Calcutta High Court
Jaichandlal Ashok Kumar And Co. Pvt. Ltd vs Nawab Yossef & Anr on 22 August, 2013
Author: Ashim Kumar Banerjee
Bench: Ashim Kumar Banerjee
Form No. J.(2)
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
Present :
The Hon'ble Mr. Justice Ashim Kumar Banerjee
And
The Hon'ble Mr. Justice Mrinal Kanti Chaudhuri
A.P.O. No. 177 of 2013
A.P. No. 229 of 2009
Jaichandlal Ashok Kumar and Co. Pvt. Ltd.
Vs.
Nawab Yossef & Anr.
And
A.P.O. 191 of 2013
A.P. No. 236 of 2009
Nawab Yossef & Anr.
Vs.
Jaichandlal Ashok Kumar and Co. Pvt. Ltd.
For Jaichandlal Ashok Kumar : Mr. Ranjan Deb, Senior Advocate
and Co. Pvt. Ltd. Mr. Surojit Nath Mitra, Senior Advocate
Mr. Ashish Kumar Chakraborty, Advocate
For Nawab Yossuf & Anr. : Mr. Ranjan Bachawat, Advocate
Mr. Prabhakar Chowdhury, Advocate
Mr. A.P. Agarwalla, Advocate
Heard on : July 16, 17, 23, 24, 30, 31, and
August 1,6, 7, 8, 12, 13 and 20, 2013
Judgment on : August 22, 2013
ASHIM KUMAR BANERJEE, J.
APOLOGY:
The hearing of this appeal, in our estimation, could be finished within three days. We are sorry; it did take long time to close the hearing. We are sorry, we could not give more than one and half hours time in a day because of other urgent matters in the Appellate Side and the administrative commitments of one of us (Banejee, J). There were other reasons too.
CONVENIENCE:
For the sake of convenience we mark the first volume and second volume of A.P.O No. 177 of 2013 as volume I and II and the first and second volume of A.P.O. No. 191 of 2013 as volume No. III and IV respectively.
FACTS:
One Abdul Gaffar was the absolute owner of premises No. 5B Outram Street Calcutta. The said property was measuring about 37 cottahs of land having structures built thereon. It was partly tenanted. Gaffar entered into agreement with Jaichandlal Ashok Kumar and Co. Pvt. Ltd. a developer, with intent to have the property developed by a joint venture. The parties entered into the agreement on June 28, 1989 appearing at page-148-196 (Volume-III). If we have a close look to the said agreement we would find, the property was comprised of 37 cottahs 11 chittaks 9 square feet. As per the agreement, the developer would build a commercial complex in the major part of the land and the rest part would have two bungalows, one for the owner and the other for the developer. The developer would pay Rs. 20 lacs as security deposit out of which 10 lacs to be paid simultaneously on execution of the said agreement and the balance 10 lacs after sanction of the plan from the Calcutta Municipal Corporation. The parties agreed, the developer would be responsible to have the tenanted portion vacated. The owner would have the sole responsibility to demolish the building so that the developer could construct the new one. The developer would pay Rs.5 lacs as lease premium upon execution of the said document and a general power of attorney followed by further sum of Rs.3500 per month to be paid by the allotees/transferees of the owner and the developer and/or its nominees towards lease rent. The agreement would provide, in case of dispute, the parties would go for arbitration of the sole arbitrator Sri Jahar Sengupta who was at the relevant time, Managing Director of Exide India, Sri Sengupta was acquainted with the owners in view of fact that the one of the parties was an employee under him at the relevant time.
OWNERS CASE:
Gaffar died during pendency of the proceeding on June 23, 2003 leaving him surviving his two sons namely Nawab Yossef and Nawab Jawed. We are told, one of them was a resident of Holand and the other is pursuing the litigation on their behalf.
According to the owners, the agreement was entered into in 1989. Initially a sum of Rs.15 lacs was paid. Subsequently, on one pretext or the other the developer got back Rs.14 lacs keeping only a sum of Rs.1 lac to their credit lying with the owners. The developer could not get the property vacated. Owner had to take the trouble of making such arrangement and the original owner was instrumental in getting all the tenants removed from the premises by mutual arrangement. A sum of Rs.5 lac was spent on that account paid by the developer. The developer caused an enormous delay in getting the plan sanctioned that too, by doing substantial modification encroaching upon the part of the land to be retained by the owner under the agreement. In any event, the developer never informed the owner about the sanctioning of the plan and allowed the said plan to be lapsed. The developer had no money to perform that would be apparent from the fact, an assertion as to subsequent payment of Rs.10 lacs by cheque was made at a time when the developer had no money in the bank. Under the agreement the developer was to make payment of taxes and all statutory outgoings that they failed to discharge. They were not ready and willing to perform their obligation under the agreement. Hence, the agreement got frustrated.
DEVELOPER'S CASE:
In 1979 the parties executed two agreements, the first one was witnessed by Mr. Jahar Sengupta that was replaced by the second agreement that was registered, being the subject matter of the present litigation. The parties were in best of relations till 1993, not a single correspondence exchanged between the parties. The developer got the tenants evicted from the premises by making appropriate payments. The developer got the plan sanctioned by the Calcutta Municipal Corporation. Advertisement was published inviting offer for demolishing the building. The owner recommended someone for the said purpose. Ultimately when question of demolition came the owner backed out and declined to vacate a portion of the premises that was under his occupation. The developer was always ready and willing to construct the building. They were not at fault.
ARBITRATION:
Since the dispute arose between the parties they initially went to the named arbitrator however, before he could publish the award this Court removed him and appointed Mrs. Manjula Bose, a former Judge of this Court to act as arbitrator. Accordingly, the parties submitted to the jurisdiction of the new arbitrator, the arbitrator published her award appearing at page 80-147 (Volume-III). The arbitrator held, the developer was not at fault however, observed, the developer would not be entitled to the specific performance as it was not possible. The arbitrator recorded the fact, the original owner died during pendency of the arbitration proceeding. His heirs were not willing to continue with the project. The arbitrator disbelieved the owner's case, the owner did not know about the sanctioned building plan. The arbitrator proceeded to award money compensation to the developer on the basis of a chart handed over to her in course of arbitration. She would, however, record, she did not rely on the said chart and adopted a different mode to assess the compensation.
PRESENT LITIGATION:
Being aggrieved, both parties challenged the award. The owner was aggrieved, the arbitrator held against them on the question of frustration of the contract. They did not agree with the finding of the arbitrator, developer performed their part. They did not agree with the award of compensation in favour of the developer either. The developer was aggrieved; he did not get the specific performance. In Course of hearing before us, Mr. Ranjan Deb, learned Senior Counsel appearing for the developer, made it clear, the developer was not at all interested in damage. Either they would get the specific performance or would lose the battle. They rather conceded to the appeal filed by the owner as against the damage/compensation awarded in their favour. SETTING ASIDE APPLICATIONS DISPOSED OF BY THE LEARNED SINGLE JUDGE:
The learned Single Judge heard both the applications analogously and disposed of the same by a common judgment and order appearing at pages 419-432 (Volume-III). Learned Single Judge allowed both the applications in part. His Lordship upheld the award to the extent, claimant was entitled to specific performance but ought not to be granted. His Lordship set aside the award on the concession of the claimant in grant of damage in lieu of specific performance. In short, the learned Single Judge accepted the award on principle that held in favour of the developer, they were entitled to specific performance however, did not grant such accepting the logic so advanced by the Arbitrator. At the end of the day, the owner succeeded by default as the developer did not agree to accept the damage so awarded in their favour.
APPEALS:
The developer initially preferred appeal before us, the owner did not. Subsequently, the owner also filed appeal challenging the part of the judgment and order that upheld the award. We heard both the appeals analogously on the above mentioned dates.
CONTENTIONS OF THE OWNER:
Mr. Ranjan Bachawat, learned Counsel advanced argument on behalf of the owner. He took us to each and every relevant clauses of the agreement to show the respective duties and obligations of the parties under the agreement and the consequence of breach. He also referred to the award in detail as well as the judgment and order impugned. He formulated his grievance to be as follows:
i) The original agreement did not empower any of the parties to modify the agreement without the consent of the other. The developer modified the plan contrary to the wishes of the parties stipulated in the agreement that would amount to breach.
ii) The developer miserably failed to prove the readiness and willingness which would be the basic requirement of a claim for specific performance.
iii) The developer got the modified plan sanctioned without any notice to the owner and allowed the same to be lapsed. The lapsed plan could not be renewed under the building rules that would make the agreement frustrated.
iv) The developer did not fulfill their obligation under the contract including payment of Rs.10 lacs simultaneously on sanctioning of the plan. The plea that Rs.10 lac was sought to be paid by account payee cheque, was not sustainable in absence of money in the bank account of the developer at the relevant time.
v) A sum of Rs.15 lacs that was paid by the developer, was virtually taken back leaving only a sum of Rs.1 lac with the owner that would ex facie demonstrate the intention of the developer not to perform the agreement.
vi) Under the agreement developer was to make arrangement for vacating of the premises under occupation of the tenants that they failed.
vii) The developer did not pay the tax and/or statutory outgoings in terms of the agreement.
Elaborating his agreement Mr. Bachawat contended, the parties approached the arbitrator on a definite case made out in the pleadings. The pleadings did not suggest any scope for awarding of monetary compensation. The statement of claim filed by the developer did not stipulate so hence, the arbitrator was not competent to award any monetary compensation. Even if the developer would press the said claim that would not absolve the arbitrator from the charge of misconduct that she committed by accepting a chart at the fag end of the arbitration that too, without any copy being supplied to the owner. He would justify the owner's action on demolition by saying, the demolition would only start after sanction of the building plan. The building plan was not sanctioned as per the agreement. In any event, owner was never informed hence, there was no question of undertaking the demolition work by the owner. On the modification, Mr. Bachawat would contend, the power of attorney executed by the owner in favour of the developer would not empower the developer to modify the plan to the detriment of the interest of the owner without his knowledge. He referred to Section 14,16 and 20 of the Specific Relief Act to contend, once the damage was adequate in lieu of specific performance, specific performance could not be granted. It was solely the discretion of the Court and/or the Tribunal as to whether such relief would be granted or not, considering the facts and circumstances involved. Mr. Bachawat would rely upon the following decisions to support his proposition, the developer was not ready and willing to perform their obligation, hence, not entitled to the relief.
1. N.P. Thirugnanam Vs. Dr. R. Jagan Mohan Rao and others reported in 1995 Volume- V Supreme Court Cases Page-115.
2. His Holiness Acharya Swami Vs. Sita Ram Thapar reported in 1996 Volume- IV Supreme Court Cases Page- 526.
3. J.P. Builders and another Vs. A. Ramadas Rao and another reported in 2011 Volume-I Supreme Court Cases Page- 429.
4. Baisakhi Bhattacharjee Vs. Shayamal Bose & Ors. reported in 2002 Volume-IV Calcutta High Court Notes Page-115. On the question of violation of principles of Natural Justice Mr. Bachawat contended, the arbitrator allowed the learned Counsel to argue on damages relying on a chart. Neither such claim was made in the statement of claim nor was any chart ever given prior to the closure of the arbitration proceeding. He would rely upon two High Court decisions, one of Delhi and the other Karnataka to support his plea. The decisions are as follows:
1. Wazir Chand Karan Chand Vs. Union of India and another reported in All India Reporter 1989 Delhi Page- 175.
8. Rudramuni Devaru Vs. Shrimad Maharaj Niranjan Jagadguru reported in All India Reporter 2005 Karnataka Page- 313.
[ [[ He also cited the Calcutta decision in the case of Gopi Nath Sen and others Vs. Bahadurmul Dulichand and others reported in All India Reporter 1979 Calcutta Page- 203 to explain the Court's power to award damage in a given case.
On the scope of setting aside of the award Mr. Bachawat relied on three Apex Court decisions which are as follows:
1. K.P. Poulose Vs. State of Kerala and Another reported in 1975 Volume-II Supreme Court Cases Page-23.
2. Sikkim Subba Associates Vs. State of Sikkim reported in 2001 Volume- V Supreme Court Cases Page- 629.
3. Rashtriya Chemicals and Fertilizers Limited Vs. Chowgule Brothers and others reported in 2010 Volume- VIII Supreme Court Cases Page-563.
He also cited the following decisions:
1. Seth Thawardas Pherumal Vs. Union Of India and Seth Premchand Satram Das Vs. Union of India reported in 1955 Volume-
II SCR Page-48 = All India Reporter 1955 Supreme Court Page-468.
2. Chhogmal Rawatmal Vs. S. G. Shah reported in 1953 Calcutta Weekly Notes Page- 828.
He would sum up his argument by referring to the pleadings and the judgment and order impugned in this appeal. He would contend, the developer was not sure about their possession. Initially, they claimed, they were in possession however, during evidence the witness categorically admitted, they were not in possession. He referred to the evidence that was laid by the parties.
DEVELOPER'S CONTENTION:
Mr. Ranjan Deb learned Senior Counsel advanced argument on behalf of the developer. He tried to confront the positive assertion of Mr. Bachawat to the extent; developer was not ready and willing to perform their obligation under the agreement. Mr. Deb would deal with this contention in two compartments i.e., financial obligation and non- financial obligation. According to Mr. Deb, in 1989 two agreements were signed, in one of which Mr. Jahar Sengupta was witness however, the said agreement was replaced by the new one being the subject agreement in the present litigation. He would contend, the parties were having best of relations for four years. Not a single letter was written by anyone till October 19, 1993. The Corporation sanctioned the building plan on April 19, 1993 that would include the personal bungalow of the owner. The developer invested money in getting the plans approved and sanctioned. He paid Rs.17 lacs approximately immediately on the day the Corporation demanded. He deposited Rs.10 lacs in fixed deposit in Federal Bank. Mr. Deb would elaborate by contending, it was not difficult for a promoter to arrange appropriate funds as and when required. The developer had more than one company involved in various project. There was no complain in respect of anyone. The present company being Jaichandlal was entrusted the present project. Since the project did not start, the fund was not arranged. The developer already got the tenancy vacated by making suitable payments as required hence, the financial obligations the developer had, were duly fulfilled.
On the non-financial obligations, Mr. Deb would contend, under the agreement the developer was to get the tenants vacated and the property free from occupancy. The developer was also obliged to get the building plan sanctioned. Once the building was free from occupier and the building plan got sanctioned it was the obligation of the owner to demolish the existing structure and hand over the vacant land to the developer for construction. The evidence would reveal, after the plan got sanctioned the owner was reluctant to vacate the premises. On the alleged ignorance of sanctioned plan, Mr. Deb would rely upon a chit sent by the owner to the developer introducing one "Karim" for being entrusted with the job of demolition.
On the question of refund of the sum of Rs.14 lacs Mr. Deb would not clarify as to why the money was taken back. He would deal with the issue by contending, the amount of Rs.4 lac was taken back in November 1990 whereas balance Rs.10 lacs was taken back in November 1992. These payments were within the period when parties were having best of relations. Subsequent complain was nothing but an afterthought.
Dealing with the issue of payment of statutory outgoing Mr. Deb would contend, the obligation to pay statutory outgoings would only come when the building would again be handed over back to the developer for construction. The situation did not arise.
On the issue of allowing the plan to be lapsed Mr. Deb would rely upon pages 62 and 63 of the Paper Book in A.P.O No. 177 wherein we would find an order of status-quo passed on October 13, 1993 and continued till date. According to Mr. Deb, Corporation sanctioned the plan on April 19, 1993. On October 13, 1993 the Learned Single Judge passed an order of status-quo with regard to the property. The developer made an application for variation of the order restraining them to start construction. The owners opposed the said application. Matter went up to the Apex Court that would show, developer was all throughout ready and willing to perform their obligation under the contract. He would contend, the Corporation sanctioned the building plan that was a composite one, even as per the agreement the plan had already been existing hence, question of ignorance would not arise at all. He would rely on the evidence of Mr. Gaffar and Mr. Pasari and contend, the modification was suggested by Mr. Gaffar. In any event, during his life time he never terminated agreement, he did not revoke the Power of Attorney that subsisted till his death. He would refer to various Clauses of the agreement to show, the agreement did talk about sanctioned/modified plan and payment of rents and taxes after the building was constructed. He would further suggest, had the owner been ignorant about sanction how Gaffar could receive appropriate notice from the Corporation. On this aspect, no suitable clarification came from Gaffar on that issue while he was deposing before the arbitrator.
Resuming his argument on the next day, Mr. Deb took us to the deposition of Mr. Passari and Mr. Gaffar to show, the plea of Mr. Gaffar that he did not know about the plan, was far from truth. According to Mr. Deb, the plan was submitted on December 13, 1990 that was modified at least on four or five occasions and the last modification was done on February 19, 1993 and the Corporation sanctioned the plan on April 19, 1993. He would refer to the questions where Gaffar was confronted during cross-examination as to signing of the demolition agreement. He deposed, he did not sign the agreement as it was kept blank. The date was blank. The name of the person to be entrusted with the work of demolition was also kept blank. He, however, asserted, plan was not ready at that time. Mr. Deb would comment; although the date was blank the month and the year were mentioned. Mr. Deb referred to the Balance Sheet and the Annual Return including the expenses borne by the developer. We would find, a sum of Rs.57.44 lacs was said to be spent in 1994 whereas Rs.63.9 lac was spent in 1995. Details of the expenditure would relate to the administrative cost for preparation and sanction of the plan, getting the building vacated and the legal charges. Resuming his argument on the next day, Mr. Deb tried to explain payment and refund of Rs.15 lacs. The owner claimed, the developer paid Rs.15 lacs and took back Rs.14 lacs. Mr. Deb tried to explain. According to him, the subject payments would cover three cheques, one for 4 lacs that was a bearer cheque issued on November 26, 1990 and the other two were for Rs.5 lacs each issued on November 16, 1992. The first cheque of Rs.4 lacs was encashed by Sri Anjani Dhanuka said to be the developer's friend. Mr. Deb cotended, the same amount was deposited in Mr. Gaffar's account by Dhanuka on December 22, 1990. The cheque for Rs.5 lacs was also encashed by Dhanuka. The other account payee cheque in the name of Ratnakar properties, a limited company, was credited to the account of the said company in which Dhanuka was a director. In all, Mr. Deb admitted, the entire sum of Rs.14 lacs was dealt with by Dhanuka who had no connection with the developer, a company limited by shares having independent entity. In any event, he asserted, neither the appellant company nor Pasari got the benefit of the said sum of Rs.14 lacs or any part thereof. Mr. Deb drew our attention to Section 20 of Specific Relief Act to contend, once the arbitrator held, appellant company was entitled to specific performance, the arbitrator could not have denied the relief, that too, on the ground, not recognized in law. The arbitrator declined relief on three counts; bitterness between the parties, complete non-co- operation and the eventuality as to the plan being lapsed in the meantime. Drawing our attention to the said provision, Mr. Deb would contend, neither of the said grounds would have the support. He further contended, the principle behind section 14(d) would have no application particularly when a contract of the like nature would create an interest in favour of the developer. In this regard, he relied on Snell's Principles of Equity, Twenty-eighth edition wherein the author observed, "The rule. It was at one time thought that a contract to do continuous successive acts (which would include a contract for personal services) would not be enforced specifically, as it would involve constant and possibly ineffective supervision by the Court: thus the Court refused to enforce a covenant in a lease by the landlord to employ a resident porter, or the tenant to repair the premises. This is no longer the rule. Contracts of this kind will often be unsuitable for specific performance, because of the difficulty of defining with precision what has to be done or because the inconvenience which would be worked by the decree makes damages a more appropriate remedy. But, in principle, the need for supervision is by itself no bar. And if a contract as a whole is suitable for specific performance, a decree will not be refused merely because the contract contains a provision which by itself would not be specifically enforced. Further, in a proper case specific performance of an agreement to sign or otherwise execute an instrument will be ordered even if the obligations under that instrument would not themselves be specifically enforced (e.g. because they are obligations to perform personal services) and so breaches of them would sound only in damages." Mr. Deb quickly glanced through the 68 pages award. He would contend, the subject agreement was a registered one. The arbitrator found, there was no breach on the part of the developer. Learned Single Judge agreed with the finding of the arbitrator on that score. Hence, there could not have been any occasion for the learned Judge to support denial of relief. He took us to pages 119 to 123 (Volume-III) wherein the learned Arbitrator dealt with all the issues that would support her to come to the conclusion, developer was not at fault. Learned Arbitrator relied on the part performance by arranging removal of tenants, sanctioning of the plan, publishing advertisement for demolition, appointment of security guard and other co-related issues. Mr. Deb would further contend, once the arbitrator held the owner responsible for the breach, there was no reason why the developer would be denied relief.
Referring to Section 3 of The West Bengal Building (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993. Mr. Deb would contend, it was incumbent upon the developer to register the document prior to the construction. Since construction did not commence there was no obligation on the part of the developer to get the said agreement registered hence; the contention of the owner on that score, was not tenable.
He took us to the judgment and order impugned wherein appearing at pages 419-431. He commented, learned Judge was not happy with the award to the extent where it denied relief, even then declined to interfere that would certainly require interference by the Court of appeal. On the issue of non-availability of fund in the Bank, Mr. Deb would contend, it was not an outright purchase that would require the purchaser to show his financial stability. This, being a building contract, the agreement itself did provide for raising of fund through prospective flat owners and the arbitrator rightly held so. He would formally rely upon two Apex Court decisions, Rahimatulla Rahiman Sarguru Vs. Bapu Hari Mane and Another reported in 1979 Volume- IV Supreme Court Cases Page- 391 and in the case of Sikkim Subba Associates (supra). He concluded his argument by contending, once the arbitrator found, the developer did not commit any breach the developer was entitled to specific performance that the arbitrator erred in declining so.
REPLY:
While giving reply Mr. Bachawat contended, the main plank of his argument on the readiness and willingness was not at all dealt with by Mr. Deb. He reiterated, his specific plea of non-registration under The West Bengal Building (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993 or the plan getting lapsed did not have a suitable reply. He reiterated, the developer did not have any money at all in the bank account. The learned arbitrator did not deal with such aspect in detail. He tried to confront Mr. Deb, when Mr. Deb would make a distinction between the agreement for sale and the development agreement. Mr. Bachawat would contend, in law there was no distinction at all, at least not recognized by the Specific Relief Act. Dealing with the refund of Rs.14 lacs, Mr. Bachawat contended, Dhanuka and Kabra were employees of Pasari. The Ratnakar properties were a company belonging to Pasari in which Pasari had a controlling block of shares through his stenographer and other employees. Dhanuka was an employee under Pasari and Pasari admitted the same during his cross-examination. In this regard, Mr. Bachawat relied on question No. 510 and 518 appearing at Page-374 (Volume-IV). Confronting the allegation, promoter could arrange money by booking of flats, Mr. Bachawat made a comment on the alleged booking by the stenographer or Kabra's staff and contended, such purported bookings were nothing but a camouflage. He would rely upon question No. 952, 1078 and 1080 appearing at page 249 and 265 (Volume-IV) respectively. Mr. Bachawat would also rely upon question No. 1330 appearing at page-303 (VolumeIV) and contended, Pasari gave an evasive answer to a definite question posed to him on the 14 lacs episode. He would also rely upon answer to question No. 1265 where Pasari would admit, he was not in possession.
Mr. Bachawat drew our attention to Section 14, 20 and 22 of the Specific Relief Act and contended, once Pasari would admit, he was not in possession his prayer for specific performance would be of no consequence as he did not claim possession. He contended, the developer failed to make out a definite case of specific performance. The learned arbitrator rightly rejected such prayer. On the aspect of general Power of Attorney Mr. Bachawat would contend, Pasari paid the sanction fee on March 31, 1994. He did not formally ask Gaffar to take up the task of demolition. The advertisement talked about, was published long before sanction of the plan by the Municipal Corporation. Hence, the argument advanced by Mr. Deb on such score would be of no help to him.
On Mr. Kabra, Mr. Bachawat would contend, he had no tax problem at all. On the insistence of Pasari, Gaffar took the advice of Kabra that too, on the future tax plan that might be necessary after completion of the project.
On the issue of status quo, Mr. Bachawat would refer to the petition made before the Court wherein the developer prayed for appointment of receiver over the property coupled with prayer for injunction restraining the owner from dealing with or disposing of the subject property. Considering such prayer, the Court passed appropriate order as referred to by Mr. Deb. In any event, in the said petition the developer never asked for permission to renew and /or revalidate the plan. Had he been so sincere about the project he should have prayed so. Mr. Bachawat commented on the arbitrator's finding, Gaffar was not at all required to be told what the developer would do with regard to sanctioning of plan.
Mr. Bachawat lastly submitted, even if this Court would negate all his arguments and find, developer would be entitled to specific performance the same could not be extended as the Court of appeal would not be competent to do so. He would rely upon the Division Bench decision reported in 1948 All India Reporter Nagpur Page-162 (Yeshwantrao ganpatrao and others Vs. Dattatrayarao Ramchandrarao and others). Mr. Bachawat relied upon paragraph 37 that is quoted below: "The decree of the lower Court embodies certain lists which the Learned Judge of the Lower Court appears to have thought were part of the award. A good deal of argument was addressed to us regarding these lists, and there was a certain amount of confusion because a large number of lists were prepared. The award refers to two lists. They are, however, not the lists which have been attached to the decree. The lower Court, of course, had no jurisdiction to travel beyond the award and had no jurisdiction to attach lists to its decree which were not attached to the award and which did not form part of it. The only lists which form part of the award are those to be found in Ex. Page-18. These will be translated, and the lower Court's decree will be corrected after these lists have been translated. The lists given by the lower Court in its decree will be deleted and the lists attached to the award will be substituted in their place. Except for that, and except as regards the direction in the award regarding maintenance, the decree of the lower Court will stand." Citing the above passage, Mr. Bachawat would conclude by saying, developer would not be entitled to any relief.
CASES CITED BY THE OWNER:
READYNESS AND WILLINGNESS:
On this issue the owner cited four decisions; three of the Apex Court and one of the Calcutta High Court.
In the case of N.P. Thirugnanam Vs. Dr. R. Jagan Mohan Rao and others (supra), the Apex Court observed, the continuous readiness and willingness is a condition precedent to grant relief of specific performance. The remedy for specific performance is an equitable remedy and is in the discretion of the Court.
In the case of His Holiness Acharya Swami (supra), the Apex Court made a distinction between readiness and willingness. According to the Apex Court, readiness would relate to capacity of the plaintiff to perform the contract that would include his financial position whereas willingness would depend upon his conduct pertaining to his performance.
In the case of J.P. Builders and another (supra), the Apex Court observed, nature of evidence that would come out, would be important to find out whether the party was ready and willing to perform his obligation under the contract. Their lordships considered Section 16 of the Specific Relief Act that barred relief of specific performance in a case where the claimant was incapable of performing the contract, or violates essential term or willfully acts at variance. In the case of Baisakhi Bhattacharjee (supra), this Court considered the facts and circumstances to find out whether the claimant was ready and willing to perform the contract. The Court held, readiness and willingness imply that the plaintiff was prepared to carry out those parts of the contract to their logical end so as they depend upon the plaintiff's performance.
[ NATURAL JUSTICE:
[ Delhi High Court decision and Karnataka High Court decision were relied upon to support the plea of Natural Justice. We do not wish to deliberate on the issue. It is settled proposition of law, a party should not be left unheard. When the arbitrator allowed one party to hand over a chart and argue on the same, the arbitrator should see to it, a copy of the same be served upon the other side. However, the arbitrator, in her award, made it clear; she did not rely upon the chart. Moreover, the developer did not insist on the claim for damage. Hence, we need not deliberate on the issue any further.
COURT'S POWER:
In the case of Gopi Nath Sen and others supra), the Division Bench of this Court held, "after evidence has been laid at the trial and decree for damages in lieu of specific performance passed in a case where the plaintiff has abandoned the case for specific performance the question of amendment of the plaint does not arise."
SETTING ASIDE AWARD:
On the scope and power of Court to set aside an award under the Arbitration law, Mr. Bachawat cited three decisions, two decisions on the old law and an Apex Court decision on the new law. In the case of Sikkim Subba Associates (supra), the Apex Court observed, the award could be set aside when it was unsound, absurd, so unreasonable and irrational that no reasonable or right thinking person or authority could have reasonably come to such a conclusion.
In the case of Rashtriya Chemicals and Fertilizers Limited (supra), the Apex Court observed, "While it is true that the Courts show deference to the findings of fact recorded by the arbitrators and even opinions, if any, expressed on questions of law referred to them for determination, yet it is equally true that the arbitrators have no jurisdiction to make an award against the specific terms of the contract executed between the parties."
Citing the above decision Mr. Bachawat tried to contend, the arbitrator committed misconduct by awarding damage that was not contemplated either in the pleadings or in the agreement itself. Mr. Bachawat also relied upon an age old decision of this Court in the case of Chhogmal Rawatmal (supra) where the Division Bench relied on an earlier precedent and the observation, "It is impossible for the Court in such a case to accept the contention that at the most the arbitrators are guilty of an error and as the error is not apparent on the face of the award, it is not open to the Court to set aside the award. An award can be set aside on the ground of error of law when it is manifest on the face of the award. It is, however, open to the Court to look into the relevant statements filed before the arbitral Tribunal. If the Court is satisfied that the arbitrators were guilty of misconduct then the Court should set aside their award."
OUR ANALYSIS OF THE BACKDROP:
[ The parties entered into the agreement for development. There was consistent finding by the Arbitrator, the developer performed his part. The learned Single Judge did not find any reason for disagreement on that score. The owner declined to perform their part on three counts that did not have any support of law. Section 14 would bar decree for specific performance in case the adequate compensation by way of damage could be awarded. The present agreement would depict, it was not an agreement for development simpliciter, the agreement was coupled with an interest created in favour of the developer. They would get Bungalow of their own. Hence, the agreement coupled with creation of interest would not come within mischief of Section 14. The Arbitrator committed miscarriage of justice by not granting specific performance even after holding, the developer was entitled to such relief. Learned Judge should have interfered with the Award on that score, particularly, when the developer made it clear, they did not want monetary compensation.
APPLYING THE LAW AS PER THE PRECEDENTS CITED:
On a close look to the decisions cited at the bar and discussed above, we feel, in a contract of the like nature, once the arbitrator was satisfied, the developer was entitled to specific performance the relief could not be denied on the grounds mentioned therein. The arbitrator categorically held, the developer was ready and willing to perform their obligation. They had the capacity to do so. The sentimental or emotional reason cannot create any impediment in performing the same. The arbitrator talked about non-cooperation on the part of the owner. Mr. Deb rightly contended, in case owner would not demolish the developer would demolish the same with the Court's supervision. We fully agree with Mr. Bachawat, on the plea of Natural Justice, the arbitrator should not have allowed the developer to submit a chart at the fag end of the arbitration. In any event, the arbitrator recorded, she did not rely on the said chart. On the top of it, at the time of hearing, Mr. Deb categorically made it clear. The developer was not interested in pecuniary damage. Hence, such issue would be academic. While giving reply, Mr. Bachawat relied upon Yeshwantrao ganpatrao (Supra), the paragraph relied on by him quoted (Supra) would not be of any assistance to us. The Division Bench observed, the Court considering the award could not travel beyond the award. It had no jurisdiction to attach list to its decree that was not attached to the original award. We fail to appreciate. The developer approached the arbitrator with the principal prayer for specific performance of the agreement dated January 28, 1989. If we look to page-215 (Volume- III) we would find the same appearing in the statement of claim. The learned arbitrator declined to grant such relief, learned Judge while considering the award also declined. The Court of appeal being an extension of the original proceeding would certainly be competent to examine the award as to whether the arbitrator committed any illegality in not granting the said relief. The scope of judicial scrutiny on this score is limited however, it would not be right to say, this Court would not be competent to consider such prayer. We reject the contention of Mr. Bachawat on that score.
On the scope of the Court's power to set aside the award under the old law we are of the view, once the arbitrator considered the issue, applied her mind, analyze the evidence and came to final conclusion, the developer was not at fault such definite finding would not be available for judicial scrutiny. It could neither be called as perverse nor devoid of cogent evidence. The Court, while considering an application for setting aside of the award, is not entitled to substitute their own reasoning. The Court could only interfere when the award was a product of miscarriage of Justice shocking the conscience of the Court. Such is not the case here.
RESULT:
Appeal of the developer succeeds.
Appeal of the owner fails.
The judgment and order impugned is set aside to the extent that declined interference with the Award on the aspect of Specific Performance. Otherwise, the judgment and order impugned is affirmed. The Award is further modified to the extent, the developer would be entitled to Specific Performance of the Agreement dated June, 28, 1989 appearing at pages 148 - 196 (Volume-III).
The Appeal No. A.P.O. 177 of 2013 is disposed of accordingly. A.P.O. No.191 of 2013 is hereby dismissed.
There would be no order as to costs.
Urgent certified copy of this judgment, if applied for, be given to the [ parties on their usual undertaking.
[[ Mrinal Kanti Chaudhuri, J:
I agree.
[ASHIM KUMAR BANERJEE, J.] [MRINAL KANTI CHAUDHURI, J.]