Delhi District Court
M/S.Chopra Land Developers Pvt. Ltd vs Jatinder Nath on 21 May, 2025
IN THE COURT OF MS. ANURADHA SHUKLA:
DISTRICT JUDGE (COMMERCIAL COURT)-02, SOUTH,
SAKET, DELHI
OMP (COMM) 7/2020
1. M/S. Chopra Land Developers and Ors.
A-11, Shivalik
New Delhi-110017.
2. Late Sh.Om Prakash Chopra
S/o. Lt. Shri. A.N.Chopra
Through his Legal Heirs
(a) Sudesh Chopra (wife)
(b) Gaurav Chopra (son)
(c) Nikhil Chopra (son)
A-11, Shivalik
New Delhi-110017.
....Petitioners
Versus
1. Late Sh. Jatinder Nath
S/o. Sh. Sohan Lal
Through his Legal Heirs
(a) Ms.Geena Sood
W/o Late Sh.Jatinder Nath Sood,
r/o. G-13, Ground Floor, Saket
New Delhi-110017.
(b) Vaishali Sood
OMP (COMM) 7/2020 Page no. 1 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath
D/o Late Sh.Jatinder Nath Sood,
r/o. G-13, Ground Floor,
M.B.Road, Saket
New Delhi
(c) Sh. Sharad Sood
S/o Late Sh.Jatinder Sood,
r/o. H.No.31, Gautam Nagar,
Hoshiarpur, Punjab-146001.
....Respondents
Date of filing : 04.02.2020
Date of reserving order : 15.05.2025
Date of order : 21.05.2025
ORDER
1. The award dt. 02.11.2019 under challenge in this matter was passed by the sole arbitrator Justice Indermeet Kaur (retd.).
2. Before proceeding with the matter it would be relevant to note down the parties before the court as on date. The claim was filed by respondent Jatinder Nath before the Ld. Arbitrator, who has since deceased and is being represented by his legal heirs Ms.Geena Sood (wife), Ms.Vaishali Sood (daughter) and Mr.Sharad Sood (son) as the respondents in the matter. There were two respondents in the claim before the Ld. Arbitrator M/s. Chopra Land Developers Pvt. Ltd. and OMP (COMM) 7/2020 Page no. 2 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath Mr.Om Prakash Chopra, Managing Director of the company. Mr. Chopra (since deceased), is being represented by his legal heirs Sudesh Chopra (wife), Gaurav Chopra & Nikhil Chopra (sons) as petitioners in this matter alongside Chopra Land Developers Pvt. Ltd., which is a struck off company.
3. Brief facts as discussed in the award are that the petitioners of this case (respondents before the arbitrator) and the respondents in this case (claimant before the arbitrator) had entered into an agreement in respect of property bearing no. G-13, Malviya Nagar Extn., Saket. The petitioners was to raise construction and upon successful completion of construction within stipulated time was to get basement, ground and mezzanine floors while first floor and second floor were to go to respondent. It was agreed that in the event of failure of respondent in completing the construction within stipulated time the owner was to have a right to put an end to the agreement; the ownership of land and incomplete construction was to vest in the claimant and respondent was to be entitled to cost of construction of the incomplete construction. The mezzanine floor was impermissible and therefore, was not constructed. The building plan was sanctioned on 21.05.1990 and construction was to be completed by 20.05.1992. It is recorded that petitioners did not raise the construction as per agreement and committed breaches in the sanctioned plan by raising extra construction OMP (COMM) 7/2020 Page no. 3 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath ad-measuring 13,711 sq. feet as against permissible construction of 7396.67 sq. feet. The structure was sealed by MCD. Respondent had to file an appeal. The appellant tribunal on 06.02.1992 directed de-sealing of property.
4. In between the petitioners in June 1992 inducted one P.K.Mathur in front portion of ground floor of the incomplete structure and in August, 1992 he permitted Mr.Pramod Dang to occupy the basement, who commenced commercial activities under the name of M/s. Blue Chip Construction Co. Pvt. Ltd. The respondent made complaints against Pramod Dang and P.K.Mathur.
5. On 03.08.1992 respondent called upon petitioners to hand over possession of suit plot alongwith incomplete structure, which was not done. In between as per agreement the matter went to arbitrator named in agreement, who passed an award which was set aside by Faridabad Court. The appeal and review petition against the order of court were also dismissed.
6. Respondent took possession of first floor, second floor and third floor of incomplete structure on 01.09.1992. The petitioners had filed a suit seeking injunction against respondent from dispossessing from front portion of first floor and entire portion of second and third floors, which suit OMP (COMM) 7/2020 Page no. 4 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath was dismissed. The appeal filed by petitioners was also dismissed. Relevantly, the basement of the premises was again sealed by MCD on 11.11.1992 (it was in possession of Pramod Dang), which seal it was alleged, was tampered by Pramod Dang and the claimant/respondent filed a police complaint. On 18.05.1993 MCD revoked sanction of building plans and issued order for demolition of structure. Suit filed by P.K.Mathur for restraining the respondent from dispossessing him was dismissed. On 19.08.1996 MCD again sealed the entire suit property. Mr. Pramod Dang had also filed some suit in which relief was temporarily granted to him, however, the suit was dismissed in default. Certain proceedings were taken up by the petitioners against the MCD also which do not seem relevant for this appeal.
7. In 2008 respondent had filed a suit for possession of the plot which was withdrawn as award passed by earlier arbitrator was pending adjudication till then. The respondent thereafter, filed a suit in Hon'ble High Court in March, 2013. This suit was dismissed on 02.06.2016 because of arbitration clause. RFA was filed in which Hon'ble High Court appointed Local Commissioner to determine exact status of property. The Local Commissioner reported that basement in the ground floor had been sold by the petitioners to Mr. Dang for Rs.23 lakhs and he had received Rs.4 lakhs and front portion of ground floor was sold to Mr.P.K.Mathur for Rs.15 OMP (COMM) 7/2020 Page no. 5 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath lakhs. The rear portion of ground floor was in custody of petitioners and rest of the premises was lying vacant and was not in living condition. The Hon'ble High Court directed possession of half portion of ground floor, first floor, second floor and third floor to be handed over to respondent.
8. Following reliefs were claimed by respondents before the arbitrator: declaring the contract between the parties as non-existent and suit plot with incomplete structure vesting with owner; to declare respondent to be the owner and entitled to possession to the exclusion of builder of any other person; directing the petitioners to hand over vacant and peaceful possession of the entire incomplete structure; directing the petitioners to pay Rs.2,50,00,000/- as damages for breach of agreement with interest @ 18% and directing the builder to pay all outstanding in respect of the property.
9. Respondent had raised issue of limitation. It was pleaded that the legal notice for cancellation of agreement was issued on 03.08.1992 and thus the suit was barred by time having been filed on 27.08.2013.
It was stated that the issue of seeking possession would have arisen only if the petitioners had failed to raise the construction within 24 months from the day of issue of extension letter from DDA. The construction of building was completed in time. Respondent had completed the OMP (COMM) 7/2020 Page no. 6 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath construction of building within stipulated period of two years as can be seen from notice of completion dt.31.12.1991 filed under the signature of claimant. The petitioners had a taken a stand before the arbitrator that the agreement between the parties was that the petitioners would purchase the property and the possession of first, second and third floor was to be retained by respondent to ensure the payment of balance consideration and possession was to be transferred to the petitioners upon receiving the balance consideration. It was pleaded that petitioners has paid an amount of Rs.20 lakhs to respondent as first part of payment towards the purchase of property. It is stated that the building plans were sanctioned by MCD on 21.05.1990, however, respondent could not obtain extension letter from DDA and persuaded petitioners to commence construction without waiting for extension letter. The petitioners accordingly commenced the construction in September, 1990. It is stated that the respondent turned dishonest and refused to execute the second part of agreement and he threatened the petitioners to cancel the agreement and forfeit the amount of Rs.20 lakhs if petitioners did not comply with whatever respondent was saying. It is stated that extra constructions were raised on the asking of respondent. The construction was completed in September, 1991 and form C & form D were filled on 18.09.1991 and 09.10.1991.
OMP (COMM) 7/2020 Page no. 7 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath
10. The petitioners' case before the arbitrator was that construction was completed before 08.09.1993 and respondent had applied for water and electricity connection also. The induction of P.K.Mathur and Pramod Dang was in terms of clause 22 of the agreement.
11. On the issue of limitation Ld. Arbitrator held that the initial arbitration proceedings were initiated vide notice of the respondent dt. 30.08.1992 and remained pending till 04.08.2011 and therefore, this period was to be excluded from the period of limitation. The challenge of petitioners to the notice dt.20.08.1992 was declined by Ld. Arbitrator on the ground that petitioners had admitted before the court of Sr. Sub Judge, Faridabad that the respondent had sent a letter dt.20.08.1992 requesting the petitioners for conceding the matter for arbitration. Also, the then arbitrator had noted that claimant had given notice dt.20.08.1992 to the arbitrator asking him to proceed with the matter. There was thus no requirement to prove the notice by producing the original or proving the service of the same upon the petitioners separately.
12. It needs to be considered that u/s.14 of Limitation Act the requirement of law for exclusion of period of any litigation pending in any court for the purposes of limitation says that such period during which proceedings of similar OMP (COMM) 7/2020 Page no. 8 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath nature are prosecuted before a wrong forum, is to be excluded. It is not the case of petitioners that the proceedings were not initiated before the then arbitrator and that they did not travel up to Hon'ble High Court of Punjab & Haryana finally coming to rest in 2011. In fact, the proceedings were attended by the petitioners and the award was also passed in favour of the petitioners. The petitioners themselves had approached the court of Sr. Sub Judge Faridabad for making the award dt.29.03.1994 Rule of Court. The proceedings from August, 1992 till 2011 were thus contested proceedings and hence irrespective of how they were started the proceedings having rightly or wrongly commenced on 24.08.1992 in view of the letter of the concerned Arbitrator (Damodar Sharma), who was named in the agreement itself, the period till which the petition continued in any forum will have to be excluded and has been rightly excluded by the Ld. Arbitrator. In so far as argument of Ld.Counsel regarding non-consideration of plea of petitioners regarding the relief being barred under article 59 r/w section 27 of Limitation Act is concerned, the period of limitation of three years would have been considered in the same manner and the respondent would have been entitled for exclusion of period of litigation before the arbitrator and other courts in the same manner as it was done by Ld. Arbitrator. Since it was categorically held by Ld. Arbitrator that the respondent was entitled for exclusion of specified period, he would have remained entitled for OMP (COMM) 7/2020 Page no. 9 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath exclusion of this period even for the purpose of Article 59 and section 27 of the Limitation Act.
13. A perusal of application under section 14-17 of Arbitration Act filed by the petitioner no.1 before the Sr. Sub Judge, Faridabad would show that the petitioner himself stated that vide letter dt.20.08.1992, the respondent had asked the arbitrator to enter the proceedings in terms of agreement and that the said arbitrator had issued notice on 24.08.1992 and both the parties had appeared before him on 05.09.1992. The ground of petitioners stating that period was wrongly excluded is therefore, not substantiable. Even if it is considered that the petitioners failed to prove on record the notices for appointment of arbitrator, the fact that the proceedings were initiated before the concerned arbitrator are admitted and it was the petitioners who got benefited in those proceedings. Thus it does not lie in the mouth of petitioners to say that since those proceedings were not initiated on the notice of respondent or such notice has not been proved or the notice was not as per the provisions of A & C Act, therefore, the entire proceedings should be considered as non-existent and respondent be denied benefit of the said period for the purposes of limitation.
14. The respondent has taken a ground that extension letter was given by DDA on 09.09.1991 and therefore, the OMP (COMM) 7/2020 Page no. 10 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath construction was to be completed by 08.09.1993. Ld. Arbitrator, however, has relied upon certified copy of RTI record submitted by the petitioners themselves, as per which document, claimant had submitted a copy of letter for completing construction up to 30.11.1990. Ld. Arbitrator had held that witness of respondent CW-1, who tendered this document in evidence claiming it to be extension letter given by DDA on 01.02.1989 was not cross-examined by petitioners. Ld. Arbitrator categorically held that petitioners relied upon another letter dt.09.09.1991, however, said letter was not proved and claimant had denied the said letter. The petitioners have not been able to point out any flaw in the conclusion of Ld. Arbitrator that the submission of petitioners that period of two years was to be counted from letter dt.09.09.1991 was imaginary as there was no such letter proved. The petitioners have not stated that this letter was ever proved before the Ld. Arbitrator. Holding as above, Ld. Arbitrator concluded that the construction was to be completed by 20.05.1992 in terms of clause 14 of the agreement as the time was essence of the contract the respondent was to be held entitled for the building.
15. The petitioners have heavily relied upon Form C & Form D Ex.RW1/4 & 5 respectively and notice of completion dt.31.12.1991. Ld. Arbitrator held that Form C was issued by municipal body for inspection of underground sanitary pipe OMP (COMM) 7/2020 Page no. 11 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath before covering the rafts for residential building. This form is submitted during and not after the construction and therefore, cannot be treated as document of completion. Form D is with respect to final inspection of sanitary, water supply for residential building. Ex.RW1/C which the petitioners claimed to be the completion certificate was as per Ld.Arbitrator not a document of completion as it only stated that "a part of work of erection of building had been completed". The said letter stated that building was completed in part and permission to occupy in part be granted. The petitioners have relied upon a document claiming it to be the completion certificate in appendix G, the same, however, was rejected by Ld. Arbitrator on the ground that document was in fact appendix F and it is only after the approval of appendix F that appendix G, which is the notice of completion had to be submitted. Ld. Arbitrator relying upon the building bylaws negated the argument of petitioners that there was no concept of part completion and part occupation and that the word part was to be ignored from the document dt.30.12.1991 and that the document should be considered as completion certificate.
16. The argument of petitioners that if there was no communication from MCD for two months after the notice of completion (Appendix F) same was to be considered as deemed completion. Ld. Arbitrator, however, relied upon the provisions of bylaws and facts to hold that the building was OMP (COMM) 7/2020 Page no. 12 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath sealed by MCD in November, 1991 and therefore, the question of any communication on document dt.30.12.1991 was not required as the sealing was continuing for the next two months.
17. Qua the arguments of petitioners that the construction was complete and building was habitable was rejected by Ld. Arbitrator placing reliance upon the report of local commissioner, who was appointed on 23.10.1992 by the Sub Judge, Delhi in suit no.945/1992, MCD also stated in its affidavit in Civil Writ Petition that no completion certificate was issued by competent authority qua this suit property. Subsequently Local Commissioner appointed by Hon'ble High Court in RFA 210 & 177 stated in his report dt. 27.07.2018 that the property was not in a habitable condition, it was sealed and demolished by MCD. Ld. Arbitrator relied upon the agreement as per which the petitioners had to obtain occupancy certificate/completion certificate from the competent authority to show that the building stood completed, however, no such document was placed on record. Ld. Counsel for the petitioners has not been able to satisfy as to how that local commissioner's report stating categorically that the construction was not complete and the premises was not habitable could be overlooked to conclude that construction in fact was complete as was being claimed by petitioners.
OMP (COMM) 7/2020 Page no. 13 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath
18. Ld. Arbitrator also rejected the plea of petitioners that petitioners had paid an amount of Rs.20 lakhs towards part purchase of property on the ground that there was no document showing payment of Rs.15 lakhs, which the petitioners claimed to have paid in cash. The amount of Rs.5 lakhs paid by cheque was mentioned in agreement dt. 16.03.1990. The petitioners thus, could not prove having paid the amount of Rs.20 lakhs towards part purchase of property in absence of documents as has been held by Ld. Arbitrator and the plea of purchase of entire property on payment of Rs.52 lakhs was also rejected on the ground that it was never mentioned by petitioners at any point of time in the 30 years long litigation between the parties.
19. It was pleaded by the petitioners that the respondent had coerced the petitioners into putting up of extra construction. It has been pleaded here that the respondent knew about the extra construction being raised and as he was following the process of construction constantly and therefore, the blame of extra construction and consequent sealing could not be laid entirely upon the petitioners. In this regard Ld. Arbitrator held that the respondent had filed a criminal complaint u/s.448, 420, 504 & 506 IPC apparently on the aspect of extra construction, however, the petitioners, who though filed several litigations did not choose to file any case against the respondent stating that he had coerced or OMP (COMM) 7/2020 Page no. 14 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath pressurized the petitioners into raising extra construction and therefore, this plea was not tenable in view of absence of reliable evidence.
20. It was argued by Ld.Counsel for the petitioners that third parties were allowed to occupy specified portions in the property pursuant to clause 22 of the agreement. Ld.Arbitrator, however, quoted the relevant clause, wherein the permission was to be taken from owner to be given at his discretion, which would have led petitioners induct any persons in the specified portions. There was no documentary evidence regarding respondent having given its consent except for a statement of petitioners' witness RW-1, who stated that the respondent had spoken with him telephonically, however, admitting that this telephonic conversation had no mention in any of the legal proceedings. The persons therefore, were rightly held to have occupied the respective portions without permission of respondent. Ld. Arbitrator also rightly held that the third parties were inducted when the relationship between parties were acrimonious and had led to filing of criminal complaint and thus question of respondent having given permission in this regard telephonically could not have arisen. It was the argument of Ld. Counsel for the petitioners that as per clause 22 the respondent would not have been bound to execute transfer paper in favour of such purchasers, however, this in OMP (COMM) 7/2020 Page no. 15 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath itself could not defeat the rights of petitioners under the agreement. The agreement categorically says that the owner had to allow the builder to book, allot, enter into agreement to sell etc. There cannot be any two interpretation of this sentence except for that the consent of owner was to be taken.
21. The main crux of arguments of Ld. Counsel for the petitioners before the court was that the construction was raised by the respondent and as per agreement in case of failure of petitioners in raising the construction within stipulated time frame the petitioners were to be considered entitled for recovery of construction cost and the respondent was to be entitled for possession of incomplete building. It was vehemently argued by Ld. Counsel for the petitioners that Ld. Arbitrator completely ignored the fact that petitioners had raised the construction which was almost complete since on the basis of this construction only respondent had sought part occupation of the premises, however, nothing was awarded by Ld.Arbitrator to the petitioners towards the construction cost.
Ld. Counsel for respondent on the other hand argued that petitioners at no point of time pleaded before Ld.Arbitrator that they were entitled for construction cost. No evidence was led by petitioners as to how much was the construction raised and what was the money spent on construction.
OMP (COMM) 7/2020 Page no. 16 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath
22. Ld. Counsel for petitioners has relied upon the judgments in cases titled as Gayatri Balasamy Vs. ISG Novasoft Technologies Ltd. Reported in 2025 INSC 605; Indian Oil Corporation Ltd. Through its Senior Manager Vs. M/s. Shree Ganesh Petroleum Rajgurunagar Through its Proprietor Mr.Laxman Dagdu Thite reported in 2022 Live Law (SC) 121; McDermott International Inc. vs. Burn Standard Col Ltd. & Ors. MANU/SC/.8177/2006; Associate Builders Vs. Delhi Development Authority, MANU/SC/1076/2014; Mahanagar Telephone Nigam Ltd. Vs. M/s. Haryana Telecom Ltd. In OMP/1113/2012, decided on 14.03.2019; M/s.Nandi Infratech Pvt. Ltd. Vs. M/s. R.K.Bararia & Anr., FAO (COMM) 49/2023 decided on 31.05.2024: PSA Sical Terminals Pvt. Ltd. Vs. The Board of Trustees of VP Chidambranar Port Trust, Tuticorin & Ors., MANU/SC/0485/2021; Canara Bank vs. State Trading Corporation of India Ltd. & Ors.MANU/DE/3798/2021; GVK Jaipur Expressway Private Ltd. Vs. National Highway Authority of India, OMP (COMM) 377/2020, decided on 29.10.2021 and HPCL-Mittal Energy Limited Vs. Artson Engineering Ltd., OMP (COMM) 95/2017 decided on 14.03.2018.
23. With reference to the judgment in Indian Oil Corporation Ltd. Through its Senior Manager Vs. M/s. Shree Ganesh Petroleum Rajgurunagar Through its Proprietor OMP (COMM) 7/2020 Page no. 17 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath Mr.Laxman Dagdu Thite reported in 2022 Live Law (SC) 12, Ld. Counsel for petitioners argued that the award was against the public policy as it did not consider the entitlement of petitioners under the agreement. In the cited judgment Hon'ble Court quoted from the judgment of Associate Builders as under:-
"43. In Associate Builders (supra), this Court held that an award could be said to be against the public policy of India in, inter alia, the following circumstances: -
(i) When an award is, on its face, in patent violation of a statutory provision.
(ii) When the Arbitrator/Arbitral Tribunal has failed to adopt a judicial approach in deciding the dispute.
(iii) When an award is in violation of the principles of natural justice.
(iv) When an award is unreasonable or perverse.
(v) When an award is patently illegal, which would include an award in patent contravention of any substantive law of India or in patent breach of the 1996 Act.
(vi) When an award is contrary to the interest of India, or against justice or morality, in the sense that it shocks the conscience of the Court."
..."44.An Arbitral Tribunal being a creature of contract, is bound to act in terms of the contract under which it is OMP (COMM) 7/2020 Page no. 18 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath constituted. An award can be said to be patently illegal where the Arbitral Tribunal has failed to act in terms of the contract or has ignored the specific terms of a contract."
24. Ld. Counsel for petitioners is relying upon the following portion of judgment in Mahanagar Telephone Nigam Ltd. Vs. M/s. Haryana Telecom Ltd. In OMP/1113/2012, decided on 14.03.2019:-
"34. The contention that MTNL has no locus to change the terms and conditions as it is only a sub-agent/purchasing entity, which is bound by the DOT‟s direction though appealing, is liable to be rejected as the purchase order constitutes the final contract. Ld. Arbitrator is bound, as per Section 28 of the Arbitration Act, to decide as per the terms of the contract. The change of the stipulation relating to sales tax in the purchase order, as sought by the supplier is, in fact, nothing but a plea to „re-write the contract‟ i.e., `re-write the purchase order‟ which is not permissible. The facts and circumstances i.e., the clauses in the NIT, clarification by DOT etc., could have had persuasive value for the board of MTNL to consider changing the terms of the purchase order, thereby resulting in a fresh agreement or novation. However, the said facts cannot be an appeal to „rewrite‟ the contract. The purchase order continues to be the binding contract between the parties. Once the purchase order, under which the supplies were made was clear, a mere hope by the OMP (COMM) 7/2020 Page no. 19 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath supplier that MTNL would clarify in its favour, could not form the basis of claims. The Ld. Arbitrator has therefore clearly erred in holding that the purchase order was not the concluded contract. The purchase order was the concluded contract between the parties. As per the terms and conditions of the NIT and the bid documents, LOI read with purchase order, HTL was well aware that insofar as Delhi region of supplies were to be made to MTNL were concerned, it would not be issued any C-Form as the Sales Tax Office had withdrawn the concessional benefit given to MTNL. Accordingly, the impugned award is liable to be set aside. The award is accordingly set aside."
25. Relying upon aforesaid judgments and other judgments cited hereinabove, Ld. Counsel for the petitioners argued that in case of petitioners failing to complete the construction within the duration of two years as per agreement the possession could have been handed over to respondent, however, as per clause 14 of agreement, petitioners would have been entitled for cost of construction. It was further argued that Ld. Arbitrator committed an error in taking judicial notice of rental in the market qua the suit property and for the purpose relying upon Nabhis Guide to House Tax without affording any opportunity to petitioners to examine the veracity and authenticity of the source of information, OMP (COMM) 7/2020 Page no. 20 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath while not considering such record available for computing the cost of construction.
Regarding the first argument, Ld. Arbitrator quoting from the agreement in para 7 of the award recorded at page no.6 that the agreement provided that in the event of respondent failing to complete the construction of Housing Complex in all respect within the stipulated time, the owner shall be within his right to put an end to the agreement and treat it as cancelled, null and void; the ownership of the land and incomplete construction would vest with the claimant and respondent would be entitled to cost of incomplete construction.
The relevant clause is clause 14 of the agreement (at page 16 of the statement of the documents filed alongwith statement of claim filed by the respondent). The same is being reproduced hereunder:
"14. That, the time being the essence of this agreement, the builders bind themselves to construct the entire Housing Complex duly approved with completion certificate procured from the concerned authorities, within a period of 24 months from the date of the Extension letter is issued by the DDA/permission to commence construction work. The period of 24 months shall count from such a date.
I) That in the event of builders failing to complete the construction of the Housing Complex within the said stipulated period for whatsoever reasons, the owner shall be OMP (COMM) 7/2020 Page no. 21 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath within his rights to treat the agreement having been vitiated/cancelled/null and void. And consequently, the ownership of land as well as incomplete building shall rest with the owner only. However, the builder may claim the construction cost of the incomplete building, the valuation as may be decided by the Hon'ble Arbitrator.
26. The clause thus says that the builder would have been entitled for cost of construction of incomplete building had it claimed the same, the word having been used 'may claim construction cost of incomplete building'. Admittedly, the petitioners at no point of time applied for cost of construction before the arbitrator. No evidence was led by the petitioners to prove the level and cost of construction. It was argued by Ld. Counsel for petitioners that Ld. Arbitrator could have made an assessment of cost as the assessment of damages was made relying upon a book. It needs to be understood that assessing damages/occupational charges/rent is easier than assessing the cost of construction for which the petitioners were supposed to lead positive evidence. The petitioners were supposed to prove before the arbitrator the level of construction; the cost of material used etc. Thus in view of petitioners having not claimed the cost of construction as per agreement and having not led any evidence in proof of cost of construction, no error was committed by Ld. Arbitrator in not granting the cost of construction to the petitioners. The OMP (COMM) 7/2020 Page no. 22 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath judgments relied upon by Ld. Counsel for the petitioners do not help the petitioners as most of them were regarding interpretation of clause of agreement/contracts. In the instant matter the petitioners have not been able to prove any diversion from the contract in not granting the cost of construction to the petitioners.
27. Qua the second part of argument it needs to be noted that respondent had specifically pleaded before Ld. Arbitrator that he was entitled for damages and an issue was framed as to whether the claimant was entitled to any monetary relief in addition to other reliefs and if so at what rate of interest and for which period and from whom. Petitioner apparently did not set up a set off or counter-claim asking for cost of construction from respondent. Since a specific issue was framed regarding entitlement of respondent for the monetary reliefs, the arbitrator was obligated to pronounce a finding on the same. It is otherwise to be noted that deciding rental income/damages on account of occupation/non-occupation is an easier process, the procedure for which has been laid down by courts in several judgments. Per contra, the petitioner not only did not plead that it was entitled for cost of construction; also it did not lead any evidence to show how much construction was raised and what amount of money was spent by the petitioner on such construction. Regarding the assessment of quantum of damages respondent had pleaded OMP (COMM) 7/2020 Page no. 23 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath specified damages of Rs.2,50,000,00/-. The calculation was also given as rental value of sanctioned area of 7396.67 sq.feet w.e.f 03.09.1992 to 27.02.2018. The petitioners thus from the issue framed and the specific plea taken by respondent, was aware about the claim of the petitioners and was entitled to rebut this claim by giving its own calculation/computation of damages. Ld. Arbitrator having not accepted the calculation given by respondent and having assessed the damages at a lesser rate cannot be said to have faulted in awarding stated damages.
In so far as awarding outstanding dues of public authority till the date of handing over of peaceful possession of suit plot is concerned, Ld.Counsel for petitioners argued that on one part the respondent sought declaration of agreement as null and void on the other hand, he sought the above dues in terms of agreement. The grant of relief of possession was very well contained in the agreement and as such there are no contradictory stands taken by the respondent. Nonetheless, giving effect to part of agreement viz payment of dues even after the termination of agreement is an accepted norms viz in cases of landlord tenant dispute the tenant is held liable for payment of rent/mesne profit and the bills of facilities even after the termination of lease agreement. There is therefore, no illegality in the order of Ld. Tribunal in having granted the same to the respondent.
OMP (COMM) 7/2020 Page no. 24 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath Ld. Counsel for petitioners has argued that respondent had filed application under Order 2 Rule 2 CPC in Civil Suit original 532/2013 stating that a separate and subsequent suit for damages will be filed, therefore, respondent was precluded from pleading the damages in the instant matter. Admittedly, in the suit the plaintiff had raised certain pleas, however, the suit was dismissed in view of provision of arbitration clause in the agreement. Later, the Hon'ble High Court in RFA granted permission to the respondent to amend its claim before Ld. Arbitrator, which amendment was also allowed. Petitioner having chosen to file the damages in the same claim petition cannot be said to have done anything against Order 2 Rule 2 CPC. In fact, the respondent after the matter was referred to arbitrator had a right to file fresh claim petition before the arbitrator, however, since Hon'ble High Court stated that suit be considered as claim and allowed for necessary amendments to be carried, the suit itself was considered as claim. The amendments having been allowed by the Ld. Arbitrator do not seem barred by any law.
28. Rest of the arguments raised by Ld. Counsel for petitioners like awarding of lawyers fee, the finding of Hon'ble Supreme Court regarding the arbitrator to have independent opinion and not to get influenced by order of Hon'ble High Court etc. are not such which need to be interfered with u/s. 34 of Arbitration & Conciliation Act. OMP (COMM) 7/2020 Page no. 25 of 33 M/S. Chopra Land Developers and Ors.
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29. Ld. Counsel for petitioners has relied upon the judgment in PSA Sical Terminals Pvt. Ltd. Vs. The Board of Trustees of VP Chidambranar Port Trust, Tuticorin & Ors., MANU/SC/0485/2021, wherein it was held as under:-
"42. It will thus appear to be a more than settled legal position, that in an application under Section 34, the court is not expected to act as an appellate court and reappreciate the evidence. The scope of interference would be limited to grounds provided under Section 34 of the Arbitration Act. The interference would be so warranted when the award is in violation of "public policy of India", which has been held to mean "the fundamental policy of Indian law". A judicial intervention on account of interfering on the merits of the award would not be permissible. However, the principles of natural justice as contained in Section 18 and 34(2)(a)(iii) of the Arbitration Act would continue to be the grounds of challenge of an award. 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". It is only such arbitral awards that shock the conscience of the court, that can be set aside on the said ground. An award would be set aside on the ground of patent illegality appearing on the face of the award and as such, which goes to the roots of the matter. However, an illegality with regard to a mere erroneous application of law would not be a ground for interference. Equally, reappreciation of evidence would not be permissible on the ground of patent illegality appearing on the face of the award."
30. Ld.Counsel for respondent on the other hand has relied upon the judgment in case titled as Kamal Karmakar Vs. S OMP (COMM) 7/2020 Page no. 26 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath Chand And Company Limited & Ors. Decided on 25.09.2018, wherein it has been held as under:-
"The above being a matter of appreciation of evidence led before the Arbitral Tribunal and inference drawn by the Arbitral Tribunal therefrom, this Court cannot sit in appeal to re-appreciate the same. The Supreme Court in Associate Builders v. DDA (2015) 3 SCC 49, while considering the powers of this Court under Section 34 of the Act has held as under:-
"33. It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award."
.."10. In M/s Sudarsan Trading Co. vs. Government of Kerala & Anr. (1989) 2 SCC 38, Supreme Court while holding the Arbitrator to be the sole judge of the evidence led before it, has held as under:
"Furthermore, in any event, reasonableness of the reasons given by the arbitrator, cannot be challenged. Appraisement of evidence by the arbitrator is never a matter which the court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The arbitrator is the sole Judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator."
31. The case of the petitioners does not fall in any of the criteria laid down by the Hon'ble Courts for interfering u/s. 34 Arbitration & Conciliation Act on the grounds considered hereinabove pertaining to the agreement. Ld.Tribunal has considered the agreement and has appreciated the evidence in OMP (COMM) 7/2020 Page no. 27 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath arriving at conclusion, which cannot be revisited by this court under the provisions of section 34 of Arbitration & Conciliation Act. It cannot be lost sight of that the petitioners not only did not conclude the construction within the period agreed between the parties, it also violated the agreement by letting third parties in without the consent of respondent. The respondent was forced to get into litigation with those third parties and also with MCD on account of violation of agreement and construction guidelines by the petitioners. Also the petitioners did not pray for cost of construction to be awarded as was mandated in the agreement. The award does not suffer from any infirmity on the aforementioned grounds and cannot be interfered with.
32. The legal issue regarding impleadment of petitioner no.2 Sh. O.P.Chopra.
It was argued by Ld. Counsel for petitioners that petitioner no.2 Sh.O.P. Chopra was Managing Director of the petitioner no.1 company. He had no individual liability under the law. Ld. Arbitrator in this regard referred to section 560 of the Companies Act. The proviso to section stated that the liability of every director, manager of other officer, who was exercising any power of management and of every member of the company, shall continue and may be enforced as if the company has not been dissolved.
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33. A company under law can be dissolved and wound up which is different from it being struck off by the MCA. Whenever the process of dissolution is undertaken the authorities take into consideration the assets and liabilities of the company and take care of debtors and creditor of such company. Striking off of the name of company on the other hand is procedural things which happens when the company does not do any business or is not in operation. In such a situation the assets and liabilities of the company are not assessed and addressed by any legal procedure. The company continues to exist and is entitled for claiming its dues from debtors and paying its debts to the creditors.
34. Hon'ble Delhi High Court in M/s. A.B Creations & Anr. Vs. M/s. Bhan Textiles Pvt. Ltd. C.R.P 151/2023, CM Appl. 30530/2023 & CM APPL. 30531/2023 held as under:-
"12. What, therefore, follows on a careful reading of the words in Section 250 of the Act by invoking the golden rule of construction that the words in the statute should be interpreted in their ordinary, normal and grammatical meaning, is that even if the name of a company is struck off from the register, it remains operational in so far as it can pursue legal remedies for realisation of the dues of the said company against its debtors, which have either crystalised or remain uncrystallised, arising from any liability or obligation of its debtors to the company, but even the creditors can pursue legal remedies against the said company for the payment and discharge of its liabilities or obligations arising from any contract or statutory implications."
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35. The judgment therefore, says that a struck off company remains alive for all practical purposes. The directors of such company are liable for everything for which they would have remained liable had the company not been struck off. With regards to the companies, which are not dissolved, the settled law is that the liability of its directors is limited. The directors can be held liable for debts of the company only if they had given a personal guarantee for repayment of such loan or have committed any fraud. Ld. Arbitrator has not given any finding on whether there was evidence on record to suggest that petitioner no.2 herein had given any personal guarantee for completion of the contract in any manner or to pay any dues.
36. No allegations of fraud have either been alleged against petitioner no.2. Ld. Arbitrator has merely held that because petitioner no.2 was representing petitioner no.1 company, therefore, he shall be liable for payment of dues as the company stood struck off, which finding is contrary to law. (Reliance placed upon judgments in Mukesh Hans vs. Smt. Uma Bhasin & Ors., 2010 SCC Online Del. 2776; Gurmeet Satwant Singh & Ors. Vs. Meera Gupta & Anr., CM Appeal No. 36566/2018 decided on 02.08.2019; Jaspal Chopra Vs. M/s. Sidhant Polyplast Ltd. & Ors.; Sanjiv Kumar Mittal vs. Deputy Commissioner (TRC), CGST Commissionerate Delhi OMP (COMM) 7/2020 Page no. 30 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath South & Ors.; Hrushikesh Panda Vs. Indramani Swain and Ors.; A.B.Creations and Another Vs. Bhan Textiles Private Limited).
37. The award therefore, suffers from infirmity in as much as it was passed against petitioner no.2 without any legal basis.
38. Hon'ble Supreme Court in Gayatri Balasamy Vs. ISG Novasoft Technologies Ltd. Reported in 2025 INSC 605 held as under:-
"A core principium of arbitration, an Alternative Dispute Resolution37mechanism, is to provide a quicker and cost-effective alternative to courtroom litigation. While this suggests minimal judicial interference, the role of domestic courts remains crucial, as they function in a supportive capacity to facilitate and expedite the resolution of disputes. Therefore, it follows that judicial intervention is legitimate and necessary when it furthers the ends of justice, including the resolution of disputes.
To deny courts the authority to modify an award
--particularly when such a denial would impose significant hardships, escalate costs, and lead to unnecessary delays-- would defeat the raison d'êtreof arbitration. This concern is particularly pronounced in India, where applications under OMP (COMM) 7/2020 Page no. 31 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath Section 34 and appeals under Section 37 often take years to resolve.
Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration,adding to the previous four stages: the initial arbitration, Section 34(setting aside proceedings), Section 37(appeal proceedings), and Article 136(SLP proceedings). In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be arrived at by the court. This would render the arbitration process more cumbersome than even traditional litigation.
Equally, Section 34 limits recourse to courts to an application for setting aside the award. However, Section 34 does not restrict the range of reliefs that the court can grant,while remaining within the contours of the statute. A different relief can be fashioned as long as it does not violate the guardrails of the power provided under Section 34.In other words, the power cannot contradict the essence or language of Section 34. The court would not exercise appellate power, as envisaged by Order XLI of the Code of Civil Procedure, 1908.
We are of the opinion that modification represents a more limited, nuanced power in comparison to the annulment of an award, as the latter entails a more severe consequence OMP (COMM) 7/2020 Page no. 32 of 33 M/S. Chopra Land Developers and Ors.
Vs. Sh.Jatinder Nath of the award being voided in toto. Read in this manner, the limited and restricted power of severing an award implies a power of the court to vary or modify the award. It will be wrong to argue that silence in the 1996 Act, as projected, should be read as a complete prohibition.
We are thus of the opinion that the Section 34 court can apply the doctrine of severability and modify a portion of the award while retaining the rest. This is subject to parts of the award being separable, legally and practically, as stipulated in Part IIof our Analysis.
39. The court therefore, is empowered to modify an award in a limited manner. In the instant matter the part of award which is intended to be struck off is qua the independent liability of petitioner no.2, which has been incorrectly fixed in the award. The above award therefore, to the extent it holds petitioner no.2 liable for the liabilities of petitioner no.1 in terms of agreement, is set aside.
Petition accordingly stands disposed off. File be consigned to record room.
Digitally signed Announced in the open court by anuradha
anuradha shukla
on 21.05.2025 shukla Date:
2025.05.21
16:51:03 +0530
(Anuradha Shukla)
District Judge
(Commercial Court-02)
South Distt., Saket, New Delhi
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