Delhi District Court
Tulsi Dass vs Prem Lata on 28 February, 2023
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 -
SOUTH EAST DISTRICT SAKET COURTS, NEW DELHI.
IN THE MATTER OF:
OMP (COMM) No. 28/2021
TULSI DASS
S/o Late Sh. Budh Prakash
R/o B-18, Sanwal Nagar
Delhi-110049. .... Petitioner/Objector herein /
Respondent/Defendant
(before Ld. Arbitrator)
Versus
1. PREM LATA
S/o Late Sh. Nathi Lal
2. DILEEP KUMAR
S/o Late Sh. Nathi Lal
Both R/o Q.No.751, Sec-2, Type-2
Sadiq Nagar
New Delhi-110049. ... Respondents herein /
Petitioners/Plaintiffs/ claimants
(before Ld. Arbitrator)
Date of Institution : 01.09.2021
Date of Arguments : 07.02.2023
Date of Judgment : 28.02.2023
JUDGMENT
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 1 / 35
1. Vide this judgement, I shall decide the petition under section 34 of Arbitration and Conciliation Act filed by petitioner Tulsi Dass for setting- aside impugned award dated 03.07.2021 passed by Ld. Arbitrator.
2. Brief facts of the case is that the respondents were looking to purchase a piece of land and in this regard met petitioner / defendant Tulsi Dass who claimed himself to be the absolute owner and in exclusive possession of plot No. B-18 (old Plot No.119 and 121) situated at Sanwal Nagar, New Delhi, having purchased the same vide sale deed dated 16.07.1971. The Plaintiff and the Defendant entered into an agreement to sell and purchase / bayana dated 31.10.2017 for the sale of the suit property. The Defendant received an amount of Rs.2 lakhs in cash as advance (token money) out of sale consideration of Rs.48 lakhs. The Plaintiff paid further sum of Rs.2 lakhs in cash to the Defendant and transferred amounts on different occasions through RTGS i.e. Rs.10,000/- on 08.12.2017, Rs.5 lakh on 11.12.2017, Rs.9 lakhs on 11.12.2017, Rs.10 lakhs on 12.12.2017. The plaintiffs in total paid a sum of Rs.28,10,000/-, out of total sale consideration of Rs.48 lakhs and balance amount of Rs.19,90,000/- to be paid at the time of execution of sales deed.
3. In terms of the agreement to sell & purchase and bayana dated 31.10.2017 after receiving Rs.28,10,000/-, defendant handed over the vacant physical possession to the Plaintiff on 12.12.2017 in presence of two witnesses namely Ved Prakash and Tara Chand Koli. Thereafter, the Plaintiff installed an iron shutter gate on the front portion of the suit property. The Plaintiff have arranged a balance amount and also OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 2 / 35 purchased the stamp papers and the date of 25.01.2018 agreed by the defendant for registration of sales deed but on the said date, defendant Tulsi Dass did not appear at the Sub Registrar Office and thereafter, Plaintiffs tried to contact him but he intentionally avoided to meet the Plaintiffs.
4. On 09.02.2018, Plaintiffs came to know that a false complaint of house trespass and threat in respect of the suit property has been filed by one Desh Raj against the Plaintiffs claiming to be tenant in the suit property. Therefore, the Plaintiff No.2 also made a complaint to the SHO P.S. Defence Colony. The Plaintiff also filed a suit for specific performance of agreement to sell dated 31.10.2018 against defendant. Vide order dated 19.03.2018, the Ld. ADJ was pleased to pass an ex-parte interim order restraining the defendant from creating third party right in the suit property, thereafter, defendant moved application under Section 8 of the Arbitration and Conciliation Act, and also for vacation of interim order and rejection of plaint. Pursuant to which, the Ld. ADJ observed that jurisdiction of this Court is barred however, given liberty to file an application under Section 9 of the Arbitration and Conciliation Act. Thus, the Plaintiffs filed an application under Section 9 of the Arbitration and Conciliation Act.
5. The defendant in reply to the claim stated that plaintiffs in collusion with neighbour Khem Chand and his son Ramesh Kumar attempted to conspire the same series of acts as Khem Chand had committed in 2005 when he got two sales deeds registered from the OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 3 / 35 replying Respondent/Defendant. The Plaintiff No.2 fraudulently transferred of an amount of Rs.24,10,000/- against the agreement to sell by fraudulently opening account in the name of the Defendant which is introduced by Plaintiff No.2, and thereafter siphoned off Rs.12,40,000/-. The Plaintiff No.2 malafidely on behalf of his mother forcibly attempted to take the possession of the suit property without any legal rights for which an FIR was registered. The bare reading of the agreement dated 31.10.2017 shows that name of the Plaintiff No.2 nowhere mentioned and was merely an attesting witness to the agreement having no privity of contract. The claim therefore is not instituted properly in accordance with Order IV Rule 1 CPC. There is no agreement to sell was ever executed by the Plaintiffs and Defendant on 31.10.2017. The Defendant only received a sum of Rs.2 lakhs from Plaintiff No.1 in cash to the agreement dated 31.10.2017. The Plaintiff No.2 falsely represented and allured the defendant Tulsi Dass then opened a bank account of the defendant under his own kind, control and supervision. The Respondent has not received the amount more than Rs.2 lakhs therefore, the said agreement to sell dated 31.10.2017 was subsequently cancelled vide legal notice dated 05.06.2019.
6. On 09.02.2018, the Plaintiff No.2 forcibly entered into the tenanted portion of the defendant which is possession of old tenant Shkuntala Devi and consequently, the police complaint was made and FIR was registered. Defendant also made a complaint dated 09.02.2018 which was registered OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 4 / 35 with P. S. Defence Colony for forcible demolition and attempt to take possession.
7. Pursuant to order dated 12.03.2019 passed by the Hon'ble Delhi High Court in Arbitration P. No. 907/2018, the Arbitration Tribunal was entered upon reference thereafter the claimants/plaintiffs filed suit for specific performance. The defendant filed the statement of defence. During evidence, Petitioner examined PW1 Dileep Kumar and the Respondent Tulsi Dass examined himself as DW1. Submissions on behalf of petitioner Tulsi Dass
8. Ld. Counsel for the petitioner/objector/defendant Tulsi Das submits that the Respondent No.2/plaintiff no. 2 has no authority to file the claim. The claim was filed by Respondent No.1 however since inception no appearance was made by the Respondent No.1 hence the claim filed by the Respondent No.1 was without evidence. There is no evidence that the Respondent No.2 being the son is properly representing the Respondent No.1. The perusal of list of documents in support of evidence filed on 21.03.2020, there is no mentioning of authority letter, therefore, the evidence led by Respondent No.2 as PW1 has no value. There is also no intention to fulfill her part of the agreement, hence suit is barred under 16 (c) Specific Relief Act (relied upon Aniglase Yohanan Vs. Ram Lata AIR 2005 SC 3503). The suit is also barred under Section 15 of the Specific Relief Act. Furthermore, there is no cause of action to file the present complaint. The Respondents also withheld the termination notice dated 05.06.2019. There is no separate pleadings / claim filed by OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 5 / 35 Respondent No.2 to join as a party in the arbitration proceedings (relied upon V.G. Santoshan Vs. Shanti Appeal Civil No. 6260/2004 dated 29.09.2005 Madras High Court). The Respondents have also filed a false site plan. Except the oral testimony of PW1, there is nothing on record which shows the possession was ever handed over to the Respondents. There is no communication after entering of the agreement to sell on 31.10.2017 and alleged handing over the possession on 11.12.2017. It is specifically admitted by PW1 in cross-examination that he was only a witness. He also stated that he has not filed any statement of account of his mother reflecting the balance amount of Rs. 19,90,000/- in her account on record on 20.11.2017. The Respondent failed to prove the financial capacity therefore, cannot be held that they are ready and willing to pay the balance sale consideration (relied upon Dinesh Kumar Jain Vs. Sanjeev Chaudhary 2017 (244) DLT 423).
9. The Respondent No.2 at the behest of her mother made a false NCR regarding loss of original documents, and induced Petitioner to open bank account at his instance with Kotak Mahindra Bank and fraudulently transferred an amount of Rs. 24,10,000/- in his account. In cross-examination, he failed to identify his own portion in the site plan which clearly shows that Respondent No.2 forcibly occupied the suit property on 02.09.2018. There is nothing in the evidence or pleading why the incomplete possession was handed over and also about the offering of the balance amount to the Petitioner despite alleged possession on 11.12.2017. The Respondent No.1 failed to act in furtherance of the OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 6 / 35 agreement to sell dated 31.10.2017, and fraudulently joined his son and claim as filed is barred by under Section 16 (c) of the Specific Relief Act.
10. Ld. Counsel further submits that the respondents played fraud by concealing the vital document of cancellation notice dated 05.06.2019 (relied upon AV Papayya Sastri Vs. State of Andhra Pradesh 2007 Law Suit (SC) 263). It is stated by the respondent that the title document of the suit property was supplied by Tulsi Dass before entering into the agreement to sell dated 31.10.2017 however stated that he does not remember the exact date and sought time for searching the original title document, thereafter, Tulsi Dass supplied him the NCR of lost documents then he had obtained the certified copy of the title document. This is nothing but the fraudulent act. There is nothing to demonstrate any readiness and willingness of the respondents to perform their part of contract. Thus, the plaint failed to disclose the cause of action for grant of specific performance (relied upon Sanjay Sethi and Anr. Vs. Deepak Sethi 2013 (2005) DLT 534). There is no arrangement of any further payment of interest between the petitioner and the respondent hence the respondent is not entitled for interest as prayed. Ld. Counsel submits that the award suffers from patent illegality, against the fundamental policy of Indian Law and also against the specific terms of the contract and opposed to public policy of India (relied upon State of Rajasthan Vs. Nav Bharat Construction Co. 2006 (1) SCC 86, Renu Sagar case (1994 Supp. (I) SCC 644, ONGC Vs. Saw Pipes 2003 (5) SCC 705 and MSK Projects Vs. State of Rajasthan 2011 ( 10 ) SCC 572).
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 7 / 35 Submissions on behalf of respondents Prem Lata and Tulsi Das
11. Ld. Counsel for the respondents/plaintiffs/claimants submits that Ex.PW1/1 the site plan, has been filed by the respondents / claimants, and there is no counter site plan filed alongwith WS however later on, the petitioner filed certain site plan which has not been proved in accordance with law. The agreement to sell between the parties is admitted on the basis of which the Hon'ble High Court appointed the Arbitrator. The petitioner has admitted in document Ex.PW1/13 (colly.) in evidence of petitioner recorded in FIR No.35/2018 in which he stated that he was called by respondent No.2 to the office of Registrar to execute the sale deed and offered remaining sales consideration. He also admitted that he has entered into the agreement to sell with Dileep Kumar i.e. respondent No.2. Ex.PW1/14 is the FIR lodged against the petitioner Tulsi Dass wherein he stated that since the possession of the suit property has already been handed over to the respondents hence no case of cheating is made out. The petitioner himself admitted this fact in anticipatory bail order Ex.PW1/8 (Colly) however stated that now he is not ready to execute the sale deed because accused/petitioner had forcibly taken the possession. The petitioner himself admitted that he had entered into the agreement to sell with respondent No.2. In Ex. PW-1/14, FIR No. 98/18 lodged against petitioner, during arguments of charge submitted that since possession has been handed over, no case of cheating has been made out. Petitioner categorically admitted that he handed over OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 8 / 35 possession. The issue of necessary party has already been decided by Ld. Arbitrator vide order dated 30.01.2020 however the said order was never challenged by the petitioner till date. The respondent had filed the suit for specific performance on 23.02.2018, hence any kind of termination notice, thereafter on 05.06.2019 to sale is void and have no value in the eyes of law. The petitioner had not filed any document at the time of filing of written statement however later on he had filed the documents which are of no relevance and not proved as per law.
12. Ld. Counsel for the respondents submits that the respondents had already paid substantial amount of Rs.28,10,000/- and only balance of Rs.19,90,000/- has to be paid, and this fact is admitted by the petitioner in Ex.PW1/13. Respondents are still ready to pay the balance amount. During cross-examination on 19.09.2020, it has been put by the petitioner to the PW1 that have you brought documents of financial capacity, to which the witness has replied that he has brought today. Ld. Counsel further submits that respondent has already purchased the stamp duty of Rs.1,44,000/- and registration fee of Rs.24,124/- and also got the appointment in the office of concerned Registrar for registration of sale deed but the petitioner did not appear. Ld. Counsel submit there is no infirmity in the impugned award passed by the Ld. Arbitrator hence present petition is liable to be dismissed.
13. Both the parties also filed written submissions.
14. Arguments Heard. Record perused.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 9 / 35
15. The relevant portion of the impugned award is reproduced as under:-
5.0 ISSUES: -
37. The Tribunal vide its order dated 12.03.2020, on the basis of the pleadings and documents as filed by both the parties before it, framed the following issues after deliberation with the parties;
i) Whether Petitioners are entitled to specific performance of the agreement to sell dated 31.10.2017 in respect of Plot bearing no. B- 18 (Old Plot No. 119 & 121), situated at Sanwal Nagar, New Delhi i.e., suit property? (OPP)
ii) Whether Petitioners, are entitled to the alternate relief of refund of the amount, the quantum of amount and the interest payable thereon? (Onus on both parties)
iii) Whether Petitioners are entitled for losses/damages and litigation expenses i.e., cost of the petition? (OPP)
iv) Whether the claim of Petitioner No.1 is maintainable in the present form? (OPD)
v) Whether the present claim is liable to be dismissed on account of concealment of material facts by the petitioners? (OPD)
vi) Whether the present claim is fraudulent and barred by Order VIII Rule 3 of CPC? (OPD)
vii) Whether the claim of the Petitioner is barred under Section 16(c) of the Specific Relief Act, 1963? (Onus on both parties) 6.0 DELIBERATION: -
I have considered and applied my mind to the pleadings, documentary evidences and submissions (both oral and written) and the authorities cited if any by both the parties in support of their arguments and I have given due weightage and consideration to all the above and I have reached my conclusions only after deep and careful consideration as under;
ISSUE NO.1: - WHETHER PETITIONERS ARE ENTITLED TO SPECIFIC PERFORMANCE OF THE AGREEMENT TO SELL DATED 31.10.2017 IN RESPECT OF PLOT BEARING NO. B-18 (OLD PLOT NO. 119 & 121), SITUATED AT SANWAL NAGAR, NEW DELHI I.E. SUIT PROPERTY? (OPP) ARGUMENTS OF THE CLAIMANTS:
38. At the outset the Claimants relying upon Section 20 of the Specific Relief Act, 1963 point out that where the Plaintiff has done substantial acts in consequence of a contract/agreement to sell then he is entitled to specific performance of an agreement to sell.
39. The relevant portion of Section 20 of the Specific Relief Act, 1963 reads as under: -
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 10 / 35 "20. Discretion as to decreeing specific performance-(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the contract is not enforceable at the instance of the party."
40.The Claimants further contend that admittedly after paying amount to the tune of Rs.28,10,000.00 to the Respondent in terms of the Agreement to Sell dated 31.10.2017 they have been in possession of the suit property. The Claimants have also pointed out that they offered the balance amount of Rs.19,90,000.00 to Respondent with the same admitted by the Respondent in his cross examination dated 20.04.2019 (Exhibit PW1/13).
41. Further, in answer to a question in his cross examination on 19.09.2020 PW1 replied that he had bought documents proving his financial capacity. The relevant question and answer of the cross examination dated 19.09.2020 of PW1 is extracted as under;
"...Q Have you bought any document of having financial capacity to pay the balance amount on 20.11.2017 today before the Arbitral Forum.
A Yes, I have bought today.
No further cross examination on the aforesaid issue was done by the Respondent who failed to challenge the financial capacity of Claimants and abandoned this aspect in the further cross examination of PWI.
42. The Claimants has submitted that the Respondent several times admitted to receipt of the amount of Rs.28,10,000.00 from the Claimants.
ARGUMENTS OF THE RESPONDENT:
43. The Respondent avers that he had not received any amount other than a sum of Rs.2,00,000.00 from the Claimants in furtherance of the said Agreement to Sell. He further contends that the Claimant No.1 after 31.10.2017 never offered for the fulfilment of her contractual obligation as cast upon her under the Specific Relief Act, 1963 subsequent to which the claim of the Claimants and the Agreement to Sell dated 31.10.2017 was cancelled by him vide Legal Notice dated 05.06.2019. No reply to the said legal notice was ever sent by the Claimants.
44. The Respondent/ Counter-Claimant has countered the contentions made by the Claimant on the premise that there was no document filed by the Claimant No.1 showing her financial capacity or readiness and willingness to perform her part of the obligations in the Agreement to Sell dated 31.10.2017 and pay the balance sale consideration of Rs.46 Lakhs on 20.11.2017 when she allegedly OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 11 / 35 purchased the stamp duty in the name of her son i.e., the Claimant No.2.
45. The Respondent has buttressed his submissions by relying on "Dinesh Kumar Jain vs Sanjeev Chaudhary 2017(244)DLT423"
wherein the Hon'ble Delhi High Court held that proof of readiness and willingness is on the plaintiff in a suit for specific performance proving that he had the necessary financial capacity to make the payment of balance sale consideration.
DECISION OF THE TRIBUNAL
46. The onus of proving this issue was upon the Claimants and thus with respect to the arguments as raised by the Respondent, I am required to examine the recitals of the Agreement to Sell dated 31.10.2017 qua performance of their part of the obligation by the Claimants to pay the balance consideration to the Respondent on the basis of which they would be awarded the decree of specific performance.
47. This Arbitral Tribunal is of the considered view that no positive evidence substantiating his claims/arguments has been placed by the Respondent before this Tribunal. Rather it is the Respondent's own admission in his cross examination dated 20.04.2019 (PW1/13) in the FIR bearing No. 35/2018 before the court of Gagandeep Jindal, MM, Saket Court that even after being informed by Claimant No.2 to visit the office of sub-registrar for execution of sale deed as the remaining sale consideration was available with him, Respondent refused to execute the sale deed.
48. Further, the Respondent even in his Statemen of Defence himself pleaded that he offered to return the Claimant's advance earnest amount which was forfeited by him vide notice dated 05.06.2019. The Respondent in his application under Order VII Rule 11, Code of Civil Procedure, 1908 as filed by him in the suit "Prem Lata vs Tulsi Das" has duly admitted to receipt of a substantial amount of Rs.26,10,000.00 from the Claimants. Also, in his cross examination dated 28.01.2019 the Respondent admits deposit of Rs.24,00,000.00 in his account by the Claimant No.2 further used by him to repay one Shri Sonu and one Shri Desh Raj.
49.The wavering stand of the Respondent makes it amply evident that he was in receipt of the amount of Rs.28,10,000.00. As such it stands duly established that the Claimants have been performing their part of the obligations under the said Agreement to Sell as they have duly made payment of substantial amount of Rs.28,10,000.00 in furtherance of the same to the Respondent.
50. The Claimants are to pay the balance amount of Rs.19,90,000.00 to the Respondent within the next 45 days after which a Sale Deed is to be duly executed by Respondent in favour of OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 12 / 35 Claimant No.2. Issue has been decided accordingly in favour of the Claimants.
ISSUE NO.2: - WHETHER PETITIONERS, ARE ENTITLED TO THE ALTERNATE RELIEF OF REFUND OF THE AMOUNT, THE QUANTUM OF AMOUNT AND THE INTEREST PAYABLE THEREON? (ONUS ON BOTH PARTIES) DECISION OF THE TRIBUNAL
51.Since, the Issue No.1 is decided in favour of the Claimant and as the Respondent is to now execute a Sale Deed in favour of the Claimant No.2, therefore in the opinion of the Tribunal, the Claimants are not entitled to the alternate relief of refund of the amount or any interest thereon. The prayer for alternate relief of refund of amount and interest under this head is therefore rejected. Issue No.2 is decided accordingly.
ISSUE NO.3: WHETHER PETITIONERS ARE ENTITLED FOR LOSSES/DAMAGES AND LITIGATION EXPENSES I.E. COST OF THE PETITION? (OPP) ARGUMENTS OF THE CLAIMANTS:
52.The Claimants have contended that they have suffered huge losses due to non-fulfilment of his part of the obligations in the Agreement to Sell dated 31.10.2017 by the Respondent. Furthermore, the Claimants contend that they have been subjected to multifarious litigation before different forums. ARGUMENTS OF THE RESPONDENT:
53. Respondent avers that the complete litigation is foisted by the Claimants owing to their defaulting attitude and malicious mindset and even the Respondent was wrongfully subjected to criminal and civil prosecution on the instance of the Claimants. Respondent further submits that the Claimants had not pleaded the loss and alleged damages and alleged litigation expenses in the pleadings and further no evidence for the same was placed by the Claimants, hence they are not entitled for claiming any loss/damage. DECISION OF THE TRIBUNAL
54.From the facts and circumstances of the case, I am of the view that since the litigation was a consequent result of the non- performance of his part of the obligations owing to which Claimants have been subjected to unavoidable litigation costs, however as this claim has not been quantified by the Claimants i.e., no Memo of Costs estimating its costs have been filed by the Claimants, I hereby award a reasonable lumpsum amount of Rs.2,00,000.00 in favour of the Claimants. Issue No.3 is decided accordingly in favour of the Claimant.
ISSUE NO.4: - WHETHER THE CLAIM OF PETITIONER NO.1 IS MAINTAINABLE IN THE PRESENT FORM? (OPD) OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 13 / 35 ARGUMENTS OF THE CLAIMANTS:
55. The Claimants contend that the Claimant No.2 has the locus standi to file claim petition in the present arbitral proceedings and represent Claimant No.1 before the Arbitral Tribunal as Claimant No.1 is mother of Claimant No.2.
56. The Claimants further contend that it is a settled law that the party i.e., "Purchaser" to the Agreement to Sell can later on purchase the property in his name or in the name of his family members. Further the Claimants argue that the Respondent in his cross examination dated 20.01.2019 before the court of Shri Gagandeep Jindal, Ld. MM, Saket Court in FIR No. 35/2018 has duly admitted that he was called to the Sub-registrar office by the Claimant No.2 for making the balance sale consideration and getting Sale Deed qua the suit property registered in the name of Claimant No.2 but the same was however refused to by him.
57. The Claimants submit that the Respondent is trying to mislead this Tribunal by contending on one side that he had entered into the Agreement to Sell dated 31.10.2017 with the Claimant No.1 and on the other that he only received Rs.2,00,000.00 in cash from Claimant No.1 in furtherance of the said Agreement to Sell. The Claimants point out that the Claimant No.2 stood out as a witness to the said Agreement to Sell and had paid Rs.28,10,000.00 to the Respondent on behalf of Claimant No.1 as he is her son, hence Claimant No.2 is also entitled to file the present claim petition as he is a necessary party from whom Respondent had taken the transaction of Rs.28,10,000.00.
ARGUMENTS OF THE RESPONDENT:
58. The Respondent contends that claims of the Claimants are barred under Order IV Rule 1 of Code of Civil Procedure, 1908 as being not properly instituted. Further, it is pointed out by the Resondent that the authority letter dated 19.07.2019 on basis of which Claimant No.2 claimed himself to be the authority holder of Claimant No.1 was not a proper authority letter as the same was unstamped. The claim petition nowhere conveyed the same as the same was not filed by the Claimant No.2 but Claimant No.1 under her own signature, hence the authority letter became redundant and futile.
59.Even in the list of documents as filed by the Claimants in support of their evidence filed on 21.03.2020 there was no mention of any alleged authority letter making the deposition and evidence led by Claimant No.2 having no value.
60. The Respondent has also pointed out that since the inception of the arbitral proceedings there has neither been any appearance of Claimant No.1 nor any evidence was led by her in support of her OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 14 / 35 claims, hence the claims filed by her were no claims in the eyes of law.
61. The Respondents submits that the present claims are not maintainable in their present form as there is no joint agreement between both the Claimants and the Respondent and no evidence have been led by the Claimants which reflect that the Claimant No.1 at any point conveyed her consent in any form wherein the Respondent was asked to execute a Sale Deed in favour of Claimant No.2.
DECISION OF THE TRIBUNAL:
62. The said Issue No.4 has already been dealt by the Tribunal vide its order dated 30.01.2020 wherein the application for rejection of the claim of Claimant No.1 as filed by the Respondent was dismissed by me.
63. The primary contention of the Respondent is qua the misjoinder of parties in the present arbitral disputes as Shri Dileep Kumar has been arrayed as Claimant No.2 in the arbitral proceedings. As already noted, it is a fact that Shri Dileep Kumar is not a signatory to the Agreement to Sell which contains the arbitration clause. This is explained in Section 8 of the Arbitration and Conciliation Act, 1996 which is reproduced hereinunder;
"Section 8 (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration."
The said provision was interpreted by the Hon'ble Supreme Court in "Ameet Lal Chand Shah & Other vs Rishabh Enterprises and Another AIR2018SC3041" wherein the enforceability of the arbitration clause even on the non-signatories when the transactions were interconnected was upheld.
64.After a combined reading of the provisions and the case law, the Tribunal is of the opinion that on the basis of the averments made in the claim petition it is clearly established that the transaction between the Respondent and both the Claimants are closely interconnected and form part of one principal understanding pertaining to sale of the suit property 65. Applying the test laid down in the Ameet Lalchand Shah Case (Supra), this Tribunal is of the considered opinion that the presence of Claimant No.2 is necessary for adjudication of present dispute.
66.Infact if the averments made in the plaint stand established after consideration of evidence, then no effective relief can be granted to OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 15 / 35 the Claimant No.1 in absence of Claimant No.2. Issue No.4 is accordingly decided in favour of Claimants and against the Respondent ISSUE NO.5: - WHETHER THE PRESENT CLAIM IS LIABLE TO BE DISMISSED ON ACCOUNT OF CONCEALMENT OF MATERIAL FACTS BY THE PETITIONERS? (OPD) AND ISSUE NO.6: WHETHER THE PRESENT CLAIM IS FRAUDULENT AND BARRED BY ORDER VIII RULE 3 OF CPC? (OPD) ARGUMENTS OF THE CLAIMANTS:
67. The Claimants submit that the site plan (PW1/1) as filed by them is correct as no counter site plan to the same has been filed by the Respondent alongwith his reply to statement of defence and the site plan filed at a later stage has not been proved as per law.
68. The Claimants further submit that in the FIR bearing No. 098 dated 17.08.2018 as lodged against the Respondent, he was discharged on the submission that "since possession of the suit property has already been handed over to the Claimants hence no case of cheating was made out against him.
ARGUMENTS OF THE RESPONDENT:
69. The Respondent has contended that the Claimants have filed a false site plan on record showing incorrect area dimensions and further have also made a false claim of possession of suit property been handed over to them by the Respondent which is in turn contrary to the site plan, Ex. PW1/3. The Claimants till date have never been in possession of the complete portion of the suit property and possession of part portion of the suit property is still with the Respondent with the same being clearly reflected in the site plan, Ex. DW1/3. Except the oral testimony of PW1 who is a stranger to the agreement there is nothing on record which shows that the possession was ever handed to the Claimants.
70.Claimant No.1 have neither led any evidence nor filed any documentary proof in support of her claim which reflected any further communication after entering into the Agreement to Sell on 31.10.2017. Furthermore, the Claimants in evidence tried concealing the existence of their being an FIR bearing no.35/2018 against the Claimant No.2 for demolishing tenanted structure of the suit property wherein Smt. Shakuntala was residing as a tenant.
71.The Respondent avers that the Claimants have committed fraud upon this Tribunal by filing false affidavit and pleadings under Order VIII Rule 3 of the Code of Civil Procedure, 1908 hence they are not entitled to any relief as claimed under the Statement of Claim.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 16 / 35
72. The Respondent submits that the Claimants wilfully withheld vital documents from the Hon'ble Court and this Tribunal for invoking the present arbitration. The Claimants made a request for invocation of arbitration to Respondent due response of which was sent by the Respondent. Further, the Claimants made no averments with respect to the termination notice dated 05.06.2019 sent by the Respondent, response to which was not sent by the Claimants and by invoking the provisions of Order VIII Rule 3, Code of Civil Procedure, 1908 the same amounts to admission of the Claimants.
73. The Respondent further avers that the fact of there being an FIR bearing No.0035/2018 registered against Claimant No.2 under Sections 427/451/453/34 of Indian Penal Code, 1908 had been concealed by the Claimants in the claim petition. DECISION OF THE TRIBUNAL
74. Issue Nos. 5 and 6 are taken together as they are inter related.
75.Issue Nos. 5 and 6 are decided accordingly in favour of the Claimants.
ISSUE NO.7: - WHETHER THE CLAIM OF THE PETITIONER IS BARRED UNDER SECTION 16(C) OF THE SPECIFIC RELIEF ACT, 1963? (ONUS ON BOTH PARTIES) ARGUMENTS OF THE CLAIMANTS:
76. The Claimants have admittedly made payment of the substantial amount of Rs.28, 10,000.00 with balance of Rs.19,90,000.00 left to be paid to the Respondent after which a Sale Deed was to be executed by the Respondent. For the same the Respondent was called to the office of the Sub-registrar on 20.11.2017 but the Respondent refused to come to the Sub-registrar office, the fact admitted by the Respondent several times in his pleading and cross examination.
77. The Claimants alongwith their Statement of Claim have filed the Statement of Account of the Claimant No.2 as an evidence which blatantly on the face of it shows that they had the financial capacity for making the balance payment in terms of the said Agreement to Sell to Respondent.
78. The Claimants further argue that they have time and again been ready and willing to make payment of the balance amount to the Respondent and even made several requests to him. ARGUMENTS OF THE RESPONDENT:
79.The Respondent submits that the entire claims of the Claimants are silent about offering the balance payment to the Respondent despite possession allegedly handed over to Claimant No.2 on 11.12.2017. Respondent further submits that as the Claimants nowhere in the claim petition have conveyed their intention to fulfil their part of the obligations under the Agreement to Sell, hence the OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 17 / 35 claims of the Claimants are barred under Section 16(C) of the Specific Relief Act, 1963 and hence liable to be dismissed.
80.The Respondent has relied upon the law laid down in "Aniglase Yohanan vs. Ram Lata AIR2005SC3503" wherein it has been held that the Plaintiff must establish the fact that he was ready and willing to perform his part of the contract by way of evidence. DECISION OF THE TRIBUNAL
81.I have considered the arguments advanced by both the parties and carefully perused the record. My findings on the issues are as follows;
82. The Claimants in their pleadings have time and again mentioned that they were and are still ready to make payment of the balance amount to the Respondent and in support of the same alongwith their Statement of Claim they have filed a Statement of Account of the Claimant No.2 as an evidence which blatantly on the face of it shows that they had the financial capacity for making the balance payment in terms of the said Agreement to Sell to Respondent. It is to be noted that admittedly payment of Rs.28,10,000.00 was already made by the Claimants to the Respondent and for making the balance payment of Rs. 19,90,000.00 the Respondent was called by the Claimants to the office of the Sub-registrar on 20.11.2017 but the Respondent refused to come to the Sub-registrar office and the same has been admitted by the Respondent in his cross examination dated 20.04.2019.
83.In the judgment of "Aniglase Yohanan vs. Ram Lata", Hon'ble Supreme Court has observed;
"It is thus clear that an averment of readiness and willingness in the plaint is not a mathematical formula which should only be in specific words. If the averments in the plaint as a whole do clearly indicate the readiness and willingness of the plaintiff to fulfil his part of the obligations under the contract which is the subject- matter of the suit, the fact that they are differently worded will not militate against the readiness and willingness of the plaintiff in a suit for specific performance of contract for sale."
84. The Claimants are still ready and willing to make payment of the balance amount of Rs. 19,90,000.00 to the Respondent and hence Issue No.7 is accordingly decided in favour of the Claimants and against the Respondent.
DISPOSITIVE The Claimant is granted the following The Claimant is granted Specific Performance of the Agreement to Sell dated 31.10.2017. Respondent is directed to execute a Sale Deed qua the suit property in favour of the Claimants. The Claimants are granted Rs.2,00,000.00 as the litigation expenses incurred by them.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 18 / 35 All other claims and requests are dismissed.
Award is passed accordingly. Award has been made and signed by me on the date mentioned below.
16. Respondent No.2 Dileep Kumar examined himself as PW1 before the Ld. Arbitrator and exhibited the site plan, agreement to sell vide which total payment of Rs.28,10,000/- was paid out of sale consideration of Rs.48 Lakhs, and balance sale consideration of Rs.19,90,000/- to be paid within six months. The vacant physical possession was given on 12.12.2017. Subsequently, purchased the stamp duty of Rs.1,44,000/- as well as paid registration fee of Rs. 24,124/- for the registration of sale deed however, the defendant / petitioner did not appear for registration. Later on, on 09.02.2018, a complaint of house trespass and theft was lodged by one Deshraj. When the respondents came to know that the petitioner was in the process of selling the suit property, filed suit for specific performance by suit and consequently, the present arbitration take place. A criminal complaint was also filed by respondent No.2 Dileep Kumar pursuant to which an FIR No.98/2018 P.S. Defence Colony u/s 420 was registered against the petitioner Tulsi Dass.
17. Tulsi Dass in his deposition in the FIR no.35/2018 lodged by him as PW1 admitted to have executed an agreement to sell for a total sale consideration of Rs.48 lakh for which advance payment of Rs.2 lakhs has been paid in cash. The said agreement was executed in favour of Prem Lata, mother of Dileep Kumar, however, Dileep Kumar opened his bank account and he transferred Rs. 24 lakhs in that bank account without his OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 19 / 35 consent and later on some persons came and demolished two rooms of his tenant Shanti Devi . In cross-examination he admitted the documents and also stated that he had not executed any rent agreement with Shakuntala Devi and Deshraj. In reply to the question what happened to Rs.24 lakhs, he stated that accused was demanding money therefore he gave Rs.12 lakhs to one Sonu Gujjar to hand over to the accused. There is an order dated 03.02.2020 exhibited as Ex.PW1/14 in which it was argued by Ld. Counsel for the petitioner that there is no evidence of dishonest intention as the complainant Dileep Kumar had admitted that he received the possession from the accused Tulsi Dass therefore no offence of cheating and only a civil dispute.
18. In cross-examination before Ld. Arbitrator, PW1 Dileep Kumar denied the suggestion that only advance payment receipt was executed and no formal agreement to sell was executed, however admitted his signature as a witness to agreement to sell dated 31.10.2017. He also admitted that the agreement was executed between Tulsi Dass and his mother Prem Lata, and he was only witness. He also stated he has not filed any statement of account of his mother reflecting the balance amount. He also not filed any statement of account of himself or his mother showing the sufficient balance on 20.11.2017 on the date of applying the registration fee of the documents however stated that he had brought the financial capacity documents today. He also admitted he had not offered the balance amount to the defendant in writing but visited the house of Tulsi Dass in the morning and got counted the balance amount OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 20 / 35 of Rs.19,90,000/- and thereafter Tulsi Dass supplied him the photocopy of aadhaar card and I card with his thumb impressions. He denied suggestion that Tulsi Dass had not contacted him for taking appointment from the office of Sub registrar and there are no differences with Tulsi Dass till 25.01.2018. He also stated that he is not the introducer for the bank account of Tulsi Dass however his mobile number is reflected for limited time in the bank account. Once he got the message that a sum of Rs.11,30,000/- were transferred to Deshraj, and then when he informed the same to Tulsi Dass, he changed the mobile number. Tulsi Dass also supplied him the NCR. He also stated that no written documents were executed on 12.12.2017 between his mother and Tulsi Dass at the time of handing over the possession however, the possession was handed over in presence of two witnesses. He also stated that he had filed the authority letter from his mother and denied suggestion that he cannot depose on behalf of his mother.
19. There is nothing in cross-examination of PW1 Dileep Kumar that the agreement to sell as alleged was not executed. There is nothing on record that any document regarding the sale of the property has been forged. It is also not categorically came in cross-examination that forcible possession was taken. Merely from the fact that there is no document of possession, do not suggest that the possession was not given and taken forcibly. It is pertinent to notice at this stage that FIR No.35/2018 u/s 451/453/427/34 IPC P.S. Defence Colony was lodged against the plaintiff No. 2 Dileep Kumar by one Deshraj alleged to be a tenant of the OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 21 / 35 petitioner, however in the said case, respondent no. 2 Dileep Kumar was acquitted. There is no complaint by the petitioner Tulsi Dass that the Dileep Kumar had forcibly opened his bank account in which deposited a sum of Rs.24 lakhs and thereafter forcibly or fraudulently taken out the money from that account. The respondents during evidence cogently able to show that an agreement to sell was executed and a total payment of Rs.28,10,000/- was paid till the possession was taken, and only balance payment of Rs.19,90,000/- is to be made. The readiness and willingness on the part of the respondent could also be inferred from the fact that the stamp duty and registration fees has been paid. Merely from the fact that the respondent not able to place the statement of account to show the financial capacity is no ground to infer that the respondents have no financial capacity to pay the balance amount of Rs.19,90,000/-.
20. DW1 Tulsi Dass examined himself before the Arbitrator and in cross-examination he categorically stated that he was not ready to execute the sale deed in favour of Dileep Kumar and Prem Lata however admitted the total payment of Rs.24 lakh received in his account but unable to prove that a sum of Rs.12 lakhs was returned to Dileep Kumar through Sonu Gujjar and further admitted that he had made a payment of Rs.11,30,000/- from his account however the said amount was later returned back in his account but there is no document to show the said fact. He also stated that he has another bank account which is State Bank of India in which he receives pension therefore it can be inferred that for the present transaction he had opened a new bank account.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 22 / 35
21. Ld. Counsel for the petitioner raised a plea that Hon'ble High Court vide order dated 12.03.2019 while appointing the Arbitrator passed questions in para No.11 and 12 as under:-
Para 11: Whether Petitioner No.2 is a necessary and proper party is a matter to be decided by the Arbitrator on receipt of pleadings and upon hearing the submissions of the parties.
Para 12: Equally, whether the petitioner No.1 or the respondent who is in default of the obligations under agreement to sell, is also a question to be determined by the Arbitrator on receiving the evidence from the parties.
22. The Ld. Arbitrator vide order dated 31.01.2020 had disposed of four applications filed by the petitioner / defendant viz. rejection of claim, grant of further time for filing of documents, for waiver from payment of arbitration fees, application of claimant for rejection of reply of the defendant. Ld. Arbitrator in this order categorically held that the transaction between the defendant and the claimant No.1 and 2 are closely interconnected, and no effective relief could be granted to claimant No.1 in absence of claimant No.2, therefore the claimant No.2 is necessary party and this order has not been challenged. Therefore the plea raised by the petitioner that the respondent no.2 Dileep Kumar is not the necessary party is devoid of merit. The respondent No.2 from the evidence on record is the person who is dealing on behalf of his mother respondent no.1 and this is also the version of the petitioner / defendant. This respondent No.2 is also witness to agreement to sell and has been authorised by his mother to conduct the arbitration proceeding. Merely from the fact that there is no express authority to depose in arbitration OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 23 / 35 proceedings do not in any manner to be construed that he has no authority to prosecute the arbitral proceedings and depose in the said proceedings particularly when he himself was also found to be necessary party in the case. From evidence on record, agreement to sell and other material facts i.e. deposit of money in his bank account of petitioner Tulsi Dass stands proved.
23. The plea of cause of action as submitted on behalf of petitioner Tulsi Dass is also devoid of any merit as the petitioner himself has not performed his part of contract i.e registration of sale deed despite the fact that the respondents are willing to make the balance payment and in this regard also purchased the stamp duty and deposited the registration fee. On the contrary, the petitioner Tulsi Dass in cross-examination categorically stated he was not ready to execute the sale deed.
24. The petitioner not able to prove that the respondents have taken the possession forcibly. In an FIR lodged by Deshraj regarding trespass against respondent No.2 Dileep Kumar, the respondent no. 2 Dileep Kumar had already acquitted. In the case of cheating, under section 420 IPC, FIR No.38/2018, the petitioner Tulsi Dass got discharged as taken the plea that he has handed over the possession as per the version of the respondent no. 2 Dileep Kumar.
25. On overall consideration of the evidence on record, the respondent/plaintiff able to prove cogently that agreement to sell was executed pursuant to which the suit premises were handed over by the petitioner/defendant on receiving the substantial payment of Rs.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 24 / 35 28,10,000/-. The plaintiff found ready and willing to make the balance payment of Rs. 19,90,000/- for execution of the sale deed. The said fact is corroborated as he has already purchased the stamp duty and deposited the registration fee, however, the defendant not reached for execution for performing his part of the contract. The defense of the petitioner/defendant is that the property was forcibly taken and he has not received the money as claimed by the claimant not found credible.
26. Apex court in case title Delhi Airport Metro Express Pvt. Ltd. vs. Delhi Metro Rail Corporation Ltd. Civil Appeal No. 5627/21 dated 09.09.2021 MANU/SC/0623/2021 have delineated the contours of the courts power to review arbitral awards, the relevant paras are reproduced as under:-
"20. The 1996 Act was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and also to define the law relating to conciliation and for matters connected therewith, by taking into account the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration and the UNCITRAL Conciliation Rules. One of the principal objectives of the 1996 Act is to minimize the supervisory role of courts in the arbitral process. With respect to Part I of the 1996 Act, Section 5 imposes a bar on intervention by a judicial authority except where provided for, notwithstanding anything contained in any other law for the time being in force. An application for setting aside an arbitral award can only be made in accordance with provisions of Section 34 of the 1996 Act. Relevant provisions of Section 34 (as they were prior to the Arbitration and Conciliation (Amendment) Act, 2015) read as under:-
"34. Application for setting aside arbitral award. (1) Recourse to a Court against an arbitral award may be made only by an OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 25 / 35 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 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. Without prejudice to the generality of sub-clause
(ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81. ..."
21. An amendment was made to Section 34 of the 1996 Act by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter, 'the 2015 Amendment Act '). A perusal of the statement of objects and reasons of the 2015 Amendment Act would disclose that the amendment to the 1996 Act became necessary in view of the interpretation of the provisions of the 1996 Act by courts in certain cases which had resulted in delay of disposal of arbitration proceedings and increase in interference by courts in arbitration matters, which had the tendency to defeat the object of the 1996 Act. Initially, the OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 26 / 35 matter was referred to the Law Commission of India to review the shortcomings in the 1996 Act in detail. The Law Commission of India submitted its 176th Report, recommending various amendments to the 1996 Act. However, the Justice Saraf Committee on Arbitration constituted by the Government, was of the view that the proposed amendments gave room for substantial intervention by the court and were also contentious. Thereafter, on reference, the Law Commission undertook a comprehensive study of the amendments proposed by the Government, keeping in mind the views of the Justice Saraf Committee and other stakeholders. The 246th Report of the Law Commission was submitted on 05.08.2014. Acting on the recommendations made by the Law Commission in its 246th Report, amendments by way of the 2015 Amendment Act were made to several provisions of the 1996 Act, including Section 34. The amended Section 34 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 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 OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 27 / 35
(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.
(2-A) 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- appreciation of evidence.
..."
22. A cumulative reading of the UNCITRAL Model Law and Rules, the legislative intent with which the 1996 Act is made, Section 5 and Section 34 of the 1996 Act would make it clear that judicial interference with the arbitral awards is limited to the grounds in Section 34. While deciding applications filed under Section 34 of the Act, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. (See: Uttarakhand Purv Sainik Kalyan Nigam Limited. v. Northern Coal Field Limited.2, Bhaven Construction Through Authorised Signatory Premjibhai K. Shah v. Executive Engineer Sardar Sarovar Narmada Nigam Ltd. and Another3 and Rashtriya Ispat Nigam Limited v. Dewan Chand Ram Saran4).
23. For a better understanding of the role ascribed to courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI)5 wherein R.F. Nariman, J. has in OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 28 / 35 clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong (supra) are noted as under: -
"34. What is clear, therefore, is that the expression "public policy of India", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law" as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar" understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] , would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 29 / 35
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49: (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204] . Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] ,as understood in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , however, would remain, for if an arbitrator gives no OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 30 / 35 reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , 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. Thus, 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. Additionally, a finding based on 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 characterised as perverse. "
24. This Court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 31 / 35 the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions.
25. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for courts to re-appreciate evidence to conclude that the award suffers from patent illegality appearing on the face of the award, as courts do not sit in appeal against the arbitral award. The permissible grounds for interference with a domestic award under Section 34(2-A) on the ground of patent illegality is when the arbitrator takes a view which is not even a possible one, or interprets a clause in the contract in such a manner which no fair-minded or reasonable person would, or if the arbitrator commits an error of jurisdiction by wandering outside the contract and dealing with matters not allotted to them. An arbitral award stating no reasons for its findings would make itself susceptible to challenge on this account. The conclusions of the arbitrator which are based on no evidence or have been arrived at by ignoring vital evidence are perverse and can be set aside on the ground of patent illegality. Also, consideration of documents which are not supplied to the other party is a facet of perversity falling within the expression 'patent illegality'.
26. Section 34 (2) (b) refers to the other grounds on which a court can set aside an arbitral award. If a dispute which is not capable of settlement by arbitration is the subject-matter of the award or if the award is in conflict with public policy of India, the award is liable to be set aside. Explanation (1), amended by the 2015 Amendment Act, clarified the expression 'public policy of India' and its connotations for the purposes of reviewing arbitral awards. It has been made clear that an award would be in conflict with public policy of India only when it is induced or affected by fraud or corruption or is in violation of Section 75 or Section 81 of the 1996 Act, if it is in OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 32 / 35 contravention with the fundamental policy of Indian law or if it is in conflict with the most basic notions of morality or justice. In Ssangyong (supra), this Court held that the meaning of the expression 'fundamental policy of Indian law' would be in accordance with the understanding of this Court in Renusagar Power Co. Ltd. v. General Electric Co.6 In Renusagar (supra), this Court observed that violation of the Foreign Exchange Regulation Act, 1973, a statute enacted for the 'national economic interest', and disregarding the superior courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of 'patent illegality' as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day.7)
27. In light of the principles elucidated herein for interference with an arbitral award by a court in exercise of its jurisdiction under Section 34 of the 1996 Act, we proceed to consider the questions that arise in these Appeals as to whether the Division Bench of the High Court was right in setting aside the award of the Arbitral Tribunal dated 11.05.2017."
27. The Ld. Arbitrator has passed the award on a detailed scrutiny of facts, appreciating the evidence and in the context of the contemporary legal situation, which is not obnoxious to the settled position of law or the principles of interpretation/appreciation of evidence.
28. A judicial appreciation of the impugned award goes to show that the Ld. Sole Arbitrator has properly appreciated the facts of the case; has done a due analysis of the evidence led by the parties and has rendered OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 33 / 35 his findings after due consideration, application of mind and on the touchstone of the law.
29. The ld. Sole Arbitrator has drawn inferences and conclusions after the factual appreciation in the light of the legal principles. The views of the ld. Sole Arbitrator can not be found fault with only for the reason that some other views can emerge by appreciating the same set of facts and evidence, until and unless it is shown that such a view is totally obnoxious and unsupported by the sound legal principles.
30. This Court cannot substitute its own views or the views of the parties with the view taken by the Ld. Arbitral Tribunal, if the view taken by the Ld. Arbitrator is not in conflict with the settled legal position. There is nothing to suggest that the findings and conclusions rendered by the Ld. Arbitrator are per-se perverse, illegal or non- sustainable.
31. On meaningful appreciation of the arguments of the parties, it is manifestly clear that the present challenge to the impugned award is purely founded on the merits of the award. The same is not permissible within the limited powers of challenge available under section 34 of the Arbitration and Conciliation Act, 1996. Even otherwise, there is no infirmity in the reasons given by the Ld. Arbitrator.
32. In fact, as it emerges, the challenge to the impugned award is purely on merits and there is no ground to state that the award is against the public policy of Indian Law. The judgements relied by Ld. Counsel for the petitioner are of no help in present case.
OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 34 / 35
33. Accordingly, the present petition under section 34 of the Arbitration and Conciliation Act, 1996, as pressed into service by the petitioner is therefore not sustainable within the scope and ambit of the provision, therefore, liable to be dismissed and accordingly dismissed and disposed of.
34. In compliance of the provisions of the Order XX Rule 1 of the Code of Civil Procedure (as amended up-to- date by the Commercial Courts Act, 2015) a copy of this judgment be issued to all the parties to the dispute through electronic mail, if the particulars of the same have been furnished, or otherwise.
File be consigned to record room after necessary compliance.
(Ajay Kumar Jain) District Judge, Comm-03 South-East, Saket Courts, Delhi OMP (COMM) 28/2021 Tulsi Dass Vs. Prem Lata & anr. dt. 28.02.2023 pg. 35 / 35