Mr.V.Sekar v. M/s.Akash Housing & Ors.

COMMON JUDGMENTR.BANUMATHI.,J.These two appeals arise out of the order dated 3.12.2010 made inO.A.Nos.40 and 41 of 2010 on the file of this Court, whereby thelearned single Judge has allowed application – O.A.No.40 of 2010 filedunder Section 9 of Arbitration and Conciliation Act, 1996 and also theother application – O.A.No.41 of 2010 granting interim injunctionrestraining the appellants from in any manner alienating, encumberingor otherwise dealing with the schedule properties situated atKondappanaickenpatti village, Salem Taluk.2. The brief facts are that the appellants are the owners of thelands measuring 4.62 acres (S.Nos.175/3B, 177/1, 178, 180/2A); 12.44acres (S.Nos.177/3, 179, 180/8) and 1.26 acres of land (S.Nos.177/2,180/7) situated in Kondappanaickenpatti village, Salem Taluk. Theappellants and respondent – Akash Housing represented by its PartnerSuresh Kumar entered into a joint development agreement dated 17.5.2006under which the respondent undertook development activities such aslevelling/filling/clearing/cutting of trees and erection of compoundwall in the lands measuring 18.32 acres. The Managing Director ofM/s.Vijay Shanthi Builders represented by its Managing Director hadentered into an independent and separate agreement dated 17.5.2006 withthe appellants and the said Company has undertaken to develop theintegrated township/gated community by forming a lay out andconstructing row houses for the purpose of sale of houses to thirdparties. In both the agreements, parties are stated to have agreed toshare the profits in the ratio of 65:35. 3. Certain modifications to the joint development were considerednecessary, which culminated in the execution of supplementary agreementon 11.6.2008. Total consideration for the works to be done by therespondent/Akash Housing was earlier fixed at Rs.25,00,000/- per acreand by the said supplementary agreement, the same was modified. Thecase of respondent is that in terms of clause 5 of the supplementaryagreement dated 11.6.2008, the appellants shall pay the entireconsideration of Rs.4,91,17,500/- within 24 months from the date ofsupplementary agreement. There arose certain disputes and difference ofopinion between the parties and the parties resorted to resolve theirdisputes through conciliation and a Memorandum of Understanding (MOU)came to be entered into between the appellants and the respondents inthe presence of Senior Counsel Mr.K.M.Vijayan on 22.8.2009.4. Case of respondent is that in pursuance of the said MOU dated22.8.2009 they proceeded to undertake the work in the schedulementioned property. On 5.1.2010 the respondent came to know that theappellants have cancelled the power of attorney executed by them on https://hcservices.ecourts.gov.in/hcservices/

13.10.2009 in favour of Vijay Shanthi Builders and that the appellantsare attempting to sell the properties directly to third parties to getrid off the obligations to pay the amount of a sum of Rs.5 Crores ownedby them under the supplementary agreement dated 11.6.2008. As per thedevelopment agreement dated 17.5.2006, in the event of any disagreementbetween the parties, the same shall be settled by arbitration as perthe Arbitration and Conciliation Act, 1996. Alleging that theappellants are taking steps to alienate the property in favour of thethird parties and that the respondent is contemplating arbitrationproceedings, the respondent had filed Petition under Section 9 of theArbitration and Conciliation Act, 1996, (hereinafter referred to as"1996 Act"). In the said petition, the respondent had sought forinjunction restraining the appellants from alienating the property. 5. The appellants have filed counter stating that the respondenthaving filed application under Section 9 of the 1996 Act, M/s.VijayShanthi Builders has also filed Civil Suit in C.S.No.36 of 2010 on thevery same cause of action. It is averred that the appellants hadalready sent communications to invoke arbitration and conciliationproceedings and without even replying to the same the respondent hadfiled the application under Section 9 of the 1996 Act. The appellantsfurther averred that the respondent had not invoked the arbitrationclause and therefore the benefit of Section 9 of the 1996 Act shouldnot be allowed to go to the respondent for obtaining interim orders.The appellants further averred that the respondent did not commence thedevelopment work nearly for three years even after the time scheduleand the third party purchasers with the appellants have starteddemanding the return of advance money and the appellants, being landowners and very reputed persons in Salem District, are put to lot ofembarrassment with third party agreement holders. According to theappellants, only due to the failure on the part of Vijay ShanthiBuilders to commence the work, the power of attorney was cancelled on5.1.2010. According to the Appellants, the respondent split the workinto two agreements only for record sake and income-tax and otherpurposes. The crux of the two agreements is 65:35 ratio between therespondent and the appellants and no separate consideration for anydevelopment was separately agreed. Without invoking the arbitrationclause, the respondent is not entitled to the interim injunction. 6. The learned single Judge held that in pursuance to the jointdevelopment agreement and subsequent agreement entered into between theparties and also in terms of MOU dated 22.8.2009, the respondent hadput up compound wall and levelled the ground for the purpose of puttingup construction. Placing reliance upon JINDAL VIJAYANAGAR STEEL (JSWSTEEL LTD.) VS. JINDAL PRAXAIR OXYGEN CO.,LTD. ((2006) 11 SCC 521), thelearned single Judge held that the Chartered High Courts including theMadras High Court could entertain the arbitral proceedings in the HighCourt, provided a part of cause of action has arisen within theterritorial jurisdiction of the Court. Observing that non-appointment https://hcservices.ecourts.gov.in/hcservices/ of arbitrator itself is not sufficient to refuse the relief andpointing out that there is likelihood of appellants entering into thealienated properties or entering into joint development agreement withthird parties, the learned single Judge allowed O.A.Nos.40 and 41 of2010 and granted injunction. The learned single Judge dismissed theapplication – A.No.134 of 2010 for appointment of Commissioner.However, the learned single Judge directed the respondent to initiatearbitration proceedings within one month from the date of the order.Challenging the said order, the present appeals are filed.7. Challenging the impugned orders, Mr.K.M.Vijayan, learned SeniorCounsel appearing for the appellants interalia made the followingsubmissions:●The joint development agreement and supplementary agreementrelates to immovable properties situated inKondappanaickenpatti village, Salem District. Since thedispute relates to immovable properties, Madras High Court isnot the principal civil Court of Original Jurisdiction andpetition filed under Section 9 is not maintainable in theOriginal Side of Madras High Court.●There is no manifest intention on the part of the respondentto have recourse to arbitration proceedings.●Respondent has initiated two parallel proceedings by filingsuit for specific performance in C.S.No.36 of 2010 andsimultaneously filing the application under Section 9 of the1996 Act and the respondent represented by its Partner SureshKumar is pursuing two parallel proceedings and grant ofinterim injunction would frustrate the very arbitration.8. Countering the argument, the learned counsel for the respondentMr.V.C.Janarthanan interalia made the following submissions:●Even though the immovable properties are situated inKondappanaickenpatti village, Salem District, under Section2(1)(e) of the 1996 Act, principal civil Court of originaljurisdiction is High Court, Madras. ●Suit for land has got nothing to do with Section 9 of theArbitration Act, the amount payable to the respondent isquantifiable and therefore de hors the suit filed by VijaySanthi Builders, application filed under Section 9 ismaintainable.9. The appellants are the land owners in S.Nos.175/3B, 177/1, 178,180/2A, 177/3, 179, 180/8, 177/2 and 180/7 situated inKondappanaickenpatti village, Salem Taluk. The respondent – AkashHousing represented by its Partner Mr.Suresh Kumar entered into adevelopment agreement on 17.5.2006 under which the respondent agreed tocarry out the developmental activities such as https://hcservices.ecourts.gov.in/hcservices/ levelling/filling/clearing/cutting of trees and construction ofcompound wall in the above said immovable property. On the same dayi.e., 17.5.2006, M/s.Vijay Shanthi Builders represented by its ManagingDirector entered into a joint development agreement under whichM/s.Vijay Shanthi Builders agreed to develop the properties – preparelayout plans, plan for construction, co-ordinate with the variousagencies for the purposes of obtaining necessary permits forconstructing villas/bungalows that are to be constructed over theproperty. In both the agreements, sharing of profit between theappellants and the respondent from out of the property was agreed to beshared at the ratio of 65:35 basis. In both the development agreements,the parties agreed that 'in the event of any disagreement/disputebetween the parties, the same shall be resolved through arbitration interms of Arbitration and Conciliation Act, 1996, the venue ofarbitration being Chennai. By the supplementary agreement dated11.6.2008, the terms of agreement were modified. As per the terms ofthe supplementary agreement, the appellants has to pay a sum ofRs.4,91,17,500/- towards clearing of trees, bushes and constructingcompound wall covering the land. Subsequently there was a MOU enteredbetween the parties dated 22.8.2009. There was also exchange of E-Mailsbetween the parties.10. Re. Contention – Jurisdiction of Original Side of High Court,Madras:- Contending that the joint development agreement pertains to thedispute in respect of immovable property, learned Senior CounselMr.K.M.Vijayan contended that the single Judge erred in rejecting thecontention of the appellants that Original Side of High Court, Madrashad no jurisdiction to entertain a petition under Section 9. Thelearned Senior Counsel inter alia made the following submissions:●Madras High Court had no jurisdiction to entertain anapplication to enforce a contract of sale of immovableproperty wholly outside the jurisdiction and therefore itcannot also entertain any petition under Section 9 of theArbitration Act, where it deals with immovable propertiessituated outside the original jurisdiction of the HighCourt.●Jurisdiction under Section 2(1)(e) of the Arbitration Actdepend upon a place, where the parties reside, dwell orcarry on business, but has jurisdiction to decide thequestion where the subject matter of the dispute issituated. Section 2(1)(e) speaks about the "principal civilCourt of Original Jurisdiction" forming subject matter ofthe arbitration only if the same had been subject matter ofthe suit.●The learned single judge ought to have appreciated that fora Court to exercise jurisdiction under Section 9 of the https://hcservices.ecourts.gov.in/hcservices/ Act, "the Court" must be a "Court" as defined under Section2(1)(e) of the Act and where the cause of action hasarisen. 11. Contending that the parties have agreed that the venue ofarbitration shall be in Chennai, the learned counsel for respondentMr.V.C.Janarthanan submitted that the dispute raised by both partiesemanates from the development agreement dated 17.5.2006, supplementaryagreement dated 11.6.2008 and also MOU dated 22.8.2009, which wereexecuted in Chennai and therefore Original Side of the Madras HighCourt has jurisdiction to entertain petition under Section 9. Insupport of his contention, the learned counsel placed reliance uponJINDAL VIJAYANAGAR STEEL (JSW STEEL LTD.) VS. JINDAL PRAXAIR OXYGENCO.,LTD. ((2006) 11 SCC 521) and DYNASTY DEVELOPERS PVT.LTD. VS. JUMBOWORLD HOLDINGS LIMITED, (2008(1) CTC 580). Learned counsel furthercontended that respondent – Akash Housing has independent claimquantified as claim Rs.4,91,17,500/- in the supplemental agreement andtherefore the dispute cannot be said to be pertaining to the immovableproperties. 12. We have carefully considered the rival contentions.Arbitration Agreement is required to be filed in a Court havingjurisdiction. "Court" has been defined in the Arbitration Act, 1996under Section 2(1)(e), which reads as follows: (e) "Court" means the principal civil Court oforiginal jurisdiction in a district, and includes the HighCourt in exercise of its ordinary original civiljurisdiction, having jurisdiction to decide the questionsforming the subject-matter of the arbitration if the samehad been the subject-matter of a suit, but does not includeany civil court of a grade inferior to such principal civilCourt, or any Court of Small Causes."On a plain reading of the definition of “court” under Section 2(1)(e) of the 1996 Act, it is evident that the arbitration petition can befiled before:(i) A Principal Civil Court of original jurisdiction indistrict;(ii) A High Court in exercise of its original civiljurisdiction… having jurisdiction to decide the questionsforming the subject-matter of the arbitration if the same hadbeen the subject-matter of a suit.13. Section 2(1)(e) of Arbitration Act, 1996 expressly recognisesthat not only District Courts, but also the High Courts exercisingoriginal civil jurisdiction would have jurisdiction under 1996 Act. TheAct thus recognises that the Chartered High Courts exercising original https://hcservices.ecourts.gov.in/hcservices/ civil jurisdiction would exercise the jurisdiction. While consideringthe question of jurisdiction, we are concerned with the originaljurisdiction of the Madras High Court, which is a Chartered HighCourt. The High Court gets its original jurisdiction by virtue ofclause 12 of "Letters patent", which reads as under:"Original jurisdictions as to suits.—And we do furtherordain that the said High Court of Judicature at Madras, inexercise of its ordinary original civil jurisdiction, shall beempowered to receive, try, and determine suits of everydescription if, in the case of suits for land or other immovableproperty, such land or property shall be situated, or in allother cases, if the cause of action shall have arisen, eitherwholly, or, in case the leave of the Court shall have been firstobtained, in part, within the local limits of the ordinaryoriginal jurisdiction of the said High Court: or if thedefendant at the time of the commencement of the suit shalldwell or carry on business, or personally work for gain, withinsuch limits; except that the said High Court shall not have suchoriginal jurisdiction in cases falling within the jurisdictionof the Small Cause Court at Madras, in which the debt or damage,or value of the property sued for does not exceed hundredrupees.”14. On behalf of the appellants, placing reliance upon judgmentof a learned single judge - KIRLOSKAR CONSTRUCTION AND ENGINEER LTD.VS. FAST TRACK ASSOCIATES, (2009(5) CTC 97), the learned Senior CounselMr.K.M.Vijayan submitted that merely because the parties agreed to havearbitration at Chennai cannot confer jurisdiction of Madras High Courtunder Section 9 unless the dispute involved in contract, which is thesubject matter of arbitration, can be decided by way of a suit withinthe jurisdiction of that Court. The contention of the appellants isthat since the dispute pertains to immovable properties, under Section2(1)(e), the Madras High Court would not have the jurisdiction todecide the question under arbitration agreement. The learned counselwould contend that clause 12 of Letters Patent makes a cleardistinction between immovable properties and other disputes. Accordingto the appellants, since the entire agreement relates to land and sinceSection 2(1)(e) stipulates "principal civil Court of originaljurisdiction", the Court must have jurisdiction to decide the questionas a subject matter of suit and the original side of Madras High Courtcannot entertain petition under Section 9 of the Act pertaining to theimmovable properties situated in Salem District. 15. In KIRLOSKAR CONSTRUCTION AND ENGINEER LTD. VS. FAST TRACKASSOCIATES, (2009(5) CTC 97), the subject matter of arbitrationagreement was relating to laying of road in Haryana and Uttar Pradeshand the contract was signed at Panipet by parties. Parties conferredjurisdiction to Courts at Delhi, though no part of cause of action had https://hcservices.ecourts.gov.in/hcservices/ arisen at Delhi. Parties also agreed that place of arbitration to be atChennai. Considering the question whether Madras High Court hasjurisdiction to entertain application under Section 9, the learnedsingle judge held that the parties' decision to have arbitration atChennai cannot confer jurisdiction on Madras High Court. In the saiddecision, the learned single judge took the view that even if anarbitration award is made in Chennai, in view of the express agreementbetween the parties, conferring jurisdiction in Delhi - the Courts atDelhi, the award can be challenged under Section 34 will be thatcompetent Court having jurisdiction - "Delhi Courts". On the saidfacts, the learned single judge held that Madras High Court cannot betermed as "Court" to entertain application under Section 9 of the Act. 16. In our considered view, the view of learned single judge inKIRLOSKAR CONSTRUCTION AND ENGINEER LTD. VS. FAST TRACK ASSOCIATES,(2009(5) CTC 97) is not a correct interpretation of Section 2(1)(e) ofthe 1996 Act. By perusal of the judgment, we also find that theattention of the learned single judge has not been drawn to thedecision of the First Bench of this Court in DYNASTY DEVELOPERSPVT.LTD. VS. JUMBO WORLD HOLDINGS LIMITED, (2008(1) CTC 580), where theFirst Bench has held that the petition filed under Section 9 cannot beequated to that of a suit. In DYNASTY DEVELOPERS PVT.LTD. VS. JUMBOWORLD HOLDINGS LIMITED, (2008(1) CTC 580), challenge was to an order ofa single judge, who took the view that to maintain an application underSection 9 of the Act, leave of the Court has to be obtained. Whetheror not the leave of the Court is required to initiate proceedings underSection 9 of the Arbitration and Conciliation Act was the questionbefore the First Bench. Holding that no leave is required to initiateproceedings under Section 9 and that application under Section 9 ofthe Arbitration act and suit cannot be treated on the same footing,referring to various judgments, the First Bench of this Court in theabove referred judgment has held as under:"19. ........ According to the learned Judge the leavewould be necessary in case this Court has jurisdiction overthe part of the cause of action only and as no suit could befiled without leave, no application under the Act under thesimilar circumstances could be entertained without leave underClause 12 of the Letters Patent. The analogy of 'suit' givenin Section 2(1)(e) of the Act only gives us guideline to findout the right court. The word 'suit' acts as an indicator andpoints out which court will be competent court to entertainthe application under the Act. Section 2(1)(e) does not treatan 'application' under the Act as a 'suit' and the applicationunder the Act remains an application. As a matter of fact, ifa civil suit is filed covering the subject matter of anarbitration agreement, the Act makes it obligatory for theCourt to refer the parties to arbitration in terms of thearbitration agreement. Therefore, it cannot be contended that https://hcservices.ecourts.gov.in/hcservices/ the Act intended that an application under the Act and thecivil suit should be treated on the same footing. It has beenconsistently held that the applications under the ArbitrationAct cannot be equated with civil suit. (See Bhagwat Singh Vs.State of Rajasthan, AIR 1964 SC 444, Usmanali Khan Vs.Sagarmal, AIR 1965 SC 1798, Firm Ashok Traders Vs. GurumukhDas Saluja, (2004) 3 SCC 155). The procedure for obtainingleave is applicable only to a suit and not to an applicationunder the Arbitration Act. In our opinion, if a part of thecause action has arisen within the jurisdiction of this Court,the application under the Arbitration Act can be instituted inthis Court and in that event leave under Clause 12 of theLetters Patent is not necessary."(underlining added)17. In the case on hand, though the development agreement relatesto levelling/clearing/cutting of trees/erecting of compound wall, etc.,Section 9 petition emanates out of the development agreement as well asthe supplementary agreement dated 11.6.2008 under which the developmentcost is said to have been quantified at Rs.4,91,17,500/-. As discussedinfra, the development agreement with Akash Housing and jointdevelopment agreement between the appellants and Vijay Shanthi Buildersfor construction of Villas/bungalows are strongly connected with eachother. 18. In the joint development agreement with Vijay ShanthiBuilders, parties have agreed that the venue of arbitration shall beChennai. In the supplementary agreement, since the development cost issaid to have been quantified, (which is disputed by the appellants),Section 9 petition cannot be equated to a suit for immovable property.The development agreement, supplementary agreement and the MOU wereexecuted in Chennai and the parties have agreed that in case of anydisagreement the same shall be settled by arbitration. Applying theratio of the decision of First Bench of this Court in DYNASTYDEVELOPERS PVT.LTD. VS. JUMBO WORLD HOLDINGS LIMITED, (2008(1) CTC580), we find that the Original Side of Madras High Court hasjurisdiction to entertain the petition under Section 9. The learnedsingle judge was right in holding that the original Side of Madras HighCourt has jurisdiction to entertain the petition under Section 9 of theAct. 19. The learned Senior Counsel Mr.K.M.Vijayan nextly contendedthat there is no manifest intention on the part of the respondent tohave recourse to arbitration agreement. The learned Senior Counsel forappellants contended that before appointment of arbitrator Section 9application cannot be treated lightly and interim order cannot be givenunless it is shown that there is a manifest intention to move thearbitration. It was further submitted that in the application, the https://hcservices.ecourts.gov.in/hcservices/ respondent did not make any averment on its manifest intention toappoint arbitrator, which the learned single Judge did not keep inview. 20. The scope of the words "before arbitral proceedings" has beenclarified by the Supreme Court in SUNDRAM FINANCE LT;D. VS. NEPC INDIALTD., ((1999) 2 SCC 479) and it is now well settled that the powers ofthe Court under Section 9 can be invoked even before arbitrationproceedings have commenced as long as there is manifest intention toinitiate arbitral proceedings. In ASHOK TRADERS VS. GURUMUKH DASSALUJA, ((2004) 3 SCC 155 = AIR 2004 SC 1433), the Supreme Court hasheld as under:"17. Section 9 permits application being filed in thecourt before the commencement of the arbitral proceedings butthe provision does not give any indication of how much before.The word “before” means, inter alia, “ahead of; in presence orsight of; under the consideration or cognizance of”. The twoevents sought to be interconnected by use of the term “before”must have proximity of relationship by reference to occurrence;the later event proximately following the preceding event as aforeseeable or “within-sight” certainty. The party invokingSection 9 may not have actually commenced the arbitralproceedings but must be able to satisfy the court that thearbitral proceedings are actually contemplated or manifestlyintended (as Sundaram Finance Ltd. ((1999) 2 SCC 479) puts it)and are positively going to commence within a reasonable time.What is a reasonable time will depend on the facts andcircumstances of each case and the nature of interim reliefsought for would itself give an indication thereof. Thedistance of time must not be such as would destroy theproximity of relationship of the two events between which itexists and elapses. The purpose of enacting Section 9, read inthe light of the Model Law and UNCITRAL Rules is to provide“interim measures of protection”. The order passed by the courtshould fall within the meaning of the expression “an interimmeasure of protection” as distinguished from an all-time orpermanent protection."21. In the case on hand, the learned single Judge directed therespondent to initiate the arbitral proceedings within one month fromthe date of the order (3.12.2010). The learned counsel for respondenthas also drawn our attention to a request - communication sent by therespondent to Justice K.P.Sivasubramaniam (Retd.) to find out hiswillingness to be the arbitrator. Therefore, in such view of thematter, it cannot be said that there is no manifest intention on thepart of the respondent to initiate arbitral proceedings. However, asdiscussed infra, the agreement between the appellant and Akash Housingand the appellants' agreement with Vijay Shanthi Builders are strongly https://hcservices.ecourts.gov.in/hcservices/ connected. In such view of the matter, we do not propose to delve into"respondent's manifest intention or otherwise". 22. On behalf of the appellants, it was submitted that in so faras the joint development agreement with Vijay Shanthi Builders, whichalso contains an arbitration clause, Vijay Shanthi Builders has filedcivil suit for specific performance in C.S.No.36 of 2010. According tothe Appellants, the development agreement with Akash is an inchoateagreement and it cannot stand in isolation and depends upon thedevelopment agreement with Vijay Shanthi Builders. The case ofAppellants is that since the development agreement with Akash Housingand joint development agreement with Vijay Shanthi Builders are inter-dependent, and are integral part of one and the same, the conduct ofthe respondent is manifest by pursuing to parallel proceedings byfiling petition under Section 9 of the Arbitration Act andsimultaneously Civil Suit for specific performance. 23. Repelling the said contention, the learned counsel for therespondent submitted that as per the supplementary agreement, theamount of Rs.Rs.4,91,17,500/- has been quantified and therefore thedevelopment agreement with Akash Housing and the supplementaryagreement have to be looked independently. The learned counsel wouldfurther contend that Akash housing is a partnership firm, whereas VijayShanthi Builders is a limited Company and both the entities, beingdifferent, the agreements cannot be said to be inter-dependent. 24. We have carefully considered the rival contentions. As pointedout earlier, both agreements between the appellants and respondent –Akash Housing (17.05.2006) and M/s.Vijay Shanthi Builders (dated17.05.2006) are in respect of the same property. Of course, in thedevelopment agreement with Vijay Shanthi Builders, there are two othersurvey numbers viz., S.No.177/2 and 180/2 – 1.26 acres. Akash Housing,a partnership firm is represented by its Partner – Mr.Suresh Kumar. Thesame person – Mr.Suresh Kumar is representing Vijay Shanthi Builders asits Managing Director. Supplementary agreements were executed betweenthe appellants and Akash Housing and M/s.Vijay Shanthi Builders on thesame day i.e., 11.6.2008. Though the entities are different in both theagreements, the subject matter is the same and both the firm andCompany are represented by Mr.Suresh kumar. It is pertinent to notethat a single power of attorney has been executed by the appellants infavour of Mr.Suresh Kumar representing Vijay Shanthi Builders and thesame has been used by both the respondent and Vijay Shanthi Builders.Furthermore the cancellation of the power of attorney given in favourof Vijay Shanthi Builders has been shown as one of the cause ofaction. In our considered view, the developmental activities such aslevelling/clearing/cutting of trees/erecting of compound wall agreed byAkash Housing is strongly connected with the agreement with VijayShanthi Builders. In Clause 5 of the supplementary agreement, the https://hcservices.ecourts.gov.in/hcservices/ appellants agreed to pay to the respondent "on receipt of the amounts"from the sale of its share in the developmental activities envisaged bythe appellants. The appellants would receive the amount from the saleof their share in the developmental activities when M/s.Vijay ShanthiBuilders complete the construction of villas/bungalows. We are of theview that the payment of the amount to Akash Builders depends upon theconstruction of Villas/bungalows and its marketing and both thedevelopmental agreements between the appellants and Akash Housing andVijay Shanthi Builders as well as the supplementary agreements dated11.06.2008 are strongly connected. The dispute between the appellantsand Akash Housing cannot be determined in isolation dehors the disputebetween the appellants and Vijay Shanthi Builders. 25. It is pertinent to note that Vijay Shanthi Builders has filedsuit for specific performance in C.S.No.36 of 2010 before the HighCourt, Madras. In the said suit, the appellants filed ApplicationNo.516 of 2010 to reject the plaint in C.S.No.36 of 2010 and alsoApplication No.648 of 2010 to revoke the unconditional leave grantedin O.A.No.123 of 2010 dated 11.1.2010. Holding that the suit forspecific performance relates to immovable properties situated outsidethe Original Side jurisdiction of High Court, by the order dated21.4.2010 the learned single judge allowed Application No.648 of 2010and revoked the leave granted. The learned single judge directed theRegistry to return the plaint for filing it before the Court having theterritorial jurisdiction and given liberty to the appellants to raisethe point regarding the arbitration clause as and when the suit isfiled before the competent Court. Being aggrieved by revoking of leaveand allowing application – A.No.648 of 2010, Vijay Shanthi Builders haspreferred appeal in O.S.A.No.194 of 2010. Referring to ADCONELECTRONICS PVT.LTD. VS. DAULATE AND ANOTHER (2001 (4) CTC 39), by theOrder dated 16.7.2010, the Division Bench of this Court allowed theO.S.A.No.194 of 2010 holding that "the suit for specific performanceis not for the land but only for enforcement of the agreement and heldthat the suit is maintainable." As against the said order, theappellants have filed review in Review Application No.132 of 2010 andthe same also came to be dismissed by the order dated 22.11.2010. 26. While praying to revoke unconditional leave granted for filingthe suit, the appellants also prayed to vacate the interim injunctionand the order of status quo granted in O.A.No.49 of 2010 and O.A.No.50of 2010. Application No.648 of 2010 was allowed by the learned singlejudge. Consequent to the revocation of the unconditional leave, theinterim injunction granted in Application No.49 of 2010 in C.S.No.36 of2010 and the status quo in Application No.50 of 2010 dated 12.1.2010were vacated. 27. It is pertinent to note that as against vacating of interiminjunction and status quo in Application Nos.49 and 50 of 2010, VijayShanthi Builders has not chosen to prefer any appeal. As we pointed https://hcservices.ecourts.gov.in/hcservices/ out earlier, in both the development agreements, both the firm and theCompany are represented by the same individual and both the agreementsare strongly connected. The dispute pertaining to Akash Housing cannotbe determined in isolation without examining the dispute between theparties in respect of Vijay Shanthi Builders. When the injunctionapplication filed by Vijay Shanthi Builders, who was put in possessionand apparently has a larger right than the very same relief cannot begiven to the respondent herein. In such facts and circumstances,whether it is "just and convenient" to grant interim injunction as aninterim measure of protection as contemplated under Section 9 of the1996 Act. The purpose of Section 9 is to provide an interim measure ofprotection to the parties to prevent the ends of justice from beingdefeated. S.9(2)(e) vests the Court with the power to grant suchinterim measures of protection as may appear to be just and convenient.The jurisdiction under the "just and convenient" clause is quite widein amplitude, but must be exercised with restraint. Interim measuresare to be granted by the Court so as to protect the right inadjudication before the arbitral tribunal from being frustrated. Itdoes not allow the Court the discretion to exercise unrestrained powersand frustrate the very object of arbitration.28. Under Section 9 of the 1996 Act, for the Court to grantinterim injunction, the Court must be satisfied (i) existence of primafacie case, (ii) balance of convenience and (iii) potential forirreparable loss or injury. The power under Section 9 has beenconsidered as essential for strengthening and establishing theeffectiveness of the arbitration proceedings. Even if a prima faciecase existed in favour of a party, the Court will grant "noinjunction", where the Court feels that the grant of injunction wouldfrustrate the object of the arbitration. Since the agreement betweenthe appellant and respondent is strongly connected with appellant'sagreement with Vijay Shanthi Builders of which the suit is pending, inthe facts and circumstances of the case, we are of the view that thisis not a fit case where the Court has to exercise its discretion underSection 9 of the Arbitration Act. The learned single judge did not keepin view that the dispute between the appellants and the respondent –Akash Builders cannot be examined without examining the dispute of theappellants with Vijay Shanthi Builders. In such facts and circumstancesof the case, the order of the learned single judge granting interiminjunction is liable to be interfered with. At the risk of repetition,it may be noted, that interim injunction granted in C.S.No.36 of 2010came to be vacated which remains unchallenged, grant of any interiminjunction under Section 9 of the Act will create conflicting orders.In view of our conclusion, we do not propose to go into the next limbof submission of the appellants that the respondent has no manifestintention of referring the dispute to arbitration. https://hcservices.ecourts.gov.in/hcservices/

29. In the result, the order of the learned single judge dated3.12.2010 made in O.A.Nos.40 and 41 of 2010 are set aside and theseappeals are allowed. However, there is no order as to costs.Consequently, the connected miscellaneous petitions are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar uskCopy to:1.The Sub-Asst.RegistrarOriginal Side,High Court, Madras+1cc to M/s. K.M.Vijayan Associates Sr 17687SP(CO)km/14.3 O.S.A.NOS.25 and 26 OF 2011