The Delhi High Court ordered Ambience Private Limited to deposit over Rs 638 crores with the court within four weeks after Indiabulls Housing Finance alleged that Ambience failed to execute sale deeds for 273 housing units despite receiving payment under their Agreements to Sell (ATS). The court dismissed Ambience’s claims that the ATS was not for property sales but a loan security arrangement and restrained Ambience from creating third-party rights until the deposit is made. Indiabulls is entitled to seek a refund if the units are sold, ensuring its financial interests are protected.
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NEW DELHI: The Delhi High Court instructed Ambience Private Limited to deposit over Rs 638 crores with the court registry within four weeks. This order comes after Indiabulls Housing Finance approached the court, alleging the real estate group’s failure to execute sale deeds for certain properties under Agreements to Sell (ATS) between the two parties.
In 2020, Indiabulls entered into an Agreement to Sell (ATS) with Ambience Projects and Infrastructure. According to this agreement, Ambience was required to transfer ownership of 273 housing units to Indiabulls. Despite receiving a payment exceeding Rs 638.08 crores, Ambience did not fulfill its obligations under the agreement.
This prompted Indiabulls to file a petition under Section 9(1) of the Arbitration and Conciliation Act, seeking the court’s intervention to direct Ambience to deposit the payment amount with the court.
The court acknowledged Ambience’s own “admission” that Indiabulls would have the right to seek a refund of the payment if the disputed housing units were sold. Justice C Hari Shankar emphasized:
“The incontrovertible position is, therefore, that Ambience has retained, with itself, the entire amount paid by Indiabulls under the ATSs, without executing any document of sale, in respect of any of the units forming subject matter of the ATSs, in favour of Indiabulls.”
The court further stated that Ambience had no justification to retain the funds, noting:
“Ambience has no legal or even moral right to hold on to the amounts as it has not executed a single sale deed in favour of Indiabulls.”
Until the deposit is made, Ambience has been restrained from creating any third-party rights in the disputed properties. However, the restriction will be lifted once the amount is deposited. As the court noted:
“Till then, Ambience shall continue to remain restrained from creating any third-party rights in respect of the disputed units. On deposit being made as aforesaid, the restraint against dealing with the disputed units shall stand lifted.”
Indiabulls alleged that Ambience violated the ATS terms, which required it to obtain all necessary permissions from statutory authorities and lenders to execute conveyance deeds in favor of Indiabulls. Indiabulls also argued that Ambience was in breach of its obligations by failing to transfer ownership.
On the other hand, Ambience argued that the ATS agreements were never meant for the sale of housing units but served as a mechanism to secure advances provided by Indiabulls. The company claimed it had already repaid a Rs 2,344 crore loan from Indiabulls using funds advanced under the ATS, rendering the agreements fulfilled.
Ambience also asserted its right to sell the disputed housing units after repaying the advances. However, the court dismissed Ambience’s argument, noting:
“No prima facie case to that effect can be set to have been made out at this stage.”
The court rejected Ambience’s claims that the agreements were not actual instruments of sale but merely security arrangements for the loans.
The court based its decision on Order XXXVIII Rule 5 of the Code of Civil Procedure (CPC), highlighting Ambience’s consistent assertion that it retained the right to sell the disputed units. The court ruled:
“In view of the repeated assertion, by Ambience, of the said right, and given the position conceded by Ambience that if the units are sold, Indiabulls would have a right to seek to be returned the amounts paid by it to Ambience, the least that Ambience can be directed to do is to deposit the amounts paid by Indiabulls to Ambience towards transfer of ownership of the said units to Indiabulls.”
The absence of an arbitral tribunal to adjudicate the dispute necessitated the court’s intervention under Section 9 of the Arbitration and Conciliation Act.
Indiabulls Housing Finance was represented by Senior Advocates Rajiv Nayar and Dayan Krishnan, along with advocates Anirudh Bakhru, Karan Barioke, Ankit Banati, Adith Nair, Naman Gowda, Nikhil Rathi, and Mallika Kamal.
Ambience was represented by Senior Advocate Rajeev Mehra, supported by advocates Anush Raajan, Madhusudan, Pradyumn Yadav, and GS Sachdeva.
CASE TITLE:
Indiabulls Commercial Credit v. Ambience Private Limited.
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