Madras High Court
K.Nalliappan vs M/S.Kiron Fashions Pvt. Ltd on 17 September, 2019
Equivalent citations: AIRONLINE 2019 MAD 1494
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
O.P.No.484 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Judgment reserved on 09.09.2019
Judgment pronounced on 17.09.2019
CORAM
THE HONOURABLE Mr. JUSTICE SENTHILKUMAR RAMAMOORTHY
O.P. No.484 of 2019
and
A. Nos.4286 and 4876 of 2019
K.Nalliappan ... Petitioner/Respondent
Vs.
1.M/s.Kiron Fashions Pvt. Ltd.,
Rep. by Director Mr.Manoj K.Lulla,
2.M/s.Kiron Creations Pvt. Ltd.,
Rep. by Director Mr.Manoj K.Lulla
3.M/s.Misty Apparels Pvt. Ltd.,
Rep. by Director Mr.Manoj K.Lulla
4.Kiron M.Lulla(Deceased)
5.Mrs.Rani Lulla
6.Mr.Manoj K.Lulla ... Respondents/Claimants
Prayer:- Original Petition is filed under Section 34(2A) of Arbitration and
Conciliation Act, 1996 to set aside the Award dated 24.12.2018 passed by
the Sole Arbitrator.
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For Petitioner : Mr. AR.L.Sundaresan,
Senior Counsel for
M/s. B.K.Sreenivasan
For Respondents : Mr. P.R.Raman
Senior Counsel for
M/s.S.P.Arthi for R5 and R6
ORDER
This Petition is filed by the Respondent in the arbitration proceedings to set aside the Arbitral Award dated 24.12.2018 (the Award) in the dispute between the Petitioner and the Respondents herein.
2.The case of the Petitioner is that he is the owner of an immovable property, which was the subject matter of an agreement of sale between the Petitioner and Respondents herein. The said Agreement for Sale was entered into on 05.01.1996 (Ex.A2)(the Agreement) for the sale of Plot Nos.5164, 5165, 5166 and 5167 in T.S.No.2 Part Block No.12, Ayanavaram Village in the Registration Sub District of Anna Nagar along with the superstructure thereon ad-measuring about 51,000 sq.ft. The said property was agreed to be sold by the Petitioner to the Respondents herein for a total sale consideration of Rs.11 Crores. Out of the said sum of Rs.11 Crores, a sum of Rs.2.75 Crores was required to be paid as an advance in two installments. The balance sale consideration of Rs.8.25 Crores was required to be paid within four months from the date of the http://www.judis.nic.in 2 of 23 O.P.No.484 of 2019 Agreement or within a period of 30 days from the date of receipt of a no objection certificate from the appropriate authority under Section 230 of the Income Tax Act,1962. The Agreement further provided as follows:-
"14.The vendor agrees to take the responsibility of modifying the structure as required by the Purchaser as agreed, and in the event of breach of agreement on account of any default or lapse on the part of the Purchaser the Purchaser agree to pay the liquidated damage of Rs.10,00,000/- or the actual loss whichever is less in consideration of the loss suffered by the vendor in account of incurring additional expenses on modification."
According to the Petitioner, the Respondents requested for several modifications to the superstructure. In specific, it is stated that the Respondents wanted the following modifications: gallery to be converted into a separate mezzanine floor; a penthouse on the top floor; and a substantial increase in the height of the compound wall. According to the Petitioner, the above mentioned modifications entailed considerable expenditure of about Rs.1.99 crores. It is also stated by the Petitioner that as against the sum of Rs.2.75 crores, which was required to be paid as advance, the Respondents paid a sum of Rs.2.60 crores and failed to pay the remaining advance amount of Rs.15 lakhs. It is further stated that draft sale deeds were forwarded in order to conclude the sale but http://www.judis.nic.in 3 of 23 O.P.No.484 of 2019 that the Respondents did not come forward to pay the balance sale consideration and, therefore, the sale could not be consummated.
3.Eventually, by letter dated 06.07.1996(Ex.A8), the Petitioner called upon the Respondents to have the sale deed executed and registered in their favour on or before 15.07.1996, failing which, the Agreement shall stand cancelled. On account of the non payment of the balance sale consideration and the non registration of the sale deed on or before 15.07.1996, the Agreement was cancelled and by notice dated 07.08.1996(Ex.A9), the Petitioner called upon the Respondents to pay a total sum of Rs.5.10 crores towards losses sustained on account of the breach of the Agreement by the Respondents. By reply dated 31.01.1997(Ex.A11), the Respondents informed the Petitioner, through its Advocate, that the Respondents were unable to purchase the property as per the Agreement on account of huge losses in export trade and on account of proceedings initiated by the Enforcement Directorate. It was further stated therein that the Agreement envisages the payment of Rs.10 lakhs or the actual loss, whichever is less, as damages for breach of contract and that the Respondents are willing to accept a refund of Rs.2.5 crores after permitting the Petitioner to deduct the sum of Rs.10 lakhs towards liquidated damages as per the Agreement. Accordingly, the Petitioner was called upon to refund the sum of Rs.2.5 crores within 7 http://www.judis.nic.in 4 of 23 O.P.No.484 of 2019 days from the date of receipt of the notice dated 31.01.1997 failing which the Respondents would invoke the arbitration clause and refer the dispute to the arbitrators.
4.Eventually, the dispute could not be resolved between the parties and was referred to arbitration. In the Statement of Claim (SoC) in the said Arbitration Proceedings, the Respondents made claims for an aggregate sum of Rs.3,50,82,500/- with interest on Rs.2,50,00,000/- at 20% per annum from the date of the SoC till the date of payment. In addition, a direction to sell the properties described in the schedule to the claim statement and apply the sale proceeds towards satisfaction of the amount awarded in favour of the Respondents herein/Claimants therein was also requested by the Respondents/Claimants. By Defence Statement and Counter Claim dated 06.06.1998(the SoD), the Petitioner/Respondent requested the Arbitral Tribunal to dismiss the claims made by the Respondents/Claimants with compensatory costs and made an aggregate counter claim of Rs.5,60,25,880/- with interest thereon at 18% per annum from 31.01.1997 till the date of recovery. Further pleadings by way of reply statements, amended Defence Statement and Counter Claim were filed. Both parties adduced both oral and documentary evidence: the Respondents/Claimants let in evidence through CW-1 and Exhibits A1 to A18 were marked by the http://www.judis.nic.in 5 of 23 O.P.No.484 of 2019 Respondents/Claimants; the Petitioner/Respondent adduced evidence through RW-1 to RW-4 and marked Exhibits P1 to P174. Upon hearing the oral arguments and considering the written arguments of both sides, the learned Arbitrator pronounced the Award. By the said Award, the Petitioner/Respondent was directed to pay a sum of Rs.2,50,00,000/- to the Respondents/Claimants with interest thereon at 9% per annum from 11.05.1998 (i.e. the date of the SoC till the date of Award) within two months from the date of receipt of the Award and, in the event of default, the Petitioner/Respondent was further directed to pay interest on the aggregate of the aforesaid principal plus interest at 18% p.a. calculated from the expiry of two months after receipt of the Award till the date of realisation of the said sum by the Respondents/Claimants. The said Award is challenged by the Petitioner/Respondent by filing the present Petition under Section 34 of the Arbitration and Conciliation Act,1996 (the Arbitration Act).
5.I heard Mr. AR.L.Sunderesan, learned senior counsel, assisted by Mr.B.K.Sreenivasan for the Petitioner, and Mr.P.R.Raman, the learned senior counsel, assisted by Ms.S.P.Arthi, for the Respondents.
6.The learned senior counsel appearing for the Petitioner referred to the Agreement and pointed out that the said Agreement envisaged the http://www.judis.nic.in 6 of 23 O.P.No.484 of 2019 payment of an advance of Rs.2.75 crores. He also referred to clause 14 of the said Agreement and contended that the modifications referred to therein are specified in Annexure - I thereof and that such modifications do not refer to the whole sale modifications, namely, the conversion of the gallery into a separate mezzanine floor, construction of a pent house and raising of the height of the compound wall. By referring to the SoD, the learned senior counsel pointed out that a sum of Rs.1,57,97,109/- was incurred as additional expenditure for making the above mentioned large scale modifications and that the aggregate losses on account of the admitted breach of the Agreement by the Respondents herein is a sum of Rs.8,20,25,880/- as detailed in paragraph 24 of the SoD. He also referred to the letter dated 20.06.1996 from the Petitioner to the Respondents(Ex.A7) wherein the Petitioner put the Respondents on notice that the requisite income tax clearance had been obtained and that the Respondents should arrange for the execution and registration of the sale deed on or before 04.07.1996, failing which, the Petitioner shall be constrained to cancel the Agreement and recover the expenditure incurred, as per the Respondents' request, on the building and pent house from the advance amount. He also referred to the letter dated 06.07.1996(Ex.A8) from the Petitioner to the Respondents, in this regard, wherein the Respondents were put on notice that unless the sale deed is executed and registered in favour of the Respondents on or before http://www.judis.nic.in 7 of 23 O.P.No.484 of 2019 15.07.1996, the Agreement shall stand cancelled. He further referred to the letter dated 07.08.1996 from the Petitioner to the Respondents(Ex.A9) and pointed out that the Respondents were put on notice by the said letter that they are liable to pay a sum of Rs.5.10 crores to the Petitioner for losses sustained as a result of the breach of the Agreement. In addition, he referred to the notice dated 31.01.1997 from the Respondents to the Petitioner(Ex.A11) and the reply thereto from the Petitioner on 13.02.1997(Ex.A12). In particular, he pointed out that the Respondents herein were put on notice under Ex.A12 that the Petitioner had incurred a total loss of Rs.7.76 crores and that after setting off the advance of Rs.2.6 crores, the Respondents are liable to pay a sum of Rs.5.16 crores to the Petitioner.
7.After referring to the above mentioned documents/exhibits, the learned senior counsel referred to the impugned Award. In particular, he referred to the issues framed by the Arbitral Tribunal with specific reference to the 2nd and 3rd issues, which relate to the alleged subsequent agreement to carry out additional work relating to the pent house, the mezzanine floor and raising of the height of the compound wall. He referred to the discussions and findings of the learned Arbitrator at paragraphs 21, 23, 26, 29, 31, 35, 36, 39, 40 and 46. By referring to the said paragraphs, the learned senior counsel contended that the http://www.judis.nic.in 8 of 23 O.P.No.484 of 2019 learned Arbitrator committed a patent illegality in concluding that clause 14 of the Agreement does not deal with the specifications set out in Annexure - I thereof. He further contended that the conclusion at paragraph 50 of the Award to the effect that there was no subsequent agreement in writing or otherwise with regard to the modifications and that, therefore, the Petitioner is entitled to a maximum sum of Rs.10,00,000/- for losses incurred as a result of the modifications is completely erroneous. In this connection, he referred to the judgment of the Hon'ble Supreme Court in STEEL AUTHORITY OF INDIA LIMITED Vs. GUPTA BROTHER STEEL TUBES LIMITED, (2009) 10 SCC 63, wherein the Hon'ble Supreme Court held that there is no impediment or obstacle for the parties to a contract to make provision for liquidated damages in respect of specific breaches only leaving other types of breaches of contract to be dealt with by way of unliquidated damages. By relying upon the said judgment, the learned senior counsel submitted that clause 14 of the Agreement only dealt with the provision of specifications as per Annexure - I thereof. Therefore, he submitted that the loss incurred both on account of the extensive modifications that were made to the building and on account of other losses such as loss of market value of the property, loss of rent, etc., are not covered by the liquidated damages of Rs.10 lakhs in clause 14. In fact, his contention was that such loss could be claimed by way of unliquidated damages http://www.judis.nic.in 9 of 23 O.P.No.484 of 2019 notwithstanding clause 14 as per the ratio of the judgment cited supra. He further submitted, in this connection, that many material documents that were submitted by the Petitioner to establish losses were disregarded by the learned Arbitrator.
8.The next contention of the learned senior counsel for the Petitioner was that the Award was pronounced after considerable delay and that this was per se a ground to interfere with the Award. On a demurrer, he further submitted that even if it does not constitute a ground to set aside the Award, it is certainly a ground to interfere with the award of interest under the Award. In order to substantiate this submission, the learned senior counsel referred to the list of dates in the grounds of the Section 34 Petition and pointed out that the Arbitration Proceedings were initially conducted before a three member tribunal and that the proceedings before the present single member tribunal commenced in January 2007 and that orders were reserved on 21.11.2009 but the Award was pronounced only on 24.12.2018. In these facts and circumstances, he submitted that it is unjust and inequitable to mulct the Petitioner with interest liability at 9% per annum from 11.05.1998 till 24.12.2018.
9.In response and to the contrary, Mr. P.R.Raman, the learned senior counsel made submissions on behalf of the Respondents. He first http://www.judis.nic.in 10 of 23 O.P.No.484 of 2019 dealt with the amount of interest awarded under the Award. In this regard, he pointed out that the Agreement specifies that interest shall be paid on the advance amount at 20% per annum, whereas the learned Arbitrator had reduced the rate of interest from the contractual rate of 20% per annum to 9% per annum. Therefore, he submitted that the Respondents are the affected parties as regards the award of 9% per annum towards interest and that the Petitioner has actually benefited in this regard. As regards the contention that the Award is liable to be set aside on account of delay, the learned senior counsel submitted that delay per se is not a ground to set aside the Award. In support of this submission, the learned senior counsel referred to the judgments, which are set out below along with context and principle:
(1) EAK CHEMICAL CORPORATION Vs. NATIONAL ALUMINIUM CO. LTD., 2012 SCC ONLINE Del 759, wherein, at paragraph 29, in the factual context of the award being pronounced more than four years after orders were reserved, the Court held that "it would be straining the language of that provision to hold that delay in the pronouncement of an Award would by itself place it in "conflict with the public policy of India" within the meaning of Section 34(2)(b)(ii) of the Act." Accordingly, the Court rejected the plea that the award is liable to be set aside solely on the ground of delay in pronouncement thereof. http://www.judis.nic.in 11 of 23 O.P.No.484 of 2019 (2)UNION OF INDIA Vs. NIKE RESOURCES LTD., 2012 SCC Online Del 3328, wherein, at paragraphs 43 and 51, in the factual context of the delay of more than four years in pronouncing the award, it was held that the delay in pronouncement of the award per se does not vitiate the Award but the Award was set aside by considering this fact along with the fact that the majority award did not deal with the basic differences in approach and reasoning as between the minority award and the majority award although the minority award was received by the majority of the Arbitral Tribunal sufficiently in time to consider the same. Accordingly, by examining the totality of the facts and circumstances, the award was set aside in that case.
10.By referring to the said judgments, the learned senior counsel contended that, in this case, although there was delay in pronouncing the Award, the learned Arbitrator carefully considered the oral and documentary evidence and the oral and written arguments of both sides before pronouncing the Award by reasonably interpreting the contract. Consequently, he submitted that the Award is not liable to be interfered with notwithstanding the delay in pronouncement thereof. With regard to the contention that the documents that were submitted by the petitioner to prove the losses that were allegedly incurred by the Petitioner were not considered by the learned Arbitrator, the learned senior counsel http://www.judis.nic.in 12 of 23 O.P.No.484 of 2019 referred to paragraph 100 of the Award and pointed out that the learned Arbitrator set out the reasons for not giving weight to some of the documents that were filed by the Petitioner. In particular, he pointed out that the learned Arbitrator concluded that many of the documents are not relevant in light of the finding that the maximum liability of the Respondents as per Clause 14 of the Agreement is a sum of Rs.10 lakhs. Therefore, he submitted that the Award is not liable to be interfered with on the ground that material evidence was ignored or disregarded by the Arbitral Tribunal. As regards the additional construction, the learned senior counsel stated that possession of the property remained with the Petitioner throughout and that the Respondents did not derive any benefit from the additional construction. He further submitted that it is clear from Exhibits A7, A8, A9 and A10 that the Petitioner agreed to transfer the property to the Respondents at the original sale consideration of Rs.11 crores notwithstanding the modifications. He also referred to Exhibits P7, P8, P9, P13 and P23 so as to establish that there was no concluded agreement with regard to the additional construction or the cost relating thereto. In this regard, he emphasized that one of the Respondents made an endorsement on Ex.P9 to the effect that this is just the initial approval and the final approval will be given after receiving the exact cost. http://www.judis.nic.in 13 of 23 O.P.No.484 of 2019
11.In any event, he submitted that this was a response to a letter dated 29.02.1996 from Pioneer Construction and not from the Petitioner. In other words, he submitted that the additional construction was carried out by Pioneer Construction and not by the Petitioner and that the documents disclosed, in no uncertain terms, there was no concluded agreement as between Pioneer Construction and the Respondents with regard to such additional construction or the cost thereof.
12.He further submitted that the Petitioner is raising inconsistent pleas with regard to the additional construction. In specific, he referred to paragraph 10 of the SoD and pointed out that it was specifically pleaded by the Petitioner that the additional construction is the subject matter of a subsequent agreement in February 1996 and not a part of the Agreement. He also referred to the finding of the learned Arbitrator, in this regard, at paragraph 25 of the Award wherein it was held that it is a mystery as to what is the actual agreement said to be subsequently entered into by the Petitioner and the Respondents. He, thereafter, referred to the nature of the counter claim of the Petitioner and pointed out that except for a sum of Rs.10 lakhs, which is claimed as per clause 14 of the Agreement, all the other counter claims are ex facie untenable and were correctly rejected by the Arbitration Tribunal.
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13.By way of rejoinder submissions, the learned counsel on record for the Petitioner referred to the two draft sale deeds, namely, Exhibits A6 to A-10, and pointed out that it is evident from the schedules thereto that the superstructure area had increased considerably on account of the modifications/additional constructions carried out by the Petitioner. In this regard, he compared the schedule in Ex.A6 at page 27 of Volume – III and the schedule at pages 46 and 47 of Ex.A10. On that basis, he submitted that the Arbitral Tribunal committed a patent illegality in the manner of interpretation of Clause 14 of the Agreement. In other words, he submitted that no reasonable person would interpret clause 14 as dealing with the kind of extensive modifications that were made to the building by the Petitioner at the instance of the Respondents.
14.The records were examined and the oral submissions of both sides were considered carefully. This dispute lies within a narrow compass. It is admitted by both sides that a sum of Rs.2.6 crores was paid by the Respondents to the Petitioner towards advance pursuant to the Agreement. It is also admitted that a sum of Rs.15 lakhs towards advance and the balance sale consideration of Rs.8.25 crores was not paid by the Respondents to the Petitioner and that the Agreement was cancelled with effect from 15.07.1996 in view of the non compliance with the demand made in the notice dated 06.07.1996(Ex.A8). Therefore, the http://www.judis.nic.in 15 of 23 O.P.No.484 of 2019 question that arises for consideration in this case is what is the amount payable by the Respondents to the Petitioner by way of damages and, therefore, whether any amount and, if so, how much is liable to be refunded by the Petitioner to the Respondents out of the advance amount of Rs.2.6 crores.
15.In order to decide this dispute, the learned Arbitrator examined the documentary and oral evidence and concluded at paragraph 50 of the Award that clause 14 of the Agreement does not refer or relate to the specifications listed in Annexure – I of the Agreement but applies to modifications and alterations made to the building and that, therefore, the Petitioner/Respondent is entitled to a maximum of Rs.10 lakhs towards such modifications/additional construction. The question that arises, therefore, is whether the said conclusion of the Arbitral Tribunal is patently illegal. When the Agreement is examined, it is evident that clause 14 thereof, which is reproduced supra, specifies that in the event of breach of the Agreement on account of default by the purchasers, the purchasers agree to pay liquidated damage of Rs.10 lakhs or the actual loss, whichever is less, in consideration of the loss suffered by the vendor on account of incurring additional expenses on modifications. Thus, it is clear that clause 14 deals with losses arising out of modifications to the superstructure by the Petitioner at the instance of the Respondents. It is also clear that the Agreement does not specify the modifications and, http://www.judis.nic.in 16 of 23 O.P.No.484 of 2019 therefore, it is necessary to examine whether the contention of the Petitioner that the modifications relate to the specifications in Annexure – I is tenable. On perusal, it is evident that Annexure - I sets out the nature of flooring, plastering, windows, painting, doors etc. The said Annexure is not specifically referred to anywhere in the body of the Agreement, including clause 14 thereof. Instead, the only reference to the Annexure is in the schedule to the Agreement wherein it is stated as follows:
“Together with superstructure nearly 51,000 sq.ft., constructed according to the detailed specification as per the Annexure enclosed.” From the above, it appears that the Petitioner was required, as per the Agreement, to sell the land and building ad-measuring about 51,000 sq.ft., which was required to be constructed in accordance with the specifications set out in Annexure -I. In other words, the said specifications do not appear to be in the nature of modifications. Indeed, if the said specifications in the Annexure are the modifications that are referred to in clause 14, the parties would have referred to Annexure – I in clause 14. Therefore, the inference that the modifications envisaged in clause 14 are not the specifications listed in Annexure – I is not only plausible but reasonable. In this context, it is relevant to note that the Hon'ble Supreme Court in several judgments, including McDermott International Inc. vs. Burn Standard Co. Ltd. (2006) 11 SCC 181 http://www.judis.nic.in
17 of 23 O.P.No.484 of 2019 and Rashtriya Ispat Nigam Ltd. vs. Dewan Chand Ram Saran (2012) 5 SCC 306, held that a plausible interpretation of the contract by the arbitral tribunal should not be interfered with. The learned Arbitrator also examined the correspondence between the parties and, in particular, the exhibits relating to additional work and concluded that no subsequent agreement in writing or concluded contract was executed by the parties with regard to the additional construction. On examining the relevant exhibits, it appears that there is no concluded contract with regard to the additional construction. In fact, as correctly contended by the learned senior counsel for the respondents, Ex.P9, which is a letter dated 29.02.1996 from Pioneer Construction to the Respondents clearly bears the endorsement of the one of the Respondents to the effect that the final approval will be given after receiving the exact cost. The learned counsel for the Petitioner was also unable to point out any exhibit on record that evidences that a concluded contract was executed as regards the additional construction. In the circumstances, the conclusion and findings of the learned Arbitrator in paragraph 50 that no subsequent agreement in writing or concluded contract was executed by the parties after Ex.A2 is a reasonable conclusion and there is no patent illegality in the Award on this account. In fact, the findings of the Arbitral Tribunal that the Petitioner is entitled to a maximum of Rs.10 lakhs or the actual amount incurred on modifications, whichever is less, cannot be faulted. http://www.judis.nic.in 18 of 23 O.P.No.484 of 2019
16.This leads to the next question as to whether the rejection of the counter claims of the Petitioner relating to other heads of claims, i.e. excluding the modifications-related counter claims, is valid. In this regard, the judgment referred to by the learned senior counsel, which is reported in (2009) 10 SCC 63, is relevant to the extent that counter claims, which are unrelated to modification should be considered on merits de hors Clause 14 of the Agreement. On examining the said counter claims, it is evident that they relate to the alleged reduction in property value as a result of a steep fall in market prices, loss in rental income, cost of converting the pent house into a kalyana mandapam, maintenance charges, property tax charges and security charges. Before considering the Award in relation to these counter claims, it is relevant to bear in mind that the Agreement was terminated with effect from 15.07.1996 and that both prior and after such termination, possession of the property remained with the Petitioner. As regards the period subsequent to 15.07.1996, it is self evident that the Petitioner was at liberty to let out the property to any person and, therefore, the claim for rent for the period subsequent to the termination appears to be ex facie untenable. Equally, with regard to the period between 05.01.1996 and 15.07.1996, the Petitioner would be required to prove the alleged loss of rental income. In this regard, the documents that were submitted by the Petitioner were considered by the Arbitral Tribunal and the Arbitral http://www.judis.nic.in 19 of 23 O.P.No.484 of 2019 Tribunal held that the Petitioner is not entitled to rental charges for several reasons, including the fact that possession was always with the Petitioner and the building was incomplete as of the date of the Agreement and even EB and water connections were provided later. As regards the period subsequent to the cancellation of the Agreement, the learned Arbitrator concluded that the property was being utilised as a kalyana mandapam in the subsequent period. As regards the alleged losses due to reduction in the market value of the property, once again, the learned Arbitrator considered the oral and documentary evidence, in this regard, and concluded that the Petitioner failed to establish any losses and that the evidence relied upon is not acceptable. Accordingly, the learned Arbitrator concluded that, without proof of loss, unliquidated damages cannot be awarded under the Indian Contract Act. The said findings of the Arbitral Tribunal are based on appraisal of evidence and cannot be interfered with unless it can be definitively concluded that it is based on no evidence or completely irrelevant evidence or in disregard of vital evidence. Although the learned senior counsel for the Petitioner contended that material documents were disregarded, he was unable to point out anything specific and establish that vital evidence was disregarded. The explanation, in this regard, at paragraph 100, of the Award is also eminently reasonable and acceptable. Thus, there is infirmity in the Award on this account.
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17.The next issue to be considered is with regard to the delay in pronouncement of the Award and the implications thereof. As correctly contended by the learned senior counsel for the Respondents, delay in pronouncement of the Award is per se not a ground for setting aside the Award. In this regard, the judgments that were referred to by the learned counsel for the Respondents are relevant and I have no hesitation in concurring with the conclusion therein that delay in pronouncing the Arbitral Award is per se not a ground to set aside the Award by holding that such delay violates the public policy of India and or that it renders the award patently illegal. As discussed above, the learned Arbitrator carefully considered the materials, including oral and documentary evidence, before recording conclusions in the impugned Award and such Award is not liable to be interfered with solely on the ground of delay in pronouncing the Award.
18.The last issue to be considered is with regard to interest. The Agreement provides that the advance amount is liable to be refunded by the Petitioner with interest thereon at 20% per annum. However, the learned Arbitrator directed that interest be paid at 9% per annum from 11.05.1998, which is the date of the SoC, until the date of Award. In paragraphs 98 and 99 of the Award, the learned Arbitrator detailed the reasons both for awarding interest and limiting the rate of interest to 9% per annum instead of 20% per annum. In specific, the learned Arbitrator http://www.judis.nic.in 21 of 23 O.P.No.484 of 2019 referred to the fact that the Petitioner retained the advance amount and allegedly used it for the additional construction long after the termination of the Agreement and also kept in mind the fact that the Arbitral proceedings were pending for a long period and that the same justifies the imposition of a lower rate of interest. In this regard, it is also relevant to bear in mind that 9% p.a. is a reasonable rate of interest for the relevant period keeping in mind the prevailing interest rate scenario. Therefore, the Award is not liable to be interfered with on this account also.
19.In the result, the Award is liable to be affirmed as per the law laid down by the Supreme Court in a long line of decisions culminating in the judgments in ASSOCIATE BUILDERS Vs. DELHI DEVELOPMENT AUTHORITY (2015) 3 SCC 49, as regards the position prior to the Arbitration and Conciliation (Amendment) Act, 2015, and SSANGYONG ENGINEERING & CONSTRUCTIONS CO. LTD., Vs. NATIONAL HIGHWAYS AUTHORITY OF INDIA(NHAI) (2019) SCC Online SC 677, as regards the position after such amendment. Accordingly, the Petition to set aside the said Award is rejected. No costs. Consequently, connected applications are closed.
17.09.2019 Speaking order Index: Yes Internet: Yes http://www.judis.nic.in 22 of 23 O.P.No.484 of 2019 SENTHILKUMAR RAMAMOORTHY, J.
rrg Pre Delivery order in O.P.No.484 of 2019 17.09.2019 http://www.judis.nic.in 23 of 23