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Samir Narain Bhojwani v. M/s Aurora Properties and Investments & Anr.

Civil Appeal · 2018 INSC 733Decided 21 Aug 2018
Civil Appeal No. 7079 of 2018
Chief Justice Dipak Misra · Justice A.M. Khanwilkar · Dr. Justice D.Y. Chandrachud

Background

A slum-redevelopment project in Mumbai involved a chain of agreements: the original developer (respondent 1) sub-developed rights to respondent 2, who in turn contracted the appellant to build and share 55%/45% of the free-sale flats. A dispute between the appellant and respondent 2 went to arbitration. Separately, respondent 1 sued the appellant and respondent 2 for its own share of flats, and while that suit was pending, respondent 1 and respondent 2 struck a private "Consent Terms" settlement requiring 8 additional flats and 16 parking spaces, on top of what had already been resolved in arbitration, to be handed over by the appellant, even though the appellant was not a party to that settlement. The Bombay High Court's Single Judge, and then a Division Bench on appeal, upheld a mandatory interim order compelling the appellant to hand over those flats before the underlying suit was even finally decided.

Decision Breakdown

The Supreme Court held that the High Court exceeded its jurisdiction by issuing a mandatory injunction at the interlocutory stage against a party (the appellant) who was not bound by a settlement reached only between the other two parties, and by effectively granting final relief (handing over 8 flats and 16 parking spaces) before trial. Citing Dorab Cawasji Warden, the Court reiterated that interlocutory mandatory injunctions are an extraordinary remedy meant only to preserve or restore the pre-dispute status quo, not to create a new state of affairs or decide the suit's merits in advance; and it held that "moulding of relief" to do complete justice is a principle for final disposal of a suit, not for interim orders. The Court set aside the High Court's mandatory order and instead revived the original, narrower ad-interim consent arrangement from December 2012, to continue until the suit's final disposal.

Lesson Learnt

Courts cannot use an interim/interlocutory order to hand one litigant a final-looking victory, especially one based on a private settlement between other parties that was never agreed to by the person being ordered to comply: interim relief must preserve the status quo, not pre-decide the case.

Official source (sci.gov.in)View Judgment (PDF)

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