The enforceability of an unregistered joint development agreement can be recognized for collateral purposes if substantial performance and conduct of the parties suggest reliance on the agreement.

JUDGMENT :

RAMACHANDRA D. HUDDAR, J.

This Miscellaneous First Appeal is preferred by the appellants herein under Order XLIII Rule 1 (r) of the Code of Civil Procedure, 1908 , (for short, "CPC") challenging the order dated 09.04.2025 passed by the learned Senior Civil Judge and J.M.F.C., Arakalagud in O.S.No.66/2024, whereby the learned trial Court rejected interlocutory application No. II filed under Order XXXIX Rules 1 and 2 of CPC, praying for a temporary injunction to restrain the respondents from alienating or encumbering the suit schedule properties pending adjudication of the main suit.

2. The facts leading to the filing of the suit and the instant appeal are rooted in an arrangement between the parties for joint development of immovable property situated at Shiradanahalli village, Mallipatna Hobli, Arakalagud Taluk, Hassan District. The suit schedule properties comprise lands in survey Nos.85, 86 and 87 totally measuring 8 acres 03 guntas. These lands initially classified as agricultural, were converted for non- agricultural residential use pursuant to an order dated 06.02.2020 issued by the Deputy Commissioner, Hassan. Thereafter, the respondent proposed to develop the said lands into residential sites and entered into certain agreements with the appellants to facilitate the development and sale of the layout.

3. On 24.03.2022, a registered agreement of sale was executed between the appellants and respondents, whereby the respondents agreed to sell a portion of the developed layout - specifically, 92,600 square feet of the residential sites, for a total sale consideration of Rs.2,42,00,000/-(Rupees two crores forty-two lakhs only). The appellants paid a sum of Rs.15,00,000/- (Rupees fifteen lakhs only) through RTGS as an advance towards the sale consideration. The very next day, on 25.03.2022, the parties executed a Joint Development Agreement (JDA), which though unregistered, outlined the terms of development of the land by the appellants at their own expense in exchange for 49% of the developed land. Under this arrangement, the appellants invested an additional Rs.75,00,000/- (Rupees seventy five lakhs only) taking the total monetary outflow to Rs.90,00,000/- (Rupees ninety lakhs only) as per the documents on record.

4. The appellants further claim to have expended Rs.20,00,00,000/- (Rupees twenty crores only) towards development activities, including labour, material procurement, laying of roads, installation of drainage and water systems, construction of a park, and electrical connections. As part of these works, the appellants also made payments to the Electricity Department to the tune of Rs. 14,66,610/- and Rs. 14,787/- respectively, towards layout related electricity connections and meter installations.

5. Despite these substantial investments and efforts, the respondents allegedly failed to fulfil their reciprocal obligations under both the agreement of sale and the JDA. The appellants asserts that repeated requests for execution and registration of the Sale Deed went unheeded, and instead the respondents started negotiating with the third parties and even began alienating parts of the developed layout, thereby frustrating the rights of the appellants and undermining their Investments. A legal notice dated 20.07.2024 was issued by the appellants, calling upon the respondents to honour their commitments. The respondents however, responded with the categorical denial and issued a public notice on 01.08.2024 indicating revocation of the agreement of sale.

6. It is alleged that, aggrieved by these actions, the appellants instituted a suit in O.S.No.66/