Bangalore District Court
/ M/S First Futuristic Holdings Ltd vs Ms.Shalini Prasad K on 28 June, 2021
IN THE COURT OF THE VI ADDL. CITY CIVIL & SESSIONS JUDGE
AT BENGALURU CITY
(CCCH.11)
Dated this the 28th day of June 2021
PRESENT: Sri. Rama Naik, B.Com., LL.B.,
VI Addl.City Civil & Sessions Judge,
Bengaluru City
A.S.No.15/2017
PLAINTIFF / M/S FIRST FUTURISTIC HOLDINGS LTD.,
APPELLANT Reptd. By its Director
Sri.K.Balasubramanyam
Having their Office at No.21
4th Floor, 1st Main Road
Ganganagar, Bengaluru -560 032
[By Pleader Sri.Poornachandra B.
Pattar]
/Vs/
DEFENDANT/ MS.SHALINI PRASAD K
RESPONDENT D/o Mr.K.V.Prasad
Aged about 24 years
R/at No.128, I Block, Railway Parallel Road
Kumara Park West
Bengaluru -560 021
KARNATAKA
[By Pleader Sri.Srinandan.K]
AS.15/2017
2
JUDGMENT
This suit is filed by Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996 for setting aside the award dated 29.09.2016 passed by sole Arbitrator in AC No.19/2016.
2) In nutshell, Plaintiff's case is that Plaintiff entered into Joint Development Agreement dated 31.12.2012 [for brevity 'JDA'] with the land owner, Sri.Swaroop Ravishankar for construction of residential apartment. When it commenced the work, Defendant's father, Sri.K.V.Prasad filed a suit in O.S No.26814/2013 against Plaintiff, contending that he had entered into JDA with said Sri.Swaroop Ravishankar. As Plaintiff commenced the work, it entered into settlement with Sri.K.V.Prasad and agreed to pay a sum of Rs.4,00,00,000/- to Sri.K.V.Prasad. In view of settlement, joint memo was filed in the suit.
AS.15/2017 3
3) It is stated that as Sri.K.V.Prasad insisted security for the payment of Rs.4,00,00,000/-, three Agreements to Sell dated 21.01.2014 were executed in favour of Defendant, who is the daughter of Sri.K.V.Prasad. Agreements were executed only for the purpose of security of the amount, which was agreed to be paid in the suit.
4) It is stated that out of the said amount of Rs.4,00,00,000/-, Plaintiff paid a sum Rs.2,75,00,000/- to Sri.K.V.Prasad. For the remaining amount, Sri.K.V. Prasad obtained an order of attachment in execution proceedings. Against the order of attachment, Plaintiff approached the Hon'ble High Court in Writ Petition. Both Plaintiff and Sri.K.V.Prasad filed a joint memo, whereby Plaintiff deposited a sum of Rs.25,00,000/-. Four cheques issued by Plaintiff in favour of Sri.K.V. Prasad were encashed by him, and thereby, entire AS.15/2017 4 transaction towards the settlement arrived at in the suit filed by Sri.K.V.Prasad was closed.
5) It is stated that K.V.Prasad, having taken advantage of the agreements executed in favour of his daughter as security for the amount of Rs.4,00,00,000/-, filed a claim petition through his daughter before the sole Arbitrator against Plaintiff claiming apartments, and sole Arbitrator passed the impugned award.
6) Plaintiff has challenged the award on the following grounds :
(a) Sole Arbitrator has not answered the issues, which are required to be held in favour of Plaintiff with reference to the specific defence of Plaintiff and the evidence led on the defence that agreements were executed as security for the decreetal amount.
(b) Despite Defendant's failure to prove the readiness and willingness in performing the contract, relief of specific performance AS.15/2017 5 has been awarded in contravention of the provisions of Section 16(1)(c) of the Specific Relief Act, 1963.
(c) Sole Arbitrator ought to have taken adverse inference in view of non-
examination of the material witness, Sri.K.V.Prasad, who was summoned by Plaintiff to prove the defence of Plaintiff.
(d) Sole Arbitrator passed one sided award after considering the materials which favour Defendant without due regard to the materials favouring Plaintiff.
For all these reasons, Plaintiff prays for setting aside the award as the same is opposed to Public Policy of India.
7) Defendant marked appearance through her counsel, but did choose not to file any statement of objections.
8) Heard learned Counsel for Plaintiff, as well as Defendant. Perused the records.
AS.15/2017 6
9) Point that arises for consideration is :
"Does Plaintiff make out any of the grounds as enumerated in Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award dated 29.09.2016?"
10) My answer to above point is in the affirmative for the following :
RE ASONS
11) This suit is filed by Plaintiff [Respondent in arbitration proceedings] for setting aside the award dated 29.09.2016, whereby, sole Arbitrator directed Plaintiff to execute sale deeds as per Exs.P.3 to P.5 [Agreements] in favour of Defendant [Claimant in arbitration proceedings] after receiving balance sale consideration of Rs.22,40,000/- per flat.
12) First contention of Plaintiff is that issues framed casting the burden on Defendant have been answered in favour of Defendant, whereas, issues, AS.15/2017 7 which cast the burden on Plaintiff, have been answered against Plaintiff without there being discussing the same with reference to the defence taken by Plaintiff.
13) Secondly, it is contended that even on Defendant's failure to prove the readiness and willingness in performing the contract, relief of specific performance has been awarded in violation of provisions of Specific Relief Act, 1963.
14) Thirdly, it is contended that adverse inference ought to have been drawn by learned Arbitrator against Defendant in view of withholding of best evidence by Defendant.
15) Lastly, it is contended that materials produced by Plaintiff have not been considered by sole Arbitrator deliberately.
AS.15/2017 8
16) On the other hand, Defendant supports the award. It is submitted that award passed by sole Arbitrator is a reasoned award. Award considered entire materials produced by Plaintiff as well as Defendant. Documentary evidence as well as oral testimony of PW.1 and RW.1 to RW.3 have been considered in a perspective manner.
17) It is further submitted that sole Arbitrator has specifically held that agreements at Exs.P.3 to P.5 have been proved by Defendant. Issue relating to readiness and willingness has been substantially proved and same has been held in favour of Defendant. There are no grounds to set aside the award, much-less no grounds are made out by Plaintiff to set aside the award. Award can be set aside for the grounds stated in Section 34 of the Arbitration and Conciliation Act, 1996.
18) It is also submitted that assailing the award on merits which sole Arbitrator has dealt with in the AS.15/2017 9 premise of evidence produced before him, is beyond the scope of this Court. Only option left open for the Court is to set aside the award if award is vitiated for the grounds mentioned in Section 34 of the Arbitration and Conciliation Act, 1996, and at the same time, it has no jurisdiction to remand the matter for arbitration again.
19) Learned Counsel for Defendant has placed reliance on the judgment of Hon'ble Supreme Court in the case of Mc Dermott International INC vs. Burn Standard Co. Ltd and others, [(2006) 11 SCC 181], wherein the Hon'ble Supreme Court was pleased to hold that "While deciding the application filed under Section 34 of the Arbitration and Conciliation Act, 1996, the Court cannot correct an error committed by the Arbitrator or correct an award and at best, it can only quash the award made by the Arbitrator thereby leaving behind the AS.15/2017 10 parties to begin the Arbitration again, if they so desire".
20) Learned Counsel for Defendant has also placed reliance on the judgment in the case of Smt.Padma Mahadev vs. M/s Sierra Constructions, [COMAP No.2 of 2021, decided on 22-03-2021], wherein the Hon'ble High Court of Karnataka has been pleased to reiterate the principle laid down in Mc Dermott International INC.
21) Plaintiff's contention is that evidence of GPA holder cannot be a substitute for evidence to be adduced by the principal, and in that circumstance, evidence of GPA holder is unreliable and invalid and learned Arbitrator ought not to have relied upon the evidence of GPA holder. To buttress his contention, he has placed reliance on the following judgments :
AS.15/2017 11
(a) Janki Vashdeo Bhojwani vs. IndusInd Bank Ltd., [(2005) 2 SCC 217], wherein the Hon'ble Supreme Court was pleased to hold thus :
"13. .... If the power of attorney holder has rendered some acts in pursuance of power of attorney, he may depose for the principal in respect of such acts, but he cannot depose for the principal for the acts done by the principal and not by him. Similarly, he cannot depose for the principal in respect of the matter of which only the principal can have a personal knowledge and in respect of which the principal is entitled to be cross examined".
(b) Man Kaur (dead) by Lrs vs. Hartar Singh Sangha, [(2010) 10 SCC 512], wherein the Hon'ble Supreme Court was pleased to hold as under :
" 18. .... Power of attorney holder of a party can appear only as a witness in his personal capacity and whatever knowledge he has about the case he can state on oath but he cannot appear as a witness on behalf of the party in the capacity of that party. If the Plaintiff is unable to appear in the Court, a commission for recording his evidence may be issued under the relevant provisions of Code of Civil Procedure."
22) Arbitral records make it clear that GPA holder of Defendant has deposed as PW.1, stating that he is aware of the facts of the case. Learned Arbitrator AS.15/2017 12 analyzed his evidence thoroughly whether he had personal knowledge of the facts stated in his examination in chief. Award makes it abundantly clear that evidence adduced by PW.1 on the basis of his personal knowledge has been appreciated, and no reliance as such has been placed on the evidence which is not within the personal knowledge of PW.1. Principles of law make it abundantly clear that GPA holder can depose as a witness about his knowledge of facts. In the instant case, Plaintiff has failed to substantiate that which portion of evidence of PW.1, which was not within his knowledge, has been considered by the sole Arbitrator. On the contrary, award makes it clear that sole Arbitrator has appreciated the evidence of PW.1 in a perspective manner. When GPA holder is permitted to give his oral evidence as a witness with respect to his personal knowledge of the fact, there would be no scope to hold that award is AS.15/2017 13 vitiated only because of the examination of GPA holder as a witness.
23) Award goes to show that learned Arbitrator framed in as much as 15 Issues. Issues No.1 and 2 were framed with respect to execution of agreements and payment of advance consideration in pursuance of the agreements casting the burden on Defendant.
24) Learned Arbitrator answered Issues No.1 and 2 partly in the affirmative. While answering Issue No.1, learned Arbitrator held as follows :
"153. ..... In view of the above inconsistency with regard to super built up area of flat nos. 303 and 304, as above and since the respondent do not dispute execution of Exs.P3 to P5, I am of the opinion that the respondent agreed to sell to the Claimant in AC No.19/2016 flat nos. 302, 303 and 304 having super built up area of 1675 sq ft, 1345 sq ft and 1180 sq ft, respectively."
"154. .... In view of nature of oral and documentary evidence produced before the Tribunal as discussed and extracted in the foregoing paragraphs, I am of the opinion that the Claimant in AC No.19/2016 has proved that the respondent executed in her favour 3 agreements of sale and construction AS.15/2017 14 dated 21.01.2014 at Exs.P3 to P5 under which the respondent agreed to sell to the Claimant flats bearing nos. 302, 303 and 304 in Block-B of Louts Palace, Residential Building Complex, described as Schedule 'C' property in Exs.P3 to P5 having super built-up area of 1675 sq ft, 1345 sq ft and 1180 sq ft, respectively, for Rs.36,00,000/-, each, as consideration along with one covered car park space, in the basement. I am of the opinion that the said Claimant has failed to prove that the respondent agreed to sell to the said Claimant 3 flats, namely, flat nos. 302, 303 and 304, having super built up area of 1570 sq ft 1630 sq ft and 1605 sq ft respectively, as averred in para no.5 of the claim statement..."
25) Issue No.2 has been answered as under :
"151. .... In view of the above discussion, I am of the opinion that the Claimant gave to the Respondent Rs.2,00,000/- by cheque as advance/initial payment as per Schedule 'D' of Exs.P3 to P5 and Exs.P15 to P17. I am of the further opinion that the Claimants have failed to prove that they paid Rs.8,00,000/- in cash per flat to the Respondent towards initial payment as per the above six agreements."
"156. .... I am of the further opinion that the above Claimants have failed to prove that they paid Rs.8,00,000/- per flat in cash to the respondent as advance as averred in para 6 of their claim statements......."
"171. I am of the considered opinion that the Claimants did not pay to the Respondent Rs.8,00,000/- per flat as balance of amount payable on the date of agreements at Exs.P3 to P.5 and Exs.P.15 to P.17."
AS.15/2017 15
26) Plaintiff's contention is that agreements were executed in favour of Defendant as intended by Sri.K.V.Prasad for the security of the amount of Rs.4,00,00,000/- which Plaintiff agreed to pay to Defendant's father, Sri.K.V.Prasad in a suit filed by him.
27) Learned Arbitrator framed Issues at Issues No.8 and 9 with respect to above contention of Plaintiff, and answered the same in the negative. In para-162 and 163, learned Arbitrator held thus :
"162. In view of my finding on Terms of Reference Nos. 1 to 4, as above, coupled with my foregoing discussion, while holding the above four terms of reference in question, I am of the opinion that the respondent in the above two cases has failed to prove that it entered into agreements to sell and construction at Exs.P3 to P5 and Exs.P.15 to P17 as security to ensure payment of settlement amount and that the agreements were drafted in the manner as stipulated by Sri.K.V.Prasad who is the father and husband of the Claimants in AC Nos.18 & 20/2016, respectively, to appease him and that the respondent was made to execute the above 6 exhibits on 21.01.2014 in favour of daughter and wife of Sri.K.V.Prasad and that after execution of the agreements, copies of the same were not furnished to the respondent for its internal purposes as contended by the respondent in para no.8 of AS.15/2017 16 statement of objections filed by it in the above two cases and ---- ."
"163. In view of my finding on Terms of Reference No.8 in the above two cases in the negative, coupled with my foregoing discussion while holding Terms of Reference Nos. 1 to 4 and 8, as above, I am of the opinion that the respondent in AC Nos. 19 & 20/2016 has failed to prove that at the time of execution of 6 agreements of sale and construction, Sri.K.v.Prasad unconditionally assured and promised that if the respondent pays and clears the settlement amount according to terms of the joint memo filed in OS No.26814/2013- CCH -29 of Additional City Civil court, Mayo-Hall Unit, Bengaluru, Sri.K.V.Prasad would cancel the agreements of sale and construction at Exs.P3 to P5 and ExsP.16 to P17, as averred by the respondent in para no.9 of its statement of objections and ..........."
28) Plaintiff's contention is that without there being given any findings on Issues No.8 and 9 with reference to its defence, learned Arbitrator negatived Issues No.8 and 9 in view of answer to Issues No.1 to 4.
29) While answering Issues No.1 to 4, learned Arbitrator has delved into the contentions of Plaintiff and Defendant in Para-137 and 138. He has taken into consideration of non-examination of AS.15/2017 17 attesting witnesses to agreements, and non- appearance of Sri.K.V.Prasad even after summoning by Plaintiff. Reason assigned by learned Arbitrator in rejecting the defense of Plaintiff finds place in Para-142 of the award. It reads thus :
"142. The Claimants have not entered the witness box to state that it is before them that the two witnesses mentioned at the foot of the above 6 exhibits, Respondent executed the 6 agreements and agreeing to the nature of terms and conditions of the above 6 documents. The fact of the Respondent admitting execution of the above six agreements of sale and construction but contending that the agreements were executed as security for a collateral transaction which the Respondent had with Sri.K.V.Prasad who is the husband of the Claimant in AC No.20/2016 and father of Claimant in AC No.19/2016 cannot give to it the legal right to contend that it is not bound by the terms of the six documents executed by it covering schedule 'C' property involved in the above two cases."
30) Thus, it would be clear that learned Arbitrator has dealt with the defence of Plaintiff while discussing Issues No.1 to 4, and in view of findings on Issues No.1 to 4, Issues framed casting the burden on Plaintiff have been answered negatively. In that view, there is no reason to contend that AS.15/2017 18 issues framed casting the burden on Plaintiff have not been discussed.
31) From the award, it would be clear that learned Arbitrator has come to the conclusion that as Plaintiff admitted the execution of the agreements, its contention as to agreements were executed as security for the transaction which it had with Sri.K.V.Prasad cannot give it right to contend that it is not bound by the terms of agreements.
32) At the same time, learned Arbitrator has come to the specific conclusion that Defendant failed to prove that Plaintiff had agreed to sell flats as averred in para-5 of claim statement, and that Defendant has failed to prove that she had paid Rs.8,00,000/- in cash per flat to Plaintiff towards the initial payment as per agreements.
AS.15/2017 19
33) In the light of findings of learned Arbitrator, it would be appropriate to look into the contention of Plaintiff that relief of specific performance has been awarded in contravention of the provisions of Section 16(1)(c) of the Specific Relief Act, 1963 even though Defendant failed to prove readiness and willingness to perform the contract.
34) Issue No.4 has been framed to the effect that whether Defendant has been ready and willing to perform her obligations?
35) Findings of learned Arbitrator find place at para-158 of the award. Para-158 reads thus :
"158. In view of evidence of PW1 and RW1 coupled with nature of covenants which the respondent agreed to as per Exs.P3 to P5 and Exs.P15 to P17 as stated while holding Terms of Reference Nos.1 to 3 in the above two cases, as above and failure on the part of the respondent to respond to the letters of the Claimants at Ex.P6, Ex.P7, Ex.P18 and Ex.P19 and since the Claimants have nothing to do with the dispute which the respondent in the above two cases had/has with Sri.K.V.Prasad and the respondent failing to substantiate under what circumstances he executed Exs.P3 to P5 and Exs.P15 to P17 making a AS.15/2017 20 mention of names of the Claimants as the prospective purchasers of the 6 flats and the above said 6 exhibits failing to state the name of the father and husband of the Claimants before the Tribunal, namely, Sri.K.V.Prasad, as the purchaser of the flats, I am of the opinion that the Claimants in AC Nos. 19 & 20/2016 have proved that time was essence of contracts of sale and construction of the 6 flats in question. I am also of the further opinion that the Claimants in the above two cases have proved that they were ready and willing to perform their part of obligations under the above 6 exhibits since the date of entering into the agreements of sale and construction as averred in para no.8 of their claim statements ....... "
36) It would also be relevant to read para-172 of the award. Para-172 reads as under :
"172. In view of nature of submission made by advocate for the Respondent in his written arguments at line no.3 of page 16 of written arguments to the effect that a simple visit of the Claimants to the place of project would have confirmed that the project is in its final stage of completion and the Claimants not making efforts to pay even a single rupee towards the same, I am of the opinion that slab work of 2nd floor and 3rd floor is completed. I am also of the opinion that brick work and flooring work of the apartments is also completed. I am of the opinion that the Claimants are required to pay to the Respondent the following amounts per flat :
AS.15/2017 21
(a)Balance amount payable on agreement
- Rs.8,00,000/-
(b) Completion of 2nd floor slab
- Rs.3,60,000/-
(c) Completion of 3rd floor slab
- Rs.3,60,000/-
(d) Brick work of the unit
- Rs.3,60,000/-
(e) Flooring of the unit - Rs.3,60,000/-
Total - Rs.22,40,000/-
In view of the above discussion and nature of completion of concerned stage of construction of six apartments of the Claimants as on date, I am of the opinion that the Claimants are required now to be directed to pay Rs.22,40,000/-, as above, to the Respondent, per flat, covered by Exs.P3 to P5 and Exs.P15 to P17 within one month from the date of passing of the award failing which the same shall carry interest at 18% per annum from the date of filing of the claim statements by the Claimants till payment to the Respondent."
37) Agreements at Exs.P.3 to P.5 were executed on 21.01.2014. Terms of Agreements stipulate that Plaintiff shall execute sale deeds in favour of Defendant on receipt of all sums from Defendant, and that possession of the apartments shall be delivered to Defendant within 24 months from the date of obtaining Commencement Certificate. Clauses-15 and 22 read thus :
AS.15/2017 22 "15. .... On receipt of all sums from the Purchaser, the Second party shall call upon the Purchaser to get the sale deed registered and take delivery of the Schedule C Property.
22. Possession of the Schedule 'C' Apartment shall normally be delivered by the Developer to the PURCHASER within 24 (Twenty Four) months from the date of obtaining the Commencement Certificate."
38) Arbitration Notice [Ex.P.11] was issued by Defendant on 22.11.2014 invoking arbitration clause in the agreements. As per the terms of agreements, Plaintiff agreed to deliver the possession of the apartments within 24 months from the date of obtaining the Commencement Certificate. Clause-15 makes it clear that on receipt of all sums from Defendant, Plaintiff shall call upon Defendant to get the sale deed registered and take delivery of possession. Arbitration notice dated 22.11.2014 and award makes it clear that Defendant, without payment of the entire sale consideration amount, called upon Plaintiff to execute sale deeds and warned for initiation of AS.15/2017 23 arbitration proceedings by naming the the sole Arbitrator in Ex.P.11. It is to be noted that said arbitration notice was issued before expiry of the stipulated time for performing the terms of agreements. Be that as it may. As per the terms of agreements, it is a condition precedent to pay the entire sale consideration amount by Defendant before getting the sale deeds from Plaintiff.
39) Plaintiff's contention is that learned Arbitrator has granted the relief of specific performance in favour of Defendant even though Defendant failed to prove his readiness and willingness. Even Defendant did not pay the advance sale consideration amount as shown in the agreements. No evidence as such has been produced before the learned Arbitrator to prove that she had sufficient balance sale consideration to prove her readiness and willingness. Thus, granting the relief of specific performance is AS.15/2017 24 against the provisions of Section 16(c) of the Specific Relief Act, 1963 and same needs to be set aside.
40) On the contrary, Defendant justifies the award by submitting that learned Arbitrator has come to the conclusion that Defendant was and has been ready to perform her part of the agreements, and accordingly, issue relating to readiness and willingness has been answered in her favour. Hence, there finds no fault in the findings of learned Arbitrator and same requires no interference of the Court.
41) Award makes it clear that learned Arbitrator came to the specific conclusion that Defendant did not pay Rs.8,00,000/- to Plaintiff per flat towards the advance amount under three agreements. This finding of learned Arbitrator remained unchallenged by Defendant. Despite the said finding, learned Arbitrator passed the award in favour of Defendant AS.15/2017 25 directing Plaintiff to execute sale deeds in respect of the flats.
42) Total sale consideration amount agreed to be paid by Defendant to Plaintiff under three agreements is Rs.1,08,00,000/-. Advance sale consideration of Rs.10,00,000/- each is shown to have been paid to Plaintiff under three agreements. Learned Arbitrator found that out of Rs.10,00,000/- each, only Rs.2,00,000/- each was paid under the agreements. In that circumstance, Defendant had to pay a sum of Rs.1,02,00,000/- to Plaintiff under three agreements. Admittedly, Defendant did not produce any document showing that she had sufficient balance sale consideration amount at the time of issue of arbitration notice till passing of the award. Without there being any document showing the financial capacity of Defendant, learned Arbitrator held that Defendant was ready and willing to perform her part of the agreements.
AS.15/2017 26
43) Section 16 of the Specific Relief Act, 1963 deals with personal bars to claim specific performance of a contract. Section 16 (c) states as follows :
" 16. Personal bars to relief. - Specific performance of a contract cannot be enforced in favour of a person. -
(a) xx xx xx
(b) xx xx xx
(c) who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the Defendant.
Explanation.- For the purposes of clause
(c). -
(i) where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the Defendant or to deposit in Court any money except when so directed by the court;
(ii) the plaintiff must aver performance of, or readiness and willingness to perform, the contract according to its true construction".
44) In N.P. Thirugnanam (D) by L.Rs vs. Dr. R. Jagan Mohan Rao and others, [AIR 1996 AS.15/2017 27 Supreme Court 116], the Hon'ble Supreme Court was pleased to hold as under.
"5. It is settled law that remedy for specific performance is an equitable remedy and is in the discretion of the court, which discretion requires to be exercised according to settled principles of law and not arbitrarily as enumerated under S.20 of the Specific Relief Act 1963 (for short, 'the Act'). Under S.20, the court is not bound to grant the relief just because there was valid agreement of sale. Section16(c) of the Act envisages that plaintiff must plead and prove that he had performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than those terms the performance of which has been prevented or waived by the defendant. The continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of specific performance. This circumstance is material and relevant and is required to be considered by the court while granting or refusing to grant the relief. If the plaintiff fails to either aver or prove the same, he must fail. To adjudge whether the plaintiff is ready and willing to perform his part of the contract, the court must take into consideration the conduct of the plaintiff prior and subsequent to the filing of the suit along with other attending circumstances. The amount of consideration which he has to pay to the defendant must of necessity be proved to be available. Right from the date of the execution till date of the decree he must prove that he is ready and has always been willing to perform his part of the contract."
(underlined by me) AS.15/2017 28
45) Same principle of law has been reiterated in I.S.Sikandar vs K.Subramani, [(2013) 15 SCC 27] and Kalawati vs. Rakesh Kumar, [(2018) 3 SCC 658].
46) In Sukwinder Singh vs Jagroop Singh and Another, [(2020) SCC OnLine SC 86], the Hon'ble Supreme Court has been pleased to hold that "Readiness and willingness was required to be proved by the plaintiff and was to be considered by the courts below as a basic requirement if a decree for specific performance is to be granted".
47) In Ram Kumar Agarwal and Another vs. Thawar Das (Dead) Through LRS. [(1999) 7 Supreme Court Cases 303], the Hon'ble Supreme Court was pleased to hold that "A person who falsely claims to have paid a sum of money and attempts to prove the plea at trial stage cannot be said to have been ever ready and willing to pay the sum due under the contract in question".
AS.15/2017 29
48) The Hon'ble High Court of Karnataka, in Sri.Punny Akat Philip Raju, since deceased by his Lrs. vs. Sri.Dinesh Reddy, [ILR 2016 KAR 2252], was pleased to hold that "Courts get no jurisdiction to pass a decree for specific performance unless the plaintiff proves that he is ready and willing to perform his part of the contract". Para-34 and 35 read thus :
"34. Therefore, mere stepping into the witness box and saying on oath that he is ready with the balance sale consideration or that he is going to borrow money from any financial institution or that he has got sufficient funds in his Bank accounts or that he has kept money in Fixed Deposit, without that oral evidence being supported by documentary evidence will not prove the plaintiff's readiness to pay the balance sale consideration. It is immaterial whether such oral evidence is challenged in cross-examination or not. The plaintiff has to prove to the satisfaction of the Court that he possessed the requisite funds. He has to produce such documentary evidence, which would enable the Court to come to the conclusion that plaintiff is ready with the requisite balance sale consideration to complete the sale transaction. If no evidence is adduced in this regard by way of documentary evidence, no prudent man would come to the conclusion that the person has proved the possession of funds. In the absence of any such documentary evidence being produced, it is a case of plaintiff's case being not AS.15/2017 30 proved. Plaintiff cannot expect the Court to pass a decree for specific performance of a contract of sale when the plaintiff has not proved his readiness to perform his part of the Contract.
35. Therefore, in a case arising under Section 16(c) of the Specific Relief Act, the obligation is cast on the plaintiff to prove that he was ready with the balance sale consideration. When the statute requires the plaintiff must plead and prove his readiness and willingness to perform his part of the contract and that readiness refers to the possession of the requisite funds, there is an obligation cast on that person, who has to prove the possession of funds to produce documents to show possession of funds by him. Though he is not expected to tender or deposit the cash before the Court, he has to produce such evidence to prove his financial capability. Only on production of such documentary evidence, on verification and appreciation of those documents, Court could come to the conclusion that the plea of readiness is proved. Mere assertion on oath that he is ready with the balance sale consideration, even if it is not challenged in the cross- examination, is not the proof of the plaintiff's readiness with the balance sale consideration. He should produce such evidence to show either he possess the requisite funds or he is capable of raising such funds within the time stipulated. If such evidence is not forthcoming it is a case of, the plaintiff's case being not proved."
49) In the instant case, learned Arbitrator has come to the conclusion that Defendant did not pay the advance sale consideration amount as shown in AS.15/2017 31 the agreements. Further, in absence of evidence showing the capacity of Defendant to pay a sum of Rs.1,02,00,000/- under three agreements, learned Arbitrator has come to the conclusion that Defendant has been ready and willing to perform her part of the contract.
50) In Associate Builders vs. Delhi Development Authority, [(2015) 3 SCC 49], the Hon'ble Supreme Court was pleased to hold that "non-compliance of statutes and judicial precedents would be equally violative of the fundamental policy of Indian law". In para-42.1, it is held as under :
"42.1. (a) A contravention of the substantive law of India would result in the death knell of the arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(1)(a) of the Act, which reads as under :
"28. Rules applicable to substance of dispute - (1) where the place of arbitration is situated in India -
AS.15/2017 32
(a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India."
51) In para-27 of the judgment (supra), it is held as follows:
"27. ..... To this it could be added that the binding effect of the judgment of a superior court being disregarded would be equally violative of the fundamental policy of Indian law."
52) Thus, in the light of the above conspectus of the law, only conclusion that can be arrived at is that award vitiates by reasons of non compliance of the provisions of substantive law as envisaged in Section 16(c) of the Specific Relief Act, 1963, and non-application of binding effect of the judgments of the Hon'ble Supreme Court and the Hon'ble High Court. In that view, award needs to be set aside; accordingly, I answer the above point in the affirmative and proceed to pass the following :
AS.15/2017 33 ORDER (1) Suit filed by Plaintiff under Section 34 of the Arbitration and Conciliation Act, 1996, is hereby allowed.
(2) Award dated 29.09.2016 passed by sole Arbitrator in Arbitration Case No.19/2016, is hereby set aside.
(3) No order as to costs.
(Dictated to the Judgment Writer directly on computer, typed matter corrected and then pronounced by me in open court, on this the 28th day of June 2021) (RAMA NAIK) VI Addl.City Civil & Sessions Judge Bengaluru City