R J Rishikaran Projects PVT LTD vs. M/S Mysore Metal Industries

Facts

The appeal was filed by R J Rishikaran Projects Pvt. Ltd. (appellant) against an order dated 29.03.2022 passed by the Commercial Court, Bengaluru. The Commercial Court had allowed an application filed by M/s Mysore Metal Industries (respondent) under Section 9 of the Arbitration and Conciliation Act, 1996, granting an interim injunction. The injunction restrained the appellant from transferring, alienating, or encumbering 40 apartment units of its share in the Schedule Property until the disposal of arbitration proceedings. The dispute arose from a joint development agreement dated 26.05.2013 concerning a property in Bhattarahalli Village, Bengaluru. The project, a multi-storied residential cum commercial complex, faced delays due to circumstances beyond the appellant's control, leading to a stalemate and litigation. The High Court had previously directed the parties to explore an amicable settlement, considering the interest of numerous third-party investors.

Held

The High Court held that the appeal could be disposed of in terms of the affidavits filed by both the appellant and the respondent. The Court found that the undertakings and commitments made by the parties in their respective affidavits were aimed at ensuring a trouble-free and early completion of the project, which was of paramount importance, especially considering the involvement of third-party rights. The terms of the affidavits were found not to contravene any law or to be under coercion. The Court noted that the parties, who had previously been in litigation, had now sought to re-engage to expedite project completion. Consequently, the Court set aside the impugned order of the Commercial Court. The appeal was disposed of in terms of the affidavits, with the direction that the parties shall strictly abide by the terms therein without giving room for further delay or complaints. The Court explicitly stated that the order impugned was set aside.

Key Issues

1. Whether the interim injunction granted by the Commercial Court under Section 9 of the Arbitration and Conciliation Act, 1996, was justified, considering the ongoing project development and the interests of third-party investors? Appellant's contentions: The appellant argued that the appeal should be allowed by setting aside the impugned order. They relied on the fact that both parties, after extensive discussions facilitated by the High Court, had arrived at a consensus and filed affidavits outlining a plan for the expeditious completion of the project. The appellant highlighted that the respondent had agreed to the vacation of the injunction order subject to the terms detailed in their affidavit, which included the respondent undertaking finishing work for its share of apartments and the cost being adjusted against amounts payable to the appellant. Respondent's contentions: The respondent, through its affidavit, agreed to the vacation of the injunction order. They committed to undertaking the finishing work for its 61 apartments at its own cost, with the estimated cost detailed. The respondent also agreed that this cost would be deducted from the amount payable to the appellant under the Joint Development Agreement. Crucially, the respondent stated it had no objection to the vacation of the order dated 29.03.2022 passed by the Commercial Court, subject to the terms detailed in their affidavit.