The Madhya Pradesh High Court has clarified that an interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 cannot be used to nullify the effect of a registered sale deed, even where part of the consideration remains unpaid. The judgment reinforces the principle that title passes upon registration, and monetary disputes cannot justify restraint on lawful possession.
Background & Facts
The Dispute
The dispute arose from the sale of agricultural land in Village Bicholi Hapsi, Indore, admeasuring 5.193 hectares. The respondent, M/s Amarjot Developers and Finance Pvt. Ltd., had acquired the land through a registered sale deed dated 03.05.2007. Subsequent clerical errors led to an amendment deed dated 02.01.2016 and an exchange deed dated 06.02.2016, after which the land was mutated in the respondent’s name in revenue records.
The respondent then represented to the appellants, M/s MPM Homes Developers LLP and its partners, that it was the absolute owner and in exclusive possession of the land. Relying on these representations, the appellants purchased the same land through two registered sale deeds dated 26.04.2019. The total sale consideration was Rs. 9,92,20,000, paid partly through RTGS and partly through two cheques. The sale deeds explicitly recorded receipt of the full consideration and transferred physical possession to the appellants. The land was subsequently mutated in the appellants’ names, and development permissions were obtained.
Key Facts
- The respondent executed two registered sale deeds dated 26.04.2019 in favor of the appellants
- Total sale consideration: Rs. 9,92,20,000
- Payment made via RTGS and two cheques (never presented for encashment)
- Possession transferred to appellants on execution of sale deeds
- Land mutated in appellants’ names in revenue records
- Development permissions obtained by appellants
- Respondent did not present cheques for encashment at any point
- Respondent alleged in 2023 that the sale was contingent on cheque encashment
- Respondent claimed the land was Government land under Misal Bandobast entry of 1925-1926
Procedural History
- 03.05.2007: Respondent acquired land via registered sale deed
- 02.01.2016: Amendment deed executed
- 06.02.2016: Exchange deed executed; land mutated in respondent’s name
- 26.04.2019: Appellants purchased land via two registered sale deeds
- 26.04.2019: Possession handed over to appellants
- 14.10.2023: Respondent filed Civil Suit seeking declaration that sale deeds are void
- 25.04.2025: Civil Court referred parties to arbitration under Section 8 of the Arbitration Act
- 10.11.2025: Commercial Court, Indore, granted interim injunction under Section 9 of the Arbitration Act
- 30.04.2026: Present arbitration appeal decided by Madhya Pradesh High Court
- 01.04.2026: Sole arbitrator appointed under Section 11 of the Arbitration Act
Relief Sought
The appellants sought to set aside the interim injunction order dated 10.11.2025, arguing that it unlawfully suspended their rights as lawful owners. They also sought a declaration that the respondent’s claim for cancellation of the sale deeds is barred by limitation under Article 59 of the Limitation Act, 1963.
The Legal Issue
The central questions were: (1) Whether an interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 can be granted to restrain a lawful owner from using property after a registered sale deed has been executed and possession transferred, despite non-payment of part of the consideration; and (2) Whether the respondent’s claim for cancellation of the sale deed is barred by limitation under Article 59 of the Limitation Act, 1963.
Arguments Presented
For the Appellant
Learned Senior Counsel argued that the Commercial Court erred in granting an injunction that effectively nullified a registered sale deed. Citing Dahiben v. Arvind Kalyanji Bhasusali (2020) 7 SCC 366, it was submitted that title passes upon registration, and non-payment of consideration does not invalidate the deed. The remedy for unpaid consideration lies in a suit for recovery, not in seeking cancellation or injunction. The respondent’s failure to present cheques for encashment for over four years amounted to acquiescence. The claim for cancellation was barred by limitation under Article 59, which prescribes a three-year period from the date of discovery of fraud or concealment. The Commercial Court’s reliance on Shobhna Sharma v. Sawariya Realties was misplaced, as that case involved dishonored cheques, whereas here, no presentation occurred. Section 9(3) of the Arbitration Act bars Court intervention once an arbitral tribunal is constituted, unless Section 17 remedy is inefficacious. The respondent had not demonstrated urgency or irreparable injury.
For the Respondent
Learned Senior Counsel contended that the sale deed contained a condition that validity was contingent upon cheque encashment. Reliance was placed on Dalpat Singh Naruka v. Karuna Bansal (2022) 15 SCC 77 and Essar House v. Arcelor Mittal (2022 SCC OnLine SC 1219) to argue that courts retain discretion under Section 9 to preserve the status quo. It was submitted that the respondent had no efficacious remedy before the constitution of the arbitral tribunal, as the appointment process was delayed and contested. The interim order was limited to 90 days and was not a final determination of title.
The Court's Analysis
The Court undertook a detailed analysis of Section 54 of the Transfer of Property Act, 1882, which defines a sale as a transfer of ownership in exchange for a price paid, promised, or part-paid and part-promised. The Court held that full payment is not a precondition for validity. Registration under the Registration Act, 1908, requires only competent parties, proper stamping, and registration - not proof of full payment. The recital in the sale deed stating that validity was contingent on cheque encashment was held to be legally ineffective, as it contradicted the statutory framework of the Transfer of Property Act.
"Section 54 of the T.P. Act, 1882 defines a sale as a transfer of ownership in exchange for a price paid, promised, or part-paid and part-promised, thereby making it clear that full payment is not a pre-condition and that once a sale deed is executed and registered, the transaction is legally complete and title passes to the purchaser."
The Court emphasized that Dahiben squarely held that non-payment does not render a registered sale deed void. The respondent’s remedy, if any, was confined to recovery of the balance amount, not cancellation of the deed.
Regarding Section 9, the Court examined the interplay between Sections 9 and 17 of the Arbitration Act. It noted that the Commercial Court had entertained the Section 9 application before the arbitrator was appointed. The Supreme Court in Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd. (2022) 1 SCC 712 clarified that once an application under Section 9 is entertained and the Court has applied its mind, the proceeding may continue even if the tribunal is constituted later. The Court found that the respondent had no efficacious remedy under Section 17 at the time of filing, as the arbitrator had not yet been appointed.
The Court rejected the argument that the claim was barred by limitation under Article 59, holding that limitation is a mixed question of law and fact requiring full adjudication in the civil suit, not at the interim stage.
The Verdict
The appeal was dismissed. The interim injunction order dated 10.11.2025 was affirmed and shall continue during the pendency of arbitration proceedings. The appellants are restrained from alienating the disputed land or creating third-party interests, but may proceed with construction activities already permitted. The respondent’s claim for recovery of unpaid consideration remains open and may be pursued before the arbitral tribunal. No costs were awarded.
What This Means For Similar Cases
Registered Sale Deeds Cannot Be Suspended by Interim Injunction
- Practitioners must argue that Section 9 relief cannot be used to nullify title conferred by a registered deed
- Courts must distinguish between monetary claims and title disputes - only the former justify recovery suits
- Any injunction restraining possession must be narrowly tailored and not tantamount to cancellation
Section 9 Applications Must Be Timely and Efficacious
- Applications under Section 9 must be filed before constitution of the arbitral tribunal
- Delay in seeking interim relief may be construed as acquiescence
- Parties must demonstrate that Section 17 remedies are genuinely inefficacious - mere delay in arbitration is insufficient
Contingency Clauses in Sale Deeds Are Legally Inoperative
- Any clause making validity of a registered sale deed contingent on payment method (e.g., cheque encashment) is void under Section 54 of the T.P. Act
- Registration confers title; payment disputes are ancillary and must be resolved separately
- Courts must disregard such clauses as contrary to statutory law
