Read Order: MGF Developments Ltd. v. State of Haryana and Others

Monika Rahar

Chandigarh, May 05,2022: The Bench of Justice Raj Mohan Singh of the Punjab and Haryana High Court has held that under Order 23 Rule 2 CPC, all questions are to be decided in the same suit as the decree is not amenable to appeal and thus fresh independent suit is barred.

The petitioner (MGF Developments Ltd.) is a holding company, such as the fifth respondent. The dispute of the petitioner was with the fifth respondent and its subsidiary companies (sixth to eleventh respondents). 

The petitioner claimed that there was no dispute with the thirteenth, fourteenth and fifteenth respondents (proforma respondents) or their holding company EMAAR India Ltd., however, since the Lok Adalat Award (detailed relevant information given below) was obtained in their names, therefore, they were impleaded as proforma respondents. The Award was between proforma respondents on the one hand and seventh to eleventh respondents on the other hand.

It was also pleaded that in 2004, a joint venture between EMAAR properties PJSE Dubai and MGF Developments Ltd. & Sareen Estates Pvt. Ltd. was executed. The new Company namely EMAAR MGF India Land Limited was incorporated, but in 2016, due to business exigency, the Company was subjected to a statutory demerger process. 

Before the initiation of the demerger process, various agreements were executed between the joint venture partners and by virtue of these agreements, rights of the assets and interest therein came to be distributed in the manner as indicated in the agreements. The gist of the agreements was that the rights on 1685 acres of land and shareholding of 21 Companies came to the petitioner/MGF Developments Ltd.

In the present writ petition, the petitioner claimed that it had the right to develop and use certain land parcels (total measuring 31.03 acres) situated in Sectors 111 and 113, Gurugram. The petitioner pleaded that in furtherance of its business interest, it expressed interest in exchange for the aforesaid land parcels Gurugram with the seventh to eleventh respondents (subsidiary companies of the fifth respondent). 

The said respondents started to claim an interest in the aforesaid land even before the execution of any formal document. Thus, the petitioner filed a civil suit, during the pendency of which a compromise was effected between the plaintiffs (which the petitioner claimed that the suit was filed on its behalf as it was represented by the proforma respondents) and the seventh to eleventh defendants. 

According to the petitioner, the compromise was effected by proforma respondents on its behalf, which was in consonance with the agreements executed between the joint venture partners (EMAAR Properties PJSE Dubai & MGF Developments Ltd.). The compromise was effected and exchange deeds were executed between proforma respondents (claims to be on behalf of the petitioners) and the seventh to eleventh respondents agreeing to exchange the respective land parcels total measuring 15.13 acres and in addition, they undertook to pay a certain amount to the proforma respondents (on behalf of the petitioner), with one condition that if while making payment the cheque is dishonored, the deed would be null and void (as happened in the case- the cheque was dishonored). 

Petitioner further alleged that under the garb of false assurances of clearance of cheques, the seventh to eleventh respondents got sanctioned mutations of the land parcels of the petitioner in  2016. In terms of the compromise deed and exchange deeds executed in the civil suit, an award was passed by the Daily Lok Adalat (the Award) and the civil suit was disposed of on the basis of the compromise deed. 

The cheques furnished by the above respondents were dishonored and thus the entire amount was not paid to the petitioner and the petitioner even did not get the land in exchange as per the terms of the exchange deeds. In the meanwhile, the demerger process was finalized by the National Company Law Tribunal, New Delhi and agreements executed between the joint venture partners in the month of April 2016 were acknowledged and approved in accordance with the law.

In the month of October 2018, the petitioner got into a dispute with its erstwhile joint venture partner EMAAR Properties PJSE Dubai along with EMAAR MGF Land Limited on the other part i.e the holding company of the thirteenth to fifteenth respondents since June 2019. The seventh to eleventh Respondents took undue advantage of the dispute and obtained partition of the land parcels at the back of the petitioner and got the revenue entries incorporated in the names of the thirteen to fifteen respondents. 

The petitioner claimed to be unaware of this until the month of July 2021, after which the petitioner filed a formal complaint against the grant of licence in favour of the seventh to eleventh respondents in collaboration with the fifth and sixth respondents. The petitioner also claimed foul play on part of the second respondent- Authority in preponing the matter without proper notice to the petitioner. The Counsel for the petitioner submitted that the civil suit was filed by proforma respondents only at the instance of the petitioner and the petitioner is a necessary party

In this petition, the petitioner sought quashing of the award dated December 09, 2016, (the Award) passed by the Daily Lok Adalat in a civil suit. Further, stay on the operation of the Award was sought along with seeking direction to the second respondent to defer the proceedings pending before the Authority in the context of a change of land use. Petitioner also prayed for a direction to the first respondent to submit an inquiry report with regard to the entry of mutations and the conduct of contesting respondents while entertaining the licence application. 

Having heard the parties, the Court opined at the very outset that the Award of the Lok Adalat was passed by the Lok Adalat presided over by the Civil Judge (Jr. Divn.) Gurgaon, therefore, has to be treated like a compromise decree under Order 23 Rule 3 CPC. And, further, while agreeing with the submission of the petitioner’s counsel, the Court opined that under Order 23 Rule 2 CPC, all the questions are to be decided in the same suit as the decree is not amenable to appeal and thus fresh independent suit is barred.

Further, the Court opined that the petitioner in terms of its pleadings specifically acquiesced to the factum of filing a civil suit, execution of exchange deeds and compromise, incorporation of mutations in the revenue record, and alleged misrepresentation of respondents. In view of the above, the Court stated that it would remain debatable as to whether the petitioner can espouse the cause at such a belated stage by moving an objection petition in the same proceeding.

Thus, without commenting on the remedies available to the petitioner, the Court held that qua this aspect, the petitioner cannot maintain the present petition being suffered from delay and latches and also the petitioner having acquiesced the subject matter of the civil suit, exchange deed and compromise etc. 

Regarding the pendency of the proceedings before the second respondent, the Court asserted that the petitioner is a necessary party in view of proceedings conducted before the National Company Law Tribunal, New Delhi and the Scheme of Arrangement approved by the Tribunal in the context of steps to be taken by the parties for the implementation of the Scheme after its approval. 

Further, deprecating the practice of the second respondent in unilaterally preponing the hearing before it without proper notice to the petitioner, the Court held, 

“The apprehension shown by the petitioner would be squarely answered, if the pending proceedings in terms of change of land use are taken before some other competent officer of the respondent-Department. In case, respondent No.2 is the only defined authority, then respondent No.1 can be asked to allocate the application for change of land use for ultimate processing before some other authority or respondent No.1 may itself take up the issue in accordance with law.”

Thus, the petition was disposed of in above terms. 

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