Delhi District Court
Rajendra Prasad Mittal vs Ashok Wadia on 7 February, 2026
IN THE COURT OF SH. PULASTYA PRAMACHALA
DISTRICT JUDGE, (COMMERCIAL COURT)-01,
PATIALA HOUSE COURT, NEW DELHI
INDEX
Sl. HEADINGS Page Nos.
No.
1. Memo of Parties 2
2. Description of case 3
3. Brief Facts of the case 3-4
4. Grounds of objection/challenge 5-6
5. Reply of respondent 6
6. Arguments of the Petitioner 7
7. Arguments of the Respondent 7-8
8. Appreciation of Arguments, Facts & Law 8-14
9. Decision 14
Digitally signed
by PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2026.02.07
16:39:57 +0530
OMP (COMM.) No. 108/2023 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 14 Patiala House Court, New Delhi
OMP (COMM) No.108/2023
In the matter of: -
1. Rajendra Prasad Mittal
A-201, Omaxe forest SPA,
Sector 93B, Noida,
Gautam Budh Nagar, UP-201301.
2. Arun Mittal
A-201, Omaxe Forest SPA
Sector-93B, Noida
Gautam Budh Nagar, UP-201301.
...Petitioners
Versus
1. Ashok Wadia
B-36, Mohan Park
Naveen Shahadra, Delhi-110032
2. Anil Wadia
B-36, Mohan Park
Naveen Shahadra, Delhi-110032
3. Jai Krishan Estates Developers Pvt. Ltd.
A-26, New Friends Colony (East)
New Delhli-110025
4. Artec Infrastructure Private Limited
B-36, Mohan Park
Naveen Shahadra, Delhi-110032
5. Jai Krishna Artec (Joint Venture)
Hansalaya Building, 15, Bharakhamba Road,
Connaught Place, New Delhi-110001.
...Respondents
Date of Institution : 07.08.2023
Arguments heard on : 28.01.2026
Decided on : 07.02.2026
Decision : Petition is partly allowed.
OMP (COMM.) No. 108/2023 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.2 of 14 Patiala House Court, New Delhi
JUDGMENT
DESCRIPTION OF THE CASE
1. Petitioners, have filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') challenging the arbitral award dated 26.04.2023 as passed by Ld. Sole Arbitrator.
BRIEF FACTS OF THE CASE
2. Briefly stated, the petitioners are erstwhile directors of respondent no. 4, a company incorporated under the Companies Act and engaged in the business of real estate, including sale, purchase and construction on landed properties. Respondent nos. 1 and 2 are directors of respondent no. 3, which is also a company incorporated under the Companies Act and similarly engaged in the business of real estate development. Both groups, through respondent nos. 3 and 4, contributed certain land parcels along with infrastructure and financial resources and consequently entered into a joint venture under the name and style of "Jai Krishna Artec-JV", i.e., respondent no. 5, for undertaking real estate development projects.
3. Respondent no. 5 undertook certain projects, however, around the year 2018, disputes and differences arose between the representatives of respondent nos. 3 and 4. Consequently, respondent no. 3 invoked the arbitration clause and, vide order dated 04.10.2018, the Hon'ble High Court of Delhi appointed Justice Indermeet Kaur Kochhar (Retd.) as the Sole Arbitrator. During the pendency of arbitral proceedings, the parties entered into a settlement agreement dated 26.04.2019.
OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 14 Patiala House Court, New Delhi
4. It is the case of the petitioners that the respondents breached the terms of the said settlement by failing to transfer the share purchase consideration in respect of the shares of respondent no. 4 and by not transferring Land Parcel-2 in favour of the petitioners despite having received the entire consideration.
5. Alleging breach of the settlement agreement, the petitioners partially rescinded the settlement vide letter dated 28.09.2021, however, respondent nos. 1 to 3 refused to accept the rescission. Thereafter, disputes pertaining to Land Parcel-2 and Land Parcel- 3 stood resolved between the parties. Nevertheless, with regard to the unpaid share purchase consideration concerning the shares of respondent no. 4, the petitioners claimed compensation/interest on account of delayed payment. According to the petitioners, a balance amount of Rs.88,97,130/- remained due and payable by the respondents. It is further pleaded that although the shares were transferred on 04.02.2020, the corresponding consideration was not paid to the petitioners within time. The petitioners, therefore, sought interest/compensation for the delayed payment. The respondents, however, denied any liability towards interest or compensation. The petitioners accordingly approached ld. Arbitral Tribunal seeking directions for payment of interest/compensation on the delayed amount of Rs.88,97,130/-. Learned Arbitrator, however, held that the parties had arrived at a consensus on this issue and consequently declined the claim for interest/compensation. Aggrieved thereby, the petitioners have preferred the present petition.
OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 14 Patiala House Court, New Delhi GROUNDS OF CHALLENGE
6. Aggrieved by the arbitral award dated 26.04.2023, the petitioners have preferred the present objections under Section 34 of the Arbitration and Conciliation Act, 1996, inter alia, on the following grounds: -
i. That ld. Arbitrator has acted in complete disregard of Order XXIII Rule 3 CPC. It is averred that any compromise is required to be in writing and signed by the parties. In the present case, there existed no written compromise or arrangement between the parties with respect to waiver of interest/compensation on the balance share purchase consideration.
ii. That the impugned award is contrary to the settled position of law inasmuch as there was no consensus between the parties on the issue of interest/compensation, and ld. Arbitrator ought to have adjudicated the dispute on merits.
iii. That ld. Arbitrator failed to appreciate that the petitioner's claim for interest/compensation on the delayed payment of share purchase consideration, was just and reasonable. The balance consideration became due on 04.02.2020, whereas the same was admittedly received only in May 2023. The petitioners were, therefore, entitled to interest for the delayed period.
iv. That ld. Arbitrator has erroneously held that the disputes stood settled on 17.02.2023. It is contended that a perusal of the said order itself reflects absence of consent on behalf of the petitioners. Further, the demand drafts were retained in the custody of ld. Arbitrator, which demonstrates that the disputes OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 14 Patiala House Court, New Delhi had not attained finality.
v. That the impugned award is in conflict with the public policy of India, being arbitrary, one-sided and based on non-appreciation and/or perverse appreciation of material on record, besides being contrary to principles of natural justice and substantive law.
REPLY OF RESPONDENT
7. The respondents have filed their reply denying all averments made in the petition. It is contended that none of the grounds urged by the petitioners fall within the scope of Section 34(2) of the Act. It is further asserted that the impugned award is well- reasoned, passed after due appreciation of evidence and applicable law, and in conformity with the principles of natural justice, public policy, justice and morality.
8. The respondents submit that the parties intended to give quietus to all disputes in one go, which is evident from the order dated 25.05.2023 passed by ld. Arbitrator. It is alleged that the petitioners have deliberately suppressed the said order. According to the respondents, the settlement arrived at between the parties was full and final. It is further pleaded that the petitioners accepted the settlement as recorded in the order dated 17.02.2023, which specifically notes that all disputes stood resolved. The conduct of the petitioners in accepting and encashing the demand drafts clearly establishes their acquiescence to the settlement terms. The respondents submit that the present petition is an attempt to seek re-adjudication of the dispute on merits, which is impermissible under Section 34 of the Act.
OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.6 of 14 Patiala House Court, New Delhi ARGUMENTS OF PETITIONER
9. Learned counsel for the petitioners contended that ld. Arbitrator has wrongly recorded in the impugned award that the parties had arrived at a consensus with respect to waiver of interest/compensation on delayed payment of the share purchase consideration relating to the shares of respondent no. 4, which makes the award perverse. In support of his submissions, learned counsel placed reliance upon the following judgments: -
i. Som Dev & Ors. v. Rati Ram and Anr. [(2006) 10 SCC 788] ii. Amro Devi & Ors. v. Julfi Ram (Deceased) thr. Lrs & Ors [AIR 2024 SC 5513] iii. Taherbhai Abdullabhai v. Mohammed Hussain Abdullabhai and Ors. [2005(1) MHLJ 566] ARGUMENTS ON BEHALF OF RESPONDENTS
10. Learned counsel for the respondents argued that the petitioners, having consciously entered into the settlement agreement dated 26.04.2019 and having thereafter acted upon the subsequent settlements recorded before ld. Arbitrator, cannot now be permitted to resile from the very settlement which has already been implemented to their benefit. It was argued that the petitioners accepted the demand drafts without any protest or reservation. Even the email dated 07.03.2023, relied upon by the petitioners themselves, fortifies the respondents' case that the settlement amount was accepted without demur. It was further contended that the scope of interference under Section 34 of the Act is extremely limited. An arbitral award can be set aside only on the grounds expressly provided under Section 34(2), namely OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.7 of 14 Patiala House Court, New Delhi incapacity of parties, invalidity of the arbitration agreement, absence of proper notice, decisions beyond the scope of submission to arbitration, procedural irregularity, non- arbitrability of subject matter, or conflict with the public policy of India. According to the respondents, none of these grounds are attracted in the present case. In support of his submissions, learned counsel for the respondents placed reliance upon the following judgments: -
i. Union of India v. N. Murugesan [(2022) 2 SCC 25] ii. Haryana Urban Development Authority v. Mehta Construction Company [2022 INSC 373] iii. Associate builders v. DDA [(2015) 3 SCC 49] iv. State of Chattisgarh v. SAL Udyog (P) Ltd [(2022) 2 SCC 275] v. Ssangyong Engineering & construction co. Ltd. v. NHAI [(2019) 15 SCC 131] APPRECIATION OF ARGUMENTS, FACTS & LAW
11. The scope of enquiry under section 34 is restricted to consideration whether any one of the grounds mentioned in section 34 exists for setting-aside the award. Section 34 of the Act reads as under: -
"34. Application for setting aside arbitral award- (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub- section (3).
(2) An arbitral award may be set aside by the court only if-(a) 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 OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.8 of 14 Patiala House Court, New Delhi 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 submission to arbitration;
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only That part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the court finds That-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 - For the avoidance of any doubt, it is clarified That an award is in conflict with the public policy of India, only if,-- (i) the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; or (ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds That the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-
OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 14 Patiala House Court, New Delhi appreciation of evidence."
12. The general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court, even if the Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
13. Hon'ble Supreme Court in the case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It was held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 14 Patiala House Court, New Delhi of the matter and cannot be of trivial nature.
14. Hon'ble Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 held that under Section 34 (2A) of the Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award.
A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore, would also have to be characterized as perverse. It was held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside on the ground of patent illegality.
15. In the present case, the dispute pertains to the claim of interest/compensation on account of delayed payment of share purchase consideration. The petitioners have assailed the award dated 26.04.2023 whereby ld. Arbitrator declined the said claim.
16. In the impugned award, ld. Arbitrator observed as under: -
"The earlier order reflects that there was one other issue which was pending inter se the parties for which the parties had agreed to resolve their dispute. This was regarding two demand drafts which had to be paid by the respondent to the claimant; these demand drafts dated 28.02.2023 are lying in the office of the undersigned since the first week of march 2023. The claimant had claimed interest on these amounts; his submission being that these amounts are now to be received in the year 2023 when they actually had become due in the year 2020. He had claimed interest. This point was agitated and debated OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 14 Patiala House Court, New Delhi before the undersigned in detail in the earlier proceedings held before this tribunal and the parties had arrived at a consensus regarding this issue and this is reflected in the order dated
17.01.2023 and thereafter in the email dated 07.03.2023. It had been agreed that no separate amount would be paid by the respondent as interest and the composite settlement and the final figure of payment arrived at between the parties (which has admittedly been paid by the respondent to the claimant) would also include the interest quotient. Thus, the claim now raised by the claimant that he is entitled to another amount of interest is rejected."
17. The core issue which arises for consideration is whether it was rightly recorded by ld. Arbitrator that there existed a consensus between the parties whereby the petitioners waived their claim for interest/compensation on account of delayed payment of share purchase consideration, and whether there actually existed a lawful and conscious consensus/agreement for such purpose?
18. Ld. Arbitrator has relied upon the order dated 17.01.2023 and the email dated 07.03.2023 to conclude that the disputes between the parties stood fully resolved and that the petitioners had agreed not to press their claim for interest. The relevant extract of the Order dated 17.01.2023 reads as under: -
"After some deliberation before this Tribunal the parties have by and large arrived at a final settlement. The Ld. Counsel for the parties shall discuss the final modalities between them and revert back along with a written application duly signed by both the parties.
Vide an email order........... Those demand drafts have since lost their life, Ld. Counsel for the respondent shall get fresh demand drafts prepared to be handed over to the claimant which will also be a part of this settlement deal."
19. The email dated 07.03.2023 states as under: -
"The parties had a meeting today and the issue regarding land OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 14 Patiala House Court, New Delhi parcel 2 has been resolved between the parties. The parties are in the process of scheduling a meeting next week for resolving the issue regarding land parcel 3."
20. A careful perusal of the said order dated 17.01.2023 reveals that it merely records that certain issues stood resolved and that learned counsel for the parties were to discuss the final modalities, pursuant to which fresh demand drafts were to be prepared. Similarly, the email dated 07.03.2023 reflects resolution of issues pertaining to Land Parcel-2, while stating that other issues, including Land Parcel-3, were yet to be resolved.
21. Thus, even from the documents relied upon by ld. Arbitrator, it is evident that the settlement process was still underway and that all disputes had not been settled and thus, had not attained finality at that stage. More importantly, neither the order dated 17.01.2023 nor the email dated 07.03.2023 contains any specific or express recording to the effect that the petitioners had agreed to waive their claim for interest or compensation. The said documents do not reflect any unequivocal relinquishment of the claim for interest.
22. Ld. Arbitrator rejected the claim for interest on the premise that the parties had amicably settled all disputes including claim for interest. However, such finding is not supported by the materials on record. The conclusion that the petitioners had waived their claim for interest is based on assumption rather than evidence. The rejection of the interest claim, solely on the basis of alleged consensus, is therefore, not based on any material.
23. Acceptance of the principal amount pursuant to settlement, by OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 14 Patiala House Court, New Delhi itself, does not amount to waiver of interest unless such waiver is expressly recorded. In absence of any clear stipulation to that effect, the rejection of the claim for interest, on the basis of wrong narration of facts, cannot be sustained.
24. In view of the law laid down by the Hon'ble Supreme Court in Ssangyong Engineering & Construction Co. Ltd. v. NHAI and Associate Builders v. DDA (Supra), a finding based on no evidence or ignoring vital material amounts to perversity and constitutes patent illegality appearing on the face of the award. The impugned finding, insofar as it holds that the petitioners had waived their claim for interest as per settlement agreement, thus, falls within the ambit of Section 34(2A) of the Act.
DECISION
25. Consequently, I am of the considered view that the interim arbitral award dated 26.04.2023 as well as final award dated 30.05.2023, insofar as it rejects the petitioner's claim for interest/compensation on delayed payment of share purchase consideration, suffers from patent illegality under Section 34(2A) of the Act and are liable to be set aside to that limited extent. Petition is accordingly allowed to set aside both aforesaid awards in respect of rejection of claim of interest, as mentioned herein- above.
26. File be consigned to Record Room after due compliance.
Digitally signed by PULASTYA PULASTYA PRAMACHALA
PRAMACHALA Date: 2026.02.07
16:40:02 +0530
Pronounced in the (PULASTYA PRAMACHALA)
Open Court on this District Judge (Commercial Court)-01,
07 Day of February, 2026 Patiala House Court, New Delhi th OMP (COMM.) No. 108/2023 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 14 Patiala House Court, New Delhi