The High Court · 2025

4. Sri Syed Osman, S/o Late Syed BabanrAggd aboul 74 year.s, Occ^Business, nlo H tto 22-3-54011, Mir Aldm Mandi, Mii Chowk Zehara Nagar,-Ch.a.rminar, Hyderabad. ..Respondents/Petitioners 5. Mr.Namrreddy Raghuram Reddy, S/o Sri Seetharam Reddy, Aged. about 52 - t;r*, occ'Buihess, R/o H.No 18-1 11, Kamalnagar, Dilshuknagar' Hyderabad

6. Mr. Namireddy Rajaram reddy. S/o Seetharam Reddy Aged. about,51 ,years Occ Business, R/o'H.No 1B-1i l. Kamalnagar, Dilshuknagar, Hyderabad' 7 Sri Posham Kiran Kuamr [gdd.y. _S{o Sri p.Dharma Reddy, Aged about 51 [ii:';f:: t'';rness, R/o H trto t7-l-aaeru:rlVil'iv'ilrgr' aoro"ny si,drb;d, (R5 to R7 Not Necessary partiers in this petition) ... Res po n de n ts/Res ponde n ts lA NO:3 oF 2024 Petitron unde . Section 1 51 CpC praying that in the circun rstances stated rn the affidavit fired irr supp-ort of the peiitio;, in" Higr' court mav be preased to suspend the order dt 11'1-2024 passed in ARB op -tto laqtzozz prri"J[iinu Hon'ble Xl Addl Chief Judge, City Civil Court, HyOeraOaO. lA NO: 4 OF 2024 Petition under section '1 5-1 cpc praying that in the circum stances stated in-the affidavit fited in support of the peiitio;, if,. fiign Court may be pleased to rssue directions to ttrfr respondents 1 to 4 here in restraining re,m tiom iat,ng measures in giving farse representations to the statutory ana a;irr"riii", through legar notice cated 2s-11-2024 to h;r;; t;" petitioner/apperant herein forthwith pending adj rcication of the Civit Mi;;;il;;ow appeat Counsel for the Appellants : Mr. Dama Seshadri Naidu,representino "oanting Ms. Madhavi priya Mantena Counsel for the Respondents : M_r. A. Ven kateshrrepresenting Mr. G. Kalyan C(akravarthy - The Court delivered the following: I. T HON ,BLE SRI JUSTICE P.SAM KOSHY AND THE H N'B LE SRI US EN AVA PUR ESH WAR RAO CIVIL MISC ELLAN EOUS AP PEAL No.31 a ot 2024 UDG ENT: (per the Hon'bte Sri Justice P.5am Koshy) The instant ls an appeal filed under Section 39 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act') assailing the order dated 11.01.2024, in Arb.o'P'No'184 of 2022' passed by the XI Additional Chief Judge, City Civil Courts' Hyderabad.

2. Heard Mr. Dama Seshadri Naidu, learned Senior Counsel representing Ms. Madhavi Priya Mantena, learned counsel for the appellants, and Mr. A. Venkatesh, learned Senior Counsel representing Mr. G. Kalyan Chakravarthy, learned counsel for the respondents.

3. Vide the impugned order, the Trial Court allowed the petition filed under Section 9 of the Act by granting an ad- interim injunction in favour of respondent Nos' 1 to 4 herein' who are the petitioners before the Trial Court, and had passed the order restraining the appellants and respondent Nos'5 to 7 herein from alienating the property covered under Memorandum ,/ of Understancling (for short, 'MoU,) dated 08.09.20,,11 and also the property covered under Deveropment Agree:ment-cum- General power-of Attorney (for short, ,DAGPA,) dated 03.12.2021 i.e. schedule'A'propefty and further interfering: with the possession of respondent Nos.1 to 4 herein over the s;chedule.B, property.

4. The fact:; which led to filing of the instant appeal are that the respondent Nos.1 to 3 herein are the owners rif the land admeasuring Ac.0.39 guntas in Survey No.64/A/E ou: of Acs.4_ 00 guntas in liurvey No.61. So also Ac.0.39 guntas in Survey No.64/A/E out ,)f Acs.4-00 guntas in Survey No.61/AAl2, total admeasuring Ac.1.0B guntas out of Acs.4_00 guntas in Survey No.61 and the land admeasuring Ac.0.36 guntas n Survey No.67/U/2 and Ac.0.37 guntas in Survey No.61/UU/1 out of Acs.4-00 gunta:i in Survey No.61; all of which situates at Kongarkalan V llage, Imbrahimpatnam Mandal, Ran,:;a Reddy District

5. All the aforesaid properties were purchased by the respondent Nos.1 to 3 herein respectivery vide regist,ered sare deeds separatel,l executed on 25.07.2019. The responc.lent No.4 herein Mr. Syed Usman was the vendor of {he property sold to \ .\ the respondent Nos.1 to 3. The said sale deeds executed on 25.07.20L9 have gone unchallenged till date. Meanwhile, the respondent Nos.1 to 4 entered into a MoU on 08.09'2021 with appellant No.1. As per the said MoU, the appellant No' 1 (respondent No.1 before the Trial Court) had agreed for payment of t8,50,00,000/- as full and final consideration for surrender and title over the land purchased by the respondent Nos'1 to 3 vlde registered sale deeds dated 25.07.2079, those which are reflected in the preceding paragraphs.

6. It was agreed that as part consideration of the transaction, the appellant No.1 would pay an amount of {2,50,00,000/-by way of cheque and cash to the respondent Nos'1 to 3 herein, who in turn, have agreed to handover the possession of the property and relinquish their claims and rights over the said property. It was further agreed between the parties that they shall pay the balance t6,O0,0O,0OO/- as agreed in terms of the MoU on the date of the execution of DAGPA' However, even before the MoU could be finalized, the appellant No' 1 and respondent Nos.5 to 7 herein entered into a DAGPA on 03.I2.2021 entrusting the aforementioned subject land to be developed by constructing residential villas with a recreation facility center The DAGpA was executed without fr.rrfiring the further consideration that was to be paid by appellani No.1 to respondent Nos.1 to 4 and the appellant No.1 and respondent Nos.5 to 7 were pranning to raise constructions o r the said subject rand' 1t was in this context that a petition under section 9 of the Act was filed by respondent Nos.1 to 4 for ar injunction against the apgreilant No.1 and respondent Nos.5 to 7 herein and also restraint tr-om alienating the property covered under the MoU i.e. schedule 'A, property and also from interfering with the possession of the respondent Nos.1 to 4 in respect o. schedule 'B' property.

7. subsequentry, the Section g petition fired before the Triar Court was regi:;i:ered as Arb.Op.No.1B4 of 2022. Notices were issued and since there was no representation on behalf of the appellants hererin, the Trial Court proceeded to decide the petition and allowed the same vide lhe impugned orrJer dated 17.07.2024 restraining the appellants as also respondr,:nt Nos.5 to 7 herein frorr alienating the property covered ur der MoU dated 08.09.20,21 and also the property covered under the DAGPA dated 03.t2.2021 i.e. schedule ,A, property and also restrained the aforesaid parties from interfering l,uith the PaBe 5 of 15 possession of respondent Nos.1 to 3 herein over the suit schedule property.

8. It is this order which has been challenged by the appellants herein who are the respondent Nos'1 and 2 before the Trial Court.

9. The grounds on which the present appeal has been filed is, firstly the notices have not been effectively served upon the appellants i.e. the addresses provided in the Section 9 petition and the addresses in the notices issued were insufficient' Secondly, the notices so issued are contrary to the provisions of Section 9(2) of the Act.

10. It was the contention of the learned Senior Counsel for the appellants that the notices which were issued to the appellants have not been effectively served can also be established from the fact that there was a clear infraction of all the procedures so prescribed under Order V Rules L7, tB, 19 and 20 of the Civil Procedure Code, 1908 (for short, the 'CPC'). It was the further contention of the learned senior counsel for the appellants that a plain reading of the impugned order would show that the Trial Court has not given any reasons which led to passing of the bt- interim injunct:ion order. According to the learned Senior Counsel for the appellarnts, the entire impugned order is only a narration of facts and i; abruptly passing of the interim injurrction order without discussing the principles which are required to be fulfilled before an ordr:r of injunction is passed. It is by now rvell settled that while grarrting an order of injunction the conc€,rned Court has to manda,_orily consider the prima facie establis'rment of a case, the balarr,:e of convenience and the irreparable oss caused in the event ii'injunction order is passed. The impur;ned order lacks these lasic ingredients required while alltwing the injunction petition, and for the said reason also the same deserves to be :;et aside / quashed.

11. The learrred Senior Counsel for the appellant:;; has also challenged the impugned order on the ground highlrghting the conduct of the appellants inasmuch as the appellants earlier have filed a writ petition i.e. W.p.No.2164 of 2020 beforr,r the High Court challenging the action on the part of the Tahasildar / respondent No.2 in the writ petition so far as mutating the names of the third parties by removing the nam,:s of the petitioners fronr the revenue records. The learned Sirrgle Judge initially vide orcler dated 21.06.2023 disposed of the w-it petition PaBe 7 of 15 directing respondent Nos.1 and 2 i.e. the State of Telangana as also the Tahasildar, Imbrahimpatnam, to implement the proceedings issued by the Tahasildar vide order dated

25.04.20Ig within a period of four (04) weeks from the date of receipt of a copy of the order. Subsequently, a Review Petition was filed i.e. Review I.A.No.1 of 2024 in W'P No'2164 of 2020' The said I.A. came up for hearing on 16.O4.2024 and the learned Singh Judge after hearing the parties, directed the respondents to maintain status quo in all aspects so far as the suit schedule property is concerned, and also so far as the interference of the possession over schedule 'B' property is concerned' In the teeth of all such developments, there could not have been yet another arbitration proceedings initiated by the respondent Nos'1 to 4 herein. L2. Thus, for all the aforesaid grounds and reasons, the learned Senior Counsel for the appellants contended that the order of interim iniunction granted by the Trial Court deserves to be vacated and the appellants be granted liberty to proceed with thedevelopmentsonthesuitschedulepropertyinaccordance with the MoU as also in accordance with the DAGPA'

13. Per contta', the learned Senior Counsel for the r,::spondents contended thal it is a case where admittedly an [YoU v1,'as entered into between t're parties on 08.09.2021 and in the MoU itself the details of the iransaction as consideration for trans;fer of the property and the rights over the said property was; reflected. However, except for signing amount of t.2,50,00,000,,'- that was to be paid was made, thereafter there has been no further payment made by the appellants towards the l.ralance of payment aqreecl upon. Meanwhile, according to the re;pondents, the appellants further entered into a DAGPA, and in terms of DAGPA, the appellants started the development activ,ties at the suit schedule property much to the detriment of the r<,rspondents entitlement oF the consideration agreed upon as per tre MoU. It was in this context that the respondents in addition tc., moving a petition under Section 11(6) of the Act.before the High Court for appointment of an Arbitrator, also moved a petition under Section 9 of the Act before the Trial Court seeking for an interim injunction atleast till the arbitration proceedings conclu,le. L4. During tne course of arguments, the learnr:d Senior Counsel for the respondents informed the Court that the High Court has already allowed the Section 11(6) petition and an Arbitrator has also been appointed and the arbitration proceedings have already been commenced between the parties. Thus, according to the learned Senior Counsel for the respondents, now that the arbitration proceedings have commenced, let the Arbitrator itself conclude the proceedings and pass the Award at the earliest which would be In the interest of all the parties, rather than considering vacating of the interim injunction at this juncture which may put the respondents in an disadvantageous position.

15. However, the learned Senior Counsel for the appellants contended that since they are into the business of development of the suit schedule property, huge amounts of money has been taken as loan from the Bank and they have to pay monthly EMIs along with high rate of interest. Now that the arbitration proceedings have commenced, let the Arbitrator take a call in respect of the entitlement of the respondents and the Award would be binding upon the parties. Till then, let the developments on the suit schedule property be not stalled, as that would put the appellants to a substantial financial burden and the cost of the development work would get substantially increased in due course of time unless it is executed at the ea r lie st

16. Having herard the learned counsel for the partres and on perusal of recr:.ds, some of the admitted factual matrix of the case are that Nos.1 to 3 being the actual owners of the property which they had purchased from responrJent No.4. '.spondent The other admi:ted position is that of the execution cf MoU on

08.09.2021 betrveen the respondent Nos.1 to 4 on one side and the appellants terein on the other side. There is arso ro dispute so far as the inil:ial payment of t2,50,00,000/_ by the appellants to respondent Nos.1 to 3 as the signing amount at the time of signing of the lvloU. However, there is no prima fa,:ie strong material to shour the payment of the barance of amount by the appellants in telrs of the MoU. L7. Clauses 6 and t2 of the MoU entered into bel ween the parties, reads as under, viz., "6. That the parties also agree and undertake lf consideration is a pre-condition for payment g i,.,ing effect to ail the covenants contained in this Memoranc um of Understernding and the Development Agreement (.:um General Povrer ofAttorney. In case of failure to honour eny of the cheqres above mentioned, tne montpetready iraid l.ha t PaBe 11 of 15 shall be forfeited and the parties of the First Part shall be entitled to seek cancellation of the Development Agreement cum General Power of Attorney.

12. In case of any dispute arising out of or in connection with this agreement shall be dealt with by way of arbitration. The place. seat and venue of arbitration shall be at Hyderabad. The courts at Hyderabad shall have exclusive jurisdiction. The language of arbitration shall be English. The proceedings of arbitration shall be governed by the provisions of The Arbitrator and Conciliation Act, 1996 along with any other statutory amendments already made or to be made. The decision oF the arbitrator shall be final and binding on the Pafties'" A plain reading oF clause 6, would go to show that there WAS SOMC pre-condition already narrated in the MoU, which otherwise becomes binding upon the parties. Likewise,in clause 12 there is a specific provision for redressal of disputes by way of arbitration

18. Admitte(ly there seems to be some disPutes between the appellants as also the respondent Nos.1 to 3 herein so Far as the payment of the balance of amount for relinquishing their rights over the subject land in dispute. Further, respondent Nos'1 to 4 having resorted the provision of MoU for redressal of their disputes invoking the arbitration clause is also an admitted position. The request for appointment oF an Arbitrator stands allowed by the High Court and the Arbitrator has beerr appointed and who has r.row seized of the proceedings. There,is also no quarrel so far as respondent Nos.1 to 4 having approached the Trial Court for interim protection invoking Section 16 of the Act. The said Sectron 9 proceedings were initiated way Dack in the year 2022 i.e. three years back and the said Sectiorr 9 petition stood allowed as early as on 11.06.2024. While allowing the Section 9 petition, the Trial Court made the following observations, nrhich for ready reference is reproduced hereunder, vtz.l " .On tl- r: other hand petitioners filed the rel,:tvant documentr; to establish their case. Since the respon,Jents remainec exparte an adverse inference can be crawn against th3m that the plea of petitioners is correct. IF the responde.lts continued with the development r,vork, pending rlisposal of writ petition filed by the petitioners, it will cause huge loss to the petitioners. More over the considerat on amount which was admitted by the responden: No.1 and 2 was not paid to the petiticners according to petitioners. prima facie case, and balanr::e of convenier,(;e is rn favour of petitioners. If injunction ist not granted the petitioners will sustain loss. In tlese circumstances this court feels it is just an proper to clrant ad inter ni injunction against the respondent l,rom alienating the property covered under Memorandunt of understanding, I.e 'A' and .8, schedule property, and also 'a from interfering with the possession of petitioners in respect of 'B' schedule ProPertY. In the result this petition is allowed restraining the respondents 1 to 5 by way of ad-interim injunction from alienating the property covered under MOU dt 8-9-21 and also the property covered under DAGPA dt: 3-12-21 vide doc No.225612022 1.e 'A' schedule property, and the respondents further restrained From interfering with the possession of the petitioners over the 'B' schedule property. " The said interim protection under Section 9 of the Act is still in operation for almost over fourteen months' Meanwhile, the arbitration proceedings itself is progresslng before the Arbitrator.

19. In the said admitted factual matrix, what is to be appreciated at this juncture is, should the interim order granted bytheTrialCourtintheSectiongpetitionwarrantsinterference?

20. One cannot brush aside the Fact that in the event if the interim protection is not continued, the appellants would continue with the construction, carry out the sale oF all the properties and subsequently, iF the arbitration case stands decided in favour of the respondents, they would find it difficult to reap the fruits of the award so passed' At the same time' we are also conscicus of the fact that continuation of the interim protection wouid stall the entire development and construction activities, which would result in the project getting delayed and the parties, particularly the appellants being put to unnecessary financial burdert of paying EMIs and interest for the lrotracted period. 2L. In the said circumstances, what is striking the conscious of this Bench is to strike a balance so that the interest c'f both the parties stands protected. In terms of the MoU, the tlalance of amount payable by the appellants to respondent Nos. l- tq 4 was {6,00,00,000/-. Now in case if the interim protection is continued, thc appellants will be put to substantial loss financially as that could delay the project incurrinr:; financial implications. In case, the interim stay is vacated, the respondent Nos.1 to 4 wottld be put to considerable detriment upon the appellants alie.rating the suit schedule property anc receiving sale consideration upon each alienation. Therefore, in the opinion of this Bench a1d in the larger interests of justice, il would be appropriate if tlre interim stay so far as restraint from alienating the suit schedul,: property is ordered to be vacated subject to the appellants providing solvent security to the satisfaction of the XI Additional Chief Judge, City Civil Courts, Hyderabad, for an amount of t6,00,00,000/- and permitting the appellants herein to carry out the development activities'

22. Accordingly, with the aforesaid observation and direction, the instant Civil Miscellaneous Appeal stands partly allowed'

23. As a sequel, miscellaneous applications pending if any, shall stand closed. However, there shall be no order as to costs' SD/-K.SRINIVASA JOINT REGIS o AR //TRUE COPY// SECTION OFFICER .i .The Xl Additional Chief .luoge, City Civil Court, Hyderabad 'One CC to Ms. tvladhavi Priya Mantena, Advocate IOPUCI oie CC toMr G. Kdlyan Chakravarthy, Advocate IOPUCI Two CD Copies To, 1 2 |) 4 DL/PSL {* - :'- :..\ d 10 Aii 2[25 a /-,F6I'ATC e9 I (.( 2 o] .ri HIGH COURT DATED:21tO3t2OZS JUDGMENT CMA.No.31B of 2024 PARTLY ALLOW ING THE C.M.A. &D h