" +ave !ause" irrepara-le "a,age to t+e appellant.
13. (ro, a -are perusal of t+e fin"ings of t+e ;ig+ Court reversing t+e or"er of t+e trial Court an"
re6e!ting t+e appli!ation for in6un!tion& it 4oul" -e evi"ent t+at t+e appellant +a" faile" to ,a8e out a
pri,a fa!ie !ase for grant of an or"er of in6un!tion in +is favour. 9ut in vie4 of our "is!ussions ,a"e
+ereina-ove& 4e are of t+e vie4 t+at t+e A""itional Cit: Civil 'u"ge& 9angalore 4as full: 6ustifie" in
"ire!ting t+e parties to ,aintain status ?uo as to t+e nature an" !+ara!ter of t+e propert: in "ispute till t+e
a4ar" is passe" -: t+e Sole Ar-itrator as 4e +ave alrea": +el" t+at if t+e or"er of t+e status ?uo is not
grante" an" respon"ent is per,itte" to sell t+e propert: in "ispute to a t+ir" part:& !o,pli!ations 4ill arise
an" t+e t+ir" part: interest 4ill -e !reate"& for 4+i!+ t+e a4ar"& if an:& passe" in favour of t+e appellant
ulti,atel:& 4oul" -e!o,e nugator:. As note" +erein earlier& one of t+e ,ain issues for t+e purpose of
"e!i"ing t+e appli!ation for in6un!tion 4as 4+et+er ti,e 4as t+e essen!e of t+e !ontra!t or not. 9: t+e
0
i,pugne" or"er& t+e ;ig+ Court +a" faile" to appre!iate t+at in t+e !ontra!t relating to i,,ovea-le
propert:& ti,e !annot -e t+e essen!e of !ontra!t. >n an: event even in su!+ a !ase& t+e ar-itration !lause
4oul" survive an" t+e "ispute 4oul" -e re?uire" to -e resolve". 7+at -eing t+e position& pen"ing "isposal
of t+e ar-itration pro!ee"ing& interi, ,easure to safeguar" t+e interest 4as re?uire" to -e ta8en. 7+e
;ig+ Court also& in our vie4& +a" faile" to appre!iate t+e ,aterial on re!or" as t+e agree,ent an" t+e
!orrespon"en!es pro"u!e" -: t+e parties to t+e effe!t t+at sin!e t+e appellant 4as re?uire" to furnis+ t+e
nil en!u,-ran!e !ertifi!ate till t+e "ate of transa!tion to s+o4 t+at t+ere 4as no !+arge over t+e propert:
an" furt+er sin!e t+e propert: 4as to -e 8ept va!ant at t+e ti,e of t+e eEe!ution of t+e sale "ee"& ti,e
!annot -e +el" to -e t+e essen!e of t+e !ontra!t in t+e fa!ts an" !ir!u,stan!es of t+e !ase an"
a!!or"ingl:& t+e interi, ,easure 4as ne!essar: to prevent irrepara-le loss an" in6ur:. ;o4ever& t+e
?uestion 4+et+er t+e ti,e 4as t+e essen!e of t+e !ontra!t or not is to -e "e!i"e" -: t+e Ar-itrator in t+e
ar-itration pro!ee"ing an" for t+at reason onl: t+e ;ig+ Court +a" also left open su!+ issue to -e "e!i"e"
-: t+e learne" Ar-itrator an" in t+is !onne!tion& t+e ;ig+ Court o-serve" as follo4s$
A" "$'h %h! '(n%!n%&(n" /&%h r!-ar# %( "$r5&5a+&&%. () %h! ar+&%ra%&(n 'a$"! an# %h! #&"*$%! a" %( /h!%h!r
%&,! &" %h! !""!n'! () %h! '(n%ra'% ar! &""$!" /h&'h ar! /&%h&n %h! r!a, () %h! Ar+&%ra%(r an# a''(r#&n-.,
/! #( n(% /&"h %( *r(n($n'! (n %h! "a,! an# %h!r!)(r!, /! #( n(% "!! r!a"(n %( r!)!r %( %h! ar-$,!n%"
an# 'a"! a/ r!)!rr!# &n %h&" r!-ar#0
10. Sin!e t+e ;ig+ Court +a" not at all gone into t+e ?uestion regar"ing 4+et+er ti,e 4as t+e essen!e of
t+e !ontra!t or not& it is not ne!essar: for us to go into t+e ?uestion as t+e sa,e s+all -e "e!i"e" -: t+e
Ar-itrator 4+ile passing t+e a4ar". As note" +erein earlier& t+e respon"ent 4+ile opposing t+e appli!ation
for grant of in6un!tion& plea"e" t+at t+e pra:er of t+e appellant for grant of in6un!tion in respe!t of t+e
propert: in "ispute s+oul" -e refuse" -e!ause a",itte"l:& t+e ti,e to eEe!ute t+e "ee" -: t+e appellant
+a" eEpire" in t+e ,eanti,e. As 4e +ave alrea": +el" t+at one of t+e ,ain issues to -e "e!i"e" -: t+e
Ar-itrator is 4+et+er ti,e 4as t+e essen!e of t+e !ontra!t or not& 4+i!+ 4as not "e!i"e" -: t+e ;ig+
Court 4+ile reversing t+e or"er of t+e A""itional Cit: Civil 'u"ge& 9angalore an" in vie4 of t+e fa!t t+at
t+ere is no "ispute t+at a su, of %s. 2&00&00&220)/ (74o Crores an" 74o ;un"re" (ift:) +as -een pai" -:
t+e appellant to t+e respon"ent at t+e ti,e of eEe!ution of t+e agree,ent for sale an" in vie4 of t+e fa!t
t+at t+ere is no "ispute t+at t+e parties +a" entere" into an agree,ent for sale on !ertain ter,s an"
!on"itions& out of 4+i!+ one of t+e !on"itions 4as 4+et+er t+e ti,e 4as t+e essen!e of t+e !ontra!t or not
4+i!+ s+all -e "e!i"e" -: t+e Sole Ar-itrator& 4e "o not fin" an: groun" as to 4+: t+e or"er "ire!ting t+e
status ?uo in t+e ,atter of transferring& alienating or !reating an: t+ir" part: interest passe" -: t+e
A""itional Cit: Civil 'u"ge& 9angalore s+all not -e ,aintaine" till t+e a4ar" is passe" -: t+e Ar-itrator.
7+at apart& t+e surviva-ilit: of t+e Ar-itration !lause in t+e agree,ent 4as also ?uestione" -: t+e
respon"ent in t+eir o-6e!tion to t+e appli!ation for in6un!tion -ut sin!e t+at ?uestion +as also -een 8ept
open for t+e "e!ision of t+e Ar-itrator -: t+e ;ig+ Court as 4ell& 4e +ave no +esitation in our ,in" to +ol"
t+at sin!e t+e sai" ?uestion s+all also -e "e!i"e" -: t+e Ar-itrator 4+ile "e!i"ing t+e "isputes -et4een
t+e parties& t+ere is no groun" 4+: t+e or"er of status ?uo grante" -: t+e trial !ourt s+all not -e
,aintaine" till t+e a4ar" is passe" -: t+e Ar-itrator.
12. >t is 4ell settle" t+at even if an agree,ent !eases to eEist& t+e Ar-itration !lause re,ains in for!e an"
an: "ispute pertaining to t+e agree,ent oug+t to -e resolve" a!!or"ing to t+e !on"itions ,entione" in t+e
Ar-itration !lause. 7+erefore& in our vie4& t+e ;ig+ Court 4as not 6ustifie" in setting asi"e t+e or"er of t+e
trial Court "ire!ting t+e parties to ,aintain status ?uo in t+e ,atter of transferring& alienating or !reating
an: t+ir" part: interest in t+e sa,e till t+e a4ar" is passe" -: t+e sole Ar-itrator.
1.. >t 4as not "ispute" -: t+e ;ig+ Court in t+e i,pugne" or"er t+at t+e respon"ent 4as tr:ing to sell off
t+e propert: in "ispute to so,e ot+er t+ir" part: 4+i!+& in our vie4& 4oul" also !ause enor,ous loss an"
+ar"s+ip to t+e appellant. >t is not in "ispute t+at t+e appellant +a" pai" a su, of %s. 2&00&00&220)/ (74o
Crores an" 74o ;un"re" (ift:) as a"van!e to t+e respon"ent at t+e ti,e of eEe!uting t+e agree,ent for
sale. At t+e sa,e ti,e& it ,a: not -e out of pla!e to ,ention t+at it 4as t+e spe!ifi! !ase of t+e appellant
t+at t+e respon"ent +a" faile" to +an" over va!ant possession of t+e propert: in "ispute 4it+in t+e perio"
spe!ifie" in t+e agree,ent an" for t+at reason onl:& +e !oul" not perfor, +is part of t+e !ontra!t.
17. >n vie4 of our "is!ussions ,a"e +erein a-ove& 4e are of t+e vie4 t+at t+e "isputes raise" -: t+e
parties !an onl: -e "eter,ine" -: t+e sole Ar-itrator an" 4+en a",itte"l:& an Ar-itrator +as -een
appointe" to "e!i"e su!+ "ispute& t+e parties s+oul" -e "ire!te" to ,aintain status ?uo in t+e ,atter of
transferring& alienating or !reating an: t+ir" part: interest in t+e sa,e till t+e a4ar" is passe" -: t+e sole
Ar-itrator.
18. At t+e sa,e ti,e& !onsi"ering t+e fa!t t+at so,e ti,e 4oul" -e re?uire" for t+e Ar-itrator to
pronoun!e +is a4ar" 4+erein t+e ?uestion 4+et+er ti,e 4as t+e essen!e of t+e !ontra!t or not 4oul" -e
2
re?uire" to -e "eter,ine" an" if t+e parties are "ire!te" to ,aintain status ?uo in respe!t of t+e propert:
in "ispute& till su!+ a4ar" is passe"& an" for t+at reasons& t+e respon"ent 4oul" not -e entitle" to
transfer& alienate t+e propert: in "ispute "uring t+e pen"en!: of t+e Ar-itration pro!ee"ing an"
!onsi"ering t+e -alan!e of !onvenien!e an" in!onvenien!e of t+e parties& 4e feel it proper to "ire!t t+e
appellant to "eposit t+e -alan!e a,ount of %s. 0&99&03&829)/ ((our Crores Ninet: Nine La!s 7+ree
7+ousan" Hig+t ;un"re" 74ent: Nine) 4it+in a perio" of t+ree ,ont+s fro, t+e "ate of suppl: of a !op:
of t+is or"er to t+e => A""itional Cit: Civil 'u"ge& 9angalore& in fiEe" "eposit for a ,ini,u, perio" of siE
,ont+s initiall: in a nationaliBe" -an8 in favour of t+e respon"ent an" rene4 t+e sa,e till t+e "isposal of
"ispute -efore t+e Ar-itrator. 7+e original fiEe" "eposit re!eipt s+all -e 8ept 4it+ t+e ar-itrator. >n t+e
event of failure of "eposit of t+e aforesai" a,ount& t+e or"er of status ?uo& as grante" -: t+e => A""itional
Cit: Civil 'u"ge& 9angalore an" affir,e" -: us& s+all auto,ati!all: stan" va!ate" an" t+e or"er of t+e
;ig+ Court& va!ating t+e or"er of status ?uo& s+all i,,e"iatel: !o,e into operation.
19. >n t+e lig+t of t+e "is!ussions ,a"e +ereina-ove& 4e set asi"e t+e or"er of t+e ;ig+ Court an" restore
t+e or"er of t+e => A""itional Cit: Civil 'u"ge& 9angalore su-6e!t to t+e !on"itions ,entione"
+ereina-ove.
20. (or t+e reasons aforesai"& t+e appeal is allo4e" to t+e eEtent in"i!ate" a-ove. 7+ere 4ill -e no or"er
as to !osts.
.