Interim orders available only if claim can be specifically enforced

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Bombay High Court recently held that no interim order can be passed by a court or an arbitrator under sections 9 and 17 of the Arbitration and Conciliation Act, 1996, where specific performance of a contract cannot be granted under section 14(1)(a) and (b) of the Specific Relief Act, 1963.

In BE Billimoria and Company v Mahindra Bebanco Developers Limited & Anr, Billimoria and Mahindra Lifespace Developers executed a memorandum of understanding in 2008 to form a joint venture (JV) company to bid for a project to develop a residential township in Nagpur district, and to jointly promote a company post grant of bid. Subsequently, Billimoria and Mahindra executed a term sheet for award of the marketing contact to the JV company and the construction contract to Billimoria.

After disputes arose, the JV company invoked bank guarantees. Billimoria filed a section 9 petition against the JV company and others, which had led to a partial injunction against the JV company and Mahindra Lifespace.

After hearing detailed arguments, the court dismissed the petition, observing that Billimoria and the JV company had entered into a pure and simple construction contract. Even if Billimoria succeeded in the arbitral proceedings and even if it was proved that the JV company had failed to fulfil its obligations or otherwise breached the agreement, Billimoria could be compensated in terms of money.

Upon considering the terms and conditions of the construction agreement, the court found that the nature of the contract was such that it went into minute and numerous details and the contract was even otherwise determinable thus in view of provisions of Specific Relief Act, the contract could not be specifically enforced.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.