Bangalore District Court
M/S.Lgcl Properties Private Limited vs Mr.M.N.Kumar on 17 February, 2022
IN THE COURT OF LXXXIX ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU. (CCH-90)
Present: Sri.S.J.Krishna, B.Sc., LL.B.,
LXXXIX Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 17th February 2022
Com.A.P.No.72/2020
PLAINTIFFS : 1. M/s.LGCL Properties Private Limited,
Having its Registered Office,
At No.12/1, Rest House Road,
Bengaluru-560 001.
Represented by its
Authorised Representative
Mr.Kiran Kumar.R.
(By Sri.B.S.Radhanandan, Advocate)
-Vs-
RESPONDENT: 1. Mr.M.N.Kumar,
S/o Late M.J.Narasimha Murthy,
Aged about 48 years,
R/at No.620, 6th B Main Road,
J.P.Nagar, 3rd Phase,
Bengaluru-560 078.
2. Mr.R.Venkata Krishna,
S/o Mr.G.Roddeppa,
Aged about 45 years,
R/at Villa No.003,
Prestige Ozone,
Near Forum Value Mall,
Whitefield Main Road,
Whitefield, Bengaluru-560 034.
/2/
Com.A.P.No.72/2020
3. Mr.C.S.Mohan,
S/o Late C.V.Srinivasa Rao,
Aged about 58 years,
R/at "Brihati" No.318, 7th main Road, 6th
Sector, HSR Extension, Bengaluru-560 034.
(By Sri.Rohan Kothari, Advocate)
4. Hon'ble Justice K.N.Keshava Narayan,
Sole Arbitrator,
Arbitration & Conciliation Centre,
Khanija Bhavan, Race Course Road,
Bengaluru.
Date of Institution of suit : 16.10.2020
Nature of suit : U/sec.34 of the Arbitration and
(suit on pronote, suit for Conciliation Act,1996
declaration and
possession suit for
injunction, etc.,)
Date of commencement : -
of recording of evidence
Date of judgment : 17.02.2022
Total duration : Year/s Month/s Day/s
01 04 01
(S.J.KRISHNA)
LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU.
(CCH-90)
/3/
Com.A.P.No.72/2020
JUDGMENT
The Plaintiff has filed this Arbitration suit U/Sec.34 of the Arbitration & Conciliation Act, 1996 praying the Court to call for records in A.C.No.9/2019 on the file of the Sole Arbitrator Mr.Justice K.N.Kesava Narayana, Former Judge of Hon'ble High Court of Karnataka of Bengaluru, the respondent No.4 herein; to set aside the Arbitration Award dated 17.06.2020 passed in A.C.No.9/2019 by the Sole Arbitrator Mr.Justice K.N.Keshava Narayan, Former Judge of Hon'ble Court of Karnataka of Bengaluru, the respondent No.4 herein.
02. The arbitration proceedings in A.C.No.9/2019 was initiated in pursuance of the Order dated:02.01.2019 passed by the Hon'ble High Court of Karnataka, Bengaluru in CMP No:159/2018.
03. For the sake of convenience, the parties to the present suit are referred to as 'claimant' and 'respondents' as before the learned Sole Arbitrator in A.C.No.9/2019.
The summary of the case of the Claimant before the Arbitral Tribunal in A.C.No.9/2019 is as under:
04. The claimants are the owners of residential site No.141 A, situated at HSR Layout, 5 th Sector, Venkoji Rao, /4/ Com.A.P.No.72/2020 Khane Village, Begur Hobli, Bengaluru South Taluk totally measuring 1822.90 sq.mtrs described in the schedule to Statement of Claim having acquired at under the sale deed dt.14.07.2011.
05. The respondent being a private limited company engaged in real estate development and construction of large- scale residential and commercial complexes, approached the claimants for a joint development of the schedule property into a residential project and the claimants entered into a JDA with the respondent on 16.04.2012 for the purpose of developing the schedule property into a residential apartments and common amenities such as a swimming pool, gymnasium and clubhouse in accordance with the scheme formulated by them and said JDA was registered on 14.06.2012.
06. In order to enable the respondent to carry out all the development, to apply for building plan and permissions and to sell their share of the apartments, a Power of Attorney was also executed by the claimants in favor of respondent on 16.04.2012.
07. The parties also executed (1) Memorandum of Agreement on 14.06.2012, for the marketing and sale of 38 /5/ Com.A.P.No.72/2020 apartments constructed on the site; (2) a Supplementary Agreement and Sharing Agreement to JDA on 18.06.2012, (3) Sharing Agreement dt.19.06.2012.
08. Under the Joint Development Agreement, Supplementary Agreement and Sharing Agreement, the proposed project envisaged construction of 38 apartments out of which 50% or 19 apartments would fall to the share of the claimants and the remaining 19 apartments would fall to the share of respondent with equal share in the total saleable constructed super built-up area in the Schedule Property. As per Clause 11.1 of the JDA, the project was to be completed within a period of 24 months from the date of obtaining the Commencement Certificate with a further grace period of six months. As per Clause 29.4.1. of JDA sanction plan was to be obtained and construction of the project was to be commenced within one year from the date of registration of JDA, but however none of this was done as per the time lines and that there has been violation of the terms of JDA by the respondent.
09. As per the terms of MOA, the respondent was specifically obligated to market and sell the claimants' share of apartments in the residential project. As per Clause 1.2 of MoA the respondent shall commence the marketing of the /6/ Com.A.P.No.72/2020 claimants' share of the apartments after the sale of three units falling to its share and thereafter for every sale of one apartment of respondent's share. As per Clause 2.1 of MoA, respondent shall perform the marketing services in a good and competent manner by exercising its best professional skill and judgment in the interest of claimants.
10. The respondent failed to market claimants' share of apartments as obligated under MOA despite selling 10 apartments from its own share. The respondent went on putting great efforts only to market and sell apartments falling to its share without making any efforts to market and sell apartments falling to its share without making any efforts to market and sell any apartment falling to claimants' share. MOA was entered into between the parties precisely because the claimants being the owners of the property and not being professional developers having any marketing expertise, did not want their apartments left unsold and therefore wanted the respondent to market and sell their share of apartments well for which respondent would get a brokerage of 2% and marketing commission of 1% amounting to 3% of sale price.
11. After the respondent had executed the sale agreements for more than 4 or 5 apartments falling to its share and when the claimants pushed the respondent to /7/ Com.A.P.No.72/2020 market and sell their share of the apartments as per the obligations under MOA, the General Manager-Sales of the respondent introduced two prospective buyers to the claimants in 2015. One of the prospective buyers was Mr.Madhu.M.M and claimants met him and sent an e-mail to him 02.04.2015 with sale price and payment terms. Though the sale price quoted was the same price at which the respondent was selling its share of apartments in the same project, the said buyer through his e-mail dt.06.04.2015 responded stating that he would only be willing to pay ₹.1.35 Crores which were below the market price. Thereafter claimants again met said Mr.Madhu and sent e-mail dt.07.04.2015 stating that the best price they can agree to was ₹.1.40 Crores but he did not respond and therefore the sale did not go through. In relation to this, respondent did nothing more than introducing the buyer to the claimants and the representatives of the respondent did no negotiate nor any of them was part of the discussions and thereby did not carry out any of the duties under the MOA to try and have the sale materialized. One of the reasons why the proposed buyer did not pursue the matter was that he was un-impressed with the constructions carried out by the respondent in another project called LGCL Bamboo Forest;
/8/ Com.A.P.No.72/2020
12. Thereafter, the respondent introduced a second buyer to the claimants, but the General Manager of the respondent was interacting with the said buyer. That even in respect of this case, the General Manager of the respondent merely informed the claimants that the final offer of the buyer was ₹.7000 per sq.ft, when the respondent was selling and advertising its share of apartments at a much higher price. The claimants did want to reduce the price to that amount as interest cost was also to be taken into account and hence, the said sale did not materialize. Even in this case, the respondent without making any efforts to interact with buyer, negotiate on the price and sell the apartments at the market price, only acted like a messenger to communicate buyer's offer to the claimants. After this no further efforts were made by the respondent for making any sales of claimants' share of apartments.
13. Though the construction going on the site was extremely slow and though even the commencement certificate had not been obtained by the respondent within one year from the date of registration of JDA, the respondent was making rapid sales of their share of apartments and there was no effort or marketing and sale of claimants' share of apartment. Though the claimants requested the respondent on several occasions to furnish information on the development /9/ Com.A.P.No.72/2020 front and also sales of the apartments, the respondent did not respond to such requests.
14. After repeated requests for information, the claimants were shocked to receive a letter from respondent dated 07.09.2015 in which the respondent purported to unilaterally terminate the MOA falsely alleging that after selling three apartments from their share, they were unable to sell any apartments from the claimants' share though they had identified buyers but the transactions were not finalized by the claimants and it has hindered sales of their apartments. That the purported termination of MOA was completely illegal and unlawful for the reason that none of the conditions stipulated by Clause 8 of MOA, nor have the claimants committed any breach which had been notified by the respondent, but on the other hand there was breach of the terms of MOA by the respondent since it had failed to market and sell any apartment falling to the share of claimants, therefore, the respondent is continued to bound by the terms of MOA;
15. Through their letter dt.16.09.2015, the claimants responded to the purported termination notice issued by respondent, stating that such unilateral withdrawal was not acceptable since the two sales did not go through despite their co-operation and reduction of sale price as well and further /10/ Com.A.P.No.72/2020 stating that the respondent has not been carrying out its obligations under the MoA and also called upon the respondent to withdraw the termination and to increase their marketing efforts to sell the apartments falling to their share. Though thereafter there was no response from respondent, claimants through their letter dt.19.10.2015 continued to request the respondent to furnish the updates on the marketing and sales of their share of apartments.
16. Thereafter the parties met and respondent agreed that since it had not carried out its obligations under MOA and did not adequately market and sell the apartments of claimants, one of its sister concerns by name LGCL Urban Homes (India) LLP would purchase three apartments of claimants' share being unit No.1101-D, 1102-C and 1103-E and based on this, claimants entered into agreement for sale dt.05.03.2016 with LGCL Urban Homes (India) LLP under the said agreement was not made, the claimants who had several financial constraints, by their letter dt.13.05.2016 wrote to LGCL Urban Homes (India) LLP for cancellation of the said agreement and also returned the advance amount of ₹.10,00,000/- which they had received.
17. Thereafter, claimants through their letter dated 19.05.2016 and emails dt.28.06.2016, 02.08.2016 and /11/ Com.A.P.No.72/2020 26.09.2016, sought from the respondent updates on the marketing efforts taken for sale of their share of apartments and also updates on the construction of the project which was also completely behind schedule. That in response to the above, respondent through letter dt.17.10.2016 made several false allegations and invited the claimants for a meeting to sort out all the issues and assuring that they would carry out their obligations to which the claimants responded through their letter dt.24.10.2016.
18. Despite meetings, since there was no progress on the sales of claimants' apartments, through email dt.04.04.2017, the claimants wrote to respondent that they have come to know that the respondent has been making several sales of its share of apartments, but in response to this, the respondent sent letter dt.25.04.2017 reiterating that MoA has already been terminated.
19. All through this time the respondent continued to hectically make sales of apartments falling to its share and as per the price list and availability of apartments published in December 2017 by the respondent, only 6 apartments were left for sale and this showed that the respondent had already entered into agreements for sale of 13 apartments. Thereafter, an updated price list and availability of its /12/ Com.A.P.No.72/2020 apartment was put out by the respondent in January 2019, which showed that there were only 4 apartments left for sale and the sale price quoted was ₹.8,700/- to ₹.9,100/- per sq.ft. That, this clearly showed that out of 19 apartments, the respondent had already sold 15 apartments leaving only 4 apartments though none of the apartments of claimants had been sold and thus the respondent acted in breach of Clause 1.2 of MOA and also acted in breach of Clause 2.1 by failing to market the claimants' share of apartment in a good and competent manner.
20. If the respondent had duly performed its obligations under the MoA, it ought to have marketed and sold 11 apartments falling to the share of claimants, since, before January 2019 respondent had already sold 15 apartments falling to its share. That on the basis of sale price at which the respondent has been selling its share of apartments, the average price for each of the apartments is ₹.2.00 Crores and if agreements for sale of 11 apartments had been executed by the claimants, till date they ought to have received 40% of the sale price on par with the amount received by respondent. That had the respondent fulfilled all its obligations by marketing and selling 11 apartments, even on the basis of the average price of the apartments, the claimants would be due to receive ₹.8.80 Crores being the 40% of the value of 11 /13/ Com.A.P.No.72/2020 apartments.
21. Apart from committing breach of terms of MOA, the respondent has also committed serious breach of its obligations of the terms of JDA and the claimants are taking appropriate action with respect to breach of JDA as well.
22. In view of the respondent's breach of MOA and the attempt to unilaterally terminate MOA, claimants issued legal notice dt.29.06.2017 invoking the arbitration clause in the MOA and seeking resolution of dispute by arbitration, to which the respondent sent reply dtd.26.07.2017 declining to refer the matter for arbitration. Therefore, claimants filed CMP No.159/2018 before the Hon'ble High Court of Karnataka under Section 11(5) of the Act seeking appointment of an Arbitrator. Respondent filed its objection and claimants filed rejoinder. By order dt.02.01.2019, Hon'ble High Court allowed the said petition and constituted this Arbitral Tribunal to adjudicate and decide all the disputes between the parties in relation of MOA.
23. On the basis of the above averments, claimants have sought for an Award in the following terms:
a. Directing the respondent to make payment of ₹.8,80,00,000/- to the claimants, being the value /14/ Com.A.P.No.72/2020 of 40% of the claimants' share of 11 apartments due to be sold by the respondent along with 18% interest from when the payment was due till the date of payment.
b. Directing that the respondent be restrained from making any further sales of the remaining 4 apartments in its share being unit Nos.002-G, 201- A, 203-B and 403-B in the project "LGCL Luxuriate".
c. Direct the respondent to specifically perform its obligations under the MOA dated 14.06.2012 and sell the 11 apartments of the claimants share in the project "LGCL Luxuriate", d. Direct the respondent to specifically perform and comply with the MOA dated 14.06.2012 in future;
e. Direct the respondent to pay all costs of these arbitration proceedings including Claimants' share of costs and fees, and pass any further orders as this Tribunal deems fit in the interest of justice and equity.
/15/ Com.A.P.No.72/2020 The summary of the Statement of objections filed by the Respondent is as under:
24. In the Statement of Objections, respondent has admitted that (i) the claimants are the owners of Schedule Property; (ii) JDA dt.16.04.2012 came into existence for development Schedule Property into a residential apartment building; (iii) execution of GPA dt.16.04.2012 by claimants pursuant to JDA; (iv) execution of MOA dt.14.06.2012 for marketing and selling the apartments falling to the share of claimants; (v) execution of supplementary agreement dt.18.06.2012 and (iv) execution of sharing agreement by and between the parties, where under apartments falling to the shares of claimants and respondent were identified. However, respondent has denied the allegations that it has committed breach and violation of the terms of MOA and that it has failed to comply with obligation of marketing and selling claimants' share of apartments. According to the respondent, claimants failed to perform their duties enumerated in Clause 3 of MOA, as such, have committed violation of said Clause of MOA. According to respondent reasons for not marketing the apartments of claimants is attributed only to the conduct of claimants. Respondent has further contended that the claimants are misguiding the Tribunal with the contention that /16/ Com.A.P.No.72/2020 respondent has sold 10 apartments falling to its share without selling the claimants' apartments.
25. Respondent has further contended that it has registered the project with the Real Estate Regulatory Authority established under Real Estate (Regulation & Development) Act, 2016, (Central Act 16 of 2016) (for short RERA Act) and has obtained Certificate, as such is entitled to sell its share of apartments as per law, whereas, the claimants being the land owners and co-promoters have not registered with RERA Authority till date as per RERA Act, as such, they are not entitled to sell their share of apartments. It is further contended that in view of implementation of RERA Act, any agreement for marketing the apartment without registration under RERA Act is illegal and is not enforceable under law and even after the lapse of more than two and half years from the date of implementation of RERA Act, since the claimants have not registered their units before RERA, they have no locus standi to dispute the sales of apartments falling to the share of respondent. The said MOA is frustrated by change of law and therefore, respondent cannot be directed to perform the terms of the said agreement even if the said agreement is deemed to be subsisting.
/17/ Com.A.P.No.72/2020
26. The respondent has further contended that the claim of claimants is not maintainable for the reason that they have still not registered with RERA Authority for marketing their share of apartments and that respondent could not market claimants' share of apartments in view of the obstacles created by them in the process of marketing and not adhering to the duties and obligations as agreed under MOA. Respondent has contended that it has sold the apartments only upon valid termination of MOA and is still struggling to sell the apartments in this bad market.
27. The respondent has further contended that, admittedly, the best offer received and negotiated by the customer was refused by the claimants. According to respondent, it cannot insist the buyers to buy the property at the whims and fancy price of the claimants and claimants cannot use the said MOA as a weapon against the respondent when marketing did not happen at their instance and that in fact, as per the terms of MOA, except introducing the buyer nothing else can be done by the respondent. Respondent has termed the allegation that it did not do the duty to have the sales materialize, as illogical by stating that the customer is the best judge of what he wants and at what price and merely because respondent force him to buy at a higher rate there is /18/ Com.A.P.No.72/2020 no obligation on the part of customer to pay price against his wishes.
28. Respondent has denied the further allegations that the price quoted by second buyer at ₹.7,000/- per sq.ft., was lesser compared to the price at which respondent sold its share of apartments. It has further contended that, each and every apartment will have its advantages and disadvantages and each customer will have its advantages and disadvantages and each customer would have his own perceptions and price varies from one apartment to another accordingly. Respondent has further contended that in spite of slump in the real estate market, with great difficulty the buyers were procured but the claimants left the chance of marketing on their own for which they have to blame themselves.
29. Respondent has further contended that MOA was terminated because as per the terms of sharing agreement, the apartments of the claimants are to be sold only after completion of development but considering the request when the customers were routed claimants started spoiling the deals and therefore, when claimants started claiming that there is an MOA and started troubling the respondent by hindering the /19/ Com.A.P.No.72/2020 sales of its apartments with an oblique motive, the said MOA was terminated.
30. The respondent has denied the allegation that there was no notice as required by MOA before termination. In this regard, respondent has contended that communications sent by providing the customers and refusal to accept the offers is nothing but the notice of breach, therefore, there cannot be any circumstance warranting issue of 30 days' notice because, the customer will not wait for 30 days.
31. The respondent denying the allegation that since it did not carry out its obligations, its sister concern agreed to purchase 3 apartments has contended that it was altogether a fresh agreement under which the claimants agreed to sell 3 apartments to the said Firm. According to respondent this fact also would show that termination of MOA was acted upon by the claimants as such, now the claimants cannot go back and claim that MOA still exists. Respondent has further contended that there was no use in taking the customers to the claimants to help them because they never intended to sell the property since they intend to sell the property only after completion of construction as stated in the Sharing Agreement dt.19.06.2014.
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32. The respondent has denied the claim made by claimants for ₹.8.80 Crores and has contended that the claimants are not entitled for the said sum or the interest and that claim for damages cannot depend upon guess work and on assumption and presumptions. According to respondent the claimants are not entitled for any reliefs sought in Statement Of Claim. The respondent has contended that the arbitration clause contained in MOA was novated by virtue of execution of Sharing Agreement Dt.19.06.2014 as well as subsequent sale agreement dt.05.03.2016, as such there is no arbitration agreement in existence and therefore, the alleged dispute is not within the scope of this Tribunal.
The Respondent has stated its case as under:
33. That after executing JDA & MOA, claimants requested respondent to change the terms of the agreement so that instead of keeping ₹.2.50 Crores as security deposit amount they be permitted to take a sum of ₹.2.00 Crores out of ₹.2.50 Crores as consideration amount which will not be refunded by them so that a plan can be sanctioned and construction can be put up comfortably by the respondent and claimants would be able to utilize the amount of ₹.2.00 Crores immediately and that they would be selling apartments only after completion of the building. That therefore after obtaining /21/ Com.A.P.No.72/2020 sanctioned plan, sharing agreement dt.19.06.2014 was executed by and between the parties by identifying the apartments falling to the respective shares of parties. That in order to bring the novated terms contrary to the terms of MOA, in clause 5 of sharing agreement it was mentioned that "the owners are not entitled to sell their share before completion of development of Schedule Property and taking possession of owners share without prior consent of the developer". That in view of the fact the terms of contract were changed and novated, the terms of MOA are deemed to have been novated by virtue of subsequent sharing agreement. That the sharing agreement does not contain arbitration clause and therefore the tribunal has no jurisdiction to hold this proceeding and shall be terminated at the threshold.
34. That since the terms regarding marketing of apartments falling to the share of claimants contained in MOA stood modified and novated by virtue of Clause 5 of sharing agreement, the claims of Clause 5 of sharing agreement, the claims put forth by the claimants based on MOA are untenable in law.
35. That since the claimants had sum of ₹.2.00 Crores at their hands for their disposal without keeping it as security deposit, they did not want to sell their share of apartments till /22/ Com.A.P.No.72/2020 the completion of construction and handing over the possession and in this background, clause 5 of sharing agreement was introduced and by virtue of the said clause the claimants virtually withdrew the power given to the developer to market the apartments falling to their share, therefore, the claims now made by the claimants are only to demand ransom from the developer and to harass the respondent.
36. After commencement of construction, respondent started marketing its share of apartments and at that juncture claimants approached respondent with a request to market certain apartments falling to their share also. With regard to fixation of the consideration with the intending purchasers and except referring the purchaser to the land owners, nothing was to be done by the respondent.
37. That since the year 2014-15, there was a slump in the real estate market which affected the entire country and especially Bengaluru, as such since then it is the buyer's market and therefore, the developers and land owners cannot insist the sale of property at a particular price and cannot insist the sale of property at a particular price and fixation of price required negotiations and bargains and since there is a huge stock of apartments available, the rates are to be /23/ Com.A.P.No.72/2020 negotiated for marketing the apartments as per the individual requirements.
38. That the respondent had negotiated for sale and executed sale apartments falling to its share at various prices depending upon the advantages and disadvantages of particular apartment, as such, there cannot be uniform price fixed for all the apartments and price vary from customer and advantages or disadvantages of every apartment and also depend on mutual negotiations by and between the owner of apartment and the intending purchaser and thus, the properties are to be sold by understanding the pulse of the market and under these circumstances the claims of claimant based on guess work is unsustainable.
39. When the claimants requested the Respondent to market their share of apartments also since they were in need of money, apartments falling to the shares of both land owners and the developer were kept open for purchasers to inspect, choose, negotiate and purchase. Thereupon, two apartments falling to the share of Claimants were selected by two different purchasers and after Respondent negotiating for the best possible price with those two intending purchasers, they were referred to the Claimants for Negotiation. Though, the price finally agreed upon by one of the customers by name /24/ Com.A.P.No.72/2020 Mr.Madhu at ₹.1.35 Crore was similar to the offer received by the developer for its apartments as such was the genuine offer, the Claimants for the reasons best known to them started avoiding the said customer and did not inform their consent and therefore, the said customer was constrained to back out and this clearly shows that the Claimants were not interested in selling their apartments and their intention was only to know the price and keep quite without selling their apartments.
40. When the Respondent requested the Claimants to close the transaction with another customer, they did not agree to negotiate the price further though ₹.7,000/- per Sq.ft., was the best offer for that apartment. That these conduct on the part of Claimants show that they wanted the price fixed by them to be paid by the purchasers which was not within the hands of Respondent.
41. At that juncture, when the Respondent questioned the Claimants as to why they are not co-operating for sale of their apartments, their response was that they are not in a hurry and that they would sell their share of apartments only after the completion of the development. Since virtually the terms of MOA were novated after execution of Sharing Agreement, the attempts to sell the apartments of Claimants /25/ Com.A.P.No.72/2020 were only at their request. That having understood the oblique motive on the part of Claimants, Respondent was constrained to officially terminate the MOA vide letter dated:07.09.2015 by intimating that they are no more interested to market the apartments on behalf of Claimants since the Claimants' conduct was a breach within the meaning of Clause 8.2 of MOA. That since as per the terms of MOA the customers are to be routed by the Respondent to the Claimants and nothing else and since the Claimants did not agree for any of the offers quoted by any of the customers, there was no purpose in holding the said MOA and therefore the same was validly terminated by the Respondent.
42. The fact that the said termination dated:07.09.2015 was acted upon by the parties is clear from the further conduct of the Claimants that Mr.M.N.Kumar, the first claimant, came forward to sell his 3 apartments to the developer himself, however, developer did not come forward for buying the property but another Firm by name LGCL Urban Home (India) LLP, which was also carrying on business of marketing, decided to purchase the apartments to ease out the difficulties of Claimants. In that regard, a single agreement dated:05.03.2016 was entered in to between the Claimants ad the said Firm. The said sale by the Claimants to LGCL Urban Home (India) LLP was outside the purview of MOA and /26/ Com.A.P.No.72/2020 therefore, said MOA is deemed to be terminated, as such, Claimants cannot claim that the MOA is still subsisting.
43. Even if the agreement of sale dated:05.03.2016 is considered as an agreement in pursuance of the MOA, still by virtue of said agreement of sale and the terms of Sharing Agreement, MOA is deemed to be modified and novated.
44. After entering in to agreement dated:05.03.2016, the Claimants again turned around and canceled the said agreement through their letter dated:13.05.2016 by coming forward to repay the advance amount received under the agreement. Thus, at the instance of Claimants the said agreement of sale was also terminated and this also further shows that the Claimants never intended to market their property and never had consistent mind to sell their property at a particular price and it was on account of this inconsistency on the part of Claimants, apartments belonging to them could not be sold and therefore, the breach was on the part of Claimants and not on the part of Respondent.
45. Subsequent to the date of termination of MOA, Claimant and Respondent had discussions about execution of fresh marketing agreement and in this regard various mails were exchanged between the parties from October 2017 to /27/ Com.A.P.No.72/2020 June 2018. However, since the Claimants insisted that developer should purchase the apartments and also to pay penalty at the rate of ₹.25,00,000/- fresh marketing agreement was not executed. Nevertheless, the circumstances also would show that the termination of MOA was acted upon by the parties.
46. The Claim for payment of ₹.8.80 Crores is based on mere presumption, assumption, surmises, guess work as well as arithmetical calculations without any basis. That there is no term in the MOA for payment of any amount by the Respondent to the Claimants in the event of Respondent's failure to market the apartments falling to their share. Since it was not agreed between the parties as to the price at which an apartment was to be sold is not forthcoming as to on what basis the Claimants could claim payment of ₹.8.80 Crores being 40% of the purported value of 11 unsold apartments, therefore the said claim is not tenable and Respondent is not liable to pay any amount.
47. The Respondent has also stated that the Arbitral Tribunal has no jurisdiction to deal with the alleged dispute raised by the claimant, as the MOA dated:14.06.2012 is a terminated agreement and further terms of MOA are novated. As per the novated agreements i.e. sharing agreement /28/ Com.A.P.No.72/2020 dated:19.06.2014 and sale agreement dated:05.03.2016 there is no arbitration clause, therefore the Arbitral Tribunal has no jurisdiction to adjudicate upon the dispute raised by the Claimants. The Respondent has prayed for dismissal of the Claim made by the Claimants with exemplary costs.
The Claimants have filed their rejoinder statement as under:
48. The contention of Respondent that MOA was novated and terminated by agreement of sale dated:05.03.2016 . It was because of their repeated reminders to the Respondent to market and sell apartments falling to their share, Respondent agreed that its sister concern LGCL Urban Homes (India) LLP would purchase three apartments owing to the fact that it had not performed its obligations under MOA and it was only under these circumstance agreement of sale dated:05.03.2016 came in to existence and the same was later canceled due to non- payment of sale consideration by Respondent. According to Claimants, since the said Agreement of sale was a separate document, it cannot be said to have novated and canceled MOA and in fact the Agreement of Sale was executed in pursuance and in furtherance of MOA and was executed by a completely different party.
/29/ Com.A.P.No.72/2020
49. The Claimants have stated that since the Sharing agreement nor Agreement of sale dated:05.03.2016 in any way novated or canceled MOA, the arbitration clause under the valid and subsisting MOA is still in force, as such, the Arbitral Tribunal has jurisdiction to adjudicate the dispute raised in these proceedings. This issue was raised before the Hon'ble High Court and the Hon'ble High Court at para 24 of its order dated:02.01.2019 has clearly rejected the said contention therefore, it is not open to Respondent to raise said issue again before this Tribunal.
50. The claimants have denied the contention of Respondent that because of coming in to force of RERA, Respondent could not perform its obligations under MOA. The RERA was passed in March 2016 while Respondent had been violating the MOA much before the said dated and the alleged termination of MOA was also much before coming in to force of said Act which states that marketing of Claimants' share of apartments cannot be done until they register under the said Act. Therefore the defense put forth by the Respondent may be rejected forthwith and the Claims of Claimants may be allowed.
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51. The Learned Arbitral Tribunal has framed the following ISSUES
1. Whether the Claimants prove that the Respondent failed to fulfill its obligations as per Clause 1.1. of Memorandum of Agreement dated:14.06.2012 in identifying the purchasers for the sale of owners' share of apartments and commence and carry on the marketing and sale of owners' share of apartments as set out in clause 1.2 of Memorandum of Agreement?
2. Whether the Claimants prove that on account of failure on the part of Respondent to fulfill its obligations as per Clause 1.1 and 1.2 of Memorandum of Agreement they were prevented from receiving a sum of ₹.8,80,00,000/- being 40% of the average sale price of apartments in respect of which the Respondent was under an obligation to have commenced and carried on marketing, till the date of presenting the claim statement, as such they are entitled for payment of the said amount from Respondent with interest at 18% p.a. from the respective dates on which the payments were due?
3. Whether the Claimants are entitled for direction to the Respondent to specifically perform its obligations under Memorandum of Agreement dated:14.06.2012 by arranging sale of 11 apartments of the Claimant's share in the project "LGCL Luxuriate"?
4. Whether the Respondent proves that by virtue of Sharing Agreement dated:19.6.2014, its obligations under Clause 1.1. and 1.2 of Memorandum of Agreement dated:14.06.2012 got novated, as a result the said Memorandum /31/ Com.A.P.No.72/2020 of Agreement stood superseded?
5. Whether the Respondent proves that upon execution of Sharing Agreement dated:19.06.2014 and Agreement of Sale dated:05.03.2016 by and between the Claimants and M/S.LGCL Urban Homes (India) LLP, Memorandum of Agreement dated 14.06.2012 stood novated and superseded?
6. Whether the Respondent proves that by virtue of novation and supersession of the terms of Memorandum of Agreement dated:14.06.2012, the Claimants are not entitled to enforce any of the terms of Memorandum of agreement as such, they are not entitled to any of the prayers sought in the Statement of Claim?
7. Whether the Respondent proves that the Claimants by their own conduct in not properly negotiating with the two prospective buyers identified by Respondent and failure to materialize the sale transaction with them in respect of owner share of apartments, have rendered the performance impossible as such they are not entitled for any relief sought?
8. Whether the Respondent proves that as per the provisions of RERA Act, the Claimants were required to register themselves in respect of their share of apartments before marketing them and that since the Claimants failed to comply with the said statutory requirement, Memorandum of Agreement dated:14.06.20212 got frustrated by change in law, as such the terms of said Memorandum of Agreement cannot be enforced against the Respondent?
9. Whether the Respondent proves that on account of novation, suppression and frustration of contract under the Memorandum of Agreement dated:14.06.2012, thee was no /32/ Com.A.P.No.72/2020 subsisting arbitration agreement between the parties as such this arbitral tribunal has no jurisdiction to adjudicate the dispute?
10. Whether the Respondent proves that it has validly terminated the Memorandum of Agreement dated:14.06.2012 through letter dated:07.09.2015?
11. Whether the Claimants are entitled for the cost of this arbitration proceedings?
12. To What relief/award parties are entitled to?
52. The Claimants examined Claimant No:1 Sri.M.N.Kumar as PW1. PW1 has exhibited Ex.C1 to Ex.C34. The Respondent has not adduced any oral evidence. The Respondent got exhibited Ex.R1 to Ex.R10 in the cross examination of PW1.
53. After the conclusion of the Trial, and upon hearing the arguments addressed by the learned Counsel for the parties the Learned Arbitral Tribunal has passed its Award on 17.06.2020 on the following terms:
AWARD The Claim of the Claimants are allowed in the following terms:
i) Respondent is directed to specifically perform its obligations under Ex.C4 by taking necessary steps as per the terms specified therein at the first place, to market and sell 7 apartments of Claimants within a time frame of one year from the /33/ Com.A.P.No.72/2020 date of this award. In the event of Respondent's failure to do so, Respondent shall pay to the claimants ₹.1,00,000/-
(Rupees one lakh only) per annum for each apartment which remain unsold out of 7 apartments, as loss, from the expiry of period of one year until all the 7 apartments are marketed and sold.
ii) Respondent is restrained from marketing and selling any of its hare of remaining 10 (ten) apartments, particulars of which are furnished in the affidavit of its authorized signatory submitted in answer to the interrogatories delivered, Viz., Unit Nos.002 Type G:003 Type H; 201 Type A; 203 Type B:
403 Type B; 603 Type B; 1001 Type A; 1003 Type B; 1201 Type B; 403 Type B: 603 Type B: 1001 Type A:1003 Type B; 1201 Type A and 1202 Type C, initially until all 7(seven) apartments of claimants are marketed and sold as directed at (i) above.
iii) After marketing of all the 7(seven) apartments of Claimants as directed at (i) above, Respondent is further directed to market and sell the remaining 12(twelve) apartments falling to the share of Claimants, in the manner specified in Clause 1.2 of Ex.C4 by marketing one apartment of Claimants after the sale of every apartment from its share till all the apartments of Claimants are marketed and sold. Until such time each of the apartment of Claimants is marketed and sold after the sale of its every apartment, Respondent is restrained from further selling apartments falling to its share. Marketing and sale of all the apartments of /34/ Com.A.P.No.72/2020 Claimants as indicated above, shall be performed by the Respondent in accordance with the provisions of RERA Act and the Rules made there under.
iv) Respondent is directed to pay to the Claimants in all ₹.21,05,000/- as compensation for the loss suffered by them calculated up to 01.05.2020, with future interest at 6% per annum on ₹.17,84,000/- from 02.05.2020 to the date of realization. Claim of the Claimants in excess of the amount computed as above, is rejected.
v) Respondent is further directed to pay to the Claimants 50% of their share of fee of the arbitrator and other expenses deposited in the Arbitration Centre by them as determined by the Centre and also to pay ₹.1,25,000/- being 50% of legal fee and other expenses spent by them, within three months, from the date of this award, failing which the said amount shall carry interest at the rate of 10% per annum from the date of this award till the date of payment;
vi) Claimant shall pay requisite stamp duty payable on this Award as per Karnataka Stamp Act.
54. With the pronouncement and publication of the Award, this arbitral proceeding stands terminated as per Section 32(1) of the Act.
55. This Award is signed and issued in 5 originals, one for the record of the Centre and rest of the 4 to each of the parties.
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56. Being aggrieved by the Impugned Award the Respondent has filed this suit under section 34 of Arbitration and Conciliation Act, 1996. The Respondent has furnished the facts of the case by reiterating the averments made in its Statement of Objections filed before the Learned Arbitral Tribunal apart from urging the grounds to set aside the impugned Award.
The case of the Plaintiff/Respondent is as under:
57. The impugned award is in contravention of fundamental policy of Indian Law and is also in conflict with the most basic notions of justice. The award is vitiated by patent illegality apparent on the face of record.
58. It is clear from the records available before the learned Arbitral Tribunal that the terms of earlier Memorandum of Understanding, JDA, the Marketing Agreement and Ex.R.10, Ex.C2 and C.4 went on a material change. As per the terms of which the security deposit of ₹.2.5 Crores was changed as ₹.2 Crores non-refundable or consideration and ₹.50 lakhs was treated as refundable security deposit amount. Hence, a sum of ₹.2 Crores was left with the claimants as consideration amount, which was a material alteration from the terms of Joint Development Agreement. Subsequently, after sanction of plans, the apartments that were falling to the share of land /36/ Com.A.P.No.72/2020 owners and developers were identified, as per the mutually agreed terms. After mutual negotiations and discussions and exchange of drafts, the sharing agreement dated 19.06.2014 as per Ex.C.6 was entered into by and between the parties agreeing to certain terms and conditions including right of sale of the apartments falling to the share of land owners and developers. Since, the consideration amount of ₹.2 Crores was paid to the claimants which was left at the disposal of the land owners, the terms of Marketing Agreement Ex.C.4 was given a go by and the terms were altered and novated and a rider was fixed on the right of the Claimants to convey their share of residential units till the completion of the project. The Claimants were restrained from not selling the apartments falling to their share till completion of the project and if the same is to be sold it was with the written permission of the developer. Therefore, the terms of the Marketing Agreement became a nonest, redundant under the law. It is has got the effect of narration of the terms of Ex.C.4 by virtue of the terms of Ex.C.6. Therefore, claiming the right under Ex.C.4 is of no consequence since the right to sell the apartments itself was curtailed by virtue of mutually agreed terms. The said defense was specifically raised and the learned Arbitral Tribunal did not consider the same and casually a finding is recorded that there is no narration of the contract. Sri.M.N.Kumar, CW.1 in his cross-examination admitted that sharing agreement was /37/ Com.A.P.No.72/2020 executed as per Ex.P.C.6 after agreeing to the terms and conditions contained in the said agreement. He has also admitted that the supplement agreement as per Ex.C.5 was executed to the effect that a sum of ₹.2 Crores was converted as consideration instead of refundable security deposit. He has also admitted that under Ex.C6 a condition was imposed restricting the right of the owners. This categorical admission shows that after mutual discussions the terms were negotiated from time to time consciously the respondent i.e., the defendants herein agreed for not marketing or selling the apartments till the completion of the project. Therefore, both as per the documentary evidence as well as oral evidence it is clear that the terms of the Ex.C.4 are novated by way of the terms of Ex.C.6 which is with respect to same subject matter and between the same parties with respect to the same transaction. CW.1 in his cross-examination also admitted that while execution of Ex.R.10 there was no discussion about the marketing rights. He has also admitted that as on the date of execution of Ex.C.2 there was no mentioning of marketing rights. He further admits that in GPA as per Ex.C3, there are no rights of marketing conferred on the developer. It is a settled position of law when the right of the parties dealt with under the documents executed at different points of time the last document executed would subsist and take away the terms of the earlier contract. Though sufficient documentary evidence /38/ Com.A.P.No.72/2020 was available on record and though claimants admit about the change of such rights of sale and subsequent agreement at Ex.C.6, the learned Arbitral Tribunal has not discussed about such an important piece of evidence and casually holds that there is no such novation. The learned Arbitral Tribunal failed to appreciate the terms of Memorandum of Agreement as per Ex.C.4 and terms of sharing agreement as per Ex.C.6 cannot simultaneously exist. But the evidence on record shows that Ex.C.6 is acted upon by both the parties and CW.1 concedes that the document No.1 was executed after agreeing to the terms and conditions contended in the said agreement. Therefore, the finding recorded by the learned Arbitrator is against the evidence available on record and it is against the law laid down and fundamental policy of Indian Law that by virtue of change of terms with respect to some right the last document executed would have the effect of novation and subsequent document would bind the rights of the parties. Though the plaintiff has placed various decisions of the Apex Court regarding the position of law as to the doctrine of law the learned Arbitral Tribunal did not even referred to the said decisions in the award. This shows that the impugned award is passed without following the settled of law and therefore the impugned award is in conflict with the position of law and is against the basic fundamental laws of the land. The plaintiff i.e., the respondent has cited a decision of Hon'ble Supreme /39/ Com.A.P.No.72/2020 Court of India reported in (i) 2015 2 SCC 461 between L & T Vs.Mohan Lal Harbans Lal. Bhayana, (ii) 2013 10 SCC 535 between Young Achievers Vs. IMF learning Resources Pvt., Ltd., (iii) 2008 (2) SCC 672 between Delhi Development Authority Vs.Joint Action Committee. The plaintiff is contending that it is clear that the findings of the learned Arbitrator that there is no novation of the contract is an incorrect finding recorded and therefore the award requires to be set aside on in the back drop of the ratio of the above cited decisions. Alternatively, a defense was raised by the claimants that they did not want to sell the residential units and in respect of two customers routed through the plaintiff were turned down by the defendants No.1 to 3 and they did not finalize the transaction and did not negotiate as to the price which was the reason for not selling the property by them. Sufficient materials were produced before the tribunal that the said customers were sent back by the defendants No.1 to 3 quoting a price which is not in the Market. Though the emails in this regard are produced by the plaintiff to show that respondents i.e, defendants herein were at fault the issue is answered against the plaintiff herein and incorrect finding is recorded that the plaintiff failed to fulfill the obligation by identifying the purchasers for sale of owners share of apartments. The entire evidence in this regard available on record including the admitted emails were /40/ Com.A.P.No.72/2020 brushed aside by the learned Arbitral Tribunal without even considering the same. Therefore, the impugned award is against the well established principles of law of the land and hence, the same requires to be set aside in limine. Though Ex.C.4 was not in existence and developer did not sell the three apartments as per the terms of Ex.C.4, the purchases were routed to the claimants and admittedly the best offer was received and as per Ex.R.1 the claimants refused to negotiate and sell the apartments. Another customer by name Madhu had negotiated for purchase at ₹.1.35 Crores as per Ex.C.8. But the said best offer was refused by the claimants. Therefore, in the said background even if Ex.C.4 was in existence under Section 39 of the Contract Act when a party to the contract has refused to perform the promise may put an end to the contract. Therefore, the termination notice at Ex.C.10 is valid under law. The plaintiff has cited a decision of The Hon'ble Supreme Court of India reported in AIR 2001 SC 206 2 between M/s.Sikkim Subha Associates, Vs. State of Sikkim. The plaintiff is contending that he cannot insist the buyers to buy the property at the wings and fancy prices of the claimants and they cannot use the said Memorandum of Agreement as a weapon against the plaintiff when marketing did not happen at the instance of the claimants. In fact except introducing the buyer nothing else can be performed by the plaintiff as per the terms of MOA. All /41/ Com.A.P.No.72/2020 other allegations, that the plaintiff did not do the duty to have sale materialize is illogical because the customer is the best judge of what he wants at what price. Merely because the claimants force him to buy him at a higher rate there is no obligation by the customer to pay the price against his wishes. Admittedly, second buyer was introduced and he quoted ₹.7000 / sq.ft it is admitted by CW.1 that they did not agree for sale. Each and every apartment will have its own customer. Its own advantages and disadvantages and each customer who would come to purchase the property would have different perception. The emails dated 16.02.2015 and 15.07.2015 supports the case of the plaintiff that no marketing can be attributed only to the conduct of the claimants. Refusal of the offer as per Ex.R.1 and Ex.C.9 shows that the claimants wanted their price to be paid by the purchasers which is not within the hands of plaintiff. As per the scope of MOU dated 14.06.2012, though it was narrated by virtue of sharing Agreement, the role of the plaintiff even as a marketing agent is only to provide marketing services and it is the decision of the customer and claimant which can culminate into a sale transaction. There cannot be any role that can be played by the plaintiff. But this aspect is not at all considered by the learned Arbitral Tribunal and therefore the award is against the evidence available on record and request to be set aside under law. The said termination of MOA was in fact acted upon by /42/ Com.A.P.No.72/2020 and between the parties. Therefore, the claimants had come forward to sell their apartments i.e., three apartments of claimants No.1 to another firm LGCL Urban Homes India Pvt.,Ltd., LLP which was carrying on business of marketing. The agreement of sale dated 05.03.2016 executed in this regard is admitted by the claimants. Therefore, the said individual sale by the claimants themselves to LGCL Urban Homes India Pvt.,Ltd., LLP Urban Homes India Pvt.,Ltd., LLP was outside the purview of MOA dated 14.06.2012 and therefore, the said MOA is deemed to be terminated and the said termination was also acted upon claimants by entering into a fresh sale agreement dated 05.03.2016 with the firm LGCL Urban Homes India Pvt.,Ltd., LLP. Therefore, by conduct the respondents i.e., claimants had acted upon the said termination and therefore now the claimants cannot claim that the said MOA dated 14.6.2012 is subsisting. In spite of best evidence on record the impugned award is passed by not even referring to the correct facts of the case. As per the said novated agreements dated 19.06.2014 i.e, the sharing agreement dated 19.06.2014 and the sale agreement dated 05.03.2016 the Arbitration Clause which was mentioned in the earlier agreement was also deleted and therefore the learned tribunal had no jurisdiction to entertain this arbitrational claim. Virtually there is no arbitration clause by and between the parties here to due to the execution of subsequent agreement.
/43/ Com.A.P.No.72/2020 Therefore, the Hon'ble Arbitral Tribunal has no jurisdiction to entertain the arbitration petition. But the Sole Arbitrator exercised the jurisdiction by holding that he has got the jurisdiction. Therefore the award passed is one without jurisdiction and hence the request to be set aside. There is one more circumstance to show that termination of MOU dated 14.06.2012 was acted upon by the claimants. The claimants and plaintiff had a discussion about executing a fresh marketing agreement since the earlier MOA was terminated. Various exchanges of mails took place between the parties hereto during the period from October 2017 to June 2018. But the claimants wanted the marketing as if it is a buy back by penalty clause was sought to be imposed. Hence, the fresh marketing was not executed. In order to force the plaintiff to come to the terms of claimants later they had issued legal notice dated 29.02.2017 as if the MOU dated 14.06.2012 is existing. If marketing agreement was really in existence there was no need to discuss about fresh marketing agreement. This shows the conduct of the claimants that they want to blow hot and cold to suit to their convenience. But the learned Arbitral Tribunal failed to even refer the said facts while passing the award. It was also intimated to the claimants that as per the provision of RERA Act. In order to market the apartments of the land owners they should also get themselves registered as promoters though they are the land owners and until and /44/ Com.A.P.No.72/2020 unless they are registered under the RERA Act they would not be able to market their apartments. Hence, it was intimated to them that in view of the change in law they would not be able to market the apartments and therefore MOA dated 14.06.2012 which is already canceled also turned out to be redundant or an impossible act to perform. The same was also intimated to the claimants. Therefore, the said MOA dated 14.06.2012 is frustrated by change of law and therefore on discount also. The plaintiff cannot perform the terms of the contract even if the said agreement is deemed to be not terminated. In spite of bringing to the notice of the learned Arbitral Tribunal about such position of law the impugned award is passed which is illegal and against the established and settled position of law of the land. The claim petition was filed by the claimants by claiming a huge sum of compensation as per MOA the commission payable was only 2% of the consideration amount. But for not marketing the apartments lakhs of rupees was awarded by the Sole Arbitrator which is nothing but serious miscarriage of justice caused to the plaintiff. On what basis the learned Arbitrator has awarded the compensation is not forth coming from the record. It is clear that the award amount is passed by the learned Arbitral Tribunal on his own presumptions and assumptions. It was also argued before the learned Arbitral Tribunal that Section 73 of the Contract Act provides that /45/ Com.A.P.No.72/2020 compensation can be granted for breach of the contract only to the extent it would naturally arose and no such compensation can be granted if the parties to the contract does not know at the time of entering into the contract that it would likely to result from the breach of it. Therefore when the profit of the plaintiff was only 2% commission and when they did not agree on any quantum of compensation in case of breach imposing huge sums of money as compensation is nothing but a perverse order passed without following the law of the land. Particularly the provisions of the contract Act and therefore passing an award of compensation totally in violation of Section 73 of the Contract Act which provides that no compensation can be granted for any remote indirect loss or damage sustained by such breach. Therefore, the award passed in unsustainable and is against well established principles of law of land and hence the award may be set aside. Even otherwise the agreement at Ex.C.4 does not provide for the consequences any breach of the contract. Therefore when the contract does not provide for damages or compensation it is a perverse order to travel beyond the scope of the arbitration or arbitral reference and grant any compensation which is not provided under the contract. An illegal award is passed also by directing the plaintiff to sell the apartments within one year such direction is not supported by any established principles of law and there cannot be any such /46/ Com.A.P.No.72/2020 power in passion. Such direction is issued further it is an injunction not to sell the apartments of the developer it itself shows that the order passed is in excess of jurisdiction of the arbitrator and beyond the scope of the reference as well as the contract. Therefore the order passed is illegal and it requires to be stayed set aside. The plaintiff has cited another decision of The Hon'ble Supreme Court of India reported in 2011 10 SCC 571 between M.S.K.PROJECT India, (JV) Ltd. Vs. State of Rajastan. AIR 2005 SC 286 between Polymat India P. Ltd. & Anr vs National Insurance Co. Ltd. & Ors. The plaintiff is contending that the terms of the contract have to be construed strictly without altering the nature of the contract as it may affect the interest of parties adversely. There is no mentioning in the agreement dated 14.06.2012 that if the plaintiff does to market the property of the claimants, the plaintiff has to pay any amount as damages. It may be appreciated that at any cost of imagination it was not agreed upon between the parties hereto as to the price for which apartment is to be sold. When the price of the apartments is not at all fixed on what is basis for sole Arbitrator to calculate the sale consideration and award damages to the respondents is also not forthcoming. Therefore, the impugned award is against the well established principles of law. No evidence was lead by the claimants about the quantum of loss caused to them and the proportionate compensation amount payable to them. The claimants /47/ Com.A.P.No.72/2020 themselves agreed in the cross-examination of PW.1 that the compensation is demanded on guess work. Strangely, the Arbitral Tribunal also passed the award on the said guess work without any evidence available on record regarding the loss caused due to the conduct of the plaintiff and quantum of such loss caused to the claimants. Therefore, the impugned award is perverse unsustainable and against the principles of law of the land that each and every rupee of the loss is to be pleaded and proved. The nature of contract at Ex.C.4 MOA cannot be specifically performed by the order of the Court. By virtue of the award passed the plaintiff is directed to sell the apartments falling to the share of the claimant within one year. Such a direction in the nature of specific performance is a strange direction which no Courts of law would ever direct. The effect of the award is the plaintiff has to go in search of intending purchasers and force them to come and buy the apartments from the claimants. When the purchasers were sent the claimants avoided and in spite of proving the said fault and conduct on the part of the claimants, again the Arbitral Tribunal directs the plaintiff to do the same exercise within one year. The award is silent as to how the plaintiff has to route the customers when there is no demand due to slum in real estate market. How the plaintiff has to sell the apartments of the claimants when nobody wants to buy. Further the award is also silent as to what the parties have to /48/ Com.A.P.No.72/2020 do if the plaintiff fails to sell within one year. The award is also silent as to what if the claimants refuse to sell the apartments at the price for which the purchaser routed through the plaintiffs demands or offers. Therefore, the contract itself is such nature of contract which requires further supervision of the Court and such a contract is not specifically enforceable under Section 14B of Specific Relief Act. In spite of bringing to the notice of the Sole Arbitrator about such a position of law, the impugned award is passed which requires to be set aside under law. Under Section 18 of Specific Relief Act, when a plaintiff seeks specific performance of the contract to which the defendant sets up a variation, the plaintiff cannot obtain the performance sought. The effect of supplementary agreement and sharing agreement which imposes a restriction on the right of claimants to sell their share of units shows such a variation of MOA at Ex.C.4. Therefore the impugned award directing the specific performance of such a contract is bad in law and against the provisions of the specifically and therefore the same requires to be set aside in limine.
59. The agreement does not provide any provision for demand of interest. But unfortunately without considering the same the learned Arbitral Tribunal has imposed the interest @ 10% illegally on the plaintiff. Therefore award of interest granted by the learned Arbitral Tribunal which is illegal, /49/ Com.A.P.No.72/2020 improper and against the principles of law of the land. Hence, the impugned award is to be set aside in limine.
60. After service of notice, the claimants appeared through their advocate and have filed their statement of objections. The claimants have reiterated the averments made in the statement of claim filed before the learned Arbitral Tribunal. The claimants have stated that the petition filed by the plaintiff under Section 34 of the A &C Act, 1996 is not maintainable either in law or on facts of the case. The claimants have denied that the Joint Development Agreement and Memo of Agreement dated 14.06.2012 was novated and terminated by the agreement of sale dated 05.03.2016 as contended by the plaintiff herein. In the present case the breach of MOA by the plaintiff is evident as it failed to market and sell the apartments falling to the share of the owners after selling three of their apartments. As per the details given in the interrogatory, plaintiffs sold its third apartment on 30.10.2015. Hence, after this date the plaintiff should have taken steps to market and sell one apartment of the land owners. Instead the plaintiff sent a letter for terminating MOA even before this date on 07.09.2015. Such termination of MOA is completely illegal and unsustainable. The plaintiff did not even refer any purchaser after this date and there was no breach on the part of the defendants. The plaintiff could only /50/ Com.A.P.No.72/2020 have terminated the MOA if it has acted in accordance with Clause 8.2 in the event of a breach by the defendants. The plaintiffs ought to have sent a notice of breach and given 30 days to rectify the said breach and then only could terminate the MOA. In the instance case, there was no breach committed by the defendants of any of their obligations as if the plaintiffs had not even commenced the marketing of the owners' share of the apartments after 30th October 2015. Hence, the sudden termination of MOA on 7.09.20015 is illegal and not valid. The defendants also sent responses to this letter not accepting such termination. The claimant has relied on the decision of the Hon'ble Supreme Court of India reported in 2008 2 SCC 672 between DDA and another Vs. Joint Action Committee and (1974) 1 SCC 141 Damodar Valley Corporation vs. KK Khar. The claimant has stated that it is completely false that MOA was rendered frustrated and impossible to render due to the failure on the part of the defendant to materialize the sales. The only purchasers that were referred to the defendants were referred much prior to the sale of third apartment by the plaintiff i.e., even before they were due to market. The defendants made every earnest attempt to ensure a sale of its share at the best prevailing market price. The plaintiff through its General Manger (Sales) one Mr.Vathsal began interacting with one potential buyer. The plaintiff had initially negotiated a price of ₹.7200/sq.ft for this unit, this being ₹.1500/- less than /51/ Com.A.P.No.72/2020 their own fixed price for similar units belonging to them. To enable this transaction, the defendants were to pay the pre EMI on behalf of the customer @ Rs 650 / sq.ft. Despite these costs, the defendants co-operated with the plaintiff and agreed to these terms vide e-mail dated 16.02.2015. It was only when the plaintiff informed them that the final offer of the buyer was ₹.7000 per sq.ft. When the plaintiff was selling and advertising its share of apartments at a much higher price. Then the defendants stated that the price cannot be negotiated further. This price even of ₹.7000 per sq.ft was much lower than the sale of the plaintiffs' share of apartments that it sold 15.06.2015 at ₹.7400/- per sq.ft. This has been stated in the interrogatories. On 02.04.2015 the defendants had sent an e- mail to one more prospective buyer one Madhu with the same price and payment terms. The same price quoted was the same price that the plaintiff was selling its share of apartments in the same projects. The said buyer responded vide e-mail dated 06.04.2015 stating that he would be willing to pay ₹.1.35 Crores. It was below the market price. The defendants responded vide e-mail dated 07.04.2015 that the best price they can agree was ₹.1.40 Crores. Thereafter this buyer did not respond and hence this sale did not go through. This amount was also much lower than the plaintiffs' apartments that were sold on 18.06.2015 at ₹.7400 p.sq.ft. Hence, there was no fault on the part of the defendants not carry out its /52/ Com.A.P.No.72/2020 obligations under the MOA and in fact as per the sharing agreement, they could not have made a transaction where the price of their apartments was lower than that of the plaintiffs' share of the apartments. All these references were also much before the plaintiffs sold three of its share of apartments and attempted to terminate the KOS even before this time. Further as per Clause 8.2 of MOA if there was any alleged breach or frustration of the contract, the plaintiff should have sent a notice to the same. However, no such notice was sent. Hence, the termination of the MOA by the plaintiff was completely illegal and invalid. The MoA dated 14.06.2012 did not stand novated and canceled by the sharing agreement or the agreement for sale dated 05.03.2016. The Arbitration Clause under the valid and subsisting MOA is still in force and the Arbitral Tribunal had jurisdiction to adjudicate upon the matter referred to it. The Hon'ble Arbitral Tribunal has rightly held that it has jurisdiction to adjudicate the dispute between the parties and that a valid arbitration clause exist between them vide its order dated 11.06.2019 disposing of IA NO.2 filed by the plaintiff. The tribunal has also held that it could not be countenanced that the supplementary agreement dated 18.06.2012 novated the MOA dated 14.06.2012. It has rightly observed that the preamble of the supplementary agreement clearly shows that it was entered into for the purpose of amending the terms of JDA dated 16.04.2012. Which is a /53/ Com.A.P.No.72/2020 wholly independent agreement and that the supplementary agreement makes no reference to MOA. It has also correctly noted that the same line of reasoning would hold for sharing agreement dated 19.04.2014 as well as it merely deals with the sharing of apartments between the parties. The plaintiff had also raised this issue before the Hon'ble High Court of Karnataka in CMP No.159/2018. However, the Hon'ble High Court of Karnataka vide its order dated 02.01.2019 held that "
24. In other words, even if it be assumed that the sale agreement dated 05.03.2016 was executed because Respondent himself undertook to buy three apartments from the owners and the name of the said entity may not make any difference yet, by virtue of such a transaction, the MOA dated 14.06.2012 cannot be treated as having been annulled altogether. First, there has not been any mutually signed written agreement between the parties, terminating the MOA and secondly, such termination cannot be a matter of inference."
62. RERA came into 01.05.2017 and the sharing agreement was executed on 19.06.2014 between the parties. Therefore, the learned Arbitral Tribunal has rightly held that the plaintiff had not prohibition to market the defendants' apartment up to 30.04.2017. The plaintiff has sold its first three apartments by 30.10.2015 and had sold fourth unit on /54/ Com.A.P.No.72/2020 19.02.2016. As per Clause 1.2 of MOA, the plaintiff should have marketed and sold the first unit of the defendants after selling three of its own units. Between 30.10.2015 and 19.02.2016 the plaintiff should have marketed and ensured the sale of one unit of defendant. But the failure to do so amounts to a breach of MOA. Thus, the plaintiff had breached the MOA even before RERA had come into force. The award is not against the fundamental policy of Indian Law nor is it illegal.
63. Under Section 34 this Court cannot access the matter on merits. The plaintiff has failed to allege any of the said grounds and instead seeking an appeal on the merits of the awards which is not possible under Section 34 of the Act. The Cross examination of CW1 does not lead to the conclusion that the sharing agreement has novated the MOA. CW.1 in his cross examination has only stated that the sharing agreement and supplementary agreement were entered in to after due consideration and discussion. This cannot be interpreted to say that the defendants had novated the obligation of marketing viz the sharing agreement. The sharing agreement and MOA exists in two different spheres. Dealing with two separate issues and therefore it cannot be said that the sharing agreement being the latest agreement super seeds the MOA. Thus, the learned Arbitral Tribunal was correct in dismissing /55/ Com.A.P.No.72/2020 the said contention and holding the plaintiff in breach of the MOA. The decisions of the Hon'ble Supreme Court of India in L & T V.s Mohanalal Herbans, 2013 2 SCC 461 and Yong Achievers Vs. IMS Learnign Resource Pvt., Ltd., 2013 10 SCC 535 are specific to the facts of the respective cases and cannot be applied to the present facts. In DDA vs.Joint Action Committed 2008 2 SCC 672 the Hon'ble Supreme Court of India has held that the novation of contract must precede the contract making process. It is clear from the clauses of the sharing agreement that there is no mention to novate the MOA. Therefore, the impugned arbitration award is not incontravention of the cases cited by the plaintiff.
64. The sale agreement entered into with LGCL Urban Homes (India) LLP was in pursuance of an arrangement between the plaintiff and defendant No.1 to 3 as a response of plaintiff failing to fulfill the obligation under the MOA. Therefore, it is falsely claimed that the sale agreement entered into with LGCL Urban Homes (India) LLP was in furtherance of the termination. The Arbitral Tribunal has not arbitrarily decided the compensation amount. Section 54 and 73 of Indian Contract Act allows the tribunal to grant compensation in absence of a Clause to the same in the contract. The tribunal awarded ₹.21,05,000/- as compensation for the loss /56/ Com.A.P.No.72/2020 incurred by the defendants due to lack of sale of their apartments. Therefore it is unreasonable to hold that the compensation amount ordered by the tribunal is baseless and without merit.
65. As held by The Hon'ble Supreme Court of India in ONGC Ltd., Vs.Saphire Ltd., 2003 5 SCC 705 the phrase public policy of India used in Section 34 connotes some matter which concerns public good and the public interest. It held that an 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. The illegality must go to the root of the matter. If the illegality is of trivial nature it cannot be held that the award is against public policy. The 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 declared void. In the instance case there is no violation of any statutory provisions in the impugned award nor is there patent illegality that shocks the conscience of the Hon'ble Court. Matters of fact and evidence cannot be raised under Section 34 of the Act by the plaintiff unless there is a patent illegality shown which goes against the public policy, there are no grounds made out for interference with the impugned award.
/57/ Com.A.P.No.72/2020 The claimants have prayed the Court to dismiss the present petition with exemplary cost.
66. The Learned Counsel for the plaintiff and the defendants have addressed their respective arguments. The learned counsel for claimant has submitted the written arguments also.
67. I have gone through the materials available on record.
68. The following points arise for my determination:
1. Whether the Plaintiff/Respondent has made out any grounds as set out under Section 34 of Arbitration & Conciliation Act, 1996 so as to set aside the Award dated:17.06.2020 passed by the Learned Arbitral Tribunal in A.C.No:09/2019?
2. What Order?
69. My findings on the above points are as under:
Point No:1 : IN THE NEGATIVE Point No:2 : As per final Order for the following /58/ Com.A.P.No.72/2020 REASONS
70. Point No.1 : The Plaintiff has filed this Arbitration suit U/Sec.34 of the Arbitration & Conciliation Act, 1996 praying the Court to call for records in A.C.No.9/2019 on the file of the Sole Arbitrator Mr.Justice K.N.Kesava Narayana, Former Judge of Hon'ble High Court of Karnataka of Bengaluru, the respondent No.4 herein; to set aside the Arbitration Award dated 17.06.2020 passed in A.C.No.9/2019 by the Sole Arbitrator Mr.Justice K.N.Keshava Narayan, Former Judge of Hon'ble Court of Karnataka of Bengaluru, the respondent No.4 herein.
71. In order to determine the suit it is useful to refer to Section 34 of Arbitration and Conciliation Act, 1996 which reads as under:
ARBITRATION AND CONCILIATION ACT, 1996 [Section : 34] Application for setting aside arbitral award (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if- (a) the party making the application establishes on the basis of record of the Arbitral tribunal that-
(i) a party was under some incapacity; or /59/ Com.A.P.No.72/2020
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.-For the avoidance of any doubt, /60/ Com.A.P.No.72/2020 it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.-For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33 , from the date on which that request had been disposed of by the arbitral Tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is /61/ Com.A.P.No.72/2020 appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral Tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral Tribunal will eliminate the grounds for setting aside the arbitral award.
[(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub- section (5) is served upon the other party.
73. The admitted facts of the case are as under:
i. that the Claimants are the owners of residential site No.141 A, situated at HSR Layout, 5th Sector, Venkoji Rao, Khane Village, Begur Hobli, Bengaluru South Taluk totally measuring 1822.90 sq.mtrs described in the schedule to Statement of Claim having acquired at under the sale deed dt.14.07.2011(Ex.C1);
ii. that the Claimants and Respondent have entered in to JDA dated:16.04.2012(Ex.C2) for the development of the property of the Claimants;
iii. execution of GPA dated:16.4.2012 by Claimants in pursuance of JDA (Ex.C3);
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iv. execution of Memorandum of
Agreement dated:14.06.2012 for marketing and selling the apartments falling to the share of the Claimants (Ex.C4);
v. execution of supplementary agreement dated:18.06.2012 (Ex.C5);
vi. execution of Sharing agreement by and between the parties, where under apartments falling to the shares of Claimants and Respondent were identified (Ex.C6).
74. The Claimants are contending that the Respondent has failed to fulfill its obligations as per Clause 1.1. of Memorandum of Agreement dated:14.06.2012 in identifying the purchasers for the sale of owners' share of apartments and commence and carry on the marketing and sale of owners' share of apartments as set out in clause 1.2 of Memorandum of Agreement; that on account of failure on the part of Respondent to fulfill its obligations as per Clause 1.1 and 1.2 of Memorandum of Agreement they were prevented from receiving a sum of ₹.8,80,00,000/- being 40% of the average sale price of apartments in respect of which the Respondent was under an obligation to have commenced and carried on marketing, till the date of presenting the claim statement, as such they are entitled for payment of the said amount from Respondent with interest at 18% p.a. from the respective dates on which the payments were due; that the Respondent is contractually liable to specifically perform its obligations /63/ Com.A.P.No.72/2020 under Memorandum of Agreement dated:14.06.2012 by arranging sale of 11 apartments of the Claimant's share in the project "LGCL Luxuriate".
75. The Respondent is contending that that by virtue of Sharing Agreement dated:19.6.2014, its obligations under Clause 1.1. and 1.2 of Memorandum of Agreement dated:14.06.2012 got novated, as a result the said Memorandum of Agreement stood superseded; that upon execution of Sharing Agreement dated:19.06.2014 and Agreement of Sale dated:05.03.2016 by and between the Claimants and M/s.LGCL Urban Homes (India) LLP, Memorandum of Agreement dated 14.06.2012 stood novated and superseded; that by virtue of novation and supersession of the terms of Memorandum of Agreement dated:14.06.2012, the Claimants are not entitled to enforce any of the terms of Memorandum of agreement as such, they are not entitled to seek any reliefs; that the Claimants by their own conduct in not properly negotiating with the two prospective buyers identified by Respondent and failure to materialize the sale transaction with them in respect of owner share of apartments, have rendered the performance impossible; that as per the provisions of RERA Act, the Claimants were required to register themselves in respect of their share of apartments before marketing them and that since the Claimants failed to comply /64/ Com.A.P.No.72/2020 with the said statutory requirement, Memorandum of Agreement dated:14.06.20212 got frustrated by change in law, as such the terms of said Memorandum of Agreement cannot be enforced against the Respondent; that on account of novation, supersession and frustration of contract under the Memorandum of Agreement dated:14.06.2012, there was no subsisting arbitration agreement between the parties as such this arbitral tribunal has no jurisdiction to adjudicate the dispute; that it has validly terminated the Memorandum of Agreement dated:14.06.2012 through letter dated:07.09.2015.
76. The Respondent has invoked Section 34 of Arbitration & Conciliation Act, 1996 challenging the impugned Award passed by the learned Arbitral Tribunal. In such circumstances, it is necessary to discuss the facts of the in the light of the ratio of the following decision of Hon'ble Supreme Court of India reported in 2021 SCC OnLine SC 1027 STATE OF CHHATTISGARH Vs. M/S. Sal Udyog Private Limited LAWS(SC) 2021 11 2 SUPREME COURT OF INDIA
14. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) [2019] 15 SCC 131, speaking for the Bench, Justice R.F. Nariman has spelt out the contours of the /65/ Com.A.P.No.72/2020 limited scope of judicial interference in reviewing the Arbitral Awards under the 1996 Act and observed thus :
"34. What is clear, therefore, is that the expression "public policy of India ", whether contained in Section 34 or in Section 48, would now mean the "fundamental policy of Indian law " as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to "Renusagar " understanding of this expression. This would necessarily mean that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12] expansion has been done away with. In short, Western Geco [ONGC v. Western Geco International Ltd.,(2014) 9 SCC 263 :
(2014) 5 SCC (Civ) 12], as explained in paras 28 and 29 of Associate Builders [Associate Builders v. DDA,(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in para 30 of Associate Builders [Associate Builders v.
DDA(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204].
35. It is important to notice that the ground for interference insofar as it concerns "interest of India" has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in /66/ Com.A.P.No.72/2020 conflict with justice or morality is now to be under- stood as a conflict with the "most basic notions of morality or justice". This again would be in line with paras 36 to 39 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], as it is only such Arbitral Awards that shock the conscience of the court that can be set aside on this ground.
36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paras 18 and 27 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], or secondly, that such award is against basic notions of justice or morality as understood in paras 36 to 39 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204]. Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco [ONGC v. Western Geco International Ltd., (2014) 9 SCC 263 : (2014) 5 SCC (Civ) 12], as understood in Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], and paras 28 and 29 in particular, is now done away with.
37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within "the /67/ Com.A.P.No.72/2020 fundamental policy of Indian law", namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.
38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be per- mitted under the ground of patent illegality appearing on the face of the award.
39. To elucidate, para 42.1 of Associate Builders [Associate Builders v DDA(2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an Arbitral Award. Para 42.2 of Asso- ciate Builders [Associate Builders v DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.
40. The change made in Section 28(3) by the Amendment Act really follows what is stated in paras 42.3 to 45 in Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 :
(2015) 2 SCC (Civ) 204], namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair-minded or reasonable person would;
in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2-A).
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41. What is important to note is that a decision which is perverse, as understood in paras 31 and 32 of Associate Builders [Associate Builders v. DDA (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204], while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterized as perverse. "
(emphasis added)
77. Hence, it is clear from the ratio of above decision that this Court while exercising jurisdiction under section 34 of Arbitration & Conciliation Act, 1996 shall not adopt the approach of an Appellate Court and shall not substitute its view to the view of the learned Arbitrator and shall examine the impugned Award within the parameters of Section 34 of the Act.
78. The learned Arbitral Tribunal has discussed Issue No:4 to 6 together. The learned Arbitral Tribunal after analyzing the contents of the exhibits, oral evidence and cross-examination of CW.1 has appreciated the materials available on record in a /69/ Com.A.P.No.72/2020 proper perspective. The learned Arbitral Tribunal has observed that according to respondent since a sum of ₹.2 Crores out of ₹.2.5 Crores agreed to be paid as interest free refundable security deposit was allowed to be treated as non-refundable security deposit and allowed to be appropriated by claimants as consideration. The claimants have expressed that they would be selling their apartments only after completion of the building. It is not explained as to why this fact was not included in Ex.C.5 where under Clause 3 of Ex.C.2 was amended permitting the claimants to appropriate ₹.2 Crores as consideration. Ex.C4 had come into existence between the parties four days prior to the date of Ex.C.5. If it was agreed between the parties at the time of executing Ex.C.5 that the claimants should sell their share of apartments only after completion of the building and taking possession for the reason that they were being allowed to appropriate ₹.2 Crores as consideration. Said Agreement i.e, Ex.C.5 should have contained a reference to the terms agreed to under Ex.C.4. Since the said purported agreement was in the nature of altering the terms of Ex.C.4, respondent has not given any explanation as to why this was not resorted to at the earliest point of time while entering into Ex.C.5. Clause 5 of Ex.C.6 restricts that the claimants from selling their share of apartments until completion of development of Schedule Property and taking possession of their share of apartments /70/ Com.A.P.No.72/2020 from the respondent without the prior written consent of respondent. In view of Clause 5 of Ex.C.6 the terms of Ex.C.5 creating an obligation on the respondent to market the apartments of claimants was given a complete go bye as such Ex.C.4 should be novated and superseded as per the contentions of the respondent. However, an analysis of Clause 5 make it clear that the restriction imposed there in is not an absolute one and as rightly held by the learned Arbitral Tribunal is a conditional restriction. The respondent is required to market claimants' share of apartments as per Ex.C.4. There was no occasion for them i.e, the claimants to sell their apartments without the consent of the developer. The requirement of obtaining prior written consent of the developer for claimants to sell any of their apartments is slightly different way has been incorporated under Clause 3.3 of Ex.C.4. As per Clause 3.3 claimants are entitled to retain or sell any of their apartments to any other person but before doing so they should inform the developer in writing in advance and on receipt of such instructions developer shall not sell such apartments. The learned Arbitral Tribunal has observed that in view of the fact that under Ex.C.4 respondent had been given exclusive right to market the apartments of claimants and for that service to be extended the respondent is entitled for brokerage and marketing expenses from the claimants. Requirements of prior written consent of /71/ Com.A.P.No.72/2020 respondent for the sale of their share of apartments during the pre-developmental activities were going on as stated in Clause 5 of Ex.C.5 came to be incorporated. That they shall sell their constructed area for a price less than the price fixed for sale of its share of constructed area. Therefore, the restrictions imposed under Clause 5 of Ex.C6 together indicates that those terms came to be incorporated with a view to protect the right and interest conferred on respondent under Ex.C.4. Clause 5 of Ex.C.6 has not in any way alter the terms of Ex.C.4 nor Ex.C.4 stood novated. The learned Arbitral Tribunal has further observed that according to the respondent February 2015 one customer, during April 2015 another customer identified by the respondent as prospective buyers of apartments of claimants were referred to the claimants. But the claimants failed to materialise those transactions and since this caused hurdle for sale of its share of apartments, the respondent terminated Ex.C.4 through its letter dated 07.09.1995 as per Ex.C.10. The learned Arbitral Tribunal has rightly rejected this contention of the respondent by observing that if Ex.C4 has already been novated as per the contention of the respondent, superseded by virtue of Ex.C.6 dated 19.06.2014 then there was no obligation on the part of respondent during February and April 2015 to identify customers for sale of apartments of claimants and also there was no need or occasion for respondent to terminate Ex.C.4.
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79. That there is no substance in the contention of the respondent that Ex.C.4 is either novated or superseded or altered by the terms of Ex.C.6. In these circumstances, the learned Arbitral Tribunal has held that the facts completely negative the plea of respondent regarding novation, supersession and alternation of Ex.C.4 by virtue of Ex.C.6. There is no substance in the contention of respondent that by virtue of Ex.C.6 its obligations under Clause 1.1 and 1.2 of Ex.C.4 got novated as a result Ex.C.4 stood superseded. Therefore, the said contention was rightly rejected by the learned Arbitral Tribunal.
80. The respondent is contending that the claimants entered into an agreement of sale as per Ex.C.13 with LGCL Urban Homes India LLP and it was an independent transaction between them and outside the purview of Ex.C.4. The respondent contended that even if Ex.C.13 is taken as agreement in pursuance of Ex.C.4 still by virtue of said agreement and also by virtue of Ex.C.6 is deemed to be modified and novated. The claimants have admitted that they have entered into an agreement of sale with LGCL Urban Homes India LLP as per Ex.C.13. They are contending that the said firm is a sister concern of respondent and the said transaction came into existence in furtherance and pursuant to /73/ Com.A.P.No.72/2020 the obligations of respondent under Ex.C.4. As such said agreement of sale did not anyway novated or superseded Ex.C.4 nor altered any of the terms of Ex.C.4. The respondent has not seriously disputed that M/s.LGCL Urban Homes (India), LLP is a sister concern of respondent. Sri.Girish Poorvankar who represented the respondent as its authorisied signatory in Ex.R.10 and Ex.C.2 to Ex.C.6 represented the purchaser in Ex.C.13 i.e., LGCL Urban Homes India LLP as its authorised signatory. Ex.C.13 came into existence after the purported termination of Ex.C.4 through Ex.C.10. Ex.C.19 is the letter dated 17.10.2016 written by the respondent addressed to claimants. Wherein the respondent has stated that the claimants have entered into an agreement of sale of three apartments allocated to their share in favor of respondent and had received advance sale consideration from the respondent. Ultimately with some flimflam the claimants made the respondent to cancel the agreement of sale. Ex.C.27 is the notice dated 26.07.2017 issued on behalf of the respondent to the advocate of claimants in reply to the notice dated 29.06.2017 issued on behalf of the claimants. The contents of the said reply notice and contents of Ex.C.19 and Ex.C.27 makes it clear that the purchaser under Ex.C.13 was the respondent itself but in the name of its sister concern. The materials available on record falsifies the contention of respondent that purchase under Ex.C.13 was with an /74/ Com.A.P.No.72/2020 independent entity with which the respondent has no concern. The respondent has failed to explain if the transaction under Ex.C.13 is an independent contract how it has novated Ex.C.4. There is no reference to Ex.C.4 in Ex.C.13. Clause 3.3 of Ex.C.4 mandates that the claimants are required to inform the respondent in advance in writing their wish if any to retain or sell to any other person any of their apartments and on receipt of such written instructions, the respondent shall not sell such apartment intended to be retained or to be sold by the claimants. The claimants had reserved their right to retain or sell to any person any of their apartments of course they were required to inform the respondent in advance in writing. The execution of Ex.C.13 cannot be said that the terms of Ex.C.4 were given a go bye by the claimants. The very fact that Ex.C13 came into existence shows that the respondent could not identify the buyers for the apartments falling to the share of claimants by that date and by that time the respondent had already sold 5 apartments from its shares as such the respondent was under an obligation to sell three units of apartments falling to the share of claimants as per Clause 2.2 of Ex.C.4. Therefore, the respondent has offered to purchase 3 units in the name of its sister concern. The materials available on record show that thus respondent has failed to establish Ex.C.4 got novated or superseded or modified either by virtue of Ex.C.6 or by virtue of Ex.C.13.
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81. The claimants are contending that the respondent failed to fulfill its obligations as per Clause 1.1 of Ex.C.4 in identifying the purchasers for the sale of their share of apartments and carry on marketing and sale of their apartments as per Clause 1.2 of Ex.C.4. Therefore, the respondent has committed breach of its obligations on Ex.C.4. They are also contending that the purported termination of Ex.C.4 by respondent through Ex.C.10 is invalid and contrary to terms of Ex.C.4. Whereas the respondent has denied the contentions raised by the claimants he has contended that he has identified two prospective buyers and introduced them to the claimants it is only an account of the attitude of the claimants the sales could not progress further. The execution Ex.C.4 is not denied by the respondent as per the terms and conditions of Ex.C.4 the respondent is entitled to have brokerage of 2% and marketing expenses of 1% of the cost of apartments so sold. The learned Arbitral Tribunal has referred to various Clauses of Ex.C.4 has analysed the marketing rights, duties of developer and duties of owner and sales promotion etc., The learned Arbitral Tribunal has rightly held that the respondent has failed to market the apartments allotted to the share of claimants. The mere introduction of prospective buyers or passing on message does not satisfy the Clauses enshrined under Ex.C.4. What was required and the expected of respondent is that a robust professional approach to the /76/ Com.A.P.No.72/2020 market the apartments falling to the share of claimants. The materials on record shows that the respondent has entered into an agreement for sale on 19.07.2014 with respect to Unit No.1 Type F @ ₹.7300/- per Sq.ft and the second agreement on 30.10.2013 with respect Unit no.802 Type C @ ₹.7400/- per Sq.ft. The basic price for the apartment located in higher floor at @ ₹.7000/- per sq.ft by the first customer identified by the respondent was less than the price at which the respondent had sold its first unit located in first floor in July 2014. The claimants have accepted the liability to pay PEMI at ₹.650/- per sq.ft for 14 months as indicated in email dated 16.02.2015. However, when later they were informed about escalation in the interest cost of PEMI scheme to around ₹.4000/- per sq.ft for 24 months claimants expressed their unwillingness to negotiate on the price further. As per Clause 5 of Ex.C.6 claimants could not have agreed to sell their apartments at ₹.7000/- per sq.ft which was lesser than the price at which respondent had sold its last unit. The entire correspondence between Mr.Vatsal Kumar on behalf of respondent and PW.1 on behalf of claimants shows that there is no indication of said customer having interacted with the claimants. The PW.1 has stated that he had not seen the said customer. It cannot be said that the said transaction could not be materialised on account of claimants not properly negotiating with the said customer when the claimants did not /77/ Com.A.P.No.72/2020 even meet the prospective customer face to face. The said transaction or proposal was not materialized because the price offered was less than the price at which the respondent had sold its first unit and claimants were also asked to bear the liability of paying interest on PEMI for 24 months. The materials available on record shows that Mr.Madhu was the second customer identified by the respondent. The price of ₹.1.35 Crores for the unit which measures 1690 sq.ft working out to nearly ₹.8000/- per sq.ft was the best offer higher than the rate of ₹.7300/- per sq.ft at which its first unit was sold and ₹.7400 at which second unit was sold in July 2015 and in spite of which the claimants rejected the same insisting payment of their own fancy rate. Thus the claimants were responsible for not materilising the proposal with Mr.Madhu. According to the respondent Unit 001 F situated at first floor, unit No.802C located in the ninth floor and whereas the unit offered for sale to Mr.Madhu was Unit No.902 C situated at 10 th floor. Price offered by Mr.Madhu was all inclusive. While the respondent has stated that the price offered by Madhu is inclusive of all other charges. The respondent has contended that when the claimants were questioned as to why they are not co- operating for selling the property, the response was that the they are not in a hurry and that they can sell the apartment only after completion of the development. Respondent has not produced any evidence to substantiate the said contention.
/78/ Com.A.P.No.72/2020 The respondent has not even suggested in the cross- examination of PW.1 about the alleged response given by the claimants. The respondent has failed to prove that the claimants by their own conduct in not properly negotiating with two customers identified by it caused the failure of those sale transactions and have rendered performance impossible. Regarding the termination of Ex.C.4 the learned Arbitral Tribunal has referred to Clause 8 of Ex.C.4 and has opined that the contract entered into between the parties as per Ex.C.4 specifically prescribed the circumstances under which the agreement may be terminated. When the contract itself contains specific provision setting out the circumstances under which the contract may be terminated such a contract could be terminated only under those circumstances. The reason assigned in Ex.C.10 for the purported termination of Ex.C.4 does not fall under any of the circumstances specified under Clause 8 of Ex.C.4. It is not the case of the respondent that during the term of Ex.C.4 a written agreement was entered into between the parties to terminate Ex.C.4. The respondent has not placed any materials to show that prior to issuance of Ex.C.10 it had notified the claimants calling upon them to remedy the alleged material breach within 30 days of receipt of such notice of breach and indicating its intention to terminate the agreement from a date specified therein in the event of failure to rectify the breach. The learned Arbitral /79/ Com.A.P.No.72/2020 Tribunal has referred to Section 51, 52 and 54 of the Indian Contact Act and made an elaborate discussion on the question of termination of Ex.C.4 by the respondent and has come to the conclusion that the claimants have satisfactorily proved that respondent has failed to full fill its obligation as per Clause 1.1 and 1.2 of Ex.C.4 therefore, the respondent cannot draw any support from Section 54 of Contract Act. Accordingly, the learned Arbitral Tribunal has rightly answered Issue No.1 in the affirmative in favor of the claimants and Issue No. 7 and 10 in the Negative and against the respondent.
82. The respondent is contending that Ex.C.4 is frustrated with the advent of RERA Act with effect from 01.05.2016. As per the provisions of RERA Act, claimants being the land owners and co-promoters are required to register themselves as promoters in respect of their share of apartments before marketing and selling any of them and since they have failed to comply with the said Statutory requirement by not registering themselves till date their share of apartments cannot be sold as such Ex.C.4 has got frustrated by change of law and therefore the terms of Ex.C.4 cannot be enforced against respondent.
83. The learned Arbitral Tribunal has observed that Section 20 of the RERA Act came into force on 01.05.2016.
/80/ Com.A.P.No.72/2020 Section 3 which imposed an embargo on promoters from marketing or from taking any steps in that regard. Unless the real estate project was registered with the authority came into force on 01.05.2017. Ex.C.4 came into existence on 14.06.2012. Since the sanction plan for construction of apartments complex was issued by the competent authority on 16.06.2014, sharing agreement exhibits Ex.C.6 identifying the apartments falling to shares of both parties came into existence on 19.06.2014. Therefore, the marketing activities for sale of apartment falling to the share by the respondent as per terms of Ex.C.4 only after 19.06.2014. In view of the fact that Section 3 of RERA Act came into force from 01.05.2017 there was no prohibition or whatsoever nature for marketing the claimants share of apartments up to 30.04.2017. Up to date the respondent could not have pressed the doctrine of frustration. The respondent sold its first unit of 19.07.2014, second unit on 18.06.2015, third unit on 30.10.2015, fourth unit on 19.02.2016. fifth unit on 22.04.2016. sixth Unit on 22.06.2004 and seventh unit on 24.05.2017. As per Clause 1.2 of Ex.C.4 the respondent ought to have marketed and sold first unit of claimants between 01.11.2015 and 19.02.2016, Second unit between 20.02.2016 and 22.04.2016, third unit between 22.04.2016 and 22.02.2017, fourth unit between 21.02.2017 and 30.04.2017. Before the Section 3 of RERA Act came into force, the respondent ought to have taken necessary steps to /81/ Com.A.P.No.72/2020 market and sell four units of claimants share of apartments. The restrictions under Section 3 is applicable on and after 01.05.2017. Therefore, after coming into the force of RERA Act the contract under Ex.C.4 is not become either impossible of performance or unlawful as contended by the respondent. The doctrine of frustration is not applicable to the facts of the case.
84. The learned Arbitral Tribunal has referred to Section 56 of Contract and various provisions of RERA Act and has observed that the claimants have produced a copy of Registration Certificate of Project issued by RERA Authority as per Ex.C.34. An application submitted by the respondent for registration of real estate project named as LGCL Luxuriat on site No.141 A, Sector 5, HSR Layout, Bengaluru South Schedule Property. The concerned authority has issued the registration certificate thus it is clear that the real estate project of LGCL luxuriat is duly registered with Real Estate Regulatory Authority Karnataka with Registration No.PRM/KA/RERA/1251/310 /PR/1710/15/000/312 and the same is valid from 31.07.2017 to 31.05.2020. There is no provision in RERA Act requiring multiple registration for the same real estate project by several persons who are promoters. As per Section 2(zk) of RERA Act even a land owner is also treated as promoter. Since, the real estate project of LGCL Luxuriat has been duly registered with RERA Authority and there is no /82/ Com.A.P.No.72/2020 statutory requirement under the Act for registration of land owners as promoters and there is no prohibition for marketing and selling the claimants share of apartments even after 01.05.2017, the date on which Section 3 of RERA Act came into force.
85. Hence, the learned learned Arbitral Tribunal has held that Ex.C.4 continues to be in force and subsisting. As sch the respondent is bound to comply with all its obligations under Ex.C.4. The learned Arbitral Tribunal has rightly answered Issue No.8 in the Negative and against the respondent.
86. The respondent is contending that the learned Arbitral Tribunal has no jurisdiction to adjudicate the dispute on the ground that there was no subsisting arbitration agreement between the parties. However, the learned Arbitral Tribunal has analysed the rival contentions and appreciated the materials available on record in a proper perspective and after application of various provisions of RERA Act has come to the conclusion that Ex.C.4 is still subsisting and there is no substance in the contention of the respondent. The learned Arbitral Tribunal has rightly answered Issue No.9 in the Negative and against the respondent.
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87. Issue No.3 pertains to the prayer of the claimants regarding specific performance of the obligations by the respondent under Ex.C.4. The learned Arbitral Tribunal has analysed the materials available on record in the back drop of amended specific relief Act. The learned Arbitral Tribunal referred to Section 16 and 20 of the Act, and has come to the conclusion that when it has already held that Ex.C.4 is still subsisting and enforceable the natural corollary would be issuing a direction against the respondent to perform its obligation under Ex.C.4. The respondent has not furnished any materials to interfere with the findings of the learned Arbitral Tribunal on issue No.3 in the Affirmative.
88. Issue No.2 is with respect to claim of the Claimants for payment of compensation of ₹.8.80 Crores with interest at 18% p.a. against the respondent on the ground that the Respondent has failed to perform its obligations as per Clauses 1.1 and 1.2 of Ex.C4, they were prevented from receiving the said sum of ₹.8.80 crores being the average sale price of 11 apartments in respect of which Respondent was under obligation to have commenced and carried on marketing, till the date of presentation of statement of claim.
89. The Respondent is contending that the claimants are not entitled for any compensation, their claim is based on pure /84/ Com.A.P.No.72/2020 guess work and even the Learned Tribunal has assessed the compensation without there being any material purely on guess work hence, the findings of the Learned Tribunal on Issue No:2 is perverse and not sustainable either in law or on facts of the Case.
90. As observed above the Learned Arbitral Tribunal has rightly held that the Respondent has committed breach of its obligations under Ex.C4 and the claimants are entitled for Specific Performance of obligations against Respondent as per the terms of Ex.C4.
91. Section 21 of Specific Relief Act contemplates awarding of compensation in addition to the Specific Performance of the obligations by the defendant in a suit for specific performance, where the Court feels that specific performance of the obligations alone is not sufficient to redeem the loss occasioned to the plaintiff. The Court while awarding compensation under section 21 of Specific Relief Act has to be guided by Section 73 of Indian Contract Act. While assessing such compensation it is inevitable to resort to some guess work, where the parties to contract have not quantified the damages payable by a party who has breached its obligations.
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92. The Learned Arbitral Tribunal has taken in to consideration of the fact that the Respondent has sold 7 units falling to its share at an average price of ₹.1.30 Crores. The Claim of the Claimants for 40% of the average value of the apartments sold by the Respondent is rightly rejected by the Tribunal, as the claimants have not furnished any materials in support of their claim. In order to assess the compensation, some clue may be taken from Ex.C13 as has been done by the Learned Arbitral Tribunal. There is no dispute between the parties regarding the execution of Ex.C3 and the transaction between the Claimants and M/S.LGCL Homes (India) LLP. Under the terms of Ex.C13 the total sale consideration for three units of apartments falling to the share of Claimants was fixed at ₹.3.30 Crores. The Claimants had received ₹.10,00,000/- as advance as on the date of execution of Ex.C13. The Claimants were to receive ₹.56,00,000/- on 20.04.2016; ₹.99,00,000/- on 10.05.2016. Within two months from the date of execution of Ex.C13, the Claiamants were to receive in all ₹.1.65 Crores, which would have been 50% of total consideration. Hence, it could be considered that the Claimants could have received 40% of value of each apartment sold up to 01.05.2017, the date on which Section 3 of RERA Act came in to force. 40% of ₹.1.30 Crores works out to ₹.52,00,000/-. The Claimants would have benefited by depositing the said amount in any Nationalized or Schedule /86/ Com.A.P.No.72/2020 bank which would have earned interest at 7% to 8% p.a. Thus, the Claimants would have earned interest amount of ₹.3,64,000/- at the rate of 7% p.a. In all ₹.14,56,000/- p.a. in respect of 4 units of apartments falling to their share.
93. As per Section 4(2)(a)(D) of RERA Act, seventy percent of the amounts realied for the real estate project from the prospective buyers shall be deposited in a separate account to be maintained in a schedule bank to cover the cost of construction and the land cost and shall be used only for that purpose and the promoter is entitled to withdraw proportionate amount as the project progresses. Therefore, only 30% of the value of the apartments falling to the share of Claimants was available to them. 30% of notional annual returns available to the Claimants would be ₹.1,09,200/- per unit and for 3 units it works out to ₹.3,27,000/-. On the basis of answers given by the authorized signatory of the Respondent to the interrogatories served by the Claimants, the Learned Tribunal has held that the Respondent has sold 7 units of apartments of its share and not 11 units as claimed by the Claimants. Thus the total amount available for the benefit of Claimants would be ₹.17,83,600/-, which is rounded off to ₹.17,84,000/-. Considering the reducing trend of interest rate it would be appropriate to fix the rate of interest at 6% p.a. on the reasonable income of ₹.17,84,000/- as on 01.05.2017 to /87/ Com.A.P.No.72/2020 01.05.2020 which would work out to ₹.3,21,000/-. Thus the claimants are entitled for ₹.17,84,000/- +3,21,000/- =21,05,000/- with future interest at 6% p.a. on ₹.17,84,000/- from 02.05.2020 to the date of realization. The excess amount claimed by the Claimants is rightly rejected by the Learned Arbitral Tribunal. The Respondent has not placed any materials to interfere with the findings of Learned Arbitral Tribunal on Issue No:2 in the AFFIRMATIVE.
94. Issue No:11. The Learned Arbitral Tribunal has taken in to consideration the fact that major portion of Arbitrators' fee and other expenses has been assessed on the basis of monetary claim of ₹.8,80,00,000/- put forth by the Claimants. The Learned Tribunal has entertained the Claim of the Claimants to a lesser extent. Thereby the Claimants have suffered monetary loss also. Section 31(8) of Arbitration & Conciliation Act w.e.f. 23.10.2015 vests discretion on the Arbitral Tribunal to fix the costs of proceedings by following mandate of Section 31A of the Act. The Learned Arbitral Tribunal has extensively considered Section 31A of the Act and has held that the Claimants are entitled for 50% of all the expenses including the advocates fee of ₹.2,50,000/- and directed the Respondent to pay the costs within 90 days from the date of award, failing which the Respondent is liable to pay interest at 10% p.a. on the costs from the date of Award till the /88/ Com.A.P.No.72/2020 date of payment. The reasons adopted and the findings given on Issue No:11 by the Learned Arbitral Tribunal calls for no interference.
95. In view of the above discussion and materials available on record it is evident that the Respondent has failed to make out grounds to set aside the impugned award. The Respondent has failed to establish that the Impugned Award suffers from patent illegality or opposed to fundamental policy of Indian Law or breaches the principles of natural justice. In the foregoing circumstances the Point No:1 is answered in the NEGATIVE.
96. POINT No.2 : In view of the discussion made above and findings on Point No:1 I pass the following ORDER The Arbitral suit filed by the plaintiff under section 34 of Arbitration & Conciliation Act, 1996 to set aside the Award Dated: 17.06.2020 passed by the learned Sole Arbitrator in A.C.No:9/2019 is hereby dismissed with costs.
/89/ Com.A.P.No.72/2020 The Award Dated: 17.06.2020 passed by the learned Sole Arbitrator in A.C.No:9/2019 is hereby confirmed.
(Dictated to the Stenographer, transcribed and typed by her, the corrected and pronounced by me in the Open Court on this 17th February 2022) (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) ****