Indiabulls Housing Finance Limited vs. Sara Estates Private Limited & Anr.

Facts

The petitioner, Indiabulls Housing Finance Ltd., entered into 17 Agreements to Sell (ATSs) with the respondent, Ambience Private Ltd., for the sale of 306 housing units across various projects. Indiabulls paid a total of ₹ 6,380,775,728/- towards these ATSs. However, Ambience failed to execute any Sale Deeds for even a single unit. Subsequently, Cancellation Deeds were executed for 33 units, leaving 273 units under the ATSs. Indiabulls filed several petitions under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief. The core of the dispute revolves around the substantial amount paid by Indiabulls and the non-transfer of property by Ambience.

Held

The Court held that a case for directing Ambience to deposit the amounts received from Indiabulls under the ATSs with the Registry of the Court is made out. The Court reasoned that Ambience had received substantial payments from Indiabulls for the transfer of ownership of housing units, but failed to execute any Sale Deeds for even a single unit. This, coupled with Ambience's insistence on its right to sell the disputed units, made it inequitable to allow Ambience to retain the amounts pending arbitral proceedings. The Court found that the requisites of Order XXXVIII Rule 5 of the CPC were, in a sense, satisfied due to Ambience's repeated assertion of its right to sell the units. The Court directed Ambience to deposit the entire amount paid by Indiabulls under the ATSs, totaling ₹ 638,07,75,728/-, within four weeks. Upon compliance, Ambience would be released from its undertaking not to alienate the disputed units. The Court clarified that these observations were only to dispose of the present petitions under Section 9 of the 1996 Act and would not influence the arbitral proceedings.

Key Issues

1. Whether the Court has the power to direct the respondent (Ambience) to deposit the amounts paid by the petitioner (Indiabulls) under the Agreements to Sell (ATSs) with the Court Registry, given that no Sale Deeds have been executed for the units in question? Petitioner's arguments: The petitioner contended that a prima facie case is made out for specific performance of the ATSs, as a substantial part of the sale consideration has been paid, yet no sale deeds have been executed. They argued that Ambience has no legal or moral right to retain the amounts paid by Indiabulls without transferring ownership. The petitioner also suggested that Ambience could return the amounts paid and retain control over the units, which was deemed a wholesome suggestion. Respondent's arguments: The respondent, Ambience, insisted on its liberty to sell the disputed units, citing a Settlement Deed. While conceding that Indiabulls would have a right to seek the return of amounts paid if the units were sold, they were unable to accede to the petitioner's offer to return the money and retain control of the units.