SAMIR NARAIN BHOJWANI versus M/S. AURORA PROPERTIES AND INVESTMENTS AND ANR. on 21 August 2018

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SUPREME COURT REPORTS

[2018] 10 S.C.R.

ASAMIR NARAIN BHOJWANI

v.

M/S. AURORA PROPERTIES AND INVESTMENTS AND ANR.

(Civil Appeal No. 7079 of 2018)

BAUGUST 21, 2018

[DIPAK MISRA, CJI, A. M. KHANWILKAR ANDDR. D.Y. CHANDRACHUD, JJ.]

Injunction: Interlocutory mandatory injunction – When canbe granted – Principle of moulding relief – Invocation of – OnCfacts, respondent no.1 appointed as developer for developing thesuit property – Thereafter, under an agreement, respondent no.1transferred the benefits of development rights in the suit propertyto respondent no.2 – Subsequently, execution of developmentagreement by respondent no.2 with the appellant whereunderDappellant would be entitled to 55% of the total area available forsale buildings and car parking and respondent no.2 retained 45%of the total area – Dispute during the construction of the building –Suit for specific performance by respondent no.1 against appellantand respondent no.2 – Order of mandatory interlocutoryinjunction by both the High Court directing the appellant to handEover 8 flats along with 16 parking spaces to respondent no. 1 – Onappeal, held: Interim mandatory injunction can be passed only whencircumstances are clear and prima facie material clearly justify afinding that status quo has been altered by one of the parties to thelitigation and the interest of justice demanded that status quo anteFbe restored by way of an interim mandatory injunction – On facts,both High Court erred in invoking the principle of moulding ofrelief so also the exercise of power to grant mandatory order at aninterlocutory stage – Mandatory order at interlocutory stage wasin excess of jurisdiction – Such order at an interlocutory stagecannot be countenanced – High Court was swayed away by theGconsent agreement between the respondents inter partes to whichthe appellant was not a party – Appellant could not be bound bythe arrangement agreed upon between the respondents inter se butonly by the agreement entered with respondent No.2 and at best thetripartite agreement – Appellant could not be directed to hand over H

8 additional flats and 16 parking spaces to respondent No.1 withwhom the appellant had no independent agreement in that regard –Complying with the directions would result in bestowing advantageon respondent No.2 who failed to discharge its obligation underthe agreement with the appellant – Thus, the order passed by theHigh Court is set aside.

Principle of moulding relief and interlocutory mandatoryinjunction – Difference between – Held: Principle of moulding ofrelief can be resorted to at the time of consideration of final reliefin the main suit and not at an interlocutory stage – Interlocutorymandatory injunction can be granted only to restore the status quoand not to establish a new set of things differing from the statewhich existed on the date when the suit was instituted.

Allowing the appeal, the Court

Conclusion

HELD: 1.1 The High Court disregarded that the SettlementAgreement and the Consent Terms have been entered intobetween the respondent No.1/plaintiff and respondentNo.2/defendant No.1 inter partes. That could not be thrust uponthe appellant/defendant No.2 who had executed a separateagreement with respondent No.2/defendant No.1. The appellantcould be bound only by the agreement dated 10[th] March, 2003 inhis favour and executed by him. Admittedly, the said agreementis the subject matter of arbitration proceedings, inter alia becauserespondent No.2 had failed to discharge its obligation thereunder.The appellant has already parted with the possession of flats torespondent No.2 in furtherance of agreement dated 10[th] March,2003 and respondent No.1/plaintiff could be accommodated onlyagainst those flats. Asking the appellant to hand over additional8 flats and 16 parking spaces by way of mandatory order, wouldbe to superimpose the liability of respondent No.2/defendant No.1on the appellant for discharging its obligation qua respondentNo.1/plaintiff in relation to the agreement entered between themand including Settlement Agreement and Consent Terms to whichthe appellant is not a party. [Para 23] [65-B-E]

1.2 That apart, the Single Judge as well as the DivisionBench have committed fundamental error in applying theprinciple of moulding of relief which could at best be resorted to A

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Aat the time of consideration of final relief in the main suit and notat an interlocutory stage. The nature of order passed against theappellant is undeniably a mandatory order at an interlocutorystage. There is marked distinction between moulding of reliefand granting mandatory relief at an interlocutory stage. Asregards the latter, that can be granted only to restore the statusBquo and not to establish a new set of things differing from thestate which existed at the date when the suit was instituted.[Para 24] [65-F-G]

Dorab Cawasji Warden v. Coomi Sorab Warden andOthers (1990) 2 SCC 117 : [1990] 1 SCR 332 –Creferred to.

Halsbury’s Laws of England 4[th] Edn., Volume 24,para 948 – referred to.

1.3 An interim mandatory injunction is not a remedy that isDeasily granted. It is an order that is passed only in circumstanceswhich are clear and the prima facie material clearly justify afinding that the status quo has been altered by one of the partiesto the litigation and the interest of justice demanded that thestatus quo ante be restored by way of an interim mandatoryinjunction. [Para 26] [67-D]EMetro Marins and Another v. Bonus Watch Co. (P) Ltd.and Others (2004) 7 SCC 478 ; Kishore Kumar Khaitanand Another v. Praveen Kumar Singh (2006) 3 SCC312 : [2006] 2 SCR 176 ; Purshottam Vishandas Rahejaand Another v. Shrichand Vishandas Raheja (Dead)Fthrough LRs. and Others (2011) 6 SCC 73 : [2011] 6SCR 913 – relied on.

1.4 In the factual scenario in which mandatory order hasbeen passed against the appellant, is in excess of jurisdiction.Such a drastic order at an interlocutory stage ought to beGeschewed. It cannot be countenanced. [Para 27] [67-E-F]

1.5 The invocation of principle of moulding of reliefs soalso the exercise of power to grant mandatory order at aninterlocutory stage, is manifestly wrong. To put it differently, while

analysing the merits of the contentions the High Court was swayedaway by the consent agreement between the respondents interpartes to which the appellant was not a party. Thus, he could notbe bound by the arrangement agreed upon between therespondents inter se. The appellant would be bound only by theagreement entered with respondent No.2 and at best thetripartite agreement. The respondent No.2 having failed todischarge its obligation under the stated agreement cannot bepermitted to take advantage of its own wrong in reference to thearrangement agreed upon by it with respondent No.1/plaintiff andincluding to defeat the claim of the appellant in the arbitrationproceedings. [Para 29] [67-G-H; 68-A-C]

1.6 It would have been a different matter if the High Courtwere to continue the ad-interim arrangement directed in termsof order dated 3[rd] December, 2012 and as corrected on 17[th]December, 2012, until the final disposal of the suit. However, byno stretch of imagination, the appellant could be directed to handover 8 additional flats and 16 parking spaces to respondent No.1with whom the appellant has had no independent agreement inthat regard. The fact that respondent No.1 would get a right inthe suit property in terms of agreement, Settlement Agreementand Consent Terms with respondent No.2, cannot be the basis toset up a claim against the appellant and, especially becausecomplying with the directions in the impugned order wouldresult in bestowing advantage on respondent No.2 who has failedto discharge its obligation under the agreement with theappellant. [Para 30] [68-D-F]

1.7 The impugned judgment and order passed by the HighCourt is set aside. It is deemed appropriate to revive thead-interim order passed by the Single Judge of the High Court inNotice of Motion and as corrected, which shall operate until thedisposal of the suit or until it is modified by the High Court onaccount of subsequent developments, if any, as and whenoccasion arises. [Para 31-32] [68-G-H]

Gaiv Dinshaw Irani and Others v. Tehmtan Irani andOthers (2014) 8 SCC 294 – referred to.

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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7079of 2018.

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From the Judgment and Order dated 09.07.2018 of the High Courtof Judicature at Bombay in Commercial Appeal No. 173 of 2017 inNotice of Motion No. 147 of 2013 in Commercial Suit No. 62 of 2013.

Mukul Rohatgi, Shyam Divan, Sr. Advs., Parimal Shroff, MaheshAgarwal, Rishi Agrawala, Ms. Parul Shukla (for E. C. Agrawala), SatyenDVora, Vikas Mehta, Sanmish Gala, Mahendra K. Ghelani, Kunal Vajani,Pratap Venugopal, Ms. Surekha Raman, Atman Mehta, Ms. Niharika,Ms. Vaishali Shah, Ms. Kanika Kalaiyarasan (for M/s. K J John AndCo.), Advs. for the appearing parties.

The Judgment of the Court was delivered by E

A.M. KHANWILKAR, J. 1. The captioned appeal challengesthe judgment and order passed by the Division Bench of the BombayHigh Court dated 9[th] July, 2018 in Commercial Appeal No.173 of 2017,whereby the Division Bench dismissed the appeal filed by the appellantand upheld the decision of the learned Single Judge dated 9[th] October,F2017 in Notice of Motion No.147 of 2013, wherein the learned SingleJudge inter alia passed a mandatory interlocutory injunction directingthe appellant to hand over 8 (eight) flats along with 16 (sixteen) carparking spaces under the Settlement Agreement dated 4[th] November,2016 and Consent Terms dated 25[th] September, 2017 between respondentNos.1 and 2 inter partes.

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2. The relevant facts are as follows: Respondent No.1/plaintiffwas appointed by one Andheri Kamgar Nagar Cooperative HousingSociety Ltd. (for short, ‘the Society’) under a DevelopmentAgreement dated 6[th] October, 1996 as a developer under the SlumDevelopment/ Rehabilitation Scheme to develop the suit property in H

question, being a plot of land situated at Versova Link Road, TalukaAndheri and bearing Survey No. 139, City Survey No. 1319 (Part)admeasuring 8892 sq. mts. or thereabouts as per Indenture of Leasedated 31[st] March, 1993 and 9402 sq. mts. as per City Survey Records.One part of the suit property was for constructing tenements free ofcharge for project-affected persons and the balance property could beused to develop and sell the balance FSI. Respondent No.1 thenexecuted an Agreement for Sub-Development dated 22[nd] September,1999 with respondent No.2/defendant No.1, transferring the benefits ofdevelopment rights in the suit property, with the consent of theaforementioned Society, to respondent No.2 after keeping aside 15,000sq. ft. for itself i.e. respondent No.1.

3. Subsequently, respondent No.2 executed an Agreement forDevelopment dated 10[th] March, 2003 with the appellant/defendant No.2,whereunder the appellant would be entitled to 55% of the total areaavailable for free sale buildings and car parking in the suit property andrespondent No.2 retained 45% of the total area available forconstruction of free sale buildings and car parking by utilizing FSI whichmay be available on the suit property as per the Slum RehabilitationScheme. This agreement was entered into without the consent ofrespondent No.1 and hence, all three parties executed a TripartiteAgreement dated 11[th] September, 2009, referencing the previousagreements of 6[th] October, 1996 and 22[nd] September, 1999 whereinrespondent No.1 was entitled to an area of 22,500 sq. ft., an increasefrom its earlier agreed upon 15,000 sq. ft., which would be allocated outof the 45% share due to respondent No. 2

4. Disputes arose during the construction of the building, whichresulted in respondent No.1 filing a Commercial Suit No. 62 of 2013against respondent No.2 and the appellant inter alia seekingspecific performance of the Development Agreement dated 22[nd]September, 1999, read with the Tripartite Agreement dated 11[th]September, 2009, including handing over constructed area of 22,500 sq.ft. in the free sale buildings along with proportionate car parking space,in the form of 12 (twelve) flats in Wings ‘A’ and ‘B’ of the building ‘Bay – View’ constructed on the suit property and 24 (twenty four) carparking spaces. Respondent No.1 also took out Notice of Motion No.147 of 2013 for interim reliefs, seeking to restrain respondent No.2 andthe appellant from creating third party rights in the suit property without AB

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Afirst handing over possession of the 22,500 sq. ft. constructed area in theform of flats and parking spaces. Respondent No. 1 alleged that thisinterim relief was necessitated by the fact that its advocate hadconducted a search in the sub-registrar’s office and found a mortgagedeed executed by the appellant in favour of a third party with respect to12 flats and 24 parking spaces in the building ‘Bay–View’ and that itBapprehended that the appellant would sell or create third party rights inrespect of the said flats. The alleged mortgage deed itself was notproduced by respondent No.1 on the ground that it had applied for acopy of the same but was yet to receive it. Respondent No.1 also soughtto appoint a Court Receiver to take charge of the premises in the suitCproperty comprising its 22,500 sq. ft. constructed area. An ad-interim,consent order was passed on 3[rd] December, 2012, in the said Notice ofMotion No. 147 of 2013, whereby respondent No. 2 and the appellantagreed to not dispose of or create third party rights in respect of 8 flatsin the completed Wings ‘A’ and ‘B’ of the building and 4 flats in theunder-construction Wing ‘C’ of the building, totaling 12 flats.D

5. The parties filed their respective replies and rejoinders in thesuit and notice of motion. The appellant’s stance was that he hadcompleted his contractual obligations and offered respondent No.2 itsentitlement of 45% area in the constructed buildings but respondent No.2had failed to take possession of the same. The subsequent delay inEconstruction of Wing ‘C’ of the building was due to the failure ofrespondent No.2 to obtain a Commencement Certificate for Wing ‘C’,resulting in losses to the appellant. Owing to this breach committed byrespondent No.2, it was no longer entitled to its 45% share in theconstructed area and as a consequence, respondent No.1 was notFentitled to its 22,500 sq. ft. area which could only be claimed out of therespondent No.2’s entitlement.

6. The appellant then took out Notice of Motion No. 540 of 2013,seeking to refer the suit to arbitration under Section 8 of the Arbitrationand Conciliation Act, 1996 (“the Arbitration Act”) and ArbitrationGApplication No. 86 of 2013, seeking to appoint an arbitrator underSection 11 of the Arbitration Act. Both these proceedings were rejectedby the High Court vide its order dated 30[th] September, 2014 on the groundthat while the Development Agreement of 22[nd] September, 1999between respondent Nos.1 and 2 contained an arbitration clause andsimilarly, the Agreement of 10[th] March, 2003 between the appellant andH

respondent No.2 also contained an arbitration clause, however, theTripartite Agreement of 11[th] September, 2009 itself did not contain anarbitration clause and that a mere reference made in the TripartiteAgreement to the previous agreements would not make the arbitrationclauses therein part of the Tripartite Agreement. The appellantchallenged that decision right upto this Court in SLP (Civil) No. 2235 of2015, which stood rejected.

7. The appellant also initiated proceedings under Section 9 of theArbitration Act against respondent Nos.1 and 2 before the High Court.The High Court refused to grant any relief in the petition filed underSection 9 of the Arbitration Act. The appellant then withdrew theSection 9 proceedings and initiated arbitration solely against respondentNo. 2 under the Agreement dated 10[th] March, 2003. In the saidarbitration proceedings, respondent No.2 filed an application for interimreliefs under Section 17 of the Arbitration Act inter alia seekingspecific performance of the agreement of 10[th] March, 2003 includingpossession of its entire 45% share of flats in the buildings constructed onthe suit property. Respondent No.2 contended that the application wasnecessitated by the fact that the appellant had violated the terms of the10[th] March, 2003 Agreement and had created third-party rights inrespect of his 55% entitlement in the suit property, without firstproviding respondent No.2 with the occupation and possession of its45% entitlement in the suit property as set out in the said Agreement.Respondent No.2 also submitted that the appellant had deposited arefundable amount of Rs.4 crore as part of his obligation under theAgreement but that refund of the said deposit was not, in any way,connected with handing over of the respondent No.2’s entitlement offlats. In any event, respondent No.2 had offered to refund the saiddeposit in exchange for possession of the flats due to it, which theappellant had refused.

8. By an interim order dated 12[th] October, 2016, the solearbitrator made prima facie observations that construction of Wing ‘C’in the building situated on the suit property had been delayed owing torespondent No.2’s failure to obtain the Commencement Certificate forthe same. Further, respondent No.2 had allowed the appellant toconstruct only 88 flats so far, which worked out to 72% of the total areato be constructed. On that basis, the arbitrator was of the opinion thatrespondent No.2 could not receive its entire 45% share in the constructed AB

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Aarea of 88 flats, which worked out to 31.6 flats, but instead, wouldreceive 72% of its 45% share which worked out to 28.5 flats. Fromthese 28.5 flats, 12 flats were to be kept aside for respondent No.1 asdirected in the High Court’s ad-interim order dated 3[rd] December, 2012and thus, respondent No.2 was entitled to 16.5 flats. Out of 16.5 flats,the appellant was directed to hand over possession of 16 flats toBrespondent No. 2, after which respondent No.2 would refund thedeposit given by the appellant in respect of such flats. The remainingamount of respondent No.2’s entitlement in one flat would be dischargedby both respondent No.2 and the appellant jointly disposing of the saidflat at a mutually agreed price.C

9. This order was challenged by the appellant, first before theHigh Court and having failed there, before this Court in SLP (Civil) No.35563 of 2016. This Court, vide order dated 14[th] December, 2016,refused to set aside the High Court’s decision but recorded that theobservations made by the sole arbitrator and High Court would notDinfluence the final outcome of the matter.

10. Reverting to Notice of Motion No.147 of 2013 in the suit filedby respondent No.1, it was then finally heard and judgment reserved.Pending the decision, however, respondent Nos. 1 and 2 filed ConsentTerms dated 25[th] September, 2017 according to which respondent No.2Eagreed to hand over an additional 8 (eight) flats along with 16 (sixteen)parking spaces to respondent No.1 in full and final settlement of theDevelopment Agreement of 22[nd] September, 1999 and the TripartiteAgreement of 11[th] September, 2009.

11. The Learned Single Judge vide decision dated 9[th] October,F2017 in Notice of Motion No.147 of 2013, relied upon the interim orderof 12th October, 2016 passed by the sole arbitrator, terming it as aninterim award. The Single Judge was of the opinion that theapportionment of flats done by the arbitrator had become res judicata.The arbitrator’s finding, that respondent No.2 was entitled to 28.5 flats,had attained finality since the appeals to the High Court and this CourtGhad been rejected. Further, from these 28.5 flats, 12 flats along with 24parking spaces formed part of respondent No.2’s entitlement, which, inturn, belonged to respondent No.1, and had been kept out of the scopeof the arbitration since there was an ad-interim order of the High Courtoperating in that regard. Possession and keys of the remaining 16 flatsHout of the 28.5 flats had been handed over by the appellant to respondent No.2, for which the appellant’s deposit had also beenrefunded by respondent No.2, as directed by the arbitrator.

12. The Single Judge further opined that even if respondent No.2was ultimately held liable to compensate the appellant for damages, thesame could not be recovered from the said 12 flats as these flats wereultimately and rightfully due to respondent No.1 (original plaintiff) andout of bounds for the appellant. The Single Judge rejected the appellant’sargument that since respondent No.1 claimed through respondent No.2,any breach by respondent No.2 would automatically affect theentitlement of respondent No.1 as well.

13. The question as to whether respondent No.2 was obligated tohand over possession of 8 flats to respondent No.1 as per the settlementagreement dated 4[th] November, 2016 and the Consent Terms dated25[th] September, 2017 and whether the appellant had to hand over thekeys of the said flats to respondent No.1, were answered by the SingleJudge in the affirmative, with the finding that respondent No.2 was therightful owner of the balance 39.6 flats, including the 8 flats, out of the88 constructed flats, and that the appellant had no rights over the same.The point of respondent No.2 being the rightful owner of the 8 flats wasbased on the following aspects:

a. Respondent No.2 alone was entitled to develop the suitproperty as the letter of intent from the SRA was in favour ofrespondent No.2;

b. The appellant was a contractor who had been given the rightto develop the suit property and his rights flowed fromrespondent No. 2;

c. Respondent No.2 had retained its right to construct 45% ofthe total area available and the appellant had even executeda Power of Attorney (POA) in favour of respondent no.2entitling respondent No.2 to execute agreements for sale onownership basis, leave and license, etc. for the flats and carparking spaces in the suit property, including the said 8 flatsand similarly, respondent No.2 had executed a POA in favourof the appellant allowing the appellant to dispose of his flatsand car parking spaces which he was entitled to receive aspart of his 55% share. This was even conceded to by theappellant in the arbitration proceedings and in light of the same, A

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Athe appellant was estopped from objecting to respondent No.2handing over 8 flats to respondent No.1;

14. On the issue of the appellant not being the owner of the saidflats, the Single Judge recorded that merely because the appellant hadconstructed the said flats and had the keys to the same, he could not beBsaid to be the owner of the flats and he could not prevent respondentNo.2 from handing over possession of the 8 flats to respondent No.1.The appellant merely had derivative rights over the suit property,flowing from respondent No.1 through respondent No.2, and anydispute between respondent No.2 and the appellant could not, in anyway, affect the right of respondent No.1 over the suit property. TheCConsent Terms dated 25[th] September, 2017 between respondent Nos.1and 2 clearly set out that respondent No.2 was obligated to hand over 8flats to respondent No.1 and the right of respondent No.1 over the saidflats was paramount to the rights of the other parties.

15. The Single Judge thus directed the appellant, by a mandatoryDorder, to hand over keys and possession of the said 8 flats to respondentNo.1 along with 16 parking spaces, recording that he had moulded thereliefs originally sought by respondent No.1 in the changed circumstancesof the case and in order to shorten the litigation and do complete justice.

16. Aggrieved by the Single Judge’s decision, the appellantEchallenged the said decision before the Division Bench of the High Courtin Commercial Appeal No.173 of 2017. It was urged on behalf of theappellant that respondent Nos.1 and 2 had entered into the ConsentTerms dated 27[th] September, 2017 with a view to defeat the appellant’sclaim. Unless respondent No.2 completed its entire obligations withFrespect to the building still under construction in the suit property,respondent No.1 was not entitled to receive its 8 flats as per theConsent Terms. The appellant further contended that the handing overof 8 flats to respondent No.1 was, in effect, a final relief since nothingfurther remained in the suit and the interim order of the Single Judgewas in fact a final order and that the confirmation of the arbitral tribunal’sGorder had no effect on the proceedings before the Single Judge. Thesearguments were countered by respondent No. 1 which inter aliasubmitted that the actual dispute was between the appellant andrespondent No.2 and that it (respondent No.1) was being made to sufferfor such dispute. Respondent No.1 contended that the main H

development agreement had been executed between the Society andrespondent No.1 and the rights of the other parties flowed through suchagreement. Hence, there was nothing wrong in the Single Judgemoulding reliefs in its favour. Respondent No.2 echoed respondent No.1’sarguments.

17. The Division Bench by its judgment and order dated 9[th] July,2018, upheld the mandatory direction issued by the Single Judge at aninterlocutory stage and rejected the appeal, holding that the Single Judgehad addressed the various issues in detail and that it was right to mouldthe reliefs, even at the interim stage, in light of changed circumstancesin the case. The Division Bench opined that the appellant was not leftremediless in case respondent No.1 failed in the suit, as his remedieswere kept open.

18. We have heard Mr. Mukul Rohatgi, learned senior counselappearing for the appellant, Mr. Shyam Divan, learned senior counselappearing for respondent No.1 and Mr. Mahendra K. Ghelani, learnedcounsel appearing for respondent No.2.

19. From the chronology of events, it is indisputable that the presentappeal emanates from an interlocutory order passed by the learned SingleJudge of the High Court on an application under Order XXXIX which, inturn, has been confirmed by the Division Bench. That interlocutoryorder has been passed in the suit filed by respondent No.1 against theappellant and respondent No.2 for the following substantive reliefs:

“a) this Hon’ble Court be pleased to declare that the suit agreementi.e. the said Development Agreement dated 22[nd] September 1999(Exhibit “B” to the Plaint), read with the said Agreement dated11[th] September 2009 (Exhibit “J” to the plaint), are valid, subsistingand binding between the Plaintiff and the Defendants.

b) this Hon’ble Court be pleased to order and decree the specificperformance of the suit agreements dated 22[nd] September 1999(Exhibit “B” to the plaint), read with Agreement dated11[th] September 2009 (Exhibit “J” to the plaint) including handingover to the Plaintiff constructed area of 22500 sq.ft. in the freesale buildings along with proportionate car parking space in theform of 12 flats in Wings “A” and “B” of the building “Bay –View” situated on the property described in Exhibit “A” to theplaint and 24 car parking spaces.

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c) In the alternative to prayer clause (b) this Hon’ble Court bepleased to order, decree and direct the Defendants to refund asum of Rs.75,00,000/- together with interest at 18% as set out inthe Particulars of Claim at Exhibit “M” to the plaint;

d) In the alternative to prayer (a) and (b) and in addition to prayer(c) above, this Hon’ble Court be pleased order, decree and directthe Defendants to pay damages of Rs.173,47,53,425/- (RupeesOne Hundred Seventy Three Crores Forty Seven Lacs Fifty ThreeThousand Four Hundred Twenty Five Only) as set out in particularsof Claim at Exhibit “M” to the plaint.

e) This Hon’ble Court be pleased to pass an order of Mandatoryand Permanent Injunction against the Defendants, their servants,agents, assigns and/or any other person acting through or underthem from in any manner directly or indirectly dealing with ordisposing of or alienating or parting with the possession of orcreating third party rights in respect of the premises coming to theshare of the Defendants in Wings “A” & “B” of the building“Bay-View” situated on the property described in Exhibit “A” tothe plaint without first delivering to the Plaintiff, the possession of22500 sq.ft. constructed areas per SRA sanctioned plan withproportionate car parking space in the form of 12 flats in Wings“A” and “B” of the building “Bay –View” situated on the propertydescribed in Exhibit “A” to the plaint and 24 car parking spaces.”

20. During the pendency of the suit for aforementioned reliefs,respondent No.1/plaintiff filed Notice of Motion No.147/2013 for thefollowing interim reliefs:

“(a) Pending the hearing and final disposal of the present suit, thisHon’ble Court be pleased to injunct the Defendants, servants,agents, assigns and/or any other persons acting through or underthem from in any manner directly or indirectly dealing with ordisposing of or alienating or parting with the possession of orcreating third party rights in respect of the premises coming to theshare of the Defendants in Wings “A” & “B” of the building“Bay-View” situated on the property described in Exhibit “A” tothe Plaint without first delivering to the Plaintiff, the possession of22500 sq.ft. constructed areas per SRA sanctioned plan withproportionate car parking space in the form of 12 flats in Wings “A” and “B” of the building “Bay-View” situated on the propertydescribed in Exhibit “A” to the plaint and 24 car parking spaces.

(b) Pending the hearing and final disposal of the present suit, thisHon’ble Court be pleased to appoint Court Receiver, High Court,Bombay and/or such other fit and proper person as Receiver ofpremises coming to the share of the Defendant No.1 in Wings“A” & “B” of the building “Bay-View” situated on the propertydescribed in the Exhibit “A” to the Plaint with all powers underOrder XL Rule 1 of the Code of Civil Procedure Code 1908including the power to take possession of premises coming to theshare of the Defendant No.1 in Wings “A” and “B” of the building“Bay-View” situated on the property described in the Exhibit “A”to the plaint and hand over to the Plaintiff the possession ofconstructed area as per SRA sanctioned plan in the free salebuilding in the form of 12 flats in Wings “A” and “B” of the building“Bay-View” situated on the property described in Exhibit “A” tothe Plaint and 24 car parking spaces.

(c) ad interim reliefs in terms of prayer (a) & (b).

(d) for costs of the suit;

(e) for such further and other reliefs as this Hon’ble Court maydeem fit and proper in the nature and circumstances of the case.”

21. Indeed, the learned Single Judge of the High Court grantedad-interim relief on 3[rd] December, 2012 during the pendency of theNotice of Motion. The same reads thus:

“Heard the Learned Senior Advocates appearing for the parties.The following order is passed by consent without going into themerits of the case and keeping all the contentions of the partiesopen.

(i) The Defendants shall not sell, dispose of, alienate, encumber,part with possession and/or create third party rights in respect of4 flats in Wing “A” and 4 flats in Wing “B” which flats arealready constructed and occupation certificate is obtained inrespect of the same. The said 8 flats are identified on thesanctioned plan which is taken on record and marked “X” foridentification.

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(ii) The Defendants shall also not sell, dispose of, alienate,encumber, part with possession and/or create third party rights inrespect of 4 flats in Wing “C”, the construction of which is inprogress. The said four flats are identified on the plan tendered inCourt and marked “X”.

B(iii) It is clarified that the above 12 flats pertain to 45 per centshare in flats of Defendant No.1 as per the agreements enteredinto by and between Defendant Nos.1 and 2. The Defendant No.2has informed the Court that Defendant No.2 will be contendingthat Defendant No.1 is not entitled to their 45 per cent share inthe flats so constructed on the ground that Defendant No.1 hasCallegedly not complied with their obligations under the Agreements.

(iv) The Defendants shall also not sell, dispose of, alienate,encumber, part with possession and/or create third party rights inrespect of the proportionate car parking spaces in respect of theabove 12 flats also identified on the plan marked “X”.

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2. Place the above Notice of Motion along with Notice of Motion(L) NO.3338 of 2012 taken out by Defendant No.2 underSection 8 of the Arbitration and Conciliation Act, 1996 for hearingand final disposal on 15[th] January, 2013.”

EThe aforementioned order was corrected on 17[th] December, 2012in the following terms:

“This application is for speaking to the minutes of the order dated3[rd] December, 2012.

2. In clause (i), 4 flats in Wing “A” and 4 flats in Wing “B” beFread as 5 flats in Wing “A” and 3 flats in Wing “B”.

Application is accordingly disposed of.”

22. The said ad-interim arrangement continued during thependency of Notice of Motion. However, while finally disposing of theNotice of Motion No. 147/2013, the learned Single Judge of the HighGCourt vide judgment and order dated 9[th] October, 2017 passed amandatory order directing the appellant to hand over 8 flats and 16parking spaces to respondent No.1/plaintiff. For passing suchmandatory order the learned Single Judge placed reliance on thedecision of this Court in Gaiv Dinshaw Irani and Others Versus H

Tehmtan Irani and Others[1], holding that the Courts ought to mould therelief in accordance with the changed circumstances for trying thelitigation or to do complete justice. The view so taken by the learnedSingle Judge commended to the Division Bench.

23. What has, however, been glossed over by the High Court isthat the Settlement Agreement dated 4[th] November, 2016 and theConsent Terms dated 29[th] September, 2017 have been entered intobetween the respondent No.1/plaintiff and respondent No.2/defendantNo.1 inter partes. That could not be thrust upon the appellant/defendant No.2 who had executed a separate agreement withrespondent No.2/defendant No.1. The appellant could be bound only bythe agreement dated 10 March, 2003 in his favour and executed by him.Admittedly, the said agreement is the subject matter of arbitrationproceedings, inter alia because respondent No.2 had failed to dischargeits obligation thereunder. The appellant has already parted with thepossession of flats to respondent No.2 in furtherance of agreement dated10[th] March, 2003 and respondent No.1/plaintiff could be accommodatedonly against those flats. Asking the appellant to hand over additional 8flats and 16 parking spaces by way of mandatory order, would be tosuperimpose the liability of respondent No.2/defendant No.1 on theappellant for discharging its obligation qua respondent No.1/plaintiff inrelation to the agreement entered between them dated 22[nd] September,1999 and including Settlement Agreement dated 4[th] November, 2016and Consent Terms dated 25[th] September, 2017, to which the appellantis not a party.

24. That apart, the learned Single Judge as well as the DivisionBench have committed fundamental error in applying the principle ofmoulding of relief which could at best be resorted to at the time ofconsideration of final relief in the main suit and not at an interlocutorystage. The nature of order passed against the appellant is undeniably amandatory order at an interlocutory stage. There is marked distinctionbetween moulding of relief and granting mandatory relief at aninterlocutory stage. As regards the latter, that can be granted only torestore the status quo and not to establish a new set of things differingfrom the state which existed at the date when the suit was instituted.This Court in Dorab Cawasji Warden Versus Coomi Sorab Wardenand Others,[2]has had occasion to consider the circumstances1(2014) 8 SCC 2942(1990) 2 SCC 117

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Awarranting grant of interlocutory mandatory injunction. In paragraphs16 & 17, after analysing the legal precedents on the point as noticed inparagraphs 11-15, the Court went on to observe as follows:

“16. The relief of interlocutory mandatory injunctions arethus granted generally to preserve or restore the statusBquo of the last non-contested status which preceded thepending controversy until the final hearing when full reliefmay be granted or to compel the undoing of those acts thathave been illegally done or the restoration of that whichwas wrongfully taken from the party complaining. But sincethe granting of such an injunction to a party who fails or would failCto establish his right at the trial may cause great injustice orirreparable harm to the party against whom it was granted oralternatively not granting of it to a party who succeeds or wouldsucceed may equally cause great injustice or irreparable harm,courts have evolved certain guidelines. Generally stated theseDguidelines are:

(1) The plaintiff has a strong case for trial. That is, it shallbe of a higher standard than a prima facie case that is normallyrequired for a prohibitory injunction.

(2) It is necessary to prevent irreparable or serious injuryEwhich normally cannot be compensated in terms of money.

(3) The balance of convenience is in favour of the one seekingsuch relief.

17. Being essentially an equitable relief the grant or refusal of aninterlocutory mandatory injunction shall ultimately rest in the soundFjudicial discretion of the court to be exercised in the light of thefacts and circumstances in each case. Though the above guidelinesare neither exhaustive nor complete or absolute rules, and theremay be exceptional circumstances needing action, applying themas prerequisite for the grant or refusal of such injunctions wouldGbe a sound exercise of a judicial discretion.”

(emphasis supplied)

25. The Court, amongst others, rested its exposition on thedictum in Halsbury’s Laws of England, 4[th] edition, Volume 24,paragraph 948, which reads thus:H

“A mandatory injunction can be granted on an interlocutoryapplication as well as at the hearing, but, in the absence of specialcircumstances, it will not normally be granted. However, if thecase is clear and one which the court thinks ought to be decidedat once, or if the act done is a simple and summary one which canbe easily remedied, or if the defendant attempts to steal a marchon the plaintiff, such as where, on receipt of notice that an injunctionis about to be applied for, the defendant hurries on the work inrespect of which complaint is made so that when he receivesnotice of an interim injunction it is completed, a mandatoryinjunction will be granted on an interlocutory application.”

26. The principle expounded in this decision has beenconsistently followed by this Court. It is well established that an interimmandatory injunction is not a remedy that is easily granted. It is an orderthat is passed only in circumstances which are clear and the primafacie material clearly justify a finding that the status quo has beenaltered by one of the parties to the litigation and the interests of justicedemanded that the status quo ante be restored by way of an interimmandatory injunction. (See Metro Marins and Another Versus BonusWatch Co. (P) Ltd. and Others[3], Kishore Kumar Khaitan andAnother Versus Praveen Kumar Singh[4]and Purshottam VishandasRaheja and Another Versus Shrichand Vishandas Raheja (Dead)through LRS. and Others[5])

27. In the factual scenario in which mandatory order has beenpassed against the appellant, in our opinion, is in excess of jurisdiction.Such a drastic order at an interlocutory stage ought to be eschewed. Itcannot be countenanced.

28. Reverting to the decision in Gaiv Dinshaw Irani, (supra),relied upon by the High Court, the Court moulded the relief in favour ofthe party to the proceedings to do substantial justice whilst finallydisposing of the proceedings and did not do so at an interlocutory stage.In other words, reliance placed on the principle of moulding of relief isinapposite to the fact situation of the present case.

29. Resultantly, the invocation of principle of moulding of reliefsso also the exercise of power to grant mandatory order at an 3(2004) 7 SCC 4784(2006) 3 SCC 3125(2011) 6 SCC 73

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Ainterlocutory stage, is manifestly wrong. To put it differently, whileanalysing the merits of the contentions the High Court was swayed awayby the consent agreement between the respondents inter partes to whichthe appellant was not a party. Thus, he could not be bound by thearrangement agreed upon between the respondents inter se. Theappellant would be bound only by the agreement entered withBrespondent No.2 dated 10[th] March, 2003 and at best the tripartiteagreement dated 11[th] September, 2009. The respondent No.2 havingfailed to discharge its obligation under the stated agreement dated10[th] March, 2003, cannot be permitted to take advantage of its ownwrong in reference to the arrangement agreed upon by it withCrespondent No.1/plaintiff and including to defeat the claim of theappellant in the arbitration proceedings.

30. It would have been a different matter if the High Court wereto continue the ad-interim arrangement directed in terms of order dated3[rd] December, 2012 and as corrected on 17[th] December, 2012, until theDfinal disposal of the suit. However, by no stretch of imagination, theappellant could be directed to hand over 8 additional flats and 16 parkingspaces to respondent No.1 with whom the appellant has had noindependent agreement in that regard. The fact that respondent No.1would get a right in the suit property in terms of agreement dated22[nd] September, 1999, Settlement Agreement dated 4[th] November, 2016Eand Consent Terms dated 25[th] September, 2017 with respondent No.2,cannot be the basis to set up a claim against the appellant and, especiallybecause complying with the directions in the impugned order wouldresult in bestowing advantage on respondent No.2 who has failed todischarge its obligation under the agreement dated 10[th] March, 2003Fwith the appellant.

31. In view of the above, we have no hesitation to conclude thatthe High Court committed manifest error and exceeded its jurisdictionin granting interlocutory mandatory injunction against the appellant.

32. Accordingly, the impugned judgment and order passed by theGHigh Court deserves to be set aside but while doing so, we deem itappropriate to revive the ad-interim order passed by the Single Judge ofthe High Court on 3[rd] December, 2012 in Notice of Motion No.147/2013and as corrected on 17[th] December, 2012, which shall operate until thedisposal of the suit or until it is modified by the High Court on account ofHsubsequent developments, if any, as and when occasion arises.

SAMIR NARAIN BHOJWANI v. M/S. AURORA PROPERTIESAND INVESTMENTS [A. M. KHANWILKAR, J.]

33. While parting, we make it clear that the observations made inthis judgment are only for considering the matter in issue underconsideration and shall not influence the substantive proceedingspending between the parties. The same be decided on its own merits.

34. The appeal is allowed in the aforementioned terms. No costs.

Nidhi Jain

Appeal allowed.

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