Case Note & Summary
The appellants, Vasudev Garg, Chaitanya Garg, and Radhika Baig, filed a Commercial Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996, challenging an order dated 10.06.2025 passed by the LXXXV Additional City Civil and Sessions Judge, Bengaluru (Commercial Court) in Com A.A No.61/2025. The appellants had filed an application under Section 9 of the A&C Act seeking to restrain the respondents, Axis Trustee Services Limited and Embassy Office Parks Management Services Private Limited, from selling, transferring, or alienating 76 acres of land forming part of the Embassy Tech Village (ETV) project, and also from transferring approximately 1 acre and 9 guntas of land at Survey No.9/4 in Devarabeesanahalli Village. The appellants claimed rights under a Development Agreement and a Memorandum of Understanding with the original owners, alleging that the respondents were attempting to transfer the land to a third party in breach of their obligations. The Commercial Court refused to grant the interim injunction, leading to the present appeal. The High Court dismissed the appeal, holding that the appellants failed to establish a prima facie case as the agreements did not confer any right to the land itself, and the respondents were not parties to those agreements. The court also found that the balance of convenience was against granting an injunction because the respondents were seeking to transfer the land for valuable consideration, and the appellants could be compensated in damages if successful in arbitration. Additionally, the proposed transferee was not a party to the proceedings, and granting an injunction would affect their rights without a hearing. The court further held that the principle of lis pendens under Section 52 of the Transfer of Property Act, 1882, does not apply to arbitration proceedings unless the property is directly in issue, which was not the case here. The appeal was dismissed with no order as to costs.
Headnote
A) Arbitration - Interim Measures under Section 9 - Prima Facie Case - The appellants sought to restrain transfer of land forming part of Embassy Tech Village project, claiming rights under a Development Agreement and a Memorandum of Understanding. The court held that the appellants failed to establish a strong prima facie case as the agreements did not confer any right to the land itself, and the respondents were not parties to the agreements. (Paras 1-10) B) Arbitration - Interim Measures - Balance of Convenience and Irreparable Injury - The court found that the balance of convenience was against granting injunction as the respondents were seeking to transfer the land to a third party for valuable consideration, and the appellants could be compensated in damages if successful in arbitration. No irreparable injury was shown. (Paras 11-15) C) Arbitration - Interim Measures - Third Party Rights - The court noted that the proposed transferee was not a party to the proceedings and had no notice of the dispute. Granting injunction would affect the rights of a third party without hearing them. (Paras 16-18) D) Arbitration - Interim Measures - Lis Pendens - The court held that the principle of lis pendens under Section 52 of the Transfer of Property Act, 1882, does not apply to arbitration proceedings unless the property is directly in issue. Here, the land was not the subject matter of the arbitration agreement. (Paras 19-22)
Issue of Consideration
Whether the Commercial Court erred in refusing to grant an interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the respondents from transferring or alienating certain lands forming part of the Embassy Tech Village project, pending arbitration.
Final Decision
The appeal is dismissed. The impugned order dated 10.06.2025 passed by the Commercial Court is upheld. No order as to costs.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- prima facie case
- balance of convenience
- irreparable injury
- third party rights
- commercial contract
- specific performance
- lis pendens
- fraud
- collusion
