Bangalore District Court
) M/S.Oikos Renaissance vs ) M/S.Aum Builders on 18 December, 2020
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 18th day of December 2020
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl. City Civil & Sessions Judge,
Bengaluru City
A.S.NO.08/2014
And
A.S.NO.37/2014
PLAINTIFFS/ 1) M/S.OIKOS RENAISSANCE
APPLICANTS ASSOCIATION OF PERSONS
No.12, 6th Main, 18th Cross,
[In A.S.No.08/2014] Malleshwaram, Bengaluru -560 055.
Reptd.by Mr.N.S.Ramanj
2) M/S.OIKOS RENAISSANCE
ASSOCIATION OF PERSONS
No.50, 8th Main, 17th Cross,
Malleshwaram, Bengaluru -560 055.
Reptd.by Mr.N.S.Ramanj
3) Mr.N.S.RAMANJ,
Aged about 45 years,
S/o.late Sri.N.G.Srinivas,
Director - M/s.Renaissance Holdings,
No.50, Renaissance Land Mark,
17th Cross, 8th Main, Malleshwaram,
Bengaluru -560 055.
4) M/S.RENAISSANCE REAL ASSET
DEVELOPERS INDIA LLP
A Partnership Company,
Having its registered Office at
No.50, 17th Cross, 8th Main,
Malleshwaram, Bengaluru -560 055.
Reptd.by its Partner - Mr.N.S.Ramanj
[By Pleader Sri.K.Suman]
A.S.NO.08/2014
&
A.S.NO.37/2014
2
/Vs/
DEFENDANTS/ 1) M/S.AUM BUILDERS
RESPONDENTS No.202, Montreal Manor
Shopping Street
[In A.S.No.08/2014] Kumara Park West, Bengaluru -560 020.
Reptd.by its Partner-Mr.Manish Shah
[By Pleader Sri.Navkesh Batra]
2) M/s.OIKOS APARTMENTS PVT.LTD.
No.543, the Embassy, No.15,
Ali Askar Road, Bengaluru -560 052.
And Others 5
3) MR.JODH KAPOOR
No.543, the Embassy, No.15,
Ali Askar Road,
Bengaluru -560 052.
[Exparte]
4) HON'BLE JUSTICE MR.T.JAYARAMA
CHOUTA (RETD.)
Sole Arbitrator,
No.385, 5th Main, 11th Cross,
RMV II Stage, Dollars Colony,
Bengaluru -560 094.
[Arbitrator]
AND
PLAINTIFFS/ 1) M/S.OIKOS APARTMENTS PVT.LTD.
PETITIONERS No.543, The Embassy,
No.15, Ali Askar Road,
[In A.S.No.37/2014] Bengaluru -560 052.
Reptd.by Authorised Signatory -
Mr.Sandeep Ratald.
2) MR.JODH KAPOOR,
No.543, The Embassy,
No.15, Ali Askar Road,
Bengaluru -560 052.
[By Pleader Sri.Suraj Govinda Raj]
A.S.NO.08/2014
&
A.S.NO.37/2014
3
/VS/
DEFENDANTS/ 1) M/S.AUM BUILDERS
RESPONDENTS No.202, Montreal Manor
Shopping Street
[In A.S.No.37/2014] Kumara Park West,
Bengaluru -560 020.
Reptd.by its Partner-Mr.Manish Shah
:ALSO AT:
No.1302, Tower Oak-B,
Godrej Woodman Estate Apts,
Bellary Road, Hebbal,
Bengaluru -560 024.
[By Pleader Sri.Janekere C.Krishna]
2) M/S.OIKOS RENAISSANCE
ASSOCIATION OF PERSONS
No.12, 6th Main, 18th Cross,
Malleshwaram, Bengaluru -560 055.
Reptd.by Mr.N.S.Ramanj
3) M/S.OIKOS RENAISSANCE
ASSOCIATION OF PERSONS
No.50, 8th Main, 17th Cross,
Malleshwaram, Bengaluru -560 055.
Reptd.by Mr.N.S.Ramanj
4) Mr.N.S.RAMANJ,
Aged about 45 years,
S/o.late Sri.N.G.Srinivas,
Director - M/s.Renaissance Holdings,
No.50, Renaissance Land Mark,
17th Cross, 8th Main, Malleshwaram,
Bengaluru -560 055.
5) M/S.RENAISSANCE REAL ASSET
DEVELOPERS INDIA LLP
A Partnership Company,
Having its registered Office at
No.50, 17th Cross, 8th Main,
Malleshwaram, Bengaluru -560 055.
Reptd.by its Partner - Mr.N.S.Ramanj
[By Pleader Sri.K.Suman]
A.S.NO.08/2014
&
A.S.NO.37/2014
4
COMMON JUDGMENT
These suits are filed under Section 34 of the
Arbitration and Conciliation Act, 1996, for setting
aside the award dated 23.11.2013 passed by sole
Arbitrator in CMP No.126/2008.
2) As both suits are arising out of single award
dated 23.11.2013, for the convenience of the
Court, they are taken together for passing common
judgment.
3) Suit in A.S.No.08/2014 is filed by
Respondents No.2, 3, 5 and 6 and suit in
A.S.No.37/2014 is filed by Respondents No.1 and 4
before the Arbitral Tribunal against Claimant, who is
Defendant No.1 in both suits. For convenience of
the Court, parties are referred to as 'Claimant' and
'Respondents' as they were referred to in arbitration
proceedings.
A.S.NO.08/2014
&
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5
4) In brief, Respondents' case is that Claimant
entered into Memorandum of Agreement dated
14.01.1994 [MoU] with Dr.Y.V.Krupa Shankar,
Sri.Ashok P. Narang and Sri.D.Ravishankar in
respect of property bearing Sy.Nos.68/2A, 70/1 and
71/1, measuring 05 Acres and 26 guntas of
Allasandra Village, Yelahanka Hobli, Bangalore
North Taluk [for brevity 'Property'], for the purpose
of Joint Development. As they failed to comply with
the terms of MoU, Claimant filed suit for specific
performance of MoU in O.S. No.4208/1995 on the
file of City Civil Judge at Bangalore, wherein,
Respondent No.1 was arrayed as party. Said suit
came to be compromised and compromise decree
came to be passed, whereunder, Respondent No.1
agreed to convey 4.25% of undivided share, right,
title and interest in the property to Claimant.
Pursuant to compromise decree, Respondents No.1
and 2 entered into Agreement of Sale dated
14.11.2003 with the Claimant agreeing to sell
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4.25% of undivided right in the property, which is
described as 'B' and 'C' schedule property in
Agreement of Sale dated 14.11.2003.
5) It is stated that Claimant raised dispute
under the Agreement of Sale dated 14.11.2003.
Sole Arbitrator was appointed in CMP filed by
Claimant before the Hon'ble High Court of
Karnataka and impugned award came to be passed.
6) Respondents No.2, 3, 5 and 6 have
challenged the award on the following grounds :
(a) Award contains decision on matters
beyond the scope of submission to
arbitration.
(b) Award is in conflict with public
policy of India as the same is passed
without appreciating the relevant
evidence on record and without correct
appreciation of substantive law relating
to specific performance.
(c) Respondent No.6 is not a party to
arbitration agreement and therefore, award
could not be passed against Respondent
No.6. Arbitral Tribunal, therefore, exceeded
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7
its jurisdiction in passing the award against
Respondent No.6.
7) In addition to the above grounds,
Respondents No.1 and 4 have questioned the
award on the following grounds :
(a) Arbitration Agreement contemplates
the jurisdiction of Courts in entertaining
the specific performance and therefore,
finding of Arbitral Tribunal is contrary to
the Agreement arrived at between the
parties.
(b) Award is passed in contravention of
public policy of India as no reasons are
assigned by Arbitral Tribunal in rejecting
the counter claim.
For all these grounds, Respondents pray
for setting aside the award.
8) Claimant, in its written statement, justifies
the award granting the alternative relief of
damages instead of specific performance.
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&
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8
9) It is stated that suits do not meet any of
the parameters stipulated in Section 34 of the
Arbitration and Conciliation Act, 1996. There are
no valid grounds to set aside the award. Hence,
prays for dismissal of the suits.
10) Heard learned Counsel for Respondents
and Claimant. Perused the written arguments
filed by both Respondents and Claimant and also
perused the records.
11) Point that arises for consideration is :
" Whether Respondents have
made out any of the
grounds as enumerated in
Section 34 of the
Arbitration and
Conciliation Act, 1996 to
set aside the award dated
23.11.2013 passed by sole
Arbitrator?"
12) My answer to above point is in the
negative for the following :
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9
REASONS
13) Respondents pray for setting aside the
award dated 23.11.2013, whereby sole Arbitrator
directed the Respondents to pay to the Claimant a
sum of Rs.12,79,88,000/- with interest at the rate
of 12% per annum from 14.08.2008 till the date of
payment within three months from the date of
receipt of the award, failing which, Respondents are
directed to pay interest at the rate of 15% per
annum from 14.08.2008 till the date of payment.
14) Learned Counsel for Respondents No.1 and 4
submits that present suits challenging the award
are made on 25.01.2014 and 08.04.2014
respectively and thus, suit is to be decided as per
provisions of Section 34 of the Arbitration and
Conciliation Act, 1996, as it stood prior to
commencement of the Arbitration and Conciliation
(Amendment) Act, 2015. It is submitted that
amendments made to Section 34 of the Arbitration
and Conciliation Act, 1996 as per the 2015
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&
A.S.NO.37/2014
10
Amendment Act would not apply to the present
suit, because present suit was filed prior to the
coming into force of the 2015 Amendment Act. In
support of their submission, they have relied on the
judgment of the Hon'ble Supreme Court in
Ssangyong Engineering and Construction
Company Limited vs. National Highways
Authority of India (NHAI), [(2019) 15 SCC
131]. Para-19 of the judgment reads thus :
"19. There is no doubt that in the
present case, fundamental changes
have been made in the law. The
expansion of "public policy of India" in
ONGC v. Saw Pipes Ltd. [Saw Pipes"]
and ONGC v. Western Geco
International Ltd. ["Western Geco"] has
been done away with, and a new
ground of "patent illegality", with
inbuilt exceptions, has been introduced.
Given this, we declare that Section 34,
as amended, will apply only to Section
34 applications that have been made to
the Court on or after 23-10-2015,
irrespective of the fact that the
arbitration proceedings may have
commenced prior to that date."
15) Award was made on 23.11.2013. The
Arbitration and Conciliation (Amendment) Act,
2015, came into force on 23.10.2015. Suits were
filed on 25.01.2014 and 08.04.2014 respectively.
A.S.NO.08/2014
&
A.S.NO.37/2014
11
Admittedly, suits were filed under Section 34 of the
Arbitration and Conciliation Act, 1996, prior to the
coming into force of the 2015 Amendment Act. In
that circumstance, it is necessary to have regard to
the principles of law laid down in Oil & Natural
Gas Corporation Ltd. vs. Saw Pipes Ltd.,
[(2003) 5 SCC 705], wherein Para-74 reads thus :
"74. In the result, it is held that :
(A) (1) the court can set aside the arbitral
award under Section 34(2) of the Act if the
party making the application furnishes
proof that :
(i) a party was under some
incapacity, or
(ii) the arbitration agreement is
not valid under the law to which
the parties have subjected it or,
failing any indication thereon,
under the law for the time being
in force; or
(iii) the party making the
application was not given proper
notice of the appointment of an
arbitrator or of the arbitral
proceedings or was otherwise
unable to present his case; or
(iv) the arbitral award deals with
a dispute not contemplated by or
not falling within the terms of the
submission to arbitration, or it
contains decisions on matters
beyond the scope of the
submissions to arbitration.
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&
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12
(2) The court may set aside the award:
(i)(a) if the composition of the
Arbitral Tribunal was not in
accordance with the agreement
of the parties,
(b) failing such agreement, the
composition of the Arbitral
Tribunal was not in accordance
with Part I of the Act.
(ii) if the arbitral procedure was not in
accordance with :
(a) the agreement of the parties, or
(b) failing such agreement, the
arbitral procedure was not in
accordance with Part I of the Act.
However, exception for setting aside
the award on the ground of composition
of Arbitral Tribunal or illegality of arbitral
procedure is that the agreement should
not be in conflict with the provisions of
Part I of the Act from which parties
cannot derogate.
(c) If the award passed by the Arbitral
Tribunal is in contravention of the
provisions of the Act or any other
substantive law governing the parties
or is against the terms of the contract.
(3) The award could be set aside if it is
against the public policy of India, that is
to say, if it is contrary to :
(a) fundamental policy of Indian law;
or
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.
(4) It could be challenged :
A.S.NO.08/2014
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A.S.NO.37/2014
13
(a) as provided under Section
13(5); and
(b) Section 16(6) of the Act. "
16) In light of above principles of law, grounds
urged by Respondents for setting aside the award
have to be assailed. In concise, Respondents have
urged the following grounds :
(a) Award is made in contravention of
provisions of substantive law relating to
Specific Relief Act, 1963 and binding
effect of the judgment of the Hon'ble
Supreme Court.
(b) Award is made in contravention of the
terms of agreement between the parties.
(c) Award is made in contravention of
Section 31(3) of the Arbitration and
Conciliation Act, 1996 as Counter Claim of
Respondents was rejected without
assigning any reasons.
17) Before assailing the grounds urged by
Respondents, it is relevant to mention the Claims
made by Claimant before the Arbitral Tribunal and
the award made by the Arbitral Tribunal.
A.S.NO.08/2014
&
A.S.NO.37/2014
14
18) Reliefs sought for by Claimant has been
extracted in Para-11 of the award, which read thus :
"11. Hence, the present claim petition
has been filed by Claimant for the
following reliefs:
A. To execute and register in favour
of the Claimant and/or to the
Claimant's nominee/s, agreement/s in
respect of the Schedule 'B' property
and the Schedule 'C' property;
B. Jointly and severally pay to the
Claimant the liquidated damages of
Rs.15,29,730/- being the liquidated
damages from 15.08.2008 till
15.05.2009 together with the
interest thereon @ 15% per annum
on delayed payments of liquidated
damages.
C. Jointly and severally pay to the
claimant liquidated damages of
Rs.1,69,970/- per month on or
before 14th of every month till such
time the Respondents deliver to the
Claimant and/or the Claimant's
nominee/s the Schedule 'B' property
and Schedule 'C' property and
execute and register deeds of
absolute sale in respect of Schedule
'B' property and Schedule 'C'
property in favour of the Claimant
and/or Claimant's nominee/s or in
the alternative to prayers (a) to (c)
D. In lieu of specific performance,
jointly and severally pay to the
Claimant damages of
Rs.16,19,70,000/- only together
with interest thereon at 15% per
annum from 14.08.2008 till the date
of payment;
E. The cost of these proceedings;
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15
F. Any other order that this
Hon'ble Tribunal may deem fit in
the facts and circumstances of the
case."
19) Operative portion of the award reads as
follows :
"A. The Respondents are directed to
pay to the Claimant jointly and
severally a sum of Rs.12,79,88,000/-
(Rupees Twelve Crores Seventy Nine
Lakhs Eighty Eight thousand only)
(Rs.4,000 x 31,997 Sq.Ft. of built up
area) with interest at the rate of 12%
per annum from 14.08.2008 till the
date of payment within a period of 3
months from the date of receipt of this
award, failing which, the said sum will
fetch interest @ 15% per annum from
the date till the date of payment.
B. The Respondents are further directed
to pay a sum of Rs.7,00,000/- (Rupees
Seven Lakhs only) to the Claimant towards
the cost of these proceedings."
(a) Respondents' contentions regarding
award passed in contravention of the
provisions of substantive law relating to
Specific Relief Act, 1963 :
20) Respondents' contention is that prayer (D) of
Claim Petition is for award of damages in lieu of
specific performance, and it is contended that Issue
No.4 framed by the Arbitral Tribunal clarifies the
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16
fact that the relief seeking for a direction to
execute and register an Agreement of Sale in
favour of Claimant was a prayer for specific
performance of Agreement of Sale.
21) It is further contended that, while examining
Issue No.4, the Arbitral Tribunal has come to the
conclusion that first relief sought for by Claimant
could not be classified as a prayer for specific
performance of Agreement dated 14.11.2003 and
in that circumstance, question of granting the relief
of specific performance did not arise and granting
of damages in lieu of specific performance of
Agreement of Sale also did not arise.
22) In support of their contention, they have
placed reliance on the judgment of the Hon'ble
High Court of Culcutta in Gopi Nath Sen and
others vs. Bahadurmul Dulichand and others,
[1978 SCC onLine Cal 270]. In para-3, it is held
thus :
A.S.NO.08/2014
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17
"3. ..... In other words, the Court must be
in a position to consider that the plaintif
was otherwise entitled to claim specific
performance. If that condition would not
be fulfilled then there could be no question
of the court's exercising that power of
granting relief by way of damages in lieu
thereof. The expression "in lieu of specific
performance" means and signifies that the
relief by way of damages is granted in
place of specific performance or in
substitution thereof so that adequate relief
might be awarded to the plaintif who was
otherwise entitled to such specific
performance. Once the plaintif would
abandon his case of specific performance
then that would be an end of the matter so
far as the relief by way of damages in lieu
of specific performance was concerned.
......."
23) Further reliance has been placed on the
judgment of the Hon'ble Supreme Court in Harjeet
Singh and another vs. Amrik Singh and
another, [(2005) 12 SCC 270], wherein it has
been held that "Plaintif found not to have been
ready and willing to perform the contract, in such
a case there is no question of plaintif being
compensated."
24) In the backdrop of above judgments,
Respondents submit that Claimant, having
relinquished its claim for specific performance of
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18
Agreement of Sale, was dis-entitled from obtaining
the relief of damages in lieu of specific performance
of Agreement of Sale. Thus, impugned award is
contrary to the settled principles of law.
25) On the contrary, Claimant submits that it
never abandoned or gave up its claim for specific
performance in the arbitration proceedings. Arbitral
Tribunal has framed a specific Issue at Issue No.4 to
the effect that "whether Claimant is entitled to
specific performance?" and said Issue has been
answered in favour of Claimant. It is submitted that
judgments relied upon by Respondents are not
applicable to the case of Claimant.
26) Award makes it clear that Arbitral Tribunal
has framed Issues with respect to prayers sought
for by Claimant in Claim Petition at Issues No.4 to
6. They read thus :
"4. Whether the claimant proves that he
is entitled for an award in terms of the
prayer for a direction to Respondent Nos. 1
& 4 to execute and register agreements of
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sale in respect of 'B' and 'C' properties in
favour of the claimant or its nominees
under the agreement dated 14.11.2003
pursuant to the consent decree dated
14.11.2003 passed in O.S.No.4208/1995,
in terms of Respondent Nos. 1 & 4's
admission and undertaking vide its letter
dated 30.11.2006, to register the
agreement of sale in respect of the above
mentioned properties in favour of claimant
or his nominees?
5. Whether the claimant proves that it is
entitled for the liquidated damages
together with interest thereon at 15% per
annum in terms of the agreement dated
14.11.2003?
6. Whether the claimant proves that in
the alternative to prayers (a) to (c) the
claimant is entitled to damages of
Rs.16,99,70,000/- together with interest
thereon at 15% per annum?"
27) Findings of the Arbitral Tribunal on Issue No.4
read as follows :
"35. ........ He made a distinction that in
the present proceedings unlike to the
decision of the Supreme Court referred
above, Ex.C-6 agreement of sale is
pursuant to the compromise petition and
consent decree (Ex.C-4 & C5) and Ex.C6 is
a binding agreement and the said
agreement is neither cancelled nor
terminated. In the present case all the
parties accepted, admitted and reiterated
their obligations under the binding
agreement. He also further pointed out
that the prayer could not be classified as
prayer for specific performance of the
agreement dated 14.11.2003 (Ex.C6), is a
prayer to comply of the statutory
obligation under KOFA and fulfilling the
obligation undertaken in Ex.C-25. I accede
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20
to the submission made by the learned
advocate for the Claimant and hold issue
No.4 in favour of the Claimant. "
28) Having regard to above findings,
Respondents contend that Claimant has abandoned
the relief of specific performance of Agreement of
Sale. They further contend that once the relief of
specific performance is abandoned, the question of
granting of damages does not arise at all.
29) A bare reading of the findings on Issue No.4,
they do not in any way signify that Claimant has
abandoned its relief of specific performance of
Agreement of Sale. Claimant has sought for 3 main
reliefs at (A) to (C). Relief 'A' is to execute and
register Agreement; relief 'B' is with respect to
liquidated damages from 15.08.2008 to 15.05.2009
and relief 'C' is for liquidated damages at the rate
of Rs.1,69,970/- per month till Respondents deliver
to Claimant, 'B' and 'C' schedule property and
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21
execute and register absolute sale deed in respect
of 'B' and 'C' schedule property.
30) In prayer 'A', Claimant sought for
enforcement of statutory obligation which
Respondent No.4 had undertaken in Ex.C-25.
Submission recorded in findings that prayer 'A'
could not be classified as prayer for specific
performance of the Agreement dated 14.11.2003
cannot be extended to interpret that Claimant has
abandoned the relief of specific performance of
Agreement of Sale as sought for in prayer 'B' and
'C'. At the most, it can be said that submission as
recorded infers that statutory obligation under The
Karnataka Ownership Flats (Regulation of the
Promotion of Construction, Sale, Management and
Transfer) Act, 1972 [KOFA] cannot be enforced
under Agreement of Sale dated 14.11.2003,
because a separate measure has been provided
under KOPA. Thus, submission as to statutory
obligation could not be classified as prayer for
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specific performance of the Agreement of Sale,
would not tantamount to abandonment of the relief
of specific performance and same does not dehors
the specific performance sought for in prayers 'B'
and 'C'.
31) Award goes to show that Arbitral Tribunal
though answered Issue No.4 in favour of Claimant,
it did not grant specific relief sought for in prayer
'A' to 'C', instead, in its discretion it granted
damages in lieu of specific performance as sought
for in prayer 'D'. Reasons for granting damages
have been stated while determining Issue No.6.
Relevant portion of the findings of the Arbitral
Tribunal reads as follows :
"38. ........ I have gone through the reliefs
claimed by the Claimant. We should not
forget the fact that though a sanction was
to be obtained and construction had to be
commenced within 9 months of agreement
i.e 13.2.2004 and the project should be
completed and occupancy certificate had
to be obtained within 48 months there
from, i.e before 13.08.2008, nothing has
been done by the Respondents. The total
extent of land is 5 Acres 26 Guntas as
could be seen from Ex.C-4, compromise
decree, Ex.C-5 Compromise Petition, Ex.C-
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6 agreement of sale dated 14.11.2003,
Ex.C-54 and Ex.C-55 agreement dated
14.11.2003, Ex.C-74 power of attorney,
Ex.C18 Plaint in OS 15719/2005, Ex.C-20
consent decree in OS 15791/2005, Ex.C-21
Memorandum of Civil Petition of CRP
364/2007 and Ex.C22 Appeal grounds in
MFA 2965/2005 and admitted by all
Respondents. ......"
"40. ...... In a case of this nature having
regard to the fact that the construction of
the project has not been commenced even
though it should have been completed on
or before 13.08.2008, I am of the opinion
that the Claimant should be granted the
alternative relief of payment of sum. We
should not forget the fact that during the
pendency of these proceedings, the
construction work has been entrusted to
Respondent No.6 who has been brought on
record subsequently. We do not know how
many hands it will pass through. Even the
Respondents have to get over number of
hurdles before getting the sanction plan so
as to start the construction and how much
time it will take to complete the
construction is left to one's own
imagination. Having regard to the bitter
relationship between the parties and the
way litigations went on between them, this
Tribunal is not sure whether Respondents
are eager to complete the project as it
should be done. I am aware of the
forfeiture clause in the agreement Ex.C-6.
Even then, in the interest of both the
parties I am of the opinion that the
alternative relief claimed by the Claimant
has to be granted."
In this background, the Arbitral Tribunal
instead of granting the relief as sought for in prayer
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'A' to 'C', granted alternative relief of damages in
lieu of prayer 'A' to 'C'.
32) In the light of the findings of the Arbitral
Tribunal, it is necessary to have regard to Section
21 of the Specific Relief Act, 1963. Section 21 reads
thus :
"21. Power to award compensation
in certain cases.- (1) In a suit for
specific performance of a contract, the
plaintif may also claim compensation
for its breach, either in addition to, or in
substitution of, such performance.
(2) If, in any such suit, the court
decides that specific performance
ought not to be granted, but that there
is a contract between the parties which
has been broken by the defendant, and
that the plaintif is entitled to
compensation for that breach, it shall
award him such compensation
accordingly.
(3) If, in any such suit, the court
decides that specific performance
ought to be granted, but that it is not
sufficient to satisfy the justice of the
case, and that some compensation for
breach of the contract should also be
made to the plaintif, it shall award him
such compensation accordingly.
(4) In determining the amount of any
compensation awarded under this
section, the court shall be guided by
the principles specified in section 73 of
the Indian Contract Act, 1872 (9 of
1872).
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(5) No compensation shall be awarded
under this section unless the plaintif
has claimed such compensation in his
plaint :
provided that where the plaintif
has not claimed any such compensation
in the plaint, the court shall, at any
stage of the proceeding, allow him to
amend the plaint on such terms as may
be just, for including a claim for such
compensation.
Explanation .- The circumstance
that the contract has become incapable
of specific performance does not
preclude the court from exercising the
jurisdiction conferred by this section."
33) A bare reading of Section 21(1) makes it
clear that in a suit for specific performance of
contract, plaintiff may claim compensation in
addition to or in substitution of specific
performance. Under Section 21(2), if Court decides
that specific performance ought not to be granted,
it shall award compensation to plaintiff, and under
Section 21(3), if Court decides that specific
performance ought to be granted, but same does
not satisfy the justice, it shall award compensation
to plaintiff. Section 21(5) mandates that no
compensation shall be granted unless plaintiff has
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claimed the same in his plaint. Further, explanation
to Section 21 makes it clear that even contract has
become incapable of specific performance, which
does not preclude the Court from exercising the
jurisdiction under Section 21.
34) In the present case, Claimant sought for
specific performance of contract at prayer 'A' to C'
and in lieu of prayer 'A' to 'C', it sought for the
relief of damages at prayer 'D'. Arbitral Tribunal
held Issue No.4 in favour of Claimant. It exercised
its jurisdiction not to grant specific performance.
Having regard to the breach of Agreement of Sale
by Respondents, it granted the relief of damages.
35) In Gopi Nath Sen's case (supra), it has
been observed that plaintiff had abandoned his
claim for specific performance and he was not
ready and willing to perform his obligations under
the Agreement. Similarly, in Harjeet Singh's case
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(supra), plaintiff found not to have been ready and
willing to perform the contract.
36) In Gopi Nath Sen's case (supra), it has
been specifically held that if damages would be
awarded in lieu of or in substitution of specific
performance then that would amount to granting of
a suitable relief. It is worthwhile to read para-3 of
the judgment, which reads thus :
"3. In my opinion, the principle under
which damages will be awarded under
Section 73 of the Indian Contract Act
will be diferent from the principle
involved in damages which will be
awarded in lieu of specific performance.
In the case of damages in lieu of
specific performance the same does not
result directly or consequentially from
out of a breach of a contract as is the
case under Section 73 of the Indian
Contract Act. There might be
circumstances when the plaintif might
be entitled to specific performance but
the Court in its discretion might find
that in the special facts of the case the
plaintif should not be awarded specific
performance of the contract; but if
damages would be awarded in lieu or in
substitution thereof then that would
amount to granting of a suitable relief.
........"
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37) The Hon'ble Bombay High Court, in Haresh
Advani vs. Suraj Jagtiani, [Appeal
No.425/2015, Decided on 21/22-09-2017], was
pleased to refer the Gopi Nath Sen's case and to
explain thus :
"49. In Gopi Nath Sen and others vs.
Bhadurmul Dulichand and others, i.e.
Calcutta High Court case as well, we find
that the principle is that damages under
Section 73 of the Contract Act is a
diferent claim from the award of
compensation in lieu of specific
performance. ......... In Calcutta case as
well, the Trial Judge had awarded
damages to the extent of Rs.25,000/- in
lieu of specific performance. The Appeal
Court was of the view that this was an
error. The learned Judge failed to
consider the evidence before the Court
and could not have reached such a
conclusion after exercising his
discretion. It was noted clearly that the
suit after amendment of the assertion of
readiness and willingness and deletion of
the claim for specific performance, was
for damages simplicitor. Therefore,
diferent considerations arise on allowing
such amendment."
38) Had the Claimant not sought for specific
relief or had it abandoned or waived the specific
relief sought for, then, the contention of
Respondents would be relevant to consider. In the
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instant case, there is no such abandonment or
waiver of the relief of specific performance.
39) In arbitral proceedings, Respondents
contested the claim of Claimant with full knowledge
that Claimant had sought for specific performance
of Agreement of Sale. Further, they have
specifically pleaded in the present suits that
Claimant's claim is for specific performance of the
Agreement of Sale and in the alternative for
damages. In that view, merely because prayer 'A'
could not be classified as prayer for specific
performance, same cannot be construed that
Plaintiff has abandoned the specific relief.
40) By relying upon the judgments in the case of
Gopi Nath Sen and Harjeet Singh, Respondents
raised the question of Plaintiff's readiness and
willingness in performing its part of the contract.
In Clause-1.3 of Agreement of Sale [Ex.C.6],
vendors confirmed the receipt of entire sale
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consideration. Statutory deposits would be payable
by Plaintiff only when apartment is ready and
against the delivery of apartment. Moreover, in the
award, Arbitral Tribunal has specifically observed
the receipt of the sale consideration by
Respondents. That being the case, no occasion
would arise for the Arbitral Tribunal to give its
findings as to readiness and willingness as
contemplated in Section 16 of the Specific Relief
Act, 1963. Hence, question of Plaintiff's proving
readiness and willingness did not arise at all.
41) Respondents' contention is that Agreement
of Sale was one which could not be specifically
enforced in view of the bar contained under Section
14 of the Specific Relief Act, 1963. Agreement of
Sale entered into between Claimant and
Respondents requires constant supervision of the
Court and same cannot be enforced under Section
14(d) of the Specific Relief Act, 1963. In support of
their contention, they rely on the judgment of the
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Hon'ble Supreme Court in Vinod Seth vs.
Devinder Bajaj and Another, [(2010) 8 SCC 1].
It is relevant to read para-12, 13, 14 and 15. They
read thus:
" 12. It is doubtful whether the
collaboration agreement, as alleged by
the appellant, is specifically
enforceable, having regard to the
prohibition contained in Sections 14(1)
(b) and (d) of the Specific Relief Act,
1963. The agreement propounded by
the appellant is not an usual agreement
for sale/transfer, where the contract is
enforceable and if the defendant fails to
comply with the decree for specific
performance, the court can have the
contract performed by appointing a
person to execute the deed of
sale/transfer under Order 21 Rule 32(5)
of the Code of Civil Procedure ("the
Code", for short).
13. The agreement alleged by the
appellant is termed by him as a
commercial collaboration agreement for
development of a residential property of
the respondents. Under the alleged
agreement, the obligations of the
respondents are limited, that is, to apply
to DDA for conversion of the property
from leasehold to freehold, to submit
the construction plan to the authority
concerned for sanction, and to deliver
vacant possession of the suit property
to the appellant for development. But
the appellant-plaintif has several
obligations to perform when the
property is delivered, that is, to
demolish the existing building, to
construct a three-storeyed building
within one year in accordance with the
agreed plan, deliver the first and second
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floors to the respondents and also pay a
token cash consideration of
Rs.3,71,000. The performance of these
obligations by the appellant is
dependent upon his personal
qualifications and volition.
14. If the court should decree the suit
as prayed by the appellant (the detailed
prayer is extracted in para 5 above) and
direct specific performance of the
"collaboration agreement" by the
respondents, it will not be practical or
possible for the court to ensure that the
appellant will perform his part of the
obligations, that is, demolish the existing
structure, construct a three storeyed
building as per the agreed specifications
within one year, and deliver free of cost,
the two upper floors to the respondents.
Certain other questions also will arise for
consideration. What will happen if DDA
refuses to convert the property from
leasehold to freehold? What will happen
if the construction plan is not sanctioned
in the manner said to have been agreed
between the parties and the
respondents are not agreeable to any
other plans of construction? Who will
decide the specifications and who will
ensure the quality of the construction by
the appellant?
15. The alleged agreement being
vague and incomplete, requires
consensus, decisions or further
agreement on several minute details. It
would also involve performance of a
continuous duty by the appellant which
the court will not be able to supervise.
The performance of the obligations of a
developer/builder under a collaboration
agreement cannot be compared to the
statutory liability of a landlord to
reconstruct and deliver a shop premises
to a tenant under a rent control
legislation, which is enforceable under
the statutory provisions of the special
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law. A collaboration agreement of the
nature alleged by the appellant is not
one that could be specifically enforced.
Further, as the appellant has not made
an alternative prayer for compensation
for breach, there is also a bar in regard
to award of any compensation under
Section 21 of the Specific Relief Act."
42) On the other hand, Claimant's submission is
that suits filed by Respondents are squarely
covered by the judgment of the Hon'ble Supreme
Court in Olympus Superstructures Pvt. Ltd. vs.
Meena Vijay Khetan and Others, [(1999) 5
SCC 651]. In para-36, the Hon'ble Supreme Court
was pleased to observe thus :
"36. Further, as pointed in the
Calcutta case merely because
there is need for exercise of
discretion in case of specific
performance, it cannot be said
that only the civil court can
exercise such a discretion. ...."
43) Be that as it may. The question that arises is,
whether Agreement of Sale entered into between
Claimant and Respondents is not specifically
enforced and does it partakes the nature of
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collaboration agreement or Joint Development
Agreement?
44) To answer the above questions, it is
necessary to look into the Agreement of Sale. Title
of the Agreement itself shows that it is an
'Agreement of Sale', whereunder, Respondents
agreed to sell 4.25% of undivided right, title and
interest in the land and 4.25% of constructed area
along with 4.25% of total surface car parks,
basement car park, terrace area and garden area
within 57 months from the date of Agreement of
Sale. A bare reading of Agreement of Sale, it is
crystal clear that this is a simple agreement of sale
of flats to the Claimant for sale consideration
received by Respondents. Certainly, it is not a
collaboration agreement or Joint Development
agreement in which owner of the property enters
into agreement with developer to develop the
property and agrees to divide their respective
shares in developed area.
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45) Respondents rely upon Clause-6.1 of the
Agreement of Sale and submit that the division of
share and determination of the location of 4.25%
share of Claimant would be done by the parties by
mutual consent and recorded in writing. It is
submitted that building to be constructed as
described in Annexure-F of Agreement of Sale and
description provided in Annexure-F was not
sufficient and imprecise for Arbitral Tribunal to
determine the exact nature of the building.
46) There is no scope for such submission
because, first of all, Respondent No.1 being the
owner of the property entered into Joint
Development Agreement with Respondent No.2 for
development of the property and sharing of
developed area. In fact, agreement entered into
between Respondents No.1 and 2 is a Joint
Development Agreement. However, agreement
entered into between Claimant and Respondent
No.1 is an Agreement of Sale, in which Respondent
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No.2 arrayed as 'confirming party' in order to
create liability. In Clause-6.1, the parties have
agreed that division of constructed area shall be
done on the plan being sanctioned. This can be
termed as one of the conditions under the
Agreement of Sale. Because of Clause-6.1,
Agreement of Sale cannot partake the nature of
Joint Development Agreement. If the Agreement of
Sale executed in favour of Claimant is termed as
joint development agreement, then, Agreements of
Sale to be executed by Respondents in favour of
prospective purchasers would also be construed as
Joint Development Agreement. If such
interpretation is made, there would be no sanctity
to the sale agreement and same would become
nugatory as to its enforceability.
47) In Vinod Seth's case, it has been
specifically held that "a collaboration agreement of
the nature is not specifically enforced". Para-15 is
extracted thus :
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"15. ..... A collaboration agreement of
the nature alleged by the appellant is
not one that could be specifically
enforced. Further, as the appellant has
not made an alternative prayer for
compensation for breach, there is also
a bar in regard to award of any
compensation under Section 21 of the
Specific Relief Act."
48) Even if it is assumed that Agreement of Sale
entered into between Claimant and Respondents
No.1 and 2 is a collaboration agreement as
contended by Respondents, then, there would be
no impediment to grant compensation for breach of
Agreement under Section 21 of the Specific Relief
Act, 1963. In the instant case, Claimant has rightly
claimed alternative prayer for compensation for
breach and the Arbitral Tribunal has rightly granted
the same. In that view, there is no substance in the
contention of Respondents that Agreement of Sale
could not be specifically enforced in view of the bar
contained in Section 14 of the Specific Relief Act,
1963.
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49) All these aspects of the matter make it clear
that the Arbitral Tribunal has exercised its discretion
within the purview of Section 14 and 16 of the
Specific Relief Act, 1963 and rightly awarded
damages for breach under Section 21 of the
Specific Relief Act, 1963. No such contravention of
the provisions of substantive law is attributable to
the award.
(b) Contention regarding award is made in
contravention of the terms of agreement
between the parties -
50) Respondents No.1 and 4 contend that
award is made in contravention of Clause-2 of
Agreement of Sale dated 14.11.2003. Clause-2 of
the Agreement stipulates pre-estimated liquidated
damages that would be occasioned if the
Respondents fail to deliver the possession of the
apartment according to the stipulated time. As per
Clause-2 of the Agreement, the Arbitral Tribunal was
bound to award liquidated damages as estimated in
the Agreement under Section 74 of the Indian
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Contract Act. Instead, the Arbitral Tribunal has
ventured beyond the scope of the Agreement of
Sale and Section 74 of the Indian Contract Act and
therefore, award is liable to be set aside for being
patently illegal and in conflict with public policy of
India.
51) In support of their contention, they have
placed reliance on the judgment of the Hon'ble
Supreme Court in Kailash Nath Associates vs.
Delhi Development Authority and another,
[(2015) 4 SCC 136]. In Para-43, the Hon'ble
Supreme Court was pleased to hold thus :
"43. On a conspectus of the above
authorities, the law on compensation for
breach of contract under Section 74 can
be stated to be as follows :
43.1. Where a sum is named in a
contract as a liquidated amount payable
by way of damages, the party
complaining of a breach can receive as
reasonable compensation such
liquidated amount only if it is a genuine
pre-estimate of damages fixed by both
parties and found to be such by the
court. In other cases, where a sum is
named in a contract as a liquidated
amount payable by way of damages,
only reasonable compensation can be
awarded not exceeding the amount so
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stated. Similarly, in cases where the
amount fixed is in the nature of penalty,
only reasonable compensation can be
awarded not exceeding the penalty so
stated. In both cases, the liquidated
amount or penalty is the upper limit
beyond which the court cannot grant
reasonable compensation.
43.2. Reasonable compensation
will be fixed on well-known principles
that are applicable to the law of
contract, which are to be found inter
alia in Section 73 of the Contract Act.
43.3. Since Section 74 awards
reasonable compensation for damage or
loss caused by a breach of contract,
damage or loss caused is a sine qua non
for the applicability of the section.
43.4. The section applies whether
a person is a plaintif or a defendant in a
suit.
43.5. The sum spoken of may
already be paid or be payable in future.
43.6. The expression "whether or
not actual damage or loss is proved to
have been caused thereby" means that
where it is possible to prove actual
damage or loss, such proof is not
dispensed with. It is only in cases
where damage or loss is difficult or
impossible to prove that the liquidated
amount named in the contract, if a
genuine pre-estimate of damage or loss,
can be awarded."
52) Respondents No. 2, 3, 5 and 6 contend that
Arbitral Tribunal has arrived at Rs.4,000/- per
square feet as the market value for the built up
area of 31,997 square feet without any basis.
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Parties have expressly agreed in Clause-2 that there
shall be payment to the Claimant for breach of
contract, which is pre-estimated genuine liquidated
damages. Even assuming that the Claimant has
suffered any losses, at the most, he would be
entitled the pre-estimated damages from
13.08.2008 at the rate of Rs.5/- per square foot on
the super built up area. Super built up area has
been determined at 31,997 square feet, thus,
damages, if any, will have to be calculated at Rs.5/-
per square foot per month computed from
13.08.2008 which works out to Rs.19,19,820/- per
year. If it is computed till 13.08.2020, then the
compensation amount payable can at the most be
only Rs.2,30,37,840/-. Thus, award of
Rs.12,79,88,000/- with interest at 12% per annum
from 14.08.2018 is arbitrary, illegal, perverse,
irrational, quixotic, unfair and unreasonable and no
reasonable person would have arrived at such a
conclusion.
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53) In support of their contention, they have
placed reliance on the judgment of the Hon'ble
Supreme Court in ONGC Ltd vs. Saw Pipes
Limited, [AIR 2003 SC 2629], which has been
considered in Kailash Nath Associates' case.
54) Tone and tenor of the above contention
makes it clear that Respondents have sought to
contend that in the Agreement alternative relief of
damages in lieu of specific performance has been
quantified by way of liquidated damages at Rs.5/-
per square foot per month and therefore, damages
could not be more than the quantified liquidated
damages of Rs.5/- per square foot, hence, award is
contrary to the Agreement.
55) Before assailing the contention of
Respondents, it is relevant to look into the Clause-2
of the Agreement of Sale. Clause-2 reads thus :
"2) TIME FOR COMPLETION :
The Consenting Witness shall
commence the construction work on
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the Schedule A property within 9
months from the date of execution of
this agreement and shall complete the
construction in all respects fit for
human habitation including obtaining
the Occupancy Certificate for the
construction within 48 months from the
date of the plan sanction of 57 months
from the execution of this agreement
whichever is earlier.
In the event of the Vendor and/or
Consenting Witness failing to hand over
possession of the Schedule 'B' Property
and Schedule 'C' Property to the
Purchaser complete in all respects with
all facilities, amenities and finishes
ready for occupation within the
stipulated period, the Vendor and/or the
Consenting Witness shall jointly and
severally be liable to pay to the
Purchaser liquidated damages at the
rate of Rs.5/- (Rupees Five Only) per
square foot of the super built area (i.e.
the Schedule 'C' Property) per month
from the due date of delivery to the
actual date of delivery of such
Constructed Area not yet delivered.
This amount is based on the rental loss
that would be sufered by the Purchaser
as acknowledged and recognized by the
Vendor and/or Consenting Witness.
This liquidated damage is a fair
quantification of the loss that would be
occasioned to be the Purchaser and/or
its nominee(s) and cannot be
contested, questioned or disputed. This
liquidated damage is to be paid to on a
monthly basis to the Purchaser and/or
its nominee(s)."
56) A bare reading of the above Clause, it makes
it clear that if the Respondents fail to hand over
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possession of 'B' and 'C' schedule property to the
Claimant within the stipulated time, they shall be
liable to pay liquidated damages at the rate of
Rs.5/- per square foot per month from the due date
of delivery to the actual date of delivery of such 'B'
and 'C' schedule property.
57) As per Clause-2, Respondents shall
commence the work within 9 months from the date
of execution of the Agreement and shall complete
the same within 48 months from the date of plan
sanction or 57 months from the date of execution of
the Agreement. If date of execution of Agreement is
taken into consideration, Respondents should have
completed the work and handed over the
possession of 'B' and 'C' schedule property on or
before 14.08.2008, which is due date for handing
over the possession.
58) However, as the Respondents failed to
deliver possession of 'B' and 'C' schedule property,
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Claimant has filed claim petition seeking specific
performance of the contract and alternative relief
of damages as contemplated under Section 21 of
the Specific Relief Act, 1963.
59) In the award, it has been specifically
mentioned that no work was commenced by
Respondents and even during the arbitral
proceedings, construction work was entrusted to
Respondent No.6. In this background, the Arbitral
Tribunal was not inclined to grant specific
performance, instead, it granted alternative relief of
damages. This alternative relief of damages cannot
be equated with the liquidated damages as
provided in Clause-2 of the Agreement. Absolutely,
alternative damages in lieu of specific performance
as provided in Section 21 of the Specific Relief Act,
1963 is different from the liquidated damages as
provided in Section 74 of the Indian Contract Act.
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60) A bare perusal of the prayer sought for by
Claimant makes it clear that in prayer 'B' and first
part of prayer 'C', Claimant claims liquidated
damages as per Clause-2 of the Agreement.
Arbitral Tribunal, for the reasons assigned, did not
grant prayer 'A' to 'C', instead, alternative relief of
damages in lieu of specific performance was
granted as provided in Section 21 of the Specific
Relief Act, 1963. The Hon'ble Calcutta High Court in
Gopi Nath Sen case (supra) has specifically held
that "The principle under which damages will be
awarded under Section 73 of the Indian Contract
Act will be diferent from the principle involved in
damages which will be awarded in lieu of specific
performance. In the case of damages in lieu of
specific performance the same does not result
directly or consequentially from out of a breach of
a contract as is the case under Section 73 of the
Indian Contract Act".
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61) If the Arbitral Tribunal decides to grant
specific performance of the Agreement, stating that
Respondents shall execute the registered Sale Deed
in favour of Claimant in respect of 'B' and 'C'
schedule property and to award damages till the
delivery of 'B' and 'C' schedule property as prayed
in prayer 'B' and 1st portion of prayer 'C', then, such
damages would be regarded as liquidated damages
as contemplated in Clause-2 of the Agreement and
in that circumstance, principles of law laid down in
Section 74 shall be adhered. In this case, Arbitral
Tribunal granted damages in lieu of specific
performance as provided in Section 21 of the
Specific Relief Act, 1963. Hence, the principles of
law laid down in Kailash Nath Associates case
(supra) cannot be availed of by Respondents. Thus,
it can be fairly said that learned Arbitrator acted
within the purview of the Agreement of Sale, while
making the award.
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62) Coming to the quantum of damages being
granted in lieu of specific performance, Arbitral
Tribunal has placed reliance on the contentions of
the Respondents and the Claimant to decide the
market value of 'B' and 'C' schedule property.
Claimant's contention is that the market value of
the property is Rs.5,000/- per square foot,
whereas, Respondents No.1 and 4 contend that the
market value is Rs.2,700/- per square foot.
Contrary, Respondents No.2, 3 and 5 contend that
the market value is Rs.2,500/- per square foot.
Arbitral Tribunal awarded the market value at the
rate of Rs.4,000/- per square feet.
63) Respondents' submission is that no reasons
were assigned in coming to a conclusion regarding
the quantum of damages. It is contended that the
Arbitral Tribunal merely reproduced the
submissions of the parties without referring the
published market values or any other documents.
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64) In para-45 of the award, the Arbitral Tribunal
held as follows :
"45. Having regard to the submission
made by both the sides and since there
is no conclusive proof regarding market
value, I am of the opinion that the ends
of justice will be met if I award the same
at Rs.4,000/- per Sq.Ft. as market value
65) Before coming to such conclusion, the
Arbitral Tribunal has taken into consideration
various factors as canvassed by the Claimant.
Factors taken into consideration by the Arbitral
Tribunal have been mentioned in para-43 of the
award. Be that as it may. Respondents contend
that no reference was made to published market
values or any other documents, while awarding
market value. Whether they had actually produced
such documents before the Arbitral Tribunal is a
moot question? It is to be noted that no such
documents have been brought to the notice of
Court. Had they produced the documents to show
the actual market value and the Arbitral Tribunal
had not considered it, then, the matter would have
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been different. In that circumstance, the Arbitral
Tribunal, having regard to the submissions of the
parties, awarded the market value at the rate of
4,000/- per square foot, which is neither on the
higher side as contended by Claimant nor on the
lower side as submitted by Respondents. In view of
absence of materials to substantiate the market
value as contended by Respondents, there is no
reason to interfere with the plausible view of the
Arbitral Tribunal in arriving at its conclusion
regarding the market value having regard to the
various factors mentioned in the award.
66) Respondents contend that the Arbitral
Tribunal has failed to set forth any reasons when
addressing the Issue No.11 and hence, the award is
violative of Section 31(3) of the Arbitration and
Conciliation Act, 1996 and same is illegal, dehors
the mandatory procedure of law, patently illegal
and liable to be set aside.
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67) Claimant submits that reasons for rejecting
Counter Claims and allowing the Claim are
interlinked.
68) It is to be noted that Respondents 2, 3 and 5
made a Counter Claim of Rs.191,50,00,000/- and
Respondents No.1 and 4 made a Counter Claim of
Rs.40,02,00,000/- against Claimant, contending that
delay is caused by Claimant.
69) No where in the award, the Arbitral Tribunal
came to the conclusion that at the instance of
Claimant the construction was delayed. On the
other hand, the Arbitral Tribunal held that
construction of the project has not been
commenced by Respondents. In that background,
the Arbitral Tribunal held that there are no merits in
the Counter Claims. In that context rejection of
Counter Claims is to be looked into. When the entire
Claim of the Claimant has been decided on merits
and award is based on reasons, then, there cannot
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be any reason to say that reasons assigned for
awarding the claim of Plaintiff cannot be made
applicable to the Counter Claims made by
Respondents.
70) Respondents 2, 3, 5 and 6 have taken the
contention that Respondent No.6 is not a party to
the arbitration agreement and Respondent No.6
has been saddled with unwarranted liability. Arbitral
Tribunal has exceeded its jurisdiction in passing an
award against Respondent No.6, therefore, award
is liable to be set aside. Reliance has been placed
on Yogi Agarwal vs. Inspiration Clothes & U,
[(2009) 1 SCC 372] and Deutsche Post Bank
Home Finance Ltd vs. Taduri Sidhar & Anr.,
[(2011) 11 SCC 375].
71) The Hon'ble Supreme Court in Yogi
Agarwal case (supra) was pleased to hold as
follows :
"10. When Sections 7 and 8 of the Act refer
to the existence of an arbitration agreement
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between the parties, they necessarily refer to an
arbitration agreement in regard to the current
dispute between the parties or the subject-matter
of the suit. It is fundamental that a provision for
arbitration, to constitute an arbitration agreement
for the purposes of Sections 7 and 8 of the Act,
should satisfy two conditions. Firstly, it should be
between the parties to the dispute. Secondly, it
should relate to or be applicable to the dispute."
72) Similarly, in Deutsche Post Bank Home
Finance Ltd case (supra), the Hon'ble Supreme
Court was pleased to reiterate the same principles
laid in Yogi Agarwal case.
73) Section 2(h) of the Arbitration and
conciliation Act, 1996 envisages the meaning of the
'party'. It states that 'party' means a party to an
arbitration agreement.
74) The question that looms the matter is that
whether the case of Respondent No.6 comes under
the principles laid down in the above judgments.
75) To assail this question, it is necessary to
have regard to the award. Relevant portion of the
award reads thus :
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"4. ..... When the matter was posted for
reply argument, on behalf of the
claimant, an application has been filed
by the Claimant under Order 1 Rule
10(2) of the CPC to implead
Renaissance Real Asset Developers
India LLP as Respondent No.6. Along
with the said application Claimant also
produced two documents which were
marked by the consent of both the
sides. Respondents have filed two
separate objection statements opposing
the said application. After hearing all
the parties, the said application was
allowed by a separate order bringing
Renaissance Real Asset Developer India
LLP on record as Respondent No.6.
Advocate who is representing
Respondent Nos.2, 3 & 5 is representing
Respondent No.6 also. After
Respondent No.6 is impleaded I heard
all the parties again and they
concluded their arguments. ......"
"40. .... We should not forget the fact
that during the pendency of these
proceedings, the construction work has
been entrusted to Respondent No.6
who has been brought on record
subsequently. ......."
76) Arbitral Tribunal has specifically held that,
during the arbitration proceedings, Respondents
No.1 and 2 entrusted the work to 6th Defendant. It
means that Respondent No.6 stepped into shoes of
2nd Respondent, who entered into MoU with
Respondent No.1. Moreover, Agreement of Sale
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makes it clear that Respondent No.2 has been
arrayed as 'consenting party'. It has been
mentioned in the Agreement of Sale that the
expression 'consenting party' shall include its
associates from time to time, successor in title.
77) The Hon'ble High Court of Karnataka in R.K.
Associates vs. Channappa, [(1992) SCC
OnLine Kar 152], was pleased to hold that "it is
well laid principle of law that an arbitration clause
is assignable, if the main contract is assignable.
Russel on Arbitration Nineteenth Edition, at page
69 has stated that an arbitration agreement will
bind not only the actual parties to it, but also an
assignee of the contract containing it."
78) In the instant case, there is no denial before
the Arbitral Tribunal that no work has been
assigned to 6th Defendant. After impleadment of 6th
Respondent, matter was heard afresh and award
was passed. Before this Court also, it is not at all
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the case of Respondents that they did not entrust
the work to 6th Respondent. Their only contention is
that there exists no arbitration agreement between
the Claimant and 6th Respondent. 6th Respondent's
impleadment has to be viewed in the context of
assignment of work to him by 2nd Respondent. In
that view, there is no reason to hold that Arbitral
Tribunal has exceeded its jurisdiction in passing the
award against 6th Respondent.
79) Thus, it is crystal clear from the award that
the view expressed by the Arbitral Tribunal is a
plausible view. No arbitrariness or capriciousness is
inferred from the award. Award is passed in
accordance with substantive law as provided and
within the purview of the contract. Award can be
set aside for the grounds stated in Section 34 of the
Arbitration and Conciliation Act, 1996. No such
grounds are made out by Respondents, muss-less
the grounds mentioned in plaints and written
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arguments; accordingly, I answer the above point
in the negative and proceed to pass the following :
ORDER
(1) Suits filed by Plaintiffs in A.S No.08/2014 and A.S No.37/2014 under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award dated 23.11.2013 passed in CMP No.126/2008, are hereby dismissed.
(2) No order as to costs.
(3) Keep the Original of this judgment in AS.No.08/2014 and copy in AS.No.37/2014.
(Dictated to the Judgment Writer directly on computer, typed matter corrected and then pronounced by me in open court, on this the 18th day of December, 2020.) (RAMA NAIK) VI Addl.City Civil & Sessions Judge, Bengaluru City