The Share Purchase Agreements are interconnected with the MOU and amended MOU, and the dispute regarding Nile and Vaigai falls within the purview of the arbitration clause in the MOU.

R. Banumathi, J. And K.K. Sasidharan, J.

Introductory:- Whether the Share Purchase Agreement entered into between the Appellant, along with its subsidiary companies, with the Respondent, on the basis of the original as well as modified Memorandum of Understanding (MOU) for the purpose of acquiring the property purchased by the Appellant in the name of its subsidiaries viz., Nile and Vaigai, by way of share transfer, instead of executing sale deeds and registering them before the Registration Department (with a view to avoid stamp duty) are linked and interconnected, so as to enable the Appellant to make use of the provision for arbitration incorporated in the MOU and to approach the Court for interim measure of protection under Section 9 of the Arbitration and Conciliation Act is the core issue that arises for our consideration in this intra- court appeal.

2. Brief facts:- The Respondent-Puravankara Projects Limited and Appellant-Galaxy Properties Private Limited entered into a Memorandum of Understanding dated 22.11.2006 (‘MOU’) for a project of acquiring 1000 acres of lands from Appellant Company. Under the MOU, Respondent agreed to acquire 1000 acres from the Appellant or from their subsidiaries/associates at Rs.38 lakhs per acre for the first 450 acres and at the rate of Rs.35 lakhs per acre for the remaining 550 acres. Thereafter, Appellant and Respondent entered into an amended MOU dated 22.11.2007 fixing the rate at Rs.50 lakhs per acre for the entire 1000 acres.

3. The Case of Appellant is that as per MOU dated 22.11.2006, Appellant and their subsidiaries/associates started acquiring lands in the name of their subsidiaries viz., Nile Developers (P) Limited (for short ‘Nile’); Vaigai Developers (P) Limited (for short ‘Vaigai’); Money Worth Estates Private Limited and Peacock Finvest (P) Limited. Under various sale deeds Nile acquired an extent of 23.7134 acres in Selvazhimangalam village at the rate of Rs.83 lakhs per acre. Vaigai purchased an extent of 19.08 acres under various sale deeds in Vittavidagai village, Part of Pappankuli village at the rate of Rs.81 lakhs per acre. Believing that Respondent will acquire 1000 acres of land and will not leave half way through and having trust in the Respondent, Appellant transferred the shares of its subsidiaries - Nile and Vaigai to the Respondent by Share Purchase Agreement dated 22.11.2007 and the consideration was worked out at Rs.50 lakhs per acre only. This has resulted in a loss of Rs.11.92 crores to the Appellant. Appellant advanced monies to acquire lands in the name of subsidiaries Nile and Vaigai and they have shown the loss of Rs.11.92 crores in the books of accounts as loss on sale of shares as per the two Share Purchase Agreements dated 22.11.2007. Loss of Rs.11.92 crores is shown in the balance sheet of Nile and Vaigai.

4. In June 2009, Respondent represented that they were not in a position to proceed with the project as there was a crunch in the real estate market due to global recession and that the monies are blocked in some other project. It was mutually agreed between the Appellant and Respondent not to proceed with the transaction and as per the mutual agreement, Appellant returned back Rs.10 crores. According to the Appellant, Respondent agreed to reconvey the shares of Nile and Vaigai infavour of Appellant or their nominees and that Appellant has to refund the consideration received out of share transfer agreements of Nile and Vaigai. After receiving back the advance of Rs.10.00 crores along with interest totalling Rs.14.08 crores from the Appellant, Respondent has not kept up their promise on coming forward to reconvey the shares of Nile and Vaigai and this caused great hardship to the Appellant. In response to the e-mail sent by the Appellant dated 01.4.2011, Respondent sent letter on 02.4.2011 stating that they have taken steps to launch the project and that they would build a compound wall and the Appellant is not to disturb their posse