Bangalore District Court
Sudharshan Umeshchandra Joshi vs M/S. Purvankara Projects Limited on 29 June, 2021
1
Com.A.S.115/2015
IN THE COURT OF LXXXVII ADDL.CITY CIVIL & SESSIONS
JUDGE, (EXCLUSIVE DEDICATED COMMERCIAL COURT)
AT BENGALURU (CCH.88)
THIS THE 29th DAY OF JUNE 2021
PRESENT:
SRI.CHANDRASHEKHAR U., B.Sc., LL.M.,
LXXXVII ADDL.CITY CIVIL & SESSIONS JUDGE,
BENGALURU.
Com.A.S.No.115/2015
Plaintiff: Sudharshan Umeshchandra Joshi,
S/o Late Umeshchandra Madav Joshi,
Aged about 72 years,
Residing at: No.107,
'Atharva', Hindu Colony,
Dadar,
Mumbai - 400014.
(Reptd by Adv.- Mr.UP)
AND
Defendants : 1. M/s. Purvankara Projects Limited,
a company incorporated under
Companies Act, 1956,
having its registered office at
No.130/1, Ulsoor Road,
Bangalore - 560 042,
Represented by its Sr. Vice President -
Land Procurement -
Mr. H.G. Nagananda.
(Reptd by Adv. - Mr. SN )
2
Com.A.S.115/2015
AND
2. Hon'ble Shri Justice Shivaraj
V.Patil,
Former Judge,
Supreme Court of India,
"Sparsh" , No.254, 18th Cross,
Sadashivanagar,
Bangalore 560 080.
(Absent )
Date of Institution of the 09.07.2015
suit
Nature of the suit (suit on
pronote, suit for
declaration & Possession, Arbitration Suit
Suit for injunction etc.)
Date of commencement of -
recording of evidence
Date on which judgment
was pronounced 29.06.2021
Total Duration Year/s Month/s Day/s
05 11 20
(CHANDRASHEKHAR U),
LXXXVII Addl.City Civil & Sessions Judge,
(Exclusive dedicated Commercial Court)
Bengaluru.
JUDGMENT
The Appellant/plaintiff has filed the above suit under Section 34 of the Arbitration& Conciliation Act, 1996, for setting aside the Arbitral Award dated 10.4.2015 r/w clarification order 3 Com.A.S.115/2015 dated 30.6.2015, arising out of CMP No.167/2010 on the file of the 2nd defendant and to dismiss the claim petition.
2. The brief facts of the case of the Appellant/plaintiff are as follows:
The plaintiff is the owner of the property, bearing Survey No.11/1 of Kaikondanahalli village, Varthur Hobli, Bangalore East Taluk to an extent of 2 Acre 1 Gunta being agricultural land. The plaintiff entered into an agreement of sale, dated 10.5.2001 with the 1st defendant herein to sell 83,099 Sq.ft of the area out of the total extent of 2 Acres 1 Gunta of land for a sale consideration of Rs.1,57,88,810/- at the rate of Rs.190/-
per Sq.ft subject to actual measurement to be determined in a joint survey. At the time of execution of agreement, dated 10.5.2001, the 1st defendant paid Rs.2,00,000/- as advance and agreed to pay the balance of consideration of Rs.50,00,000/- within 15 days, after obtaining NOC under Section 269 of Income Tax Act, 1961 and change of land use from agricultural to residential purpose, which ever was later and Rs.1,05,88,810/- to be paid on monthly installments at the rate of Rs.25,00,000/- each commencing from the date of payment set out above. At the time of entering into agreement, there was a litigation pending between the plaintiff and his family 4 Com.A.S.115/2015 members and the schedule property was also one among the properties sought for partition by the family members of plaintiff. In fact, land in Survey No.14 and 10/1 of Kaikondanahalli Village is belonging to the wife of the plaintiff and adjoining to the schedule property was also agreed to be sold in favour of the 1st defendant herein, for which a separate agreement was entered into between the parties. The plaintiff had intimated orally to the first defendant about the ongoing litigation and the said fact was not culled out in the agreement, dated 10.5.2001 as the plaintiff was hopeful of settling the matter amicably with his family members. The property belonging to the wife of the plaintiff was conveyed in favour of the 1st defendant herein and since the litigation among the family members of the plaintiff was not settled, a supplementary agreement, dated 5.7.2003 was entered into between the plaintiff and the 1st defendant under which the plaintiff had categorically stated that the schedule property is under litigation and a suit for partition is pending before the competent court of law at Bombay and that the execution of the sale deed shall be subject to settlement of the dispute among the family members. The 1 st defendant entered into a supplementary agreement on 5.7.2003, on the basis of a 5 Com.A.S.115/2015 calculated risk and the said agreement clearly amounts to a contingent contract stipulating the execution of the sale deed by the plaintiff in favour of the 1st defendant on the happening of the settlement among the family members of the plaintiff. Further, the land was also required to be converted from agriculture to non-agriculture residential purpose, so as to enable 1st defendant being a company incorporated under the Companies Act, 1956 was not eligible to purchase an agriculture land. Since, there was no settlement of the dispute among the family members of the plaintiff and the plaintiff was unable to execute a sale deed in favour of the 1 st defendant on account of the prohibitory orders passed by the Court before which the suit for partition was pending. Furthermore, the Khatha in respect of the schedule property could not be obtained in the name of the plaintiff as the conversion of the land from agricultural to non-agricultural purpose was revoked, and the challenge made to such a revocation of the conversion was dismissed by all the Courts including the Apex Court. The property remained to be an agricultural property and there was a bar for the 1st defendant to purchase the property, since the 1st defendant is a company incorporated under the Companies Act, 1956. With all these impediments, the agreement dated 6 Com.A.S.115/2015 10.5.2001 and the supplementary agreement dated 5.7.2003 became impossible to be performed. However, the 1 st defendant herein invoked the Arbitration clause found in agreement, dated 10.5.2001 and raised a dispute and got appointed Arbitrator by filing CMP No.167/2010 on the file of the Hon'ble High Court of Karnataka. Accordingly, 2 nd defendant was appointed as sole Arbitrator to adjudicate the disputes arising out of the agreement of sale dated 10.5.2001. The 2nd defendant, Hon'ble Sole Arbitrator conducted the arbitral proceedings in respect of the reliefs relating to direction to perform his obligations under the agreement of sale, dated 105.2001 and supplementary agreement of sale dated 5.7.2003 and executed a sale deed in respect of the schedule property in favour the claimant. Further, to direct the respondent to hand over the vacant physical possession of the schedule property and also directed to deliver all the original documents and to pay a sum of Rs.29,88,900/- in terms of item
(a) to (c) of para No.46 with interest etc. Alternatively, and without prejudice in the event of the Tribunal coming to a conclusion that the relief of the specific performance of agreement of sale dated 10.5.2001 and the supplemental agreement dated 5.7.2003 cannot be grated, then the Tribunal 7 Com.A.S.115/2015 may be pleased to direct the respondent to make payment of a sum of Rs.10,00,00,000/- as a damages to the claimant as and by way of damages for the breach of the agreement of sale dated 10.5.2003 and the supplement agreement dated 5.7.2003.
3. The plaintiff/respondent entered appearance before the ASrbitrator and filed his written statement inter-alia contending that the agreement dated 10.5.2001 read with supplementary agreement dated 5.7.2003 constituted a contingent contract the performance of which has become impossible on account of the ongoing litigations among the family members of the plaintiff which was not settled. Further, it was contended that the first defendant had only taken a calculated risk in order to deprive the plaintiff of his valuable rights in respect of the schedule property and the plaintiff would be at a great disadvantage on account of the enhancement in the market value of the schedule property situated on the outskirts of Bangalore city and that the specific performance agreement dated 10.5.2001 and 5.7.2003 cannot be ordered. It was also contended that the damages sought by the 1st defendant is exorbitant in nature and the defendant is not at all pay any 8 Com.A.S.115/2015 damages as the non-performance of contract on beyond his control. The Hon'ble Arbitrator based upon the pleadings framed the issues and the 1st defendant got examined two witnesses as CW1 and 2 and Exhibit C1 to C49 were got marked. The plaintiff got himself examined RW1 and Ex.R1 to R7 were marked in his evidence. In the meanwhile, an application was filed by the parties under Section 30 of the Act, to mediate a negotiated settlement between the parties and the Hon'ble Sole Arbitrator passed an order to settle the matter directing the 1st defendant herein to pay a sum of Rs.13,60,00,000/- towards the sale consideration and the plaintiff to get settled the disputes pending among his family members, has to clear the schedule property from litigation. However, the settlement did not take place for various reasons. Accordingly, learned Sole Arbitrator heard the arguments and passed the Arbitral award on 10.4.2015 and clarified order on 30.6.2015.
4. The plaintiff/respondent has challenged the above Award on the grounds that the impugned Award is contrary to the law, evidence and material placed on record and as such the same is liable to be set aside. The impugned Award is patently erroneous, highly Arbitrary, capricious and opposed to 9 Com.A.S.115/2015 the public policy rendering the same to be set aside. The Hon'ble Sole Arbitrator ought to have seen that the subject matter of dispute was not capable of settlement by Arbitration under the law for the time being in force, since the schedule property was under litigation, having been included in a suit for partition among the family members of the plaintiff herein and that there was a prohibitory order against alienating the schedule property was in force as on the date of the very initiation of the Arbitral proceedings as well as on the date of the award. The schedule property if held to be a family property of the plaintiff on a finding that the plaintiff having purchased it from the joint family funds, the agreement of sale dated 10.5.2001 and supplemental agreement dated 5.7.2003 would have been a nullity and no dispute could be entertained arising out of such agreements. The Arbitral Award is in conflict with the public policy of India for the reason that the impugned award is contrary to Section 31 and 32 of Indian Contract Act, which envisages that a contingent contract is unenforceable and would be void, if the happening a specific event does not occur. ( Section 31 and 32 of the Indian Contract Act, 1872).
10
Com.A.S.115/2015
5. The impugned Award is contrary to Section 79 A & B of the Karnataka Land Reforms Act, which envisages an agricultural property could be purchased by only an agriculturist by profession, whose income from other sources does not exceed Rs.2,00,000/- per annum. The 1 st defendant being a company incorporated under Companies Act is ineligible to purchase the schedule property being an agricultural property is totally perverse. The Hon'ble Sole Arbitrator grossly erred in holding that the agreement of sale dated 10.5.2001 r/w Supplementary agreement dated 5.7.2003 are capable of being enforced under law inspite of the fact that there are litigations pending and as such the award is untenable in the eye of law. The Hon'ble Arbitrator grossly erred in holding that the schedule property is the absolute property of the plaintiff inspite of the fact that the parties to the Arbitration had entered into the Supplementary agreement dated 5.7.2013 acknowledging the pending litigations and that the sale deed could have been executed in respect of the schedule property only in the event of the plaintiff succeeding to get his share in the schedule property arose as his absolute property. Therefore, impugned Award passed is totally erroneous an unsustainable in the eye of law. The Hon'ble Sole 11 Com.A.S.115/2015 Arbitrator grossly erred in directing the 1st defendant to pay a sum of Rs.4,76,20,000/- on the basis of the market value fixed by the Government of Karnataka, under the Notification bearing No.CVC24/2013-14, dated 7.8.2003 at the rate of Rs.2,50,000/- per acre, when it was crystal clear that the Notification bearing No.CVC01/06/2014-15, dated 27.10.2014 was applicable as on the date of Award, wherein the market value for the agricultural property was fixed at the rate of Rs.6,00,00,000/- per acre. The Hon'ble Sole Arbitrator grossly erred in treating the agreement to be for the sale of the entire property to an extent of 2 acres 1 gunta without verifying the actual measurement agreed to be conveyed and as such the impugned award is contrary to the terms of the agreement. The Hon'ble Sole Arbitrator grossly erred in holding that the property to be conveyed as an agricultural property and as such conveyance could be registered in the name of any nominee of the 1 st defendant, when it was crystal clear from the agreement of sale as well as Supplemental agreement that the intention of the parties to convey the schedule property as a converted land the measurement of which was shown in metric units. In these circumstances, the finding of the Sole Arbitrator that the market value of the property as applied for agricultural property 12 Com.A.S.115/2015 to be applied for the schedule property is erroneous and is without any rhyme or reason. If at all, market value in respect of the property is to be taken, it should be at the rate of Rs.3,750/- per Sq.ft on the total extent of 82,976 Sq.ft as per the supplemental agreement dated 5.7.2003. Further, it is also pertinent to mention that the Hon'ble Sole Arbitrator had in fact directed the 1st defendant to pay Rs.13,60,00,000/- to the plaintiff under a negotiated settlement taking into the market value of the property and as such the direction embodied in the impugned award to pay a meager amount of Rs.4,76,20,000/- to the plaintiff is incorrect. The impugned Award is otherwise opposed to the provisions of Specific Reliefs Act, Indian Contract Act and therefore, it is opposed to public policy of India. The Hon'ble Arbitrator having come to the conclusion that there are litigations pending in respect of the schedule property and passing the Award, grossly erred in passing the award for specific performance, on flimsy grounds. The sole Arbitrator grossly erred in directing the plaintiff to co-operate with the 1st defendant for settling the disputes, when it is crystal clear that the verdict in respect of such dispute is awaited at the hands of the competent court of law and that the plaintiff has no role to play in such verdicts. Such a 13 Com.A.S.115/2015 direction issued by the Hon'ble Arbitrator is beyond the scope of submission to the Arbitration and as such the impugned award is liable to be set aside. The Hon'ble Sole Arbitrator also erred in virtually clarifying the award dated 10.4.2015 under order dated 30.6.2015 to the effect that there is no direction in award to pay any amount over and above the amount of Rs.4,43,65,000/-. The said observation is unwarranted in view of the embargo placed under Section 33(1)(b) of the Act. The impugned Award is contrary to various terms and conditions of the agreement and passed without considering various legal principles. Accordingly, the plaintiff has prayed for setting aside the ex-parte award.
6. The 1st defendant after appearance has filed objection statement stating that application is not maintainable and liable to be dismissed in limine as the same would tantamount to an abuse of process of Court. It is trite that an Arbitral Award can be set aside only on the basis of the grounds laid down in Section 34(2) of the Arbitration & Conciliation Act, 1996. The Section 34 is to ensure that there is minimal judicial intervention in the award passed by the Arbitrator, so as to promote speedy adjudication of disputes, which is the object of the Act. The plaintiff has failed to make out any grounds, so as 14 Com.A.S.115/2015 to warrant the interference by this Court under the Act. The plaintiff has failed to comply with the Karnataka Arbitration(Procedure before the Court) Rules, 2001. The sole Arbitrator which specifies that an application filed under Section 34 of the Act shall be treated as plaint and the CPC, 1908 shall be followed as far as applicable. Order VII Rule 3 of the CPC, mandates that the plaint shall contain a schedule of the property in dispute. However, the plaint does not disclose the same and therefore, the plaint is liable to be rejected. The plaintiff has misrepresented and concealed material facts, which are germane for the purpose of determining the present lis between the parties to make unlawful gains. The plaintiff has not approached the Court with clean hands. The whatever the points raised by the plaintiff have been raised by the learned Arbitrator and has answered after obtaining the same by giving opportunities to parties to produce the documents and give evidence. The plaintiff has failed to show the misconduct on the part of the Arbitrator and failed to establish that the dispute is beyond the scope of the Arbitrator. There is no violation of public policy of India. The defendant has further stated that it is a public limited company, incorporated under the provisions of the Companies Act, 1956. The defendant is in the business of 15 Com.A.S.115/2015 Real Estate Development and has over a period of time established valuable reputation as regards its business activities and is well known for its quality of construction and business ethics. The defendant No.1 has been conferred several awards honouring to its commitment to the Real Estate Business and is a CRISIL rated organization. The plaintiff had approached the defendant during the period of late 2000 and early in the year 2001 with a proposal to sell the property bearing Sy. No. 11/1 and measuring 82,976 Sq. ft situated at Kaikondanahalli Village, Varthur Hobli. After negotiations, they entered into the sale agreement on 10th May 2005 and the agreement itself stipulates the total sale price was fixed at Rs.1,57,88,810/- and it was also agreed that plaintiff shall get clear title over schedule property so as to convey the same to the defendant. On the basis of the said agreement Rs.2,00,000/- was paid to the plaintiff and it was agreed to pay balance amount of Rs.50,00,000/- on the particular date and the remaining amount as per installments. Therefore, it was revealed that a suit for partition was pending in O.S. No.4579/1996 on the file of Hon'ble High Court of judicature, Bombay, in which, the schedule property was also a subject matter. Immediately, defendant No.1 contacted the plaintiff 16 Com.A.S.115/2015 and the plaintiff has stated that he will get the clear title of the property after setting aside the case pending before the Court. Accordingly, 2nd supplemental agreement came to be executed on 5th July 2003 to an extent of 82,976 sq.ft of land in the same survey number and as per clause No.3.5, the plaintiff categorically accepted the same that there is no pending litigation other than OS 4579/2003. As per clause No.7, in case of breach the party aggrieved can seek to enforce specific performance and also recover the costs, expenses and losses incurred. Learned Arbitrator by considering all these aspects, has passed impugned Award and clarified order as stated above and after 2nd agreement, 1st defendant has paid Rs.32,55,000/- on the assurance that the plaintiff would get clearance of all the pending litigations. The additional claim was not compensated either in the agreement of sale or supplemental agreement. After payment of Rs.32,55,000/- the plaintiff sought for further release of amount of Rs.1,44,57,810/- in favour of the nominees of the plaintiff to settle the case. Defendant No.1 kept ready 17 Demand Drafts in escrow with the respondent's Advocate Divakar and Company and it was agreed that the amounts in escrow would be released once the matter is settled and balance consideration would be paid on 17 Com.A.S.115/2015 the date of registration. Subsequently, on 15.11.2008, the Advocate for the plaintiff herein, M/s Divakar and company wrote to the Advocate of defendant No.1 stating that the property is yet to be released from the Court Receiver and they are unable to state as to when the schedule property would be released and hence the demand drafts were returned to defendant No.1. But, the defendant has kept ready all the demand drafts and he was always ready and willing to perform his part of contract. However, the plaintiff has not got demand drafts cleared though he started insisting to pay excess amount. Since the, plaintiff has failed to perform his part of the contractual obligations, an application A.A No. 25044/2010 was filed, wherein, an exparte order of temporary injunction was obtained against the plaintiff. Thereafter, the 1st defendant invoked the Arbitration clause mentioned in the agreement of sale, dated 10.5.2015 and supplemental agreement dated 5.7.2003, by filing CMP 167/2010 before the Hon'ble High Court of Karnataka under Section 11 of the Act, for appointment of Arbitrator on behalf of the plaintiff. Accordingly, sole Arbitrator was appointed and after service of notice and giving sufficient opportunity to the parties, learned Arbitrator allowed the claim of the defendant No.1 directing the plaintiff to 18 Com.A.S.115/2015 execute the sale deed. The plaintiff has also filed an application for permission to file additional written statement. It was partly allowed by learned Arbitrator. It is amply clear that the impugned award is a fair, reasonable, objective and well-reasoned award and there is no irregularity in the award passed. Since, the 1st defendant sought for certain clarification and clarification was ordered by learned Arbitrator. The 1 st defendant has admitted the allegation made in the para No.1 & 2 and 3.1, 3.2 of the claim. However, he has denied para No.III and stated that other paragraphs are borne out by the record. It is also admitted about mediation attempt made by learned sole Arbitrator for mediation and settlement of dispute by paying Rs.34,50,00,000/- by the 1 st defendant subject to the condition that the plaintiff shall get clearance of all the pending claims. He has stated about para No.III, X, IV, V has borne out from the records. He denied para Nos. 6, 9 to 12 and 14 of the plaint. The defendant has denied other allegations made against him by the plaintiff and the learned Arbitrator regarding contention raised in the plaint. According to him, the award is perfectly in consonance with the public policy of India and there is nothing that it is against the interest of India, morality or that it is patently illegal. Since, the impugned Award came to be 19 Com.A.S.115/2015 passed after hearing a full-fledged trail, by following law relating to Arbitration and Indian Contract Act, and therefore, there is nothing to interfere with the impugned Award. Accordingly, it has prayed for dismissal of the suit.
7. Heard, learned counsel for the 1 st defendant. Though the case was posted for arguments on behalf of the plaintiff, learned counsel for plaintiff did not appear. Accordingly, the argument was taken as not addressed. However, he was permitted to furnish written arguments within 24.5.2021 in the counter. However, he has not filed any written arguments till today.
8. Now, the points that arise for my consideration are:-
1. Whether the plaintiff has shown to the Court that the Award, dated 10.4.2015 r/w clarification order dated 30.6.2015, arising out of CMP No.167/2010 on the file of the 2 nd defendant passed by learned Arbitrator is against public policy and is liable to be set aside under Section 34 of Arbitration and Conciliation Act, 1996?
2. What Order ?
9. My findings on the above Points are as under:
Point No.1 :- In the Affirmative.20
Com.A.S.115/2015 Point No.2 :- As per the final Order for the following reasons.
REASONS
10. Point No.1 :- Though, initially, the case was posted for judgment by taking arguments on behalf of the plaintiff as not addressed, but in the meantime, learned counsel for the plaintiff sent a request through e-mail for providing an opportunity to address his arguments on the ground that he was prevented from appearing before the Court due to testing positive for COVID-19. Accordingly, by considering the request, an opportunity was given to learned counsel for plaintiff to address his arguments through video conferencing by notifying, learned counsel for the defendant No.1. So, both the counsels appeared through video conferencing. Learned counsel for the plaintiff would argue that the learned Arbitrator ought not to have passed Award directing the plaintiff to execute sale deed pursuant to agreement of sale, dated 10.5.2001 and supplemental agreement, dated 7.10.2003, on the ground that there was enough materials placed before the Tribunal about impossibility of performance of contract owing to the pendency of case before the High Court of Bombay Judicature and also the suit 21 Com.A.S.115/2015 filed by the legal heirs of vendors on the file of Senior Civil Judge of Bangalore Rural District in O.S No. 551/2003 and 1024/2003. The learned Civil Judge Senior Division, Bangalore Rural District, has disposed off the matter by clubbing the cases on 19.12.2014 by decreeing the suit in O.S. No.1024/2003 filed by Pillappa and Byrappa, challenging the Power of Attorney issued in favour of Udaya Deju Kotian and the plaintiff and also to set aside the sale, held in favour of the plaintiff, dated 5.6.1992 as void. Since, the judgment has reached its finality as on today, the plaintiff has no title over the property and therefore, the specific performance of both the agreements relied upon by the 1 st defendant cannot be enforced. When the vendor looses title, which was prior to the passing of the award, dated 10.4.2015 read with clarification Order, dated 30.6.2016 in the above case, since, the plaintiff has taken specific contention before learned Arbitrator in his objection statement, particularly, para Nos.17, 19 and 30, the same has not been considered by learned Arbitrator and by relying upon the conditions of Exs.C2 and C3, Award came to be passed, which is against the public policy and provisions of Contract Act, regarding contingent Contract. He referred to the above paras, wherein, he has stated that he is ready to 22 Com.A.S.115/2015 complete the agreement and discharge his obligations provided no adverse orders are passed in original suit No. 551/2003 and 1024/2003 pending on the file of Civil Judge Senior Division, Bangalore Rural District. After referring to the above cases, to substantiate his arguments, he took the Court to clause No.3 of the agreement, i.e., Ex.C2, which refers to time for completion of contract and the time stipulated is within 10 months from the date of execution of agreement or within 15 days of the vendor obtaining and furnishing the documents shown at serial Nos. (a) to (g), which has become impossible on account of cancellation of conversion order by the Appellate Tribunal and confirmation till Hon'ble Apex Court. When, the very conversion order itself is cancelled, there is no chance for executing sale deed in favour of a company, which is against Section 79-A of the Karnataka Land Reforms Act. He also took the Court to clause No.4, particularly, 4.1 to 4.3, which deals with condition regarding the vendor making out and convey, a good marketable and subsisting title and the property shall be free from all encumbrances, attachments, Court or acquisition proceedings, charges of any kind. When the clause Nos.4.1 and 4.2 speak about marketable title, so as to transfer the same to the 1st defendant, when the plaintiff 23 Com.A.S.115/2015 lost his title on account of the judgment and decree in O.S. No.1024/2003, the performance has become impossible and therefore, the observation of learned Arbitrator about the same is against the settled law, regarding passing of rights, title and interest. The decree passed by the Senior Civil Judge, Bangalore Rural Court, is subsequent to the execution of Ex.C1, agreement and when the defendant came to know about the pending of suits on the file of High Court of Bombay Judicature, the learned Arbitrator ought to have dismissed the suit. There is no whisper about the suit on the file of Bangalore Rural Court. Ofcourse, neither the plaintiff nor the 1 st defendant placed these facts before learned Arbitrator for the reason not known to this Court. So, according to learned counsel for the plaintiff, when the plaintiff has no title and the title now vests with vendors of the plaintiff, the performance has become impossible and the learned Arbitrator ought to have taken into account these aspects. After referring to the above clauses, he took the Court to clause No.8 relating to breach, which speaks that if, the required compliance is not done within stipulated time, the 1st defendant is entitled to receive the refund of advance directly from the appropriate Authority including cost and consequences. Even in Ex.C3 supplemental agreement, it 24 Com.A.S.115/2015 is stated about pendency of suit in O.S. No.4579/1996 in the High Court Bombay Judicature and clause No.VII(2) emphasise that the purchaser shall pay the balance sale consideration against the vendor conveying the schedule property by way of registering a deed of sale in favour of the purchaser within 15 days of the vendor obtaining conversion of the schedule property for non-agricultural purposes, Katha for the schedule property and settling the litigation between the family members of the first party in the case No.O.S 4579/1996 on the file of the High Court of Judicature at Bombay, in which the schedule property is also a subject matter, which is still pending whichever is later. So, there was difficulty in obtaining clearance and settlement of dispute among the family members, though it was agreed by the plaintiff that he would see that disputes are settled at any costs and payments were made to his brothers and sisters, since, he has received only meager amount of Rs.2,00,000/- and other amounts were paid to his brothers and sisters and they turned down the proposal for settlement and therefore he has no absolute right. Further, clause No.3.4 also speaks about the remaining amount shall be paid after disposal of litigation between the family members of the 1st party in O.S No.4579/1996, which is still pending. So, 25 Com.A.S.115/2015 the plaintiff is helpless and the attempt made by him to settle the matter went in vain and further, his title has been set aside by a competent Civil Court and the said judgment has reached its finality. He would further refer to page No.56 of the Award at para No.10.22, learned Arbitrator has stated about the contention of the present plaintiff in O.S. No.553/2012 filed by one Ramakrishna, for cancellation of sale deed obtained by the plaintiff and that said Ramakrishna had also obtained Katha in respect of scheduled property and therefore, the subject property cannot be purchased by the claimant for want of Katha, so according to learned counsel for the plaintiff, the learned Arbitrator was aware of the suit filed by Ramakrishna and inability of plaintiff to get the Katha so as to convey the same to the defendant herein. Further, the filing of suit in O.S 1024/2003 by original owners was also within the knowledge of learned Arbitrator, but learned Arbitrator, instead of ordering for refund of earnest money or damages, ordered specific performance, which is against the law, amounts to violation of public policy. Further, the compromise talk arrived at by the parties and submission of the same before the learned Arbitrator found in Minutes of proceedings, dated 17.6.2014 discloses the amount agreed to be paid at Rs.13.06 crores, but 26 Com.A.S.115/2015 while ordering for specific performance, the consideration amount was fixed at Rs.4,43,65,000/- which is much less than the actual value and it shocks the conscious of the Court in ignoring the terms of the compromise petition and also the market value of the property. Since, the performance of the contract depends upon the happening of events of compromise and getting clear title would render the contract unenforceable, besides loss of title pursuant to decree in O.S No.1024/2003, which is nothing but, the finding against the materials on record, which require interference by this Court. According to him, though the plaintiff has agreed to get the property free from any encumbrances and also Court disputes, all the attempts went in vain and when the plaintiff has no title, how he could execute the sale deed. Though, the decree was passed prior to the passing of Award and when the fact of pendency of case was made known to the defendant by way of written statement before the Tribunal, the defendant must have enquired and pursue the said suit on the basis of Ex.C2 and C3 sale agreements. No doubt, the vendor cannot set up a defence that he has no title in respect of property. It is only the purchaser, in a suit for refund of earnest money, can set up such plea. However, it is not so here and therefore, even if 27 Com.A.S.115/2015 Award is held to be correct, same cannot be enforced for want of title. Learned counsel for plaintiff relies upon a decision in the case of Fizz Developers and Inter trade Vs. AMCI (1) Pvt Ltd., and another reported in 2009 17 SCC 796, wherein, it is held that the scope of enquiry in a proceeding under Section 34 is restricted to any one of the grounds mentioned in Section 34(2) exists for setting aside the Award. Section 34(2) also clearly places the burden of proof on the person who makes the application. Therefore, question arising for adjudication as also the person, on whom, the burden of proof is placed is statutorily specified.
11. So, with the help of above decision he would argue that Section 34(2) of the Act provides for setting aside of the award, if it is against public policy, when the making of Award was induced or affected by fraud or corruption or was in violation of Section 75 and Section 81, which deals with confidentiality and admissibility of evidence in other proceedings, against fundamental policy of Indian law and conflict with the most basic notions of morality or justice. When it is specifically contended about pendency of suits particularly, one which made the plaintiff to loose right and title, then it amounts to failure to consider the evidence on record and law 28 Com.A.S.115/2015 relating to doctrine of frustration. He would argue that after the agreement for sale, if the vendor looses title on account of acquisition of land by the Government, then, the performance becomes impossible.
12. Per contra, learned counsel for the defendant would argue that the plaintiff cannot agitate anything other than one found in the records of the Arbitral Tribunal as per Section 34(2) and nothing can be substituted before this Court by production of documents. Further, an Award cannot be set aside merely on the ground of erroneous application of law or by re-appreciation of evidence. He would further argue that the plaintiff failed to disclose pending proceedings at the time of first agreement and when the defendant came to know about the pending proceedings, supplemental agreement came to be executed, which shows the conduct of the plaintiff herein, somehow to deny the execution of sale deed. Therefore, the Award cannot be found fault with. Further, no additional documents can be looked into in a proceedings under Section 34, as the opening words of Section 34 specifically states that "the party making application establishes on the basis of the record of the Tribunal that ....". So, the plaintiff must argue on the evidence produced before the Arbitrator and 29 Com.A.S.115/2015 not by producing before this Court. Only in exceptional circumstances, document can be produced by subjecting the witness to cross-examination, then only such document can be relied upon as held in the decision in the case of Canara Nidhi Ltd., Vs. M.Shashikala, reported in (2019) 9 SCC 462. No doubt, this Court cannot receive the documents like in Appeals and it has to decide case on the basis of records of Arbitration proceedings. The main attack of the plaintiff is that, it is a contingent contract and therefore, unenforceable under Section 31 and 32 of Indian Contract Act. Further, the impugned award is opposed to provisions of Specific Relief Act. Since, the execution of the sale deed is on the basis of the two agreements, would depend upon the Judgment of the Court at Bombay, wherein, others were claiming share and therefore, unless and until it is decided, the plaintiff is not in a position to execute the sale deed. Learned counsel for the plaintiff further drew the attention of the Court to relief column of the claim petition, wherein, the claimant has sought for alternative relief of damages to the tune of Rs.10 crores and when there is an alternative relief, it would be appropriate to grant such alternative relief in view of impossibility to perform the obligations on account of pendency of suits and loss of title. 30
Com.A.S.115/2015 Further, he drew the attention of the Court, the operative portion of the Award, which reads at para No.5, last two lines that, "the claimant is held entitled to take steps and to protect its interest on the basis of this Award", which goes to show that learned Arbitrator, inspite of production of documents regarding pendency of suits and contention about the suit for cancellation of sale deed, proceeded to pass Award for specific performance, which does not sound well, as the defendant herein in the guise of Award has filed suit in O.S.No. 5474/2016 against Ramakrishna and others including the plaintiff herein without getting a proper sale deed in its favour. Therefore, the Award is against the documents and evidence adduced before the Court. I find considerable force in the argument canvassed by learned counsel for the plaintiff for the reason that the documents show about difficulty in getting the disputes settled and the decree of Senior Civil Judge Court in O.S No.1024/2003, whereby plaintiff lost title to the Subject Property, the alternative relief would have been most appropriate. Therefore, the contention of the plaintiff has to be accepted. Therefore, in toto, it is the contention of the plaintiff that learned Arbitrator should not have passed the award, when it is very clear from the documents, that the performance of the 31 Com.A.S.115/2015 contract is impossible on account of pendency of suit and also outcome of the same.
13. Now, to counter to this argument, learned counsel for the 1st defendant would argue that it is an attempt made by the plaintiff to stall the proceedings for the reasons best known to him and having executed two sale agreements by stating that he is the absolute owner of the schedule property and he will settle all the disputes and execute the sale deed and taken the amount in part on various occasions, the present contention raised on the grounds of petition cannot be considered. While canvassing his argument, he straightaway took the Court, to claim petition filed by the claimant before learned Arbitrator on various heads and the minutes of the learned Arbitrator during the Arbitration proceedings and evidence of PW1, 2 and DW1. The Ex.C1 is the authorisation letter given by the company to PW1 to represent the case and Ex.C2 is the agreement of sale, dated 10.5.2001, which was executed at Bangalore. He referred to para No.II, wherein, the vendor has unequivocally has stated that he is the absolute owner of the schedule property, having a good marketable title and that no one has got any interest over the schedule property. In para No.III, it is stated that the schedule property 32 Com.A.S.115/2015 is the land used for the comprehensive development plan as industrial and that the vendor shall get the change of land user from industrial to residential at his own cost. At para No.VI (3) the time for completion of sale is 10 months or by furnishing the document, whichever is later. So, a duty cast upon the plaintiff to furnish NOC under Section 269 UL of the I.T. Act, certificate of clearance under Section 230A of I.T. Act, 1961, Khatha with regard to the schedule property, payment of betterment charges, change of land use from industrial to residential and making out good and marketable title, etc. So, when we go through the entire Ex.C2 and C3, it is clear that the plaintiff himself has stated that he is the absolute owner and made the 1st defendant to believe his version and entered into a sale agreement. Thereafter, learned counsel for the 1 st defendant took the Court to Ex.C3, which is the supplemental agreement, dated 5.7.2003, which discloses that after execution of Ex.C2, the 1st defendant came to know about the suit filed on the file of Hon'ble High Court of Judicature, at Bombay in O.S. No.4579/1996 and other litigation and also cancellation of conversion order by the Revenue Appellate Tribunal and confirmation of the same by the High Court of Karnataka and Supreme Court. So, when the 1 st defendant 33 Com.A.S.115/2015 came to know about pendency of proceedings and cancellation of the conversion order, they again entered into the supplemental agreement as per Ex.C3. In the said agreement also, he has assured the 1st defendant to see that all cases are settled and sale deed is executed. To substantiate further, learned counsel for the first defendant has produced Ex.C8 i.e., the Letter issued by Sudarshan U Joshi, the plaintiff herein that his brother has agreed to release his rights and he has also submitted before the Court Receiver that he has no right over the schedule property. Further, as per Ex.C10, the plaintiff has assured the 1st defendant that he is bound by the agreement and he would execute the sale deed as agreed. Ex.C11, C12, C13, C14, 15 and 16 are the receipts, whereunder, the plaintiff has received directly or through his brothers and family members a sum of Rs.20,00,000/- to be paid to his family members by name i.e., Sri. Jagadish Joshi and also another name and similarly he has requested the defendant to pay Rs.33,31,200/- and that he would execute the sale deed. Similarly, he has requested the 1st defendant to pay Rs.25,000/- to Sri. G.V. Chandrashekar Advocate and as per Ex.C14, he has requested 1st defendant to pay Rs.20,0000/-to his brothers and sisters and all the amounts were paid as per 34 Com.A.S.115/2015 Ex.C14, C15 to C18 receipts. So, one thing is clear that in furtherance of the sale agreement and supplemental agreement, the plaintiff has received the amount and tried to settle the case, which goes to show that an attempt was made to see that sale deed is executed as soon as settlement of all the disputes are over. So, according to learned counsel for the 1st defendant, when the plaintiff was aware of the proceedings, by suppressing the same, he has executed Ex.C2 sale agreement and later, he bound himself to settle all the cases and received the amount and therefore, he is bound to execute the sale deed in favour of the 1st defendant or its nominee. Therefore, according to him, the award of the Arbitrator is not opposed to public policy and same is based upon the documents produced before the Arbitrator, based upon the evidence of PW1 and PW2 and DW1. Both the PW1, 2 and DW1 subjected to lengthy cross-examination, wherein DW1 has clearly and categorically admitted the sale agreement and also his attempt and that he has played a genuine role to settled the matter, but in vain. However, the above contention of the defendant cannot be accepted for the reason that the document produced with the Memo pertains to a suit in O.S. NO.1024/2003 between the plaintiff and his vendors which 35 Com.A.S.115/2015 ended in decree, thereby setting aside the sale deed, and whatever the right acquired under sale deed by the plaintiff gets extinguished. I do not know, why the judgment in the above suit was not produced before the Tribunal, but there is a serious contention in the written statement before the Tribunal about the pendency of that suit. No attempt is made by the defendant to see that the suit is dismissed as it was filed after many years. However, the said decree has become final. So, when the plaintiff has no title, how could he convey a better title in favour of the defendant is a question, which requires consideration by learned Arbitrator. When the agreement provides for return of earnest money or claim for damages, then, directing the plaintiff to do an impossible event amounts to non-consideration of materials available on record, which comes within the definition of public policy as per Section 34(2) of the Act. This requires elaborate discussion, based upon the submission made by the learned counsel for the plaintiff. According to learned counsel for the defendant, the Award can be set aside, if it is opposed to public policy or interest of India or that it is patently illegal, or it is against the justice or morality and in support of that, he took the Court to Section 34 of the Act and various grounds available therein. It 36 Com.A.S.115/2015 is not the case of the plaintiff that he had some incapacity to execute the sale deed or that he was not aware of consequence of Arbitration proceedings or that terms of the Arbitration cannot be decided by the Arbitrator etc., as contemplated under Section 34(1) (2) of the Act. The Award of the learned Arbitrator can also be set aside, if the Arbitrator has not followed the procedure contemplated under the Act, or that subject matter dispute is not capable of settlement by the Arbitration under the law for the time being in force. The Arbitrator has recorded evidence of the parties, marked relevant documents and considered the argument canvassed before him and arrived at the factual conclusion that the contention that the sale agreements Ex.C2 and C3, do not come under the purview of contingent contract under Section 31 & 32 of the Indian Contract Act. Besides that when an Arbitral award can be set aside, has been held under the various decisions as cited by learned counsel for the defendant. They are:
1. In the case of ONGC Ltd., Vs. Saw Pipes Ltd., reported in (2003) 5 SCC 705, wherein, it is held that:
31 "Therefore, in our view therefore, in our view, the phrase 'Public Policy of India' used in Section 34 in context is required to be given a wider meaning.37
Com.A.S.115/2015 It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term 'public policy' in Renusagar's case (supra) it is required to be held that the award could be set aside if it is patently illegal. Result would be - award could be set aside if it is contrary to:- (a) fundamental policy of Indian law; or (b) The interest of India; or (c) Justice or morality, or (d) in addition, if it is patently illegal. Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void."
14. The second decision in the Oil and Natural Gas Corporation Limited Vs. Western Geco, reported in (2014) 9 SCC 263, wherein it is held that:
35. "the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country. Without meaning to exhaustively enumerate the purport of the expression "Fundamental Policy of India Law", we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law.38
Com.A.S.115/2015 The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the for a concerned. What must be remembered is that the importance of Judicial approach in judicial and quasi-judicial determination lies in the fact so long as the Court, Tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an Arbitrary, capricious or whimsical manner..."
38. Equally important and indeed fundamental to the policy of Indian Law is the principle that a Court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated 'audi alteram partem' rule one of the facets of the principles of natural justice is that the Court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind an disclosure of the mind is best done by recording reasons in support of the decision which the Court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.
39. No less important is the principle now recognised as a salutary juristic fundamental in 39 Com.A.S.115/2015 administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a Court of law. Perversity and irrationality of decisions is tested on the touchstone of Wedenesbury's principle of reasonableness."
15. So, when we peruse the above decisions, it is very clear that the Arbitral Award can be set aside only if it is against the fundamental policy of Indian law and the interest of India, justice or morality or if it is patently illegal. The illegality must go to the root of the matter and if it is of trivial in nature, then it cannot be set aside. With this background, we have to analyze whether the learned Arbitrator has followed the procedure or where he has erred in passing the Award. In the said regard, the Award, at page No.25, he has referred to Section 31 of the Indian Contract Act, and culled out the very provisions along with illustration and tried to distinguish the contention that it is a "contingent contract". In para No.10.8, it is clearly stated that in order to make a contract contingent, its performance must depend on a future event. The happening of the event must be uncertain. The happening or non-happening of such future event should not form an essential part of the contract, but it should only be collateral to it. The happening or non-happening of such future event must 40 Com.A.S.115/2015 be beyond the powers of the contracting parties. However, it is not so in the present case, there may be a delay in getting order from the Court regarding his title and as soon as his title is perfected, in the sense, the Court dismisses the suit filed by his brother and his family, then, certainly, he can execute the sale deed in favour of 1st defendant. When it becomes contingent as per illustration, that "A, contracts to pay to B, Rs.10,000, if B's house is burnt. This is a contingent contract." If this analysis is applied, then, though there is a genuine delay in disposal of the matter in the hands of the Court, it does not become a contingent contract. Therefore, I am of the view that the observation of learned Arbitrator that pendency of suit on the file of High Court of Bombay Judicature, it cannot be termed as impossible future event, has to be accepted. When we peruse the Ex.C2 and C3, the plaintiff has stated that he is absolute owner and made 1st defendant to believe the same and entered into sale agreement. Ofcourse, learned Arbitrator has referred to various decisions to come to the conclusion that it is not a contingent contract, which I do not want to repeat once again in the present case. So, when it is not opposed to Sections 31 and 32 of the Contract Act, then, it is not opposed to the public policy as stated in the above 41 Com.A.S.115/2015 decision. However, rightly or wrongly there is a decree of competent Court against the plaintiff declaring his title as nul and void, even by setting aside Power of Attorney and sale deed subsequent to Ex.C2 and C3, which was not within his control, therefore, the contract cannot be enforced as it is hit by doctrine of frustration enshrined in Section 56 of Contract Act.
16. Learned counsel for the 1 st defendant has also submitted the decision in the case of State Trading Corporation of India Limited Vs. M/s Toepfer International Asia Pvt Ltd., reported in 2014 (144) DRJ 220, in support of the earlier two decisions and in the said decision, their lordships have considered the decision in the case of ONGC Ltd., Vs. Saw Pipes Ltd., regarding interpretation and the grounds to set aside the Arbitration Award under Section 34 of the Act. The Section 34 is found to provide for annulment only on the grounds affecting legitimacy of the process of decision and not the substantive correctness of the decision. The Arbitral Award can also be set aside, if from reading of the Award one can infer that the award is conflict with the public policy of India and the test of "fails to draw inference, which ought not to have been drawn or draws 42 Com.A.S.115/2015 an inference which is untenable, then also comes under Section 34 of the Act as held in the decision in the case of National Highway Authority of India Vs. Oriental Structural Engineering Pvt. Ltd., reported in AIR 2015 Del.79. Even, if there is any defective report or that there is any bar under the provisions of any other special enactment, there is no bar for specific performance and if there is any violation of laws, the Authority would exercise power under the special enactment, such as Karnataka Land Reforms Act, particularly Sec. 86, if the sale of agriculture land to any of non-agriculturist. In the said regard, the decision in the case of Andanur Rajashekar Vs. Sri Vasavi Industrial Encterprises, reported in 2006 SCC OnLine Kar 545, is relevant, wherein, it is held that the proviso under Sections 79- A, 79-B and 79-C of the Karnataka Land Reforms Act, would raise that any competent authority under the Act, who has the jurisdiction can certainly grant permission for such sale, gift or exchange to a bonafide purchaser intending to take up agriculture or to acquire land on such conditions as may be prescribed in addition to the condition mentioned therein. Therefore, when, the Act provides for grant of permission by the competent authority, at the stage of entering into the sale 43 Com.A.S.115/2015 agreement or for suit for specific performance, it cannot be held that the very agreement itself is void. The Authority under the Act is always at liberty to proceed to take action, in case of violation. Further, in a suit for Specific Performance, regarding execution of sale agreement, willingness and competency of such court to grant its discretionary decision. He has also cited decision in the case of J.P. Builders and another Vs. Ramdas Rao and Another reported in (2011) 1 SCC 429, wherein, it is held that:
54. " that merely because the contract insist settlement of a loan of the Bank and handover the title deeds to the plaintiff from the Bank are not impossible events in the light of the performance made by the plaintiff, the contract in question did not come to an end on this ground and such contract is not a contingent contract and undoubtedly, the Court has jurisdiction to grant relief in terms of the contract. Obtaining No Objection Certificate (NOC) from the authority concerned, clearance of NOC from Income Tax Department or any other State/Central authority, securing title deeds after clearing certain loans are incidental and implied covenant on the part of the vendors to do the needful to give effect to the agreement."
17. So, when we peruse the above decision, it is very clear that there may be certain obligations to be performed on the part of the either of the parties and there may be some delay in achieving performance of certain obligations that itself 44 Com.A.S.115/2015 does not mean that the contract is unenforceable subject to that condition only agreement was entered into. Therefore, these contentions are condition precedent, which the vendor must perform or allowed to proceed to get it done at the cost of the vendor. Therefore, the contention of the plaintiff that since it is a contingent contract, the same cannot be ordered, etc., cannot be accepted. He would further argue about defect in the title and even if there is any defect in the title, the vendor cannot set up the said defects in the suit for specific performance. However, the parties cannot attack such defects in a suit for specific performance and therefore, the plaintiff having entered into sale agreement with the defendant, knowing fully well that there are cases pending in respect of the title and right of the plaintiff as well as others sharers, he is precluded from contending the same in the present suit. In this regard, the decision in the case of Mir Abdul Hakeem Khan Vs. Abdul Mannan Khadri reported in AIR 1972 AP 178 is relevant. One more decision to that effect is also cited in the case of Netyam Venkataraman Vs. Mahankali Narasimhan, reported in AIR 1994 AP 244. So, one thing is clear from the above two decisions, that the plaintiff cannot contend the inability of execution of sale deed for want of 45 Com.A.S.115/2015 decision of the Court. Even if he executes the sale deed with those impediments, it is the responsibility of the 1 st defendant to get it done. There is no dispute about the ratio laid down in the above decisions. The scope under Section 34(2) is limited and the interference by the Court must be minimum. I do not find fault with the Award regarding Section 31 and 32 of the Contract Act. But, the fact remains is that before passing Award by the learned Arbitrator, the plaintiff has lost the title.
Therefore, non-consideration of contention urged by the plaintiff herein, regarding suit challenging his title goes to the root of the case, as learned Arbitrator has observed that plaintiff is prepared to execute sale deed after settlement of disputes and under various receipts he has agreed that he would settle the disputes and execute the sale deed. But, in para No.10.52, it is observed that as on the date of Award the property is not free from litigation and the matter is pending on the file of Bombay High Court in Appeal. Further, Ramakrishna has executed a registered JDA infavour of certain Ushodaya Developers on 18.2.20132 in respect of subject property. The claimant who will be granted specific performance will have to defend/ contest and or settle such claims/ or litigation. There is no conversion order of Subject Property from agricultural 46 Com.A.S.115/2015 purpose in the name of the respondent. These are all the impediments/obstacles, which the claimant has to sort out, although the respondent was obliged to make out a clear and marketable title. When the learned Arbitrator observes above legal impediments, non-consideration of pendency of O.S 1024/2003, which goes to the root of the case about title of the plaintiff, then, it amounts to non-consideration of material facts, which comes within the purview of public policy as per Section 34(2) of the Act and therefore, I am of the view that, the Award is against the public policy of India. Now, regarding doctrine of frustration, it is necessary to go through Section 56 of Indian Contract Act, which states that Agreement to do impossible Act, in itself is void. A contract to do an Act, which, the contract is made, becomes impossible, or by reason of some event, which the promisor could not prevent, unlawful, becomes void, when the Act becomes impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non- performance of the promise. In this regard, the judgment in the case of Satyabra Ghose Vs. Mugneeram Bangur and Company reported in AIR 1954 SC 44 is relevant, wherein, it is held that "according to the Indian law, which is embodied in 47 Com.A.S.115/2015 Section 54 of T.P. Act, a contract for sale of land does not of itself create any interest in the property which is the subject matter of the contract. The obligations of the parties in a contract for sale of land are, therefore, the same as in other ordinary contracts, and, consequently, the doctrine of frustration is applicable through contract for sale of land in India. Further, the word "impossible" has not been used in the sense of physical or literal impossibility. The performance of an Act may not be literally impossible, but, it may be impracticable and useless from the point of view of the object and purpose, which the parties had in view and if untoward event or change of circumstances, totally upsets the very foundation upon which the parties rested their bargain, it can very well said that the promisor finds it impossible to do the Act which he promise to do".
18. Their lordships have referred to various decisions of English Court to apply the above doctrine to the sale of lands in India. As on the date of Award, and even today, the plaintiff has no title on account of decree of the Court and therefore, the same should have been considered by the Arbitrator at the time of Award. In view of the above facts, non-consideration of 48 Com.A.S.115/2015 material facts, also amounts to a decision against public policy, which comes within the purview of Section 34(2) of the Act.
19. Now, coming to the aspect of costs, learned counsel for the defendant would argue that the plaintiff having suffered award from the hands of learned Arbitrator has come before this Court and stalled entire projects for all these years and therefore, suit is to be dismissed with exemplary costs. The plaintiff having executed two agreements, having received a portion of the consideration amount and having fixed consideration amount by learned Arbitrator at higher end, he has challenged the same by way of present suit and made the project to stall all these years. Therefore, exemplary costs has to be imposed. In this regard, learned counsel for the defendant relies upon the decision in the case of Ramrameshwari Devi Vs. Nirmala Devi reported in (2011) 8 SCC 249, to the effect that the other factor, which should not be forgotten while imposing costs is for how long the defendant/claimants or respondents were compelled to contest and defend the litigation in various Courts. The appellants in the instant case, have harassed the respondents to the hilt for four decades in a totally frivolous and dishonest litigation in various courts. The appellants have also wasted judicial time of 49 Com.A.S.115/2015 the various courts for the last 20 years.
20. Similarly, he has cited the decision in the case of Maria Margarida Sequeira Fernandes Vs. Erasmo Jack de Sequeira, reported in (2012) 5 SCC 370 and the decision in the case of Yallanasa and others Vs. Ambasa and others, of Hon'ble High Court of Karnataka, in RFA 100186 of 2016. In all the decisions, the Court has heavily come down against the plaintiff for filing false, frivolous case and imposed heavy costs. With the help of the above decisions, he would argue that though sale agreement was executed in the year 2001 and 2005 and Arbitration proceedings was initiated in the year 2010 in CMP 167/2010 and award came to be passed in the year 2015 and the present suit is filed in the year 2015 and the plaintiff successfully dragged the case till date. However, learned Arbitrator has not considered the case of the 1 st defendant regarding compensation, etc., stating that the 1st defendant is not entitled to the compensation and interest as claimed in the petition and ultimately award came to be passed allowing the claim petition directing to execution of the sale deed by the present plaintiff by receiving Rs.4,43,65,000/- inclusive of amount already paid. However, since the plain tiff is unable to execute the sale deed for want of title, question 50 Com.A.S.115/2015 of imposing cost on him does not arise. However, the 1 st defendant can agitate for refund of Earnest Money and compensation, if it so desires.
21. This Court has no power to substitute its view in the place of view expressed by the learned Arbitrator as he is the chosen Judge of the parties as per the terms of the contract. The plaintiff has shown that the award is against the public policy for the reasons stated supra, I am of the view that the award is liable to be set aside. The 1st defendant is always at liberty to seek for refund of Earnest Money or compensation, if it is so advised. Therefore, the Award is liable to be set aside. Hence, I answer the point No.1 in the Affirmative.
22. Point No.2 :- For the aforesaid reasons, I proceed to pass the following Order.
ORDER The suit filed by the plaintiff U/S. 34 of Arbitration & Conciliation Act, 1996 is hereby allowed. No costs.
The Award, dated 10.4.2015 r/w clarification order dated 30.6.2015, arising out of CMP No.167/2010 on the file of the 2nd defendant is 51 Com.A.S.115/2015 hereby set aside.
(Dictated to the Stenographer partly and partly on computer, typed by him, corrected and then pronounced by me in open Court on this the 29th day of June, 2021).
(CHANDRASHEKHAR U), LXXXVII Addl.City Civil & Sessions Judge, (Exclusive dedicated commercial court) Bengaluru.
52
Com.A.S.115/2015 SK xxxx 29.06.2021 P-
For Judgment
The Judgment is
pronounced in Open Court
vide separate judgment. The
operative portion of the said
Judgment is as follows :-
ORDER
The suit filed by the plaintiff
U/S. 34 of Arbitration &
Conciliation Act, 1996 is hereby
allowed. No costs.
The Award, dated 10.4.2015
r/w clarification order dated
30.6.2015, arising out of CMP
No.167/2010 on the file of the 2nd
defendant is hereby set aside.
53
Com.A.S.115/2015
LXXXVII ACC&SJ,
B'LURU.