B.P. Colabawalla, J.
1. This Appeal takes exception to the order of the learned Single Judge dated 10 October 2013 under which the learned Single Judge revoked the leave granted under Clause XII of the Letters Patent to file a section 9 Petition under the provisions of the Arbitration and Conciliation Act, 1996 (for short âthe Actâ).
2. The leave was initially granted on the basis that a material part of the cause of action has arisen within the jurisdiction of this Court, and therefore, on granting leave under Clause XII, this Court had jurisdiction to entertain the section 9 Petition. In a nutshell, vide the impugned order, the learned Judge upheld the contention of the Respondent that the dispute in the proposed arbitration between the parties was in respect of the land situated at Indore which was owned by the Respondent and which was to be developed by the Appellant. In other words, the learned Judge held that the dispute between the parties in the proposed arbitration would amount to a âsuit for landâ as envisaged under Clause XII of the Letters Patent, and therefore, the section 9 Petition could only be filed where the property was situated, which in the present case is at Indore. On this basis, the learned Single Judge revoked the leave granted by this Court. Hence the present Appeal.
3. The facts stated briefly are that under a development agreement dated 28 February 2008 registered with the Sub-registrar, Indore executed between the Respondent herein as the owner and the Appellant herein as the developer, the Appellant acquired developmental rights in respect of a property bearing Survey No.1487/1 and Survey No.1487/2, totally admeasuring 4.160 hectares situated at Kesar Bagh Road, Kasba Indore, Patwari, Halka No. 15/2, Tehsil, District Indore, Madhya Pradesh (hereinafter referred to as âthe said landâ).
4. Though initially at the time of executing the development agreement it was merely decided that the said land would be developed as a residential project and / or commercial complex and / or multiplex and / or hotels and / or malls etc., it was later decided that the township comprising of one commercial building, eleven residential wings and one private club house would be built upon the said land and would be named and styled as âSumer Saffron Homesâ (hereinafter referred to as the âsaid projectâ). Under the said development agreement, the Respondent was entitled to 40% of the developed saleable area and the Appellant was entitled to the balance 60% saleable area. One of the clauses under the said development agreement, inter alia, stipulated that the Appellant was entitled to possession of the said land and accordingly the Respondent by a separate possession receipt dated 28 February 2008 handed over to the Appellant possession of the said land which is the subject matter of the development agreement. It is the specific case of the Appellant in the Petition filed under section 9 of the Act that the Appellant is in exclusive possession of the said land.
5. It is the further case of the Appellant that possession of the said land was to remain with the Appellant till the completion of the entire project and refund of the security deposit by the Respondent. Some of the clauses of the said development agreement read as under:-
â4.(viii) Upon receiving the permissions and sanctions from the competent authority the Developer shall be entitled to start the proposed development work. The possession of the said land shall continue to be with the Developer only till completion of the entire project and refund of the Security Deposit and thereafter possession will be jointly owned.
7. REFUND OF SECURITY DEPOSIT:-
B. The Developer shall upon completion of any part of the project intimate the same to the Owner and the area in Sq Feets being proposed to be handed over to the Owner. The Owner upon receiving such communication shall refund the amount of Security deposit calculated on the above basis to the Developer and shall thereafter get the possession of the developed area.
C. The Developer shall be entitled to retain the area in the share of the Owner in absence of refund of the Security Deposit or any delay cause in the same.
11. The Owner agrees and declares that the Developers shall be entitled to raise finance as construction / project loan, for approval of the project etc. from any financial institution/s, Bank/s, Organization/s or individuals and for the said purpose are entitled to create charge or mortgage their share under this Agreement without affecting the Owners share, rights and interest in the said property. The Developers hereby agree and confirm that the loans borrowed by it shall be on principal to principal basis and the Owner and his property shall in no manner be liable and/or responsible for the same. However the Owner consent for such purposes will not require.
12. The Developer shall be entitled to retain, sell, lease, exchange, gift create leave and licence or enter into any package deal with regard to sale or alienation for Developers Share of the proposed project and to enter into any agreement in this regard with any person and to receive money in part or full for the same to be constructed on the property of the Owner on such price and terms as deemed proper to the Developer without reference to the Owner. The Owner shall also have the same right as the Developer subject to fulfillment of conditions as stipulated in Clause subject to complaisance of Clause 10 of this Development Agreement regarding refund of Security Deposit.
13. RESOLUTION OF DISPUTES :-
That in case of any difference or dispute between the parties with regard to the meaning or construction of this MOU or regarding any terms of the Development Agreement or with regard to the project undertaken under this MOU or Development agreement to be executed between the parties, the same shall be resolved by arbitration in conformity with the provisions of the Arbitration and Conciliation Act, 1996.â
(emphasis supplied)
6. After entering into the development agreement, there was protracted correspondence between the parties regarding the requisite permissions, sanctions and development of the said project; regarding payment of the refundable security deposit of Rs.20 crores; and regarding delay with reference to implementation of the project etc. For the purposes of deciding this appeal, we are not really concerned with the merits of the allegations contained in the said correspondence. Be that as it may, thereafter the parties entered into a MOU dated 8th June 2012 which inter alia recited that the developer (Appellant) has to construct a township project consisting one commercial building, eleven residential wings in four buildings and one club house under licence from the Indore Municipal Corporation. The parties agreed that if the MOU was terminated, the developer (Appellant) would not have any right, title or interest in the township and would be required to remove his machinery and employees. The purpose for which the MOU was entered into is stated in the recitals therein which read as under :-
âand Whereas 'YES BANK' (hereinafter referred to as the 'SAID BANK') has principally agreed to grant loan of Rs.85 crores to the Developers for the development of the said Township for which purpose the Developers are required to mortgage the Land and Development of the said Township to the SAID BANK in lieu of which the SAID BANK has agreed to disburse construction related loan which shall be disbursed as per the progress of the project.
and Whereas as the Development Agreement did not provide for mortgage of the Land of the OWNER and for availing the facility of loan the Developer are required to mortgage the entire project the Developer has proposed to pay a lump sum amount of Rs.137 crores to the OWNER in lieu of his share in the said Township for which consideration the Owner has agreed to permit the Developer to avail loan facility from the Said Bank for the development of the Said Township and to release / transfer his Share in the said Township in favour of the Developer.â
7. In a nutshell, the MOU provides that a sum of Rs.137 crores was payable by the Appellant to the Respondent in place of the 40% share of the Respondent under the Development agreement. This payment was to be made in a time bound manner as set out in the said MOU. The MOU further provided that on termination of the development agreement and the MOU, the Respondent was entitled to take back possession and absolute ownership of the said project in the existing stage as it is, without any encumberance of the developer (Appellant). It further provided that in such an event the Respondent would be entitled to deal with the development already put up by the Appellant in any manner the Respondent so chooses. This MOU also incorporated an arbitration clause (see clause 19). It must be mentioned that this MOU, according to the Appellant, is not adequately stamped or registered.
8. Pursuant to this MOU, the Respondent deposited the original title deeds of the said land with YES BANK. It appears that the said Bank has been repaid its dues in full and the said Bank has shown its readiness and willingness to return the original title deeds and other documents only if jointly collected by the Appellant and the Respondent.
9. As there were serious disputes between the parties, with reference to timely payment as well as regarding the progress of construction of the said project, the Respondent, under its advocates letter dated 6 June 2013, terminated the MOU and the development agreement, forfeited the security deposit and invoked arbitration. After setting out the background of what had transpired between the parties, the said notice stated as under:-
â9. My client therefore hereby terminates the said MOU and the Development Agreement with immediate effect and has today taken over possession and absolute ownership of the said Township including the structures in accordance with the terms of the said MOU, including the construction made by you towards the development of the said Township.
10. On account of the breach of contract committed by you , my client also hereby forfeits the security deposit amounting to Rs. 20.0 Crores, in accordance with the terms of MOU.
11. The legal ownership of the land is and has always been vested in my client but is only subject to the Declaration dated 08.06.2012 made in favour of the YES Bank. However, the YES Bank has, vide its letter dated 29.05.2013 confirmed that as a result of final payment received by it, as on date, there are no outstanding dues with respect to the Term Loan facility of Rs.85.0 crores availed exclusively by you and that it is ready and willing to release the title deeds to the said land on the condition that you and my client jointly collect it from the Bank's Indore branch. The Bank has categorically stated in this letter that the title deeds would not be released singly to either you or to my client.
12. In view of the aforesaid and considering the fact that the land is owned by my client, you are requested to accompany my client from his residence at Indore on 13.06.2013 at 11 am for the purpose of joint collection of title deeds from the Bank enabling my client to receive the same back. If you do not comply with this requisition, you will deprive of access to my client's land and my client thereupon will claim damages from you for the consequent loss to my client.â
10. In reply to the aforesaid notice, the Appellant by its letter dated 19 June 2013 denied the contentions raised by the Respondent in the letter of termination and inter alia called upon the Respondent to specifically perform the development agreement dated 28 February 2008. It would be apposite to reproduce certain paragraphs of the said letter dated 19 June 2013 which read as under:-
â9. Without prejudice to what is stated hereinabove, your client as Owner of property admeasuring 4.160 Hectare situated at Survey No.1487/1 and Survey No.1487/2 at Kesar Kasba Baug Road,Indore, Patwari Halka No.15/2 Tehsil and district (Indore) M.P. (referred as 'the said property') did grant to our clients the development cum Sale rights of the said property on the terms and conditions contained therein. At the time of execution of the said Agreement, your client did hand-over to our clients the exclusive physical possession of the said property. The registered Agreement recorded the terms and conditions of Development Cum Sale of the property.
(a) It was agreed between the parties that your client as Owner would be entitled to 40% of the developed Salable area with the balance remaining with our clients irrespective with the nature of development. Under Clause 3, it was agreed that our clients would give a refundable Security Deposit of Rs. 20 Crores to your client. The said Security Deposit was a refundable deposit and in the event, your client did not refund the said deposit, then, under Clause 7 (C), our clients as the Developer would be entitled to retain the area, which would come to the share of the Owner. Accordingly, our clients had made the payment of the refundable Security Deposit to your client.
21. With reference to Para 9 of the letter under reply, our client denies that your client is entitled to terminate the Agreement for Development. Our client has made the payment of Rs.20 Crores towards refundable Security Deposit and Rs.4 Crores as a loan to your client to tide him over his financial difficulties. Moreover, in the terms of the Agreement, your client has received a sum of Rs.47,37,467/- being 35% Share in the advances received on the Sales. Further, our client has paid various charges to the Various Authorities for obtaining the requisite permissions as demanded by your client from time to time and also in view of our clients being in exclusive possession of the said property along with the construction carried thereon. The contention of your client to be entitled to terminate the said MOU and the Development Agreement allegedly by reason of our clients alleged failure to pay the amounts alleged to be due from our clients is not only unwarranted and uncalled for but is also unjust and untenable. Your client's failure to obtain the requisite permissions and sanctions and to ensure continuation of the validity thereof in breach of his contractual obligation, but for which, the project would have progressed well ahead of the stage at which it presently stands. With further reference to the said Paras, our clients deny that your client has any right to terminate the Development Agreement as alleged on the basis of the Termination Clause in the said MOU as alleged or at all. Our clients further deny that any amounts are due and payable under the said MOU. Our clients also deny that your client is entitled to terminate the Development Agreement with immediate effect as alleged or at all. With further reference to the said para, our clients deny that by addressing the letter under reply, your client is entitled to take back the possession of the property and the ownership of the township, as alleged, which is admittedly in exclusive possession of our clients in pursuance to Agreement dated 28 February, 2008.
22. With reference to Para 10 of the letter under reply, our clients deny that you are entitled to forfeit the Security Deposit of Rs.20 Crores in accordance with the MOU, as alleged. We are instructed to inform you that the refundable Security Deposit of Rs. 20 Crores was paid to your client under a registered Deed dated 28 February 2008. In view of the failure of your client to obtain Environment Clearance, our clients are entitled to 1% interest per month on the Security Deposit under Clause 8(c) of the Agreement.
23. With reference to Para 11 of the letter under reply, our clients deny that the legal ownership of the land is any longer of your client. In view of the Security Deposit, being retained by your client and our clients having given a sum of Rs. 4 Crores to your client to tide over his financial difficulty, our clients have a charge on the said land. Furthermore, Yes Bank has correctly not handed over the original title documents to your client, as your client is no longer entitled to receive the said documents from Yes Bank, in view of the mortgage with Yes Bank and the charge of our clients on the property.
24. With reference to Para 12 of the letter under reply, our clients deny that your client is entitled to impose upon our clients any conditions which are not in sync with the Agreement for Development. Our clients further state that in the event, you deprive our client the access to the property as threatened in the said letter, our clients shall initiate civil and criminal proceedings against your client for unlawful restraint upon our clients in view of our clients being the person in legal and actual physical possession of the property.â
(emphasis supplied)
11. In reply to the aforesaid letter dated 19 June 2013, the advocates for the Respondent by their letter dated 30 June 2013 reiterated that since disputes had arisen between the parties, the Respondent nominated Hon'ble Shri Justice R. C. Lahoti, the former Chief Justice of India, as a sole arbitrator and requested the Appellant to confirm the aforesaid nomination within 30 days from the receipt of the said letter. This letter also sought to set out the purpose for which Memorandum of Understanding dated 8 June 2012 was executed. The Respondent's advocates further stated in the said letter that the Respondent being the owner and occupier of the said land had given possession to the Appellant, only for the specific and limited purpose of construction that was to be carried out. This possession was given on a temporary basis. Since the Respondent had terminated the development agreement and the MOU, it was reiterated that the Respondent had taken over the entire physical and actual possession of the said land. In view thereof, the Appellant was called upon to remove its machinery and construction material lying upon the said land within a period of 15 days, failing which the Respondent would deal with the same in the manner as he deemed fit.
12. The aforesaid letter of the Respondent was again replied to by the advocate for the Appellant by its letter dated 16 July 2013. By the said letter, it was denied that the physical possession of the said land has been taken over by the Respondent as alleged in the letter under reply. It was reiterated by the Appellant that its construction material, machinery, and office equipment required for construction activities were still at site along with its office staff, contractor's staff, PMC staff and workers. The Appellant once again claimed that it was in exclusive physical possession of the said land and put the Respondent to notice that if there was any damage to the Appellant's property, construction material or labour, the Appellant would hold the Respondent solely responsible for the same.
13. In this factual background and since there were serious disputes between the parties, the Appellant filed the above section 9 Petition after obtaining leave under Clause XII of the Letters Patent. In the Petition seeking leave under Clause XII, it was inter alia averred that the material part of the cause of action had arisen in Mumbai, and therefore, on leave being granted to the Appellant under Clause XII of the Letters Patent, this Hon'ble Court would have jurisdiction to try, entertain and dispose of the proposed Arbitration Petition under section-9 of the Act. After the leave was granted, the Appellant filed the section-9 Petition inter alia praying the Respondent be restrained from entering upon the said land and/or from disturbing or interfering with the Appellants possession thereof in any manner. To support this prayer, the Appellant, in the section-9 Petition, inter alia averred as follows:-
â10. The Petitioners have shocked to receive letter dated 6 June 2013, from Respondent's Advocates, informing the Petitioner that the Respondent had terminated the MOU and the Development Agreement with immediate effect and had allegedly taken over the possession of the Township in terms of the MOU. By the said letter, the Petitioners were further informed that the Security Deposit of Rs. 20 Crores stood forfeited. The Petitioners were informed that without prejudice to the termination, the Respondent made a demand of payment of Rs. 71 Crores along with interest thereon. A copy of the letter dated 6 June 2013 is annexed and marked Exhibit-F hereto.
14. The Respondent, by Advocates letter dated 30 June 2013 sought to invoke the Arbitration Clause under the Development Agreement and the Memorandum of Understanding. By the said letter, the Petitioners were informed that the entire physical and actual possession was allegedly already taken over by the Respondent. This is a false statement. The Petitioners were further called upon to remove the machinery and construction material. Hereto annexed and marked Exhibit-I is a copy of the Respondents' Advocates letter dated 30 June 2013.â
17: The Petitioners submit that they had completed substantial work by completing Building B-1, B-2 and B-3 (where only top slabs are pending), construction of five slabs of Building C-1, commencing digging and footing work of Building A-1. The Petitioners' machinery and labour are at site. The Petitioners are in possession of the site. Now, the Respondent has suddenly demanded a sum of Rs. 71 Crores, allegedly due to the Respondent, under the MOU dated 8 June 2012. Though not entitled, the Respondent has sought to forfeit the Security Deposit of Rs. 20 Crores, in accordance with the MOU.
18: In the circumstances, the Petitioners submit that the Petitioners are entitled to, pending an adjudication in the proposed Arbitral proceedings and for a period of sixty (60) days after the award therein, for an Order of injunction, restraining the Respondent by himself or through his servants or agents from entering upon the property, subject matter of the Development Agreement and from dealing with and moving the machinery of the Petitioners used in construction activity and from disturbing or interfering with the Petitioners possession thereof in any manner.â
(emphasis supplied)
14. In this section 9 Petition, the Respondent filed the above Chamber Summons seeking recall of the order dated 6 August 2013, pursuant to which leave was granted under Clause XII of the Letters Patent to file the above Arbitration Petition. In the said Chamber Summons, the principal contention of the Respondent was that the dispute between the parties being one relating to the possession of the said land and also about the rights and interests of the Respondent therein, which was situated at Indore, the disputes in the proposed arbitration were in the nature of a âsuit for landâ and thus this Court had no jurisdiction to entertain the section-9 Petition. The Respondent therefore, sought revocation of the leave granted under Clause XII of the Letters Patent.
15. After hearing the parties at great length, the learned Judge by an elaborate reasoned order allowed the Chamber Summons and revoked the leave under Clause XII granted by this Court. Hence, the present Appeal.
16. Mr. Dada, learned Senior Counsel appearing on behalf of the Appellant, contended that the jurisdiction of this Court in its original civil jurisdiction is determined by Clause XII of the Letters Patent. He submitted that the applicability of sections 16, 17 and 20 of the Code of Civil Procedure, 1908 (for short âCPCâ) is specifically excluded by section 120 of the CPC which stipulates that sections 16, 17 and 20 of the CPC shall not apply to the High Court in exercise of its original civil jurisdiction. He submitted that the learned Single Judge completely misdirected herself by coming to the conclusion that the dispute between the parties hereto amounted to a âsuit for landâ. He submitted that a âsuit for landâ is one where on the pleadings, the controversy raised is such that the Court is called upon to adjudicate as to the title to the land or other immovable property or the court is asked to pass a decree or order which would affect directly the proprietary or possessory title to the land or immovable property. According to Mr. Dada, in the present case there was no dispute with reference to (i) either title to the said land or (ii) the possession thereof. He submitted that the claim of the Appellant in the arbitration simplicitor relates to specific performance of the development agreement, and any relief in aid of specific performance including an interim relief to protect possession of the Appellant would not convert the dispute between the parties into one which could be termed as a âsuit for landâ as understood under Clause XII of the Letters Patent. He submitted that this was clear from the scope of the dispute raised by the Respondent (claimants) in its letter dated 6 June 2013 wherein the agreement for development as well as the Memorandum of Understanding were terminated. Even in reply to the aforesaid letter, the Appellant, by its letter dated 19 June 2013 had called upon the Respondent to specifically perform the development agreement dated 28 February 2008 and called upon the Respondent to pay interest on the security deposit of Rs. 20 Crores and to refund the sum of Rs. 4 Crores loaned by the Appellant to the Respondent. He submitted that looking at the dispute as raised between the parties in the correspondence, it was clear that this was a dispute relating only to specific performance of the development agreement, and was therefore, an action in personam which could never be termed as a âsuit for landâ. Mr. Dada further submitted that the impugned judgment heavily relies upon the judgment of the Calcutta High Court in the case of New Age Realty Pvt Ltd v/s M/s Karthikeya Ancilaries Pvt Ltd and Another (AIR 2011 CAL 229 : 2012 (2) ARB LJ 241 (CAL)which according to him, is contrary to the settled law as to what dispute can be termed as a âsuit for landâ. He submitted that in the facts of the present case, there is no dispute that at least a material part of the cause of action had arisen within the jurisdiction of this Court, and therefore, if the present dispute does not fall within the term âsuit for landâ, then, this Court rightly granted leave under Clause XII of the Letters Patent to entertain the section 9 Petition. In support of his submission that the present dispute cannot be termed as a âsuit for landâ, heavy reliance was placed on a five judge Bench Judgement of the Federal Court in the case of MooljiJaitha and Co. vs. Khandesh Spinning and Weaving Mills Co Ltd. (AIR 1950 FC 83 : (1949-50) 11 FCR 849 (FC).For all the aforesaid reasons, Mr. Dada submitted that the impugned order was unsustainable and had to be set aside.
17. The real question that arises for our consideration in this Appeal is whether the dispute between the parties would fall within the term âsuit for landâ as appearing in Clause XII of the Letters Patent. To understand the controversy, it would be apposite to reproduce Clause XII of the Letters Patent.
â12. Original jurisdiction as to suits- And we do further ordain that the said High Court of Judicature at Bombay, in the exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try and determine suits of every description, if, in the case of suits for land or other immovable property such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court, or if the defendant at the time of the commencement of the suit shall dwell or carry on business, or personally work for gain, within such limits; except that the said High court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Bombay, in which the debt or damage, or value of property sued for does not exceed one hundred rupees.â
(emphasis supplied)
18. On a plain reading of Clause XII, it is clear that the High Court in exercise of its ordinary original civil jurisdiction will have powers to receive, try and determine suits (i) for land or other immovable property, if such land or property is situated within the territorial limits of the ordinary original jurisdiction of the High Court; or (ii) in all other cases, (a) if the cause of action has arisen wholly within the local limits of the ordinary original jurisdiction of the High Court; or (b) if prior leave of the Court has been obtained, when the cause of action has arisen in part within the local limits of the ordinary original jurisdiction of the High Court; or (c) if the defendant dwells or carries on business or personally works for gain within such limits. What follows is that if a suit is a âsuit for landâ, the land which is the subject matter of the suit has to be within the territorial jurisdiction of the High Court for the Court to have any authority to receive and try the action. If the suit is regarded to be a âsuit for landâ then the question of the cause of action (either wholly or in part) arising within the jurisdiction of the High Court or the question of whether the Defendants dwell or carry on business, or personally work for gain within its jurisdiction, would be wholly irrelevant for the purposes of determining jurisdiction under Clause XII of the Letters Patent. This is amplified by the words âor in all other casesâ appearing in clause XII of the Letters Patent. In other words in a âsuit for landâ the only criteria that would invest the High Court with jurisdiction would be the location of the said land within the ordinary original civil jurisdiction of the High Court. In a âsuit for landâ, if the land is not situated within its ordinary original civil jurisdiction, the High Court cannot invest itself with jurisdiction on the basis that the cause of action (either wholly or in part) has arisen within its jurisdiction or whether the Defendants dwell or carry on business, or personally work for gain within its jurisdiction. In a âsuit for landâ these considerations would be wholly irrelevant.
19. This being the case, we shall now examine as to what is the meaning of the words âsuit for landâ appearing in Clause XII of the Letters Patent. The words âsuit for landâ came up for consideration before a five Judge Bench of the Federal Court, in the case of MooljiJaitha. (Supra).In the said judgment, the Chief Justice Kania at Pg 847 of the FCR report opined as follows:-
ââ¦â¦. The object of treating suits for land differently from other suits in the clause, which defines the jurisdiction of the Original Side of the High Court, is to respect the generally approved principle that disputes as to title or possession are ordinarily decided where the land is situated. Therefore questions of title to land and not merely to obtain possession of land should be covered by this expression. It seems equally clear that the widest meaning, which will include suits which have any reference to land, should also be rejected. The object cannot be that any question which indirectly or incidentally has any reference to land should be excluded from trial merely because the suit has some reference to land. In the ordinary way therefore a suit for land is one the primary or direct object of which is to obtain possession of, or an adjudication of title to, land.â
(emphasis supplied)
20. The Chief Justice Kania at Pg 857 of the FCR report further held:-
ââ¦â¦. No judicial decision has attempted to give an exhaustive enumeration of the suits covered by the expression âsuit for land and I do not propose to do so. It is sufficient to say that taking the suit as a whole one has to consider whether it is for the purpose of obtaining a direction for possession or a decision on title to land, or the object of the suit is something different but involves the consideration of the question of title to land indirectly.â
(emphasis supplied)
21. Shri Fazal Ali, J. at pg 883 of the FCR report held thus :
In the view I take, it is unnecessary to deal with the so-called substantial question of law said to be involved in the appeal, namely, what is the exact meaning of the expression âsuit for landâ. This question is said to be an important one, since there has been considerable divergence of opinion in regard to it; and if I had really felt that I was called upon to decide it, I would have agreed with the line of cases in which it has been held that, broadly speaking, the expression âsuit for landâ covers the following three classes of suits:
(1) suits for the determination of title to land;
(2) suits for possession of land; and
(3) other suits in which the reliefs claimed, if granted, would directly affect title to or possession of land.â
(emphasis supplied)
22. Shri Patanjali Sastri, J. at pg 885 of the FCR report held thus:
âWithout, however, attempting a definition which will cover all and no more than all the suits that may properly be held to come within that description, it seems reasonable to say, as âsuitâ means the process by which a party seeks to obtain a judicial determination of his rights and âforâ means, in its most natural sense in this context, âin order to get or obtainâ, that the words in question, besides obviously covering claims for recovery of possession or control of land, are apt to connote also suits which primarily and substantially seek an adjudication upon titie to immovable property or a determination of any right or interest therein. This accords, in substance, with the views expressed in the great majority of the decisions on the point, though divergent conclusions have been reached as to whether a claim for any particular class of relief was or was not a âsuit for landâ.
(emphasis supplied)
23. Shri Mahajan, J. at pg 906 of FCR report opined:
In the decided cases great emphasis has been laid on the preposition âforâ in the expression âsuit for landâ in order to determine the true construction to be placed on this phrase. In a large number of cases it has been observed that the natural meaning of the preposition âforâ is âto obtainâ or âto recoverâ and hence the expression âsuit for landâ was intended to cover only suits for the recovery of land. In some cases it was said that the preposition âforâ in the context is capable of bearing another meaning as well, i.e., it can be said to have been used in the sense of âconcerningâ or ârelating toâ, as for instance when used in the expressions, âsuit for libelâ, âsuit for wrongful dismissalâ, etc. In my judgment, the emphasis on the preposition âforâ occurring in the expression âsuit for landâ has led to a wrong approach to the construction of the phrase âsuit for landâ in Clause 12 of the Charter. The preposition âforâ had necessarily to be used after the word âsuitâ in the context of Clause 12 in order to indicate the subject of the suit, the cognizance of which was taken away from the Court. To limit the meaning of the preposition âforâ and to say that it only means âto obtainâ or âto recoverâ does not seem to me a very natural way of construing it when it is indicative of the subject of a suit. If the preposition âforâ was used indicating a particular kind of relief claimed in a suit in respect of which jurisdiction was conferred or taken away, then appropriately it could have been used in the sense âto obtainâ or âto recoverâ, viz., âa suit for possessionâ would mean a suit to obtain possession or to recover possession, âa suit for moneyâ would mean a suit to get money; but a âsuit for landâ cannot be very appropriately said to mean a âsuit to get possession of landâ because in respect of this subject a number of reliefs may be open. In a clause dealing with jurisdiction according to classes of suits and not reliefs the preposition âforâ cannot appositely be used in a limited sense. In its dictionary meaning in a most general sense it indicates that with reference to which anything is done in Order to affect it. It can also bear the following meaning: âregardingâ, âconcerningâ, âquaâ, âaffectingâ, âtouchingâ and âin respect toâ. It seems to me that the expression âsuit for landâ in the clause in the dictionary sense means suits in respect to land or affecting land. This grammatical construction however is likely to lead to some confusion and vagueness unless properly understood and applied. No definition expressed in general words can possibly be satisfactory in the sense of covering every case which may arise. The only method is to see if the facts of any particular case fall within the meaning of the words and the question has to be decided with reference to the essential nature of the relief sought.
24. Shri Mahajan, J. further held: (pg 920 of the FCR report)
Finally, I would like to say a word about suits for specific performance regarding which conflicting decisions have been pronounced by the High Courts in India, In my opinion, if the suit is for specific performance and a decree for possession of the land sold is claimed, such a suit would certainly be a suit for land; but if the suit is simpliciter for specific performance , i.e., for the enforcement of the contract of sale and for execution of a conveyance, in that event there can be no good ground for holding that such a suit is a suit for determination of title to land or that the decree in it would operate on the land.
(emphasis supplied)
25. We may note here that this judgement of the Federal Court came up for consideration before the Supreme Court in the case of AdconElectronics Pvt. Ltd. vs. Daulat and Another. ((2001) 7 SCC 698)After considering the views of Chief Justice Kania, Justice Fazal Ali, Justice Patanjali Sastri, Justice Mahajan and Justice Mukherjea, the Supreme Court held as under:
â15. From the above discussion it follows that a âsuit for landâ is a suit in which the relief claimed relates to title to or delivery of possession of land or immovable property. Whether a suit is a âsuit for landâ or not has to be determined on the averments in the plaint with reference to the reliefs claimed therein; where the relief relates to adjudication of title to land or immovable property or delivery of possession of the land or immovable property, it will be a âsuit for landâ. We are in respectful agreement with the view expressed by Mahajan, J. in Moolji Jaitha case [AIR 1950 FC 83 : 1949 FCR 849]
16. In a suit for specific performance of contract for sale of immovable property containing a stipulation that on execution of the sale deed the possession of the immovable property will be handed over to the purchaser, it is implied that delivery of possession of the immovable property is part of the decree of specific performance of contract. But in this connection it is necessary to refer to Section 22 of the Specific Relief Act, 1963 which runs:
â22. Power to grant relief for possession, partition, refund of earnest money, etc.â
(1) Notwithstanding anything to the contrary contained in the Code of Civil Procedure, 1908, any person suing for the specific performance of a contract for the transfer of immovable property may, in an appropriate case, ask forâ
(a) possession, or partition and separate possession, of the property, in addition to such performance; or
(b) any other relief to which he may be entitled, including the refund of any earnest money or deposit paid or made by him, in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just for including a claim for such relief.â
17. It may be seen that sub-section (1) is an enabling provision. A plaintiff in a suit of specific performance may ask for further reliefs mentioned in clauses (a) and (b) thereof. Clause (a) contains reliefs of possession and partition and separate possession of the property, in addition to specific performance. The mandate of sub-section (2) of Section 22 is that no relief under clauses (a) and (b) of sub-section (1) shall be granted by the court unless it has been specifically claimed. Thus it follows that no court can grant the relief of possession of land or other immovable property, subject-matter of the agreement for sale in regard to which specific performance is claimed, unless the possession of the immovable property is specifically prayed for.
18. In the instant case the suit is for specific performance of the agreement for sale of the suit property wherein relief of delivery of the suit property has not been specifically claimed, as such it cannot be treated as a âsuit for landâ.â
(emphasis supplied)
26. What can be discerned from the aforesaid judgments of the Federal Court and the Supreme Court is that no exhaustive meaning can be given to the expression âsuit for landâ and neither do we propose to do so in this judgment. Whether a particular suit is a âsuit for landâ would have to be determined taking into consideration the suit as a whole. After considering the suit as a whole, if the Court finds that it is one which is primarily and substantially seeking an adjudication upon title to the said land or determination of any right or interest therein or recovery of possession or control thereof, it would fall within the expression âsuit for landâ. On the other hand, if the object of the suit is something quite different but involves the consideration of a question of title to the land indirectly, the same would not fall within the expression âsuit for landâ as appearing in Clause XII of the Letters Patent. A suit simplicitor seeking specific performance of an agreement would be one such instance which would not fall within the expression âsuit for landâ. However, if in a suit for specific performance, a decree for possession of the land sold is also claimed, such a suit would certainly be a âsuit for landâ. This, what we understand, is the law laid down by the Federal Court in MooljiJaitha's case (Supra)and the Supreme Court in AdconElectronics' case. (Supra)We may state over here that Mr. Dada referred to several other judgments of Single Judges of this Court on the scope of the expression âsuit for landâ.
In view of the pronouncement on this issue by the Federal Court in MooljiJaitha's case and Supreme Court in AdconElectronics case, we do not think it necessary to refer to and deal with the aforesaid judgments.
27. Before we delve into the facts of the present case, we must be mindful of the fact that the judgments of the Federal Court in MooljiJaitha's case (Supra)and of the Supreme Court in AdconElectronics case (Supra), were dealing with suits that were filed on the original side of this Court. In this scenario, the aforesaid judgments hold that the suit has to be looked at as a whole and if the Court comes to a conclusion that the suit is one which is primarily and substantially seeking an adjudication upon the title to the said land or determination of any rights or interest therein or recovery of possession or control thereof, it would fall within the expression âsuit for land'. However, in the present case, we are concerned with the Petition filed under section 9 of the Arbitration and Conciliation Act, 1996.
28. It is now well settled that a section 9 Petition can be filed even before the arbitration is invoked and certainly before the arbitral proceedings commenced before the Arbitral Tribunal. In such a scenario, the Court may not have the advantage of perusing the pleadings that would be filed before the Arbitral Tribunal, as against a suit which is filed on the original side of this High Court. In such a situation, the only way the Court would be able to determine as to what is the dispute between the parties is through the correspondence exchanged immediately preceding the filing of the section 9 Petition. This, in fact has been so held by the Single Judge of the Calcutta High Court in the case of New Age Realty Pvt Ltd. (Supra)and on which heavy reliance has been placed by the learned Single Judge whilst revoking the leave granted under Clause XII of the Letters Patent. Paragraphs 14 to 16 of the said Calcutta High Court judgment reads thus:-
14. The difficulty in assessing which would be the appropriate Court that could have received the plaint had a claim been filed by way of a suit rather than being carried by an arbitration petition is that upon a suit being filed, the assessment of whether the Court is the proper Court to have received the action would be based on the plaint relating to the suit; but in an arbitration petition the substance of the claim may not be apparent to Court. That would be the situation both in a pre-reference application under section 9 of the 1996 Act, which is most common form of an arbitration petition, and even in a request under section 11 of the 1996 Act.
15. The matter is even more compounded by the 1996 Act carrying section 5 therein which limits the ambit of judicial interference in matters pertaining to arbitration. Unlike the 1940 Act which required the disputes between the parties to be enumerated, the 1996 Act does not call for the enumeration of the disputes, though in certain cases without the enumeration of the disputes no meaningful assessment can be made.
16. Since there is no claim to go by at the present moment, the assessment as to whether the claim of the petitioner herein could have been filed before any Court in this State, has to be made primarily on the basis of the correspondence between the parties immediately preceding the present request. It would appear from the letter dated April 29, 2010 and the petitioner's response thereto of May 20, 2010, that the disputes between the parties concern a piece of land which is in Coimbatore. The petitioner claims that the petitioner is in possession of the land and that there is no dispute in such regard. The petitioner suggests that the petitioner's challenge to first respondent's termination of the development agreement would not make the petitioner's claim a suit for land.
(emphasis supplied)
29. We are in full agreement with the aforesaid reasoning of the Calcutta High Court.
30. Having said so, we shall now turn our attention to the facts of the present case. As stated earlier, the development agreement dated 28 February 2008 was registered at Indore under which the Appellant acquired developmental rights in respect of the said land. Under the said development agreement, the Respondent was entitled to 40% of the developed saleable area and the Appellant was entitled to balance 60% saleable area. The development agreement also stipulated that the Appellant was entitled to possession of the said land and accordingly the Respondent, by a separate possession receipt dated 28 February 2008 handed over to the Appellant possession of the said land which is the subject matter of the development agreement. Thereafter, the parties entered into a MOU dated 8 June 2012 which inter alia recited that the Appellant was to construct the township project consisting of residential and commercial buildings and a club house and further that the Respondent would be paid a sum of Rs.137 Crores in place of its 40% share under the development agreement. As disputes arose between the parties, the said development agreement and the MOU were terminated by the Respondent by its Advocate's letter dated 6 June 2013 and the Respondent invoked arbitration. It is pertinent to note that in paragraph 9 of the said termination letter, the Respondent has specifically stated that as on that date (6 June 2013), the Respondent had taken over the possession and absolute ownership of the said township including the structures thereon, in accordance with the terms of the MOU. This included the construction put up by the Appellant on the said land. In the said letter, at paragraphs 11 and 12, the Respondent reiterated that it was the owner of the said land.
31. In reply to the aforesaid notice, the Appellant, by its letter dated 19 June 2013 claimed that the Respondent had handed over to the Appellant exclusive physical possession of the said land and claimed to continue to be in exclusive possession thereof along with the construction thereon. The Appellant categorically denied that the Respondent was entitled to take possession of the said land which according to the Appellant was admittedly in its exclusive possession pursuant to the development agreement. In the said letter, the Appellant also sought to deny the legal ownership of the said land as belonging to the Respondent. In fact at paragraph 23 of the said reply, the Appellant has specifically stated as under:-
â23: With reference to para 11 of the letter under reply, our client deny that the legal ownership of the land is any longer of your client. â¦..â
(emphasis supplied)
32. Again by their letter dated 30 June 2013, the Respondent reiterated that since disputes had arisen between the parties, they had proceeded to appoint the Former Chief Justice of India as a sole Arbitrator and requested the Appellant to confirm the aforesaid nomination within 30 days from the receipt of the said letter. This letter of the Respondent further stated that since the Respondent had terminated the development agreement and MOU, the Respondent had taken over the entire physical and actual possession of the said land and in view thereof called upon the Appellant to remove its machinery and construction material from the said land. Again, by its letter dated 16 July 2013, the Appellant once again denied that the physical possession of the said land had been taken over by the Respondent as alleged in its letters dated 6 June 2013 and 30 June 2013 respectively.
33. On going through the correspondence between the parties, it is clear that one of the major disputes raised between the parties clearly relates to possession of the said land at Indore and another major dispute relates to ownership rights over the constructed property on the said land at Indore. Furthermore, the agreement in question is a development agreement. The development agreement read with Memorandum of Understanding grants certain rights in favour of the Appellant to construct commercial and residential building on the said land and in fact entitles the Appellant to retain 60% of the salable area. This would indicate that the development agreement creates interest in the said land in favour of the Appellant. On a holistic reading of the correspondence it is quite clear that there is a serious dispute between the parties relating to the possession of the said land. On the one hand the Appellant claims to be in exclusive possession thereof till today, whereas on the other hand, the Respondent has alleged that the possession of the said land has been taken over by the Respondent on 6 June 2013. This to our mind, is not an incidental issue that would arise in the proposed arbitration but any order passed in the arbitration would operate directly upon the said land. Furthermore, the Appellant has even denied the legal ownership of the Respondent over the said land. These disputes, and which we may add are not ancillary in nature, would certainly amount to a âsuit for landâ as contemplated under clause XII of the Letters Patent. In this backdrop, we are unable to agree with the contention of Mr. Dada that the dispute between the parties in the present case relates only to specific performance simplicitor and that the possession and/or title to the said land was not in dispute.
34. The fact that there is a dispute with respect to possession is further fortified by the averments in the section 9 Petition filed by the Appellant before this Court. In the section 9 Petition, the Appellant has reiterated that they are in possession of the said land and have denied that the entire physical and actual possession thereof has been taken over by the Respondent. It is on this basis that the Appellant in section 9 Petition has prayed for an order of injunction restraining the Respondent from entering upon the said land and/or from disturbing or interfering with the Appellant's possession thereof in any manner. We are, therefore, clearly of the view that one of the major disputes between the parties is in relation to possession of the said land.
35. We may state here that when the impugned order was passed, no pleadings were filed before the Arbitrator. The learned Judge therefore did not have the advantage of perusing the pleadings before the Arbitral Tribunal. The learned Judge was guided by the correspondence exchanged between the parties prior to filing of the section 9 Petition. However, by the time we have heard this Appeal, pleadings have been filed before the Arbitral Tribunal in which the Respondent herein is the Claimant and the Appellant herein is the Respondent. In the said arbitration, the Appellant herein has also filed a counter claim in which the Appellant has prayed for specific performance of the development agreement.
36. We were fortunate to peruse the pleadings that were filed before the Arbitral Tribunal. In the statement of claim filed by the Respondent herein (Claimant) the question of possession of the said land has specifically been put in issue. In the said statement of claim, the Respondent herein has specifically claimed that it has taken over the actual physical possession of the said land, and therefore, prayed for a declaration to that effect as well as for a perpetual injunction restraining the Appellant herein from interfering with his possession. There is also an alternative prayer made that if the Arbitral Tribunal comes to the conclusion that the Appellant herein is still in possession of the said land and unfinished structures, an order for delivery of their possession by the Appellant to the Respondent herein. We, therefore, find that in line with the disputes that were raised between the parties in the correspondence, the Respondent herein (as the Claimant before the Arbitral Tribunal) has specifically put in issue the question of possession of the said land. Furthermore, since the Appellant had denied the legal ownership of the Respondent to the said land, the Respondent has also claimed a declaration that the Respondent has the sole and absolute right, title and interest in respect of the said land along with the unfinished structures standing thereon. We, therefore, find that even on the pleadings before the Arbitral Tribunal the question of title to the said land as well as the possession thereof, is directly in issue which would have to be decided by the Arbitral Tribunal. We, therefore, in these circumstances, are unable to agree with the submission of Mr. Dada that the dispute between the parties is one relating to specific performance simplicitor, and therefore, would not fall within the expression âsuit for landâ as appearing in Clause XII of the Letters Patent.
37. It is true that the Appellant herein has filed a Counter Claim before the Arbitral Tribunal in which the primary relief prayed for is one of specific performance of the development agreement dated 28 February 2008. To our mind, this would make no difference to what we have held in this judgement. Whether or not the Appellant is entitled to specific performance is also an issue which will be decided by the Arbitral Tribunal in addition to the other issues that arise for consideration before it. In fact, the issue of possession and title to the said land has directly been put in issue by the Respondent herein (Claimant before the Arbitral Tribunal) in its pleadings and in fact points for determination have also been framed by the Arbitral Tribunal on that basis. We, therefore, find that the dispute between the parties clearly falls within the expression âsuit for landâ as appearing in Clause XII of the Letters Patent.
38. This being the case, the section 9 Petition could never have been filed in this Court, as admittedly the said land is situated at Indore. As held earlier, once the dispute between the parties amounts to a âsuit for landâ, then whether a material part of the cause of action had arisen within the jurisdiction of this Court was wholly irrelevant. We, therefore, find that the learned Single Judge was fully justified in revoking the leave granted under Clause XII of the Letters Patent.
39. Having said so, we shall now deal with the judgment of the Calcutta High Court in the case of New Age Realty Pvt Ltd. (supra) On going through the said judgment, we find that the facts of that case were quite similar to the facts before us. In that case also a joint development agreement was entered into between the parties in relation to the property situated at Coimbatore under which the developer was to develop the property into a shopping mall-cum-commercial complex consisting of one or more buildings. Though the question involved in that case was with reference to section 11, the Calcutta High Court held as under:-
17. The petitioner says that the petitioner does not question the first-respondent's title to the Coimbatore land and asserts that the possession of the land has been made over by the first respondent to the petitioner. The petitioner insists that merely because some work has to be performed on the land and construction work has to be undertaken thereat, it would not imply that the petitioner's claim relating to the joint development agreement as assigned under the subsequent agreement would entail an adjudication on any right, title and interest relating to the land or any dispute as to the possession thereof.
21. A development agreement, by its very nature, has to be inextricably connected to the land that it relates to. There is no dispute that it is a development agreement relating to Coimbatore property that the parties fight over. It may be true that the petitioner herein is in possession of the property, but such possession is not by virtue of any immediate right or title relating to the property; but only by virtue of development agreement itself and the obligation of the petitioner to perform in terms thereof.
22. The possession of the Coimbatore land, if it has been made over at all to the petitioner, is only for the purpose of the petitioner constructing the shopping mall-cum-commercial complex thereat and not in any other capacity. In any event, the disputes between the parties, as evident from the correspondence exchanged between them immediately prior to the present petition being filed, are such that they are completely rooted to the land and cannot be divorced there-from.
23. The principle recognized in the 1960 Calcutta decision, as now accepted in the 2001 judgment of the Supreme Court cited by the petitioner, may not be apposite in the context since the disputes herein do not relate to the execution of a document but they require the performance of a contract that involves construction on a land which is outside jurisdiction. Further, upon the first respondent's termination of the development agreement, there are questions that arise as to the petitioner's right, title and interest in the land; the petitioner's right to obtain or remain in possession thereof; and, the petitioner's entitlement to a sizeable portion of the constructed space thereat.
24. With the handicap that a Chief Justice's Designate has in considering the gamut of the claim merely on the basis of a request made under section 11 of the 1996 Act, and without the benefit of the statement of claim since such statement would not be filed at such stage, it appears from the correspondence exchanged between the parties just before this petition was filed, that the disputes between the parties are so closely connected to the Coimbatore land that any claim in relation to the development agreement made by the petitioner would be a suit for land.
(emphasis supplied)
40. In the said judgment, the learned Single Judge of the Calcutta High Court has held that a development agreement by its very nature has to be inextricably connected to the land to which it relates to. We do not express any opinion on this absolute proposition, save and except, to state that whether the dispute in relation to any development agreement would fall within the expression âsuit for landâ would depend upon the facts and circumstances of each case. In the present case, we are of the view that the disputes between the parties hereto in relation to the development agreement dated 28 February 2008 and the MOU dated 8 June 2012 are of such a nature that they are rooted to the land. The disputes are not such that they relate only to the execution of any document and/or specific performance thereof simplicitor. The disputes relate to possession of the said land which is outside the jurisdiction of the Court as also regarding the percentage of the parties rights, title and interest in the said land and/or their entitlement to a sizable portion of the constructed space thereon. These disputes would certainly fall within the expression âsuit for landâ appearing in Clause XII of the Letters Patent.
41. For all the aforesaid reasons, we find no merit in this Appeal and the same is dismissed with costs quantified at Rs. 1,00,000/- which shall be paid to the Respondent within a period of two weeks from today.