Goldendreams Arcade Pvt. Ltd., a Company Incorporated and Registered Under the Provisions of the Companies Act, 1956 Vs. Shiv Embroidery Manufacturing Company, a Partnership Firm Registered Under the Provisions of the Indian Partnership Act, 1932 - Court Judgment

SooperKanoon Citationsooperkanoon.com/361979
SubjectArbitration
CourtMumbai High Court
Decided OnJul-10-2009
Case NumberAppeal No. 119 of 2009 in Arbitration Petition No. 267 of 2008
JudgeB.H. Marlapalle and ;S.J. Vazifdar, JJ.
Reported in2009(6)BomCR187; 2009(6)MhLj454
ActsArbitration and Conciliation Act, 1996 - Sections 9 and 11
AppellantGoldendreams Arcade Pvt. Ltd., a Company Incorporated and Registered Under the Provisions of the Com
RespondentShiv Embroidery Manufacturing Company, a Partnership Firm Registered Under the Provisions of the Ind
Appellant AdvocateP.K. Samdhani, Sr. Counsel, ;Simil Purohit and ;Abhishek Sawant, Advs., i/b., Wadia Gandhy and Co.
Respondent AdvocateD.D. Madon, Sr. Counsel and ;Chetan Kapadia, Adv., i/b., DSK Legal
Excerpt:
- - the breach, he submitted, was the failure on the part of the appellant to tender the consideration in terms of the agreement. he further submitted that the appellant had committed a breach under another agreement which indicates an absence of readiness and willingness on its part to perform this agreement as well. 25,00,000/-.the second submission is according to us not well founded in law or on the facts of this case. ..the appellant, purchaser was by clause 3 afforded another opportunity of making good the payment of a dishonoured cheque within fifteen days. the respondents ought to have first deposited the post dated cheques which they held as security under clause 3. even if those cheques had been dishonoured, the appellant was entitled to another opportunity of making good the payment within fifteen days. the appellant was thus denied the opportunity of making good the deficit, if any, in its account on which the said cheques were drawn within fifteen days. 19. the learned judge further held that the appellant was not entitled to any reliefs in view of its conduct in respect of the other agreement as well as its failure to deposit a sum of rs. considering the same, as well as the above facts, it is necessary to protect the appellant's right to claim specific performance and/or any other reliefs pending the hearing and final decision of the arbitrators. the appellants have more than just a strong prima-facie case. the balance of convenience is also clearly in favour of the appellants. in the event of the amount being deposited the office shall invest the same in fixed deposit of a nationalized bank initially for a period of one year and thereafter for like periods of one year each.s.j. vazifdar, j.1. heard the learned counsel for the parties. admit. respondent waives service.2. at the request of the parties, heard finally.3. this is an appeal against the order and judgment of the learned single judge dismissing the appellant's arbitration petition under section 9 of the arbitration and conciliation act, 1996 (for short 'the said act').4. the appellant claims to be entitled to specific performance of an agreement dated 16.8.2007 under which the respondents agreed to assign and transfer to the appellant and the appellant agreed to purchase and acquire from the respondents all the benefits of an agreement for lease in respect of the property for the residual period of lease for a consideration of rs. 3,40,00,000/-.5. in the above application under section 9 of the said act, the appellant has sought the usual interim reliefs in an action of this nature for the appointment of a court receiver and for an injunction restraining the respondents inter-alia from encumbering the property in any manner.6. the execution of the agreement is admitted. that clause 19 thereof pertains to arbitration is also admitted. the appellant has admittedly paid the respondents a sum of rs. 2,65,00,000/-constituting 78% of the consideration. the appellant also tendered a further sum of rs. 25,00,000/- which the respondents did not accept and instead terminated the agreement by a letter dated 15.2.2008. in our opinion, the termination was not justified.7. the argument before us was confined to a limited aspect namely as to whether the appellant was ready and willing to perform the agreement. mr. madon, the learned senior counsel appearing on behalf of the respondents submitted that the appellant was not only not ready and willing to perform the agreement but had committed a breach thereof. the breach, he submitted, was the failure on the part of the appellant to tender the consideration in terms of the agreement. he further submitted that the appellant had committed a breach under another agreement which indicates an absence of readiness and willingness on its part to perform this agreement as well.8. on the first submission we are of the view that there was no breach even in the payment of the sum of rs. 25,00,000/-. the second submission is according to us not well founded in law or on the facts of this case. both the submissions are negated by clauses 2 and 3 of the agreement which read as under:2. a) the consideration amount of rs. 3,40,00,000/- (rupees three crores forty lacs only) payable by the assignee to the assignor, is payable as under:(i) a sum of rs. 1,65,00,000/- (rupees one crore sixty five lacs only) paid by the assignee to the assignor prior to the execution of this agreement as advance (the payment and receipt whereof the assignor hereby admits and acknowledges);(ii) a sum of rs. 75,00,000/- (rupees seventy five lacs only) payable by the assignee to the assignor by august 31, 2007 as part payment ;(iii) a sum of rs. 50,00,000/- (rupees fifty lacs only) payable by the assignee by, september 30, 2007 as part payment; and,(iv) a balance sum of rs. 50,00,000/- (rupees fifty lacs only) payable by the assignee by april 30, 2008.it is agreed between the parties that the time for payment of the aforesaid amounts, shall be the essence of the contract. upon execution hereof, to secure payment of the amounts under sub-clause (ii), (iii) and (iv) above, the assignee has handed over post-dated cheques for the said amounts, details whereof are set out in annexure 'b'. it is clarified that upon the realization of the post dated cheques for the amounts set out at sub clauses (ii), (iii) and (iv), the assignor shall permit the assignee to enter upon and occupy the said property as licensee thereof and shall not claim any ownership rights and nothing herein contained shall be construed as creating any right, interest, easement, tenancy or sub-tenancy or any other right or title of any kind whatsoever in favour of the assignee in the said property or as creating any interest therein in favour of the assignee other than the permissive use hereby granted. it is the express intention of the parties hereto that under this agreement mere permission has been granted to the assignee to use and occupy the said property and the assignor shall have an unfettered right to verify and inspect the same.3. it is agreed between the parties that the assignor shall deposit the post-dated cheques for the amounts set out at clause 2(ii), (iii) and (iv) above on their respective due dates. however, in the event, any posted-dated cheque is dishonoured when deposited by the assignor, the assignor shall be required to re-deposit the same for collection after a period of 15 days, upon receipt of information of such dishonour. it is further agreed between the parties, that in the event the post dated cheque/s stand dishonoured on the same being re-deposited, then this agreement shall stand automatically terminated and all the amounts paid by the assignee until such termination shall stand forfeited and the assignor shall thereafter be entitled to deal with and dispose off the said property to any third party entirely at its discretion.9(a). rs. 1,65,00,000/- (48.53% of the total consideration) had already been paid prior to the execution of the agreement. [this was pursuant to the previous negotiations between the parties with which we are not concerned as ultimately the rights of the parties stood crystallized in the said agreement dated 16.8.2007.] in respect of the payments due under clause 2(ii) and (iii), the appellant paid a sum of rs. 50,00,000/- on 25.9.2007 and a further sum of rs. 50,00,000/- on 11.10.2007.(b). thus as against a sum of rs. 2,90,00,000/- due on 30.9.2007, the appellant had paid a sum of rs. 2,65,00,000/- by 11.10.2007.(c). it is pertinent to note however, that the said sums of rs. 50,00,000/- each tendered on 25.9.2007 and 11.10.2007 were accepted by the respondents. the delay in payment thereof therefore stood waived.(d). there thus remained a balance sum of only rs. 25,00,000/- in respect of the amounts due under clause 2(i), (ii), and (iii).10. the appellant tendered a demand draft dated 18.1.2008 in the sum of rs. 25,00,000/-. the respondents by its advocate's letter dated 15.2.2008 stated that they had not encashed the said demand draft which was received by them on 23.1.2008 and purported to terminate the agreement. paragraph 4 of this letter is important in view of the respondents' other defence to the present appeal viz. mr. madon's second submission. paragraph 4 reads as under:4. our clients had indicated to you that they did not encash the said demand draft as there were continual defaults being committed by you in respect of the terms of the agreement dated august 16, 2007 ('slcpl agreement') entered into between you and our clients' sister concern shiv laminating and coating private limited ('slcpl') and relating to the adjoining property owned by slcpl. on account of the breaches being committed in respect of the slcpl agreement, the slcpl agreement stood terminated. however, despite the termination of the slcpl agreement, you have surreptitiously and underhandedly, gone behind slcpl's back and deposited a cheque for the sum of rs. 90,00,000/- (rupees ninety lacs) directly into slcpl's bank account without their consent or concurrence.11. the respondents having purported to terminate the agreement by the said letter dated 15.2.2008, the question of payment of the balance amount of rs. 50,00,000/- under clause 2(iv) of the agreement did not arise.the first question therefore is whether there was any default on the part of the appellant in making payment under clause 2 of the said agreement of the amount of rs. 25,00,000/- on 18.1.2008 instead of by 30.9.2007. we think not.12. it is important in this regard to refer to the provisions of clause 3 of the agreement which we have set out earlier. clause 3 in effect contains inter-alia an in built mechanism to test the appellant - purchaser's readiness and willingness to perform the agreement. it was incorporated in the agreement obviously due to the fact that the initial payment at the time of the execution of the agreement of rs. 1,65,00,000/- constituted 48.53% of the total consideration. this amount together with the first installment aggregating to rs. 2,40,00,000/- would constitute 70.60% of the total consideration. these amounts together with the third installment aggregating to rs. 2,90,00,000/- would constitute 85.30% of the total consideration. the purpose of clauses 2 and 3 therefore, obviously was to ensure that the respondents - vendors ought not to be permitted to terminate the agreement merely upon the vendor delaying in making payment or even upon any of the post dated cheques being dishonoured once.clause 3 expressly provided that '...the assignor (i.e. the respondents) shall deposit the post-dated cheques....' it further provides that even if the cheques were dishonoured '...the assignor (respondents) shall be required to redeposit the same....' lastly, it provides that the agreement shall stand terminated only '...in the event the post-dated cheques stand dishonoured on the same being re-deposited....'the appellant, purchaser was by clause 3 afforded another opportunity of making good the payment of a dishonoured cheque within fifteen days. this was not merely an important but a crucial clause placing an important obligation upon the respondents and conferring a valuable right in favour of the appellant. the respondents have admittedly not followed the procedure under clauses 2 and 3.13. thus though by 30.9.2007 an aggregate sum of rs. 2,90,00,000/- was to be paid against which the appellant had paid rs. 2,65,00,000/- leaving a balance of rs. 25,00,000/-, the respondents were not entitled to terminate the agreement. the respondents ought to have first deposited the post dated cheques which they held as security under clause 3. even if those cheques had been dishonoured, the appellant was entitled to another opportunity of making good the payment within fifteen days. admittedly, the respondents did not re-deposit the said cheques. the appellant was thus denied the opportunity of making good the deficit, if any, in its account on which the said cheques were drawn within fifteen days. if the cheque had been dishonoured, the appellant also would have been informed of the same by its bank.the respondents not having followed the procedure prescribed under clause 3, are not entitled to terminate the agreement contending that the appellant was in breach of the said agreement by reason of not having paid the amount of rs. 25,00,000/- within the stipulated time.14. faced with this, it was contended on behalf of the respondents both before the learned single judge and before us that the respondents justifiably presumed that the appellant would be unable to make payment of the entire balance amount in view of the fact that in respect of another agreement also dated 16.8.2007 entered into between the appellant and the respondents' sister concern shiv lamination and coating pvt. ltd. (slcpl) the appellant had defaulted in making payment. this in fact was the ground stipulated in the notice of termination dated 15.2.2008 as is evidenced in paragraph 4 thereof which we have quoted earlier. this submission found favour with the learned single judge. we are with respect unable to agree.15. the slcpl agreement was similar in terms to the present agreement. it was however in respect of a different albeit adjoining property. in respect of the said agreement, a similar application under section 9 of the said act being arbitration petition no. 406 of 2008 has been filed by the appellant which has also been dismissed by the impugned order. there is as yet no appeal from the order as regards arbitration petition no. 406 of 2008. for the purpose of this appeal we proceed on the basis that the appellant has committed a breach of the other agreement. we also proceed on the basis that the two agreements have been entered into between the same parties. that however would make no difference.16. we are with respect unable to agree with mr. madon's submissions that merely because the appellant may have committed a breach of the terms of the other agreement namely the slcpl agreement, the court ought to infer that the appellant is not ready and willing to perform its obligations under the present agreement. there is no principle of law and our attention has not been invited to any principle of law which even raises a presumption that merely because a party is not ready and willing to perform its obligation under one agreement or has committed breaches in respect of that agreement, it leads to an inference that the party is not ready and willing to perform its obligations under any other agreement or agreements.17. the two agreements admittedly were independent of each other. nor did they constitute a single composite transaction. it is not the respondents case that the performance of one agreement depended upon or was subject to the performance of the other agreement. nor is it contended on behalf of the respondents that a breach in respect of one agreement would jeopardize or even adversely affect the other agreement or the subject matter thereof. a party may enter into several agreements. it may not fulfill its obligation including the term regarding payment under one or more of them. there is nothing in law or on principle which would justify a presumption that it would not fulfill its obligations under the other agreements.18. there may be cases where the breach of one agreement may lead to an inference that there is bound to be a breach of the other. that would depend entirely upon the facts and circumstances of each case. in the facts and circumstances of the present case, there is nothing that even remotely suggests that the appellant would not have been in a position to raise the balance amount of rs. 50,00,000/- which constituted only 14.70% of the total consideration.19. the learned judge further held that the appellant was not entitled to any reliefs in view of its conduct in respect of the other agreement as well as its failure to deposit a sum of rs. 1,85,00,000/-on or before 10.11.2008 as directed by an ad-interim order dated 23.10.2008 in the other arbitration petition namely arbitration petition no. 406 of 2008. for the same reasons, we are, with respect, unable to agree with the approach adopted by the learned judge. the order dated 23.10.2008 was passed only in arbitration petition no. 406 of 2008. it was not a common order in both the arbitration petitions. there was no such order in the present arbitration petition. indeed this fact namely that there was no such condition of deposit in the present arbitration petition is in the appellant's favour. it indicates that considering the facts of the present case, the court did not even think it necessary to test the bona-fides or readiness and willingness of the appellant in this case.20. the least that must be said in the appellant's favour is that there are substantial issues which would fall for consideration in the arbitration. considering the same, as well as the above facts, it is necessary to protect the appellant's right to claim specific performance and/or any other reliefs pending the hearing and final decision of the arbitrators. the appellants have more than just a strong prima-facie case. the balance of convenience is also clearly in favour of the appellants.21. the agreement admittedly contains an arbitration clause. mr. samdhani stated that the appellant has filed an application under section 11 of the said act for appointment of an arbitrator. the appellant was ready and willing to have the arbitrator appointed forthwith. the respondent however, did not agree to the same stating that they intend opposing the application under section 11 of the said act. with this aspect, we are not concerned.22. mr. madon submitted that if we are inclined to grant an injunction in favour of the appellant, we ought to direct it to deposit the balance consideration of rs. 75,00,000/- to test the readiness and willingness of the appellant.23. we are inclined to direct the appellant to deposit only a sum of rs. 25,00,000/- and that too only because the appellant had tendered a demand draft in that amount earlier as noted above. there is no justification for directing the appellant to deposit the balance consideration of rs. 50,00,000/-. any order to this effect would be totally unwarranted and unjustified in the facts and circumstances of this case.along with the sum of rs. 25,00,000/-, the appellant would have paid an aggregate sum of rs. 2,90,00,000/- out of the total consideration of rs. 3,40,00,000/-. this constitutes 85.30% of the total consideration. despite having paid 85.30% of the consideration, the appellant has not received any benefits under the agreement. there was no breach on the part of the appellant. we have held that there is nothing that even remotely suggests that the appellant was not ready and willing to perform its obligations under the said agreement. it is the respondents who have wrongly refused to perform their obligation under the agreement and have at the same time been enjoying the sum of rs. 2,65,00,000/- paid to them by the appellant. in the circumstances, it would be a travesty of justice to direct the appellant to deposit a further sum of rs. 50,00,000/-.24. it is sufficient to note the appellant's undertaking that in the event of the respondent agreeing to perform the agreement, it would make the payment of the balance amount as per the agreement. it is pertinent to note that the respondent has refused to test the bona-fides and the readiness or willingness of the appellant. on the other hand mr. madon has offered to deposit a sum of rs. 2,65,00,000/- only in the event of the appeal being dismissed. further he has refused to pay the amount over to the appellant and has agreed only to deposit the same in court. we hasten to add that even if the amount was offered to be paid over to the appellant, it would make no difference to our order.25. in the circumstances, the order and judgment of the learned single judge is set-aside. the petition is made absolute in terms of prayer clause (b) which reads as under:(b). that pending the arbitral proceeding between the petitioner and respondent, and passing of the award, the respondent by themselves, their servants, agents or otherwise howsoever, be restrained by an order and injunction of this hon'ble court from in any manner negotiating, disposing of, alienating, selling, assigning, transferring, encumbering or creating any right, title or interest in favour of any third party or inducting anyone or entering into any agreement and/or arrangement with any third party in respect of the said plots more particularly described in the schedule exhibit 'a' hereto or any part thereof.the amount of rs. 25,00,000/- which had earlier been tendered by a demand draft shall be deposited within eight weeks from today failing which the injunction shall stand vacated. in the event of the amount being deposited the office shall invest the same in fixed deposit of a nationalized bank initially for a period of one year and thereafter for like periods of one year each.there shall however be no order as to costs.
Judgment:

S.J. Vazifdar, J.

1. Heard the learned Counsel for the parties. Admit. Respondent waives service.

2. At the request of the parties, heard finally.

3. This is an appeal against the order and judgment of the learned Single Judge dismissing the Appellant's Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996 (for short 'the said Act').

4. The Appellant claims to be entitled to specific performance of an agreement dated 16.8.2007 under which the Respondents agreed to assign and transfer to the Appellant and the Appellant agreed to purchase and acquire from the Respondents all the benefits of an agreement for lease in respect of the property for the residual period of lease for a consideration of Rs. 3,40,00,000/-.

5. In the above application under Section 9 of the said Act, the Appellant has sought the usual interim reliefs in an action of this nature for the appointment of a Court Receiver and for an injunction restraining the Respondents inter-alia from encumbering the property in any manner.

6. The execution of the agreement is admitted. That Clause 19 thereof pertains to arbitration is also admitted. The Appellant has admittedly paid the Respondents a sum of Rs. 2,65,00,000/-constituting 78% of the consideration. The Appellant also tendered a further sum of Rs. 25,00,000/- which the Respondents did not accept and instead terminated the agreement by a letter dated 15.2.2008. In our opinion, the termination was not justified.

7. The argument before us was confined to a limited aspect namely as to whether the Appellant was ready and willing to perform the agreement. Mr. Madon, the learned Senior Counsel appearing on behalf of the Respondents submitted that the Appellant was not only not ready and willing to perform the agreement but had committed a breach thereof. The breach, he submitted, was the failure on the part of the Appellant to tender the consideration in terms of the agreement. He further submitted that the Appellant had committed a breach under another agreement which indicates an absence of readiness and willingness on its part to perform this agreement as well.

8. On the first submission we are of the view that there was no breach even in the payment of the sum of Rs. 25,00,000/-. The second submission is according to us not well founded in law or on the facts of this case. Both the submissions are negated by Clauses 2 and 3 of the agreement which read as under:

2. a) The consideration amount of Rs. 3,40,00,000/- (Rupees Three Crores Forty Lacs only) payable by the Assignee to the Assignor, is payable as under:

(i) A sum of Rs. 1,65,00,000/- (Rupees One Crore Sixty Five Lacs only) paid by the Assignee to the Assignor prior to the execution of this Agreement as advance (the payment and receipt whereof the Assignor hereby admits and acknowledges);

(ii) A sum of Rs. 75,00,000/- (Rupees Seventy Five Lacs only) payable by the Assignee to the Assignor by August 31, 2007 as part payment ;

(iii) A sum of Rs. 50,00,000/- (Rupees Fifty Lacs only) payable by the Assignee by, September 30, 2007 as part payment; and,

(iv) A balance sum of Rs. 50,00,000/- (Rupees Fifty Lacs Only) payable by the Assignee by April 30, 2008.

It is agreed between the Parties that the time for payment of the aforesaid amounts, shall be the essence of the contract. Upon execution hereof, to secure payment of the amounts under Sub-clause (ii), (iii) and (iv) above, the Assignee has handed over post-dated cheques for the said amounts, details whereof are set out in Annexure 'B'. It is clarified that upon the realization of the post dated cheques for the amounts set out at sub Clauses (ii), (iii) and (iv), the Assignor shall permit the Assignee to enter upon and occupy the said property as licensee thereof and shall not claim any ownership rights and nothing herein contained shall be construed as creating any right, interest, easement, tenancy or sub-tenancy or any other right or title of any kind whatsoever in favour of the Assignee in the said property or as creating any interest therein in favour of the Assignee other than the permissive use hereby granted. It is the express intention of the Parties hereto that under this Agreement mere permission has been granted to the Assignee to use and occupy the said property and the Assignor shall have an unfettered right to verify and inspect the same.

3. It is agreed between the Parties that the Assignor shall deposit the post-dated cheques for the amounts set out at Clause 2(ii), (iii) and (iv) above on their respective due dates. However, in the event, any posted-dated cheque is dishonoured when deposited by the Assignor, the Assignor shall be required to re-deposit the same for collection after a period of 15 days, upon receipt of information of such dishonour. It is further agreed between the Parties, that in the event the post dated cheque/s stand dishonoured on the same being re-deposited, then this Agreement shall stand automatically terminated and all the amounts paid by the Assignee until such termination shall stand forfeited and the Assignor shall thereafter be entitled to deal with and dispose off the said property to any third party entirely at its discretion.

9(A). Rs. 1,65,00,000/- (48.53% of the total consideration) had already been paid prior to the execution of the agreement. [This was pursuant to the previous negotiations between the parties with which we are not concerned as ultimately the rights of the parties stood crystallized in the said agreement dated 16.8.2007.] In respect of the payments due under Clause 2(ii) and (iii), the Appellant paid a sum of Rs. 50,00,000/- on 25.9.2007 and a further sum of Rs. 50,00,000/- on 11.10.2007.

(B). Thus as against a sum of Rs. 2,90,00,000/- due on 30.9.2007, the Appellant had paid a sum of Rs. 2,65,00,000/- by 11.10.2007.

(C). It is pertinent to note however, that the said sums of Rs. 50,00,000/- each tendered on 25.9.2007 and 11.10.2007 were accepted by the Respondents. The delay in payment thereof therefore stood waived.

(D). There thus remained a balance sum of only Rs. 25,00,000/- in respect of the amounts due under Clause 2(i), (ii), and (iii).

10. The Appellant tendered a demand draft dated 18.1.2008 in the sum of Rs. 25,00,000/-. The Respondents by its advocate's letter dated 15.2.2008 stated that they had not encashed the said demand draft which was received by them on 23.1.2008 and purported to terminate the agreement. Paragraph 4 of this letter is important in view of the Respondents' other defence to the present Appeal viz. Mr. Madon's second submission. Paragraph 4 reads as under:

4. Our clients had indicated to you that they did not encash the said demand draft as there were continual defaults being committed by you in respect of the terms of the Agreement dated August 16, 2007 ('SLCPL Agreement') entered into between you and our clients' sister concern Shiv Laminating and Coating Private Limited ('SLCPL') and relating to the adjoining property owned by SLCPL. On account of the breaches being committed in respect of the SLCPL Agreement, the SLCPL Agreement stood terminated. However, despite the termination of the SLCPL Agreement, you have surreptitiously and underhandedly, gone behind SLCPL's back and deposited a cheque for the sum of Rs. 90,00,000/- (Rupees Ninety Lacs) directly into SLCPL's bank account without their consent or concurrence.

11. The Respondents having purported to terminate the agreement by the said letter dated 15.2.2008, the question of payment of the balance amount of Rs. 50,00,000/- under Clause 2(iv) of the agreement did not arise.

The first question therefore is whether there was any default on the part of the Appellant in making payment under Clause 2 of the said agreement of the amount of Rs. 25,00,000/- on 18.1.2008 instead of by 30.9.2007. We think not.

12. It is important in this regard to refer to the provisions of Clause 3 of the agreement which we have set out earlier. Clause 3 in effect contains inter-alia an in built mechanism to test the Appellant - purchaser's readiness and willingness to perform the agreement. It was incorporated in the agreement obviously due to the fact that the initial payment at the time of the execution of the agreement of Rs. 1,65,00,000/- constituted 48.53% of the total consideration. This amount together with the first installment aggregating to Rs. 2,40,00,000/- would constitute 70.60% of the total consideration. These amounts together with the third installment aggregating to Rs. 2,90,00,000/- would constitute 85.30% of the total consideration. The purpose of Clauses 2 and 3 therefore, obviously was to ensure that the Respondents - vendors ought not to be permitted to terminate the agreement merely upon the vendor delaying in making payment or even upon any of the post dated cheques being dishonoured once.

Clause 3 expressly provided that '...the Assignor (i.e. the Respondents) shall deposit the post-dated cheques....' It further provides that even if the cheques were dishonoured '...the Assignor (Respondents) shall be required to redeposit the same....' Lastly, it provides that the agreement shall stand terminated only '...in the event the post-dated cheques stand dishonoured on the same being re-deposited....'

The Appellant, purchaser was by Clause 3 afforded another opportunity of making good the payment of a dishonoured cheque within fifteen days. This was not merely an important but a crucial Clause placing an important obligation upon the Respondents and conferring a valuable right in favour of the Appellant. The Respondents have admittedly not followed the procedure under Clauses 2 and 3.

13. Thus though by 30.9.2007 an aggregate sum of Rs. 2,90,00,000/- was to be paid against which the Appellant had paid Rs. 2,65,00,000/- leaving a balance of Rs. 25,00,000/-, the Respondents were not entitled to terminate the agreement. The Respondents ought to have first deposited the post dated cheques which they held as security under Clause 3. Even if those cheques had been dishonoured, the Appellant was entitled to another opportunity of making good the payment within fifteen days. Admittedly, the Respondents did not re-deposit the said cheques. The Appellant was thus denied the opportunity of making good the deficit, if any, in its account on which the said cheques were drawn within fifteen days. If the cheque had been dishonoured, the Appellant also would have been informed of the same by its bank.

The Respondents not having followed the procedure prescribed under Clause 3, are not entitled to terminate the agreement contending that the Appellant was in breach of the said agreement by reason of not having paid the amount of Rs. 25,00,000/- within the stipulated time.

14. Faced with this, it was contended on behalf of the Respondents both before the learned Single Judge and before us that the Respondents justifiably presumed that the Appellant would be unable to make payment of the entire balance amount in view of the fact that in respect of another agreement also dated 16.8.2007 entered into between the Appellant and the Respondents' sister concern Shiv Lamination and Coating Pvt. Ltd. (SLCPL) the Appellant had defaulted in making payment. This in fact was the ground stipulated in the notice of termination dated 15.2.2008 as is evidenced in paragraph 4 thereof which we have quoted earlier. This submission found favour with the learned Single Judge. We are with respect unable to agree.

15. The SLCPL agreement was similar in terms to the present agreement. It was however in respect of a different albeit adjoining property. In respect of the said agreement, a similar application under Section 9 of the said Act being Arbitration Petition No. 406 of 2008 has been filed by the Appellant which has also been dismissed by the impugned order. There is as yet no appeal from the order as regards Arbitration Petition No. 406 of 2008. For the purpose of this Appeal we proceed on the basis that the Appellant has committed a breach of the other agreement. We also proceed on the basis that the two agreements have been entered into between the same parties. That however would make no difference.

16. We are with respect unable to agree with Mr. Madon's submissions that merely because the Appellant may have committed a breach of the terms of the other agreement namely the SLCPL agreement, the Court ought to infer that the Appellant is not ready and willing to perform its obligations under the present agreement. There is no principle of law and our attention has not been invited to any principle of law which even raises a presumption that merely because a party is not ready and willing to perform its obligation under one agreement or has committed breaches in respect of that agreement, it leads to an inference that the party is not ready and willing to perform its obligations under any other agreement or agreements.

17. The two agreements admittedly were independent of each other. Nor did they constitute a single composite transaction. It is not the Respondents case that the performance of one agreement depended upon or was subject to the performance of the other agreement. Nor is it contended on behalf of the Respondents that a breach in respect of one agreement would jeopardize or even adversely affect the other agreement or the subject matter thereof. A party may enter into several agreements. It may not fulfill its obligation including the term regarding payment under one or more of them. There is nothing in law or on principle which would justify a presumption that it would not fulfill its obligations under the other agreements.

18. There may be cases where the breach of one agreement may lead to an inference that there is bound to be a breach of the other. That would depend entirely upon the facts and circumstances of each case. In the facts and circumstances of the present case, there is nothing that even remotely suggests that the Appellant would not have been in a position to raise the balance amount of Rs. 50,00,000/- which constituted only 14.70% of the total consideration.

19. The learned Judge further held that the Appellant was not entitled to any reliefs in view of its conduct in respect of the other agreement as well as its failure to deposit a sum of Rs. 1,85,00,000/-on or before 10.11.2008 as directed by an ad-interim order dated 23.10.2008 in the other Arbitration Petition namely Arbitration Petition No. 406 of 2008. For the same reasons, we are, with respect, unable to agree with the approach adopted by the learned Judge. The order dated 23.10.2008 was passed only in Arbitration Petition No. 406 of 2008. It was not a common order in both the Arbitration Petitions. There was no such order in the present Arbitration Petition. Indeed this fact namely that there was no such condition of deposit in the present Arbitration Petition is in the Appellant's favour. It indicates that considering the facts of the present case, the Court did not even think it necessary to test the bona-fides or readiness and willingness of the Appellant in this case.

20. The least that must be said in the Appellant's favour is that there are substantial issues which would fall for consideration in the arbitration. Considering the same, as well as the above facts, it is necessary to protect the Appellant's right to claim specific performance and/or any other reliefs pending the hearing and final decision of the arbitrators. The Appellants have more than just a strong prima-facie case. The balance of convenience is also clearly in favour of the Appellants.

21. The agreement admittedly contains an arbitration clause. Mr. Samdhani stated that the Appellant has filed an application under Section 11 of the said Act for appointment of an Arbitrator. The Appellant was ready and willing to have the Arbitrator appointed forthwith. The Respondent however, did not agree to the same stating that they intend opposing the application under Section 11 of the said Act. With this aspect, we are not concerned.

22. Mr. Madon submitted that if we are inclined to grant an injunction in favour of the Appellant, we ought to direct it to deposit the balance consideration of Rs. 75,00,000/- to test the readiness and willingness of the Appellant.

23. We are inclined to direct the Appellant to deposit only a sum of Rs. 25,00,000/- and that too only because the Appellant had tendered a demand draft in that amount earlier as noted above. There is no justification for directing the Appellant to deposit the balance consideration of Rs. 50,00,000/-. Any order to this effect would be totally unwarranted and unjustified in the facts and circumstances of this case.

Along with the sum of Rs. 25,00,000/-, the Appellant would have paid an aggregate sum of Rs. 2,90,00,000/- out of the total consideration of Rs. 3,40,00,000/-. This constitutes 85.30% of the total consideration. Despite having paid 85.30% of the consideration, the Appellant has not received any benefits under the agreement. There was no breach on the part of the Appellant. We have held that there is nothing that even remotely suggests that the Appellant was not ready and willing to perform its obligations under the said agreement. It is the Respondents who have wrongly refused to perform their obligation under the agreement and have at the same time been enjoying the sum of Rs. 2,65,00,000/- paid to them by the Appellant. In the circumstances, it would be a travesty of justice to direct the Appellant to deposit a further sum of Rs. 50,00,000/-.

24. It is sufficient to note the Appellant's undertaking that in the event of the Respondent agreeing to perform the agreement, it would make the payment of the balance amount as per the agreement. It is pertinent to note that the Respondent has refused to test the bona-fides and the readiness or willingness of the Appellant. On the other hand Mr. Madon has offered to deposit a sum of Rs. 2,65,00,000/- only in the event of the Appeal being dismissed. Further he has refused to pay the amount over to the Appellant and has agreed only to deposit the same in Court. We hasten to add that even if the amount was offered to be paid over to the Appellant, it would make no difference to our order.

25. In the circumstances, the order and judgment of the learned Single Judge is set-aside. The Petition is made absolute in terms of prayer Clause (b) which reads as under:

(b). that pending the arbitral proceeding between the Petitioner and Respondent, and passing of the award, the Respondent by themselves, their servants, agents or otherwise howsoever, be restrained by an order and injunction of this Hon'ble Court from in any manner negotiating, disposing of, alienating, selling, assigning, transferring, encumbering or creating any right, title or interest in favour of any third party or inducting anyone or entering into any agreement and/or arrangement with any third party in respect of the said Plots more particularly described in the Schedule Exhibit 'A' hereto or any part thereof.

The amount of Rs. 25,00,000/- which had earlier been tendered by a demand draft shall be deposited within eight weeks from today failing which the injunction shall stand vacated. In the event of the amount being deposited the office shall invest the same in fixed deposit of a nationalized bank initially for a period of one year and thereafter for like periods of one year each.

There shall however be no order as to costs.