Madras High Court
Sri Krishna Tiles And Potteries ... vs All Government Staff Social Welfare ... on 14 June, 2011
Author: R.Banumathi
Bench: R.Banumathi, V.Periya Karuppiah
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.06.2011 CORAM : THE HONOURABLE Mrs.JUSTICE R.BANUMATHI and THE HONOURABLE Mr.JUSTICE V.PERIYA KARUPPIAH O.S.A.No.314 of 2010 Sri Krishna Tiles and Potteries (Madras) Pvt.Ltd., Flat No.A-1, Kumara Vijayam New No.187, Royapettah High Road Mylapore, Chennai 600 004. ..... Appellant Vs. 1.All Government Staff Social Welfare Trust (Office No.27/31, Old Police Station Complex, Varadarajapuram, Ambattur, Chennai 600 053) represented by its Chairman and Managing Trustee Mr.M.J.Pushparajah No.2, Babuji Street, S.V.Nagar Padur, Ambattur, Chennai 600 053 and its Treasurer V.Devarajan and trustees A.Baskaran (Secretary) P.Govindrajan (Trustee) E.Chellappa (Trustee) 2.Mr.Justice T.Somasundaram (Retd.) New No.1, Old No.1686 15th Street, H Block Anna Nagar West, Chennai 40. ... Respondents Prayer: Original Side Appeal filed under Order XXXVI Rule 1 of Original Side Rules read with Clause 15 of Letters Patent against the order dated 17.2.2010 made in O.P.No.382 of 2009 on the file of this Court. For Appellant : Mr.R.Thyagarajan,Sr.Counsel and Mr.V.Kuberan for M/s.Rank Associates For Respondents : Mr.V.Selvaraj (for R.1) R-2 Arbitrator. JUDGMENT
R.BANUMATHI,J.
This intra Court Appeal arises out of the order dated 17.2.2010 made in O.P.No.382 of 2009, whereby the learned single Judge has confirmed the award of the Arbitrator directing execution of sale deeds in favour of the members of the 1st respondent Trust.
2. The facts in nutshell are as follows:
The 1st respondent entered into an agreement with owners of subject property of an extent of 50.93 acres (comprising 15.87 acres in S.No.330, 14.75 acres in S.No.334, 15.60 acres in S.No.339 and 14.71 acres in S.No.342/1A) in Kavanur village, Arakkonam Taluk, Vellore District on 5.7.2006 to purchase the same by itself or its nominees. A deed of disclaimer dated 6.9.2006 (Ex.C.1) was executed by the 1st respondent Trust, wherein it was stated that the Trust entered into an agreement dated 5.7.2006 with the owners of the property for an extent of 50.93 acres. It was also confirmed that they nominated the appellant Company as purchaser of the said property. By the very same disclaimer deed, the Trust declared that they have abandoned all their rights, title and interest in favour of owners of the property. A sale deed (Ex.C.2) dated 7.9.2006 was executed by the erstwhile owners of the property and the appellant Company, wherein the 1st respondent Trust was shown as the confirming party. Ex.C.3 is the letter of undertaking dated 8.9.2006 executed by C.W.2 K.S.Rangadorai and R.W.2 R.S.Chandrasekaran in favour of the appellant Company, wherein it was stated that K.S.Rangadorai (C.W.2) and R.S.Chandrasekaran (R.W.2) were the mediators for the sale. On the same day 8.9.2006, Marketing Agreement (Ex.C.4) has been entered into between the 1st respondent Trust and the appellant Company, according to which, about 600 members of 1st respondent Trust are in need of plots for building houses and the Banks have come forward to sanction necessary loans to those members. In the said agreement, it was mutually agreed to plot out 50.93 acres of land owned by the appellant Company and to allot 75 percent of such plots to members of the 1st respondent Trust and to allot 25 percent of the plots to outsiders for consideration.
3. It is the case of the appellant before the Arbitrator that the office bearers of the 1st respondent offered to provide all assistance required for developing the subject property and for marketing. A sum of Rs.76,39,500/- was paid even before execution of sale deed and documents. The appellant acquired lands under the sale deed dated 7.9.2006 registered as document No.2831/2006 with Joint Sub Registrar-II, Arakkonam. As per the Marketing Agreement, the 1st respondent had undertaken to allot approved plots to members at the rate of Rs.30/- per sq.ft. as sale consideration; obtain plot approvals; collect Rs.3,000/- per plot from each allottee and pay to the appellant/claimant and to complete the sale transaction within six months; arrange to execute and register sale deeds in favour of 600 members within six months from the date of DTCP approval for layout and to receive 20 paise per sq.ft. as donation from the appellant at the time of registration of sale deed in respect of each plot. However, the entire expenditure for obtaining approval was incurred by the appellant and no services were provided by the 1st respondent as undertaken. Therefore, in the 1st week of June, 2007, the appellant informed the 1st respondent that on account of failure of the 1st respondent to discharge its obligations and breach of terms of agreements and understandings, the 1st respondent has no right to deal with the property in any manner. However, the 1st respondent threatened to proceed with various activities. Therefore, the appellant was constrained to send a letter dated 5.6.2007 terminating the agreement and intention of appellant to initiate arbitration proceedings for the purpose of recovering the moneys paid to them. On coming to know the appellant's decision to issue notice, the 1st respondent has sent a letter dated 4.6.2007 (Ex.C.6) with a payment of Rs.3,00,000/- purported to be initial payments towards sale deeds in favour of 50 members, who opted for buying 2 plots each. The 1st respondent filed O.A.No.785 of 2007 under Section 9 of the Arbitration and Conciliation Act to restrain the appellant from alienating and creating any encumbrance over the property pending initiation of arbitration proceedings. The appellant also filed O.A.No.828 of 2007 under Section 9 to restrain the 1st respondent from dealing with the property. According to the appellant, the 1st respondent has to return the sum of Rs.75,39,500/- together with interest at the rate of 18% per annum from the date of demand being 5.6.2007. However, the 1st respondent has taken a stand that the appellant is legally bound to continue to sell the plots to its members. The appellant further claimed a sum of Rs.50,00,000/- from the 1st respondent towards compensation and damages for the loss and hardship caused to the appellant on account of breach committed by the 1st respondent.
4. The 1st respondent filed defence statement contending that a sum of Rs.76,39,500/- was paid in the name of Trust by Pay Order dated 6.9.2006. The 1st respondent Trust, in turn, after retaining Rs.1,00,000/- paid as advance to the original owners, the remaining amount of Rs.75,39,500/- was paid to Bharath Foundation of which R.S.Chandrasekaran is the Managing Partner and K.S.Rangadorai for the purpose of developing the property as house sites and for obtaining planning permission. It is learnt that apart from the sum of Rs.75,39,500/- paid to M/s.Bharath Foundation and K.S.Rangadorai the appellant paid a further sum of Rs.10,09,717/- to S.Paulraj of Bharath Foundation for completion of the development work and for obtaining planning permission. Accordingly, the total investment of appellant in the project is Rs.1,01,86,000/- towards sale consideration; Rs.75,39,500/- paid to Bharath Foundation and K.S.Rangadorai through the Trust and the sum of Rs.10,09,717/- paid to S.Paulraj of Bharath Foundation, totalling a sum of Rs.1,87,35,217/-. The Trust has to purchase the approved layout at Rs.30 per sq.ft. of about 600 grounds. The total amount to be paid by the Trust by selling the plots including the property meant for public purpose is about Rs.4,32,00,000/-. The profit of the appellant as per the Agreement would be approximately Rs.2,44,64,783/-. After planning permission was obtained, the 1st respondent Trust called upon the appellant to execute the sale deed for 100 plots and submitted a demand draft for Rs.3,00,000/- drawn on Syndicate Bank, Ambattur Branch dated 4.6.2007 and since the appellant refused to receive the draft on 4.6.2007, a letter dated 5.6.2007 was sent by the Trust to the appellant to execute the sale deeds for 100 plots to begin with in terms of the agreement and that thereafter the 1st respondent Trust received letters dated 5.6.2007 and 7.6.2007 sent by the appellant repudiating the contract. The 1st respondent obtained injunction in O.A.No.785 of 2007 restraining the appellant from alienating or creating any encumbrance in the subject property. The appellant is legally bound to execute the sale deeds in favour of the Trust/nominees/members in terms of the agreement dated 8.9.2006 at the rate of Rs.30/- per sq.ft. of all the plots including saleable property meant for public purposes. On account of increase in price of land, the appellant is attempting to resile from the contract and the appellant cannot terminate the contract. The appellant cannot suspect the persons in whose favour the sale deeds have to be executed since the Trust has given the names of purchasers and the details in the letter dated 5.6.2007. The 1st respondent has fulfilled its obligations and denied their liability to return the sums of Rs.75,39,500/- and pay a sum of Rs.50,00,000/- towards compensation and damages.
5. The 1st respondent filed a counter claim to direct the appellant to execute and register the sale deeds transferring all plots meant for public purpose in favour of All Government Staff Social Welfare Trust/its nominees/its members in terms of the agreement dated 8.9.2006 (Ex.C.4) entered into between the appellant and the 1st respondent. The appellant filed a detailed rejoinder to the counter claim denying the averments in the statement of defence/counter claim.
6. The learned Arbitrator framed 7 issues. Before the Arbitrator, the parties adduced both oral and documentary evidence. On the side of the claimant/appellant, Exs.C.1 to C.22 were marked and C.Ws.1 to 3 were examined. On the side of 1st respondent Trust, Exs.R.1 to R.10 were marked and R.Ws.1 and 2 were examined. Upon consideration of oral and documentary evidence, the arbitrator dismissed the appellant's claim and decreed the counter claim holding that the 1st respondent is entitled to award directing the appellant to execute sale deeds and transfer all the approved plots and the learned arbitrator inter alia held as follows:
Rs.76,39,500/- received by the 1st respondent Trust was utilised by the 1st respondent for the purpose of clearing the bushes and levelling the land. However, the work of laying of roads, construction of road side ditches have not been completed.
The appellant committed breach of the terms of the Marketing Agreement dated 8.9.2006 (Ex.C.4) and the termination of the agreement dated 8.9.2006 by the appellant by their notice Ex.C.5 is invalid.
Even though work of laying roads and construction of road side ditches were not done as provided in clause 3 of the deed of of disclaimer that cannot be a ground for terminating the Marketing Agreement (Ex.C.4) in view of the offer of R.W.1.
Laying of roads and construction of roadside ditches and provision of other amenities are meant for the benefit of purchasers of the plots and when the 1st respondent Trust is willing to purchase all the plots and as per the lay out plan and as per the terms of Ex.C.4, without calling upon the appellant to spend anything more than the amount already paid by them to the 1st respondent under clause 3 of Ex.C.1, the appellant cannot have any objection to execute the sale deeds in favour of the 1st respondent.
7. Being aggrieved by the dismissal of the Appellant's claim and decreeing of the counter claim of the 1st respondent, the appellant filed petition under Section 34 of the Arbitration and Conciliation Act in O.P.No.382 of 2009 seeking to set aside the award. Referring to the findings of the arbitrator, the learned single Judge held that the amount had been spent for the purposes mentioned in Clause 3 of Ex.C.1 and that the 1st respondent has rendered assistance to the appellant in obtaining the lay out, sanction of the plots and holding that the findings of the arbitrator are based upon the materials and that the factual findings recorded by the arbitrator, the learned single Judge dismissed the O.P.No.382 of 2009 finding that there is no ground to disturb the factual findings and well considered award.
8. Aggrieved by the dismissal of the Petition filed under Section 34, the appellant has preferred the appeal. We have heard the learned Senior Counsel Mr.R.Thyagarajan appearing along with Mr.Kuberan for the appellant. We have also heard Mr.V.Selvaraj, learned counsel appearing for the 1st respondent.
9. The award and the impugned order are assailed by the learned Senior Counsel for the appellant by contending that the agreement dated 8.9.2006 obligates the 1st respondent to perform various acts and when the 1st respondent has not performed the obligations, the appellant was justified in terminating the agreement and the learned arbitrator was not justified in restoring the original agreement. It was further submitted that the arbitrator is trying to enforce what is beyond the terms of reference which calls for interference. Taking us through the evidence, the learned Senior Counsel would further submit that when there was no plotting out, there is no scope for the arbitrator to direct the appellant to accept the offer. The contention of the appellant is that unless each plot is identified and the details are furnished as to the allotment of plots to the members of the 1st respondent Trust, the sale deeds cannot be executed and while so, the learned arbitrator erred in directing the appellant to execute the sale deeds.
10. Mr.V.Selvaraj, the learned counsel appearing for the 1st respondent has submitted that the 1st respondent Trust has performed the obligations in terms of deed of disclaimer (Ex.C.1) and agreement dated 8.9.2006 and that the appellant is legally bound to execute the sale deeds in favour of the 1st respondent Trust/members/nominees in terms of the agreement dated 8.9.2006 at the rate of Rs.30/- per sq.ft. for all the plots including salable property meant for public purposes. The learned counsel would further submit that only on account of increase in prices of land, the appellant is attempting to resile from the contract and the learned arbitrator rightly held that the termination is not valid. The learned counsel would further submit that in a Petition under Section 34 to set aside the award, Court does not sit as an appellate Court and the scope of interference is very limited. Taking us through the materials on record and the award, the learned counsel would submit that the conclusion is based upon the materials on record and award does not suffer from any perversity warranting interference.
11. Before we consider the submissions, we need to keep in view mainly four documents- (i) Deed of disclaimer dated 6.9.2006 (Ex.C.1), wherein, the 1st respondent Trust confirmed that they nominated the appellant Company as purchaser of the subject property of 50.93 acres at Kavanur village and the fact of receiving a sum of Rs.75,39,500/- for performing certain obligations is also stated in the deed of disclaimer. (ii) Sale deed dated 7.9.2006 (Ex.C.2) for Rs.1,01,86,000/- between the erstwhile owners of the property and the appellant Company, wherein the 1st respondent Trust was shown as the confirming party. The sale deed refers to the agreement for sale in favour of the 1st respondent Trust and that the 1st respondent Trust nominated the appellant as vendors. (iii) On 8.9.2006, a letter of undertaking was executed by C.W.2 Mr.K.S.Rangadorai and R.W.2 R.S.Chandrasekaran in favour of the appellant Company; (iv) On 8.9.2006, marketing agreement (Ex.C.4) was entered into between the 1st respondent Trust and the Appellant Company, as per which it was mutually agreed to plot out 50.93 acres of land owned by the appellant Company and to allot 75% of such plots to the members of 1st respondent Trust and to allot 25% of the plots to outsiders for consideration. Ex.C.4 agreement stipulates mutual obligations of both parties, which we would refer while dealing with the contentions.
12. The learned Senior Counsel for the appellant contended that by referring to letter of undertaking dated 8.9.2006 (Ex.C.3), the arbitrator has travelled beyond the agreement. It was submitted that Clause 20 of Ex.C.4 agreement contains the arbitration clause and the rights and obligations of the parties flow out of Ex.C.4 agreement dated 8.9.2006 and while so, by referring to Ex.C.3 and other documents and deciding upon the other issues, the learned Arbitrator travelled beyond the terms of the agreement. In this regard, the learned Senior Counsel has drawn our attention to letter dated 23.8.2007 (Ex.C.16) in and by which the appellant Company called upon the 1st respondent Trust to repay the money of Rs.76,39,500/- paid to the 1st respondent and in the event of non-compliance, the appellant Company would be initiating arbitration proceedings and their intention to nominate Mr.Justice T.Somasundaram (Retd.) as the sole arbitrator to take up the dispute for arbitration. In its reply Ex.C.17 (3.9.2007), the 1st respondent Trust has stated "no objection" for Mr.Justice T.Somasundaram being appointed as arbitrator. In Ex.C.17, the 1st respondent has also stated that the dispute between the parties relate to the interpretation of the agreement dated 8.9.2006 entered between appellant and the 1st respondent Trust and that the said dispute has to be resolved by the arbitrator.
13. Laying emphasis upon Exs.C.16 and C.17, the learned Senior Counsel has submitted that the parties have understood that the dispute between the parties relate to the interpretation of the agreement dated 8.9.2006 and while so, the learned arbitrator by extensively referring to letter of undertaking (Ex.C.3) and other documents the learned arbitrator has gone beyond the terms of arbitration.
14. Placing reliance upon the above decision (2006) 1 SCC 86, it was contended that the arbitrator cannot go beyond the terms of the contract between the parties. For the very same proposition, reliance was also placed upon HINDUSTAN ZINC LTD. VS. FRIENDS COAL CARBONISATION, ((2006) 4 SCC 445).
15. In STATE OF RAJASTHAN VS. NAV BHARAT CONSTRUCTION CO., ((2006) 1 SCC 86), in paragraph No.27, the Supreme Court held as under:
"27. ...... An arbitrator cannot cannot go beyond the terms of the contract between the parties. In the guise of doing justice he cannot award contrary to the terms of the contract. If he does so, he will have misconducted himself. Of course if an interpretation of a term of the contract is involved then the interpretation of the arbitrator must be accepted unless it is one which could not be reasonably possible. However, where the term of the contract is clear and unambiguous the arbitrator cannot ignore it."
16. The learned Senior Counsel for appellant contended that by referring to letter of undertaking dated 8.9.2006 (Ex.C.3) executed by C.W.2 K.S.Rangadurai and R.W.2 R.S.Chandrsekaran and the agreement between the 1st respondent Trust and Bharat Foundation and Ex.R.10 vouchers, the learned arbitrator acted in disregard of the provisions of the terms of agreement, which vitiates the award. The learned Senior Counsel further submitted that the learned arbitrator acted in contravention of the terms of agreement, which aspect was not properly considered by the learned single Judge.
17. Of course, clause 20 of the Marketing agreement dated 8.9.2006 between the appellant and 1st respondent Trust contains the arbitration clause and the arbitration proceedings pertains to the dispute revolving around Ex.C.4 agreement. But the deed of disclaimer (Ex.C.1); sale deed (Ex.C.2), Letter of undertaking (Ex.C.3) and agreement between the 1st respondent Trust and Bharat Foundation dated 21.7.2006 (Ex.R.9) are all interconnected. Letter of undertaking dated 8.9.2006 (Ex.C.3) also relate to marketing of land, which is the subject matter of arbitration. As held "by the Arbitrator", under letter of undertaking dated 8.9.2006 (Ex.C.3), C.W.2 and R.W.2 agreed to render some services regarding marketing of the land purchased under sale deed dated 7.9.2006 (Ex.C.2). Annexure to the Letter of undertaking (Ex.C.3) contains the cash flow statement. In the said annexure, it is mentioned that the appellant Company had to incur Rs.25 lakhs towards other expenses (development of land and D.T.C.P. Approval and the said Rs.25 lakhs form part of the estimated cost of the claimant). It is pertinent to note that the undertaking dated 8.9.2006 (Ex.C.3) was executed on the same day when the marketing agreement (Ex.C.4) was entered into between the appellant and the 1st respondent Trust. Elaborately referring to the terms of Exs.C.3 and C.4, the learned arbitrator held that Exs.C.1 to C.4 contain the terms governing the transactions between the claimant and the 1st respondent. Referring to Exs.C.1 and C.3 and Exs.R.9 and R.10, the learned arbitrator has also recorded findings as to how the money of Rs.75,39,500/- was spent by the 1st respondent Trust. There is no force in the contention that by referring to Ex.C.3 and Exs.R.9 and R.10, the learned arbitrator acted outside the framework of the agreement and beyond the terms of the agreement. There is no merit in the contention that the arbitrator has travelled beyond the scope of arbitration agreement.
18. As pointed out earlier, Deed of disclaimer (Ex.C.1) and agreement (Ex.C.4) contain mutual obligations to be performed by both the appellant and 1st respondent. As per Clause 3 of deed of disclaimer (Ex.C.1), the 1st respondent Trust received a sum of Rs.76,39,500/- from the appellant in full and final settlement of all the amounts due to them including the amounts paid by the 1st respondent Trust to the vendors, amounts expended by the 1st respondent Trust for development of property, proposed laying of roads, proposed expenses towards laying out the property as plots, providing for pathways and other amenities, providing necessary infrastructure and arranging to sell the same on behalf of staff social welfare Trust. The agreement dated 8.9.2006 (Ex.C.4) also enumerates the obligations of both the appellant and the 1st respondent.
19. The contention of the appellant Company is that after receiving huge payment of Rs.76,39,500/-, the 1st respondent Trust did not come forward and discharge their obligations as agreed and the appellant had to do all the works in obtaining the plan approval from the Director of Town and Country Planning even though the sale had been agreed and undertaken by the 1st respondent and only by the efforts of the appellant, planning approval was obtained in Proceedings No.2 of 2007. Contention of the appellant is that the 1st respondent Trust failed to discharge its obligations under deed of disclaimer and on account of breach of failure to perform their part of obligations, the 1st respondent Trust lost all the rights. By ignoring the breach committed by the 1st respondent Trust, learned arbitrator committed patent error by referring to and accepting the evidence of R.W.1 to say that the 1st respondent Trust has performed its part of the obligations under deed of disclaimer (Ex.C.1).
20. Case of 1st respondent is that from out of Rs.76,39,500/-, after retaining Rs.1,00,000/- paid by them as advance to the original owners, remaining amount of Rs.75,39,500/- was paid to M/s.Bharat Foundation for the purpose of developing the property and they entered into the agreement dated 21.7.2006 (Ex.R.9) with Bharat Foundation. R.S.Chandrasekaran, who is the Managing Partner of Bharat Foundation, was examined as R.W.2. By the said agreement (Ex.R.9), Bharat Foundation agreed to remove the bushes in the land using JCB and further agreed to fill the pits and level the lands by bringing the earth from outside by the lorry. As per the terms of the agreement (Ex.R.9), the 1st respondent Trust agreed to pay Rs.1,50,000/- per acre to Bharat Foundation for carrying out the works mentioned in the agreement (Ex.R.9). Ex.R.10 are the vouchers showing payments to Bharat Foundation by the 1st respondent Trust on various dates from 12.9.2006 to 14.2.2007.
21. Referring to the agreement (Ex.R.9) between the 1st respondent Trust and Bharat Foundation and vouchers series (Ex.R.10) and the evidence of R.S.Chandrasekaran (R.W.2) and after detailed discussion, the learned arbitrator held that the sum of Rs.76,39,500/- received by the 1st respondent Trust from the appellant was utilised for the purpose of clearing the bushes and leveling the land in the schedule mentioned property. However, referring to the report of the Commissioner and other evidence, the learned arbitrator observed that the laying of the roads, construction of road side ditches and planting of stones demarcating the individual plots have not been completed. After consideration of the evidence of R.Ws.1 and 2, the learned arbitrator held that the laying of roads, construction of road side ditches and provisions of other amenities are only meant for the benefit of purchasers of the plots and when the 1st respondent Trust is willing to purchase all the plots as per the lay out plan without calling upon the claimant/appellant to spend anything more than the amount already paid by them to the 1st respondent, under clause 3 of deed of disclaimer dated 6.9.2006 (Ex.C.1), the claimant cannot have any objection to execute the sale deeds in favour of the 1st respondent. The above finding of the arbitrator is based upon the appreciation of the materials on record. The learned single Judge was right in concurring with the above findings of fact, which are based upon evidence and materials on record and we do not find any reason to upset the findings of the arbitrator.
22. Let us now consider the arguments advanced on the alleged non-performance of the obligations of 1st respondent under Ex.C.4 agreement. Clauses 1 to 3 of Ex.C.4 deal with plotting out, obtaining of D.T.C.P. approval and enumerate the mutual obligations of both parties. As per Clause 1 of the agreement (Ex.C.4), the appellant has to promote house plots measuring various dimensions and obtain D.T.C.P. approval for the layout and to put 6' boundary stones. Clauses 2 and 3 of Ex.C.4 provides that the appellant shall within 30 days from the agreement prepare necessary plans for D.C.T.P. approval at his cost. Clause 4 of Ex.C.4 provides that the appellant shall lay stones, make road side ditches and make arrangements for giving the reserved lands for public purposes by executing the necessary gift deeds in favour of the Panchayat. The obligations of the Trust provided in clauses 1 to 4 of Ex.C.4 are to allot approved plots to its members at the rate of Rs.30/- per sq.ft.; to render all cooperation and services in preparing the plans for D.T.C.P. approval and to extend the full cooperation in all respects for completion of such works.
23. Contention of Appellant is that the 1st respondent Trust did not perform his obligations and on account of failure on the part of the 1st respondent, the 1st respondent Trust had lost its rights under the agreement.
24. As held by the Arbitrator, on a reading of Ex.C.4 agreement, it is clear that the appellant has to bear the cost for plotting out and obligation is cast upon the appellant to make necessary plots and to obtain D.T.C.P. approval. The 1st respondent Trust has to make arrangements and render full cooperation in all respects for completion of such works. In the Letter of undertaking (Ex.C.3), in the cash flow statement, Rs.25,00,000/- has been included in the land cost towards expenses for development of land and D.T.C.P. approval. Referring to the terms of Clauses 1 to 4 in Ex.C.4 agreement and oral evidence of R.W.1, the arbitrator held that the primary responsibility to develop housing plots is only on the appellant and that there was no breach on the part of 1st respondent Trust. The said finding of fact is based on the materials on record and the same cannot be interfered with.
25. Clause 5 of the agreement dated 8.9.2006 (Ex.C.4) provides that in the 3rd month of agreement or as soon as the approval is received from DTCP, which ever is later, the 1st respondent Trust shall collect Rs.3,000/- per plot from each allottee and pay it to the appellant by Bank Draft in favour of the appellant. Clause 6 of the agreement (Ex.C.4) provides that the 1st respondent Trust agrees to arrange to execute and register the sale deeds in favour of 600 members within six months from the date of DTCP approval for lay out at the rate of 100 members in a month. The approval for lay out was granted by Kavanur village on 28.3.2007 (Ex.R.4) and the deed of gift (Ex.R.6) was executed by A.R.Santhanakrishnan (C.W.3) in favour of Kavanur Panchayat on 27.4.2007 in respect of the lands reserved for roads and other public purposes. As seen from the endorsement in the approved layout and also the evidence of C.W.3, that as per the rules, after planning permission is granted, gift deed has to be executed in favour of Panchayat and that the approved plots can be sold only after obtaining planning permission and execution of gift deed.
26. Clause 7 of the agreement (Ex.C.4) stipulates four points regarding allotment of plots to the members of the Trust:- (i) the members of the Trust for whom plots are allotted are to pay 10 percent of the sale price of their allotted plot less initial advance of Rs.3,000/- by way of demand draft in favour of the appellant, enter into agreement of sale at their cost for their allotted plot, (ii) 1st respondent Trust has to do all secretarial work in connection with the execution of the agreement of sale; (iii) the persons thus entering into agreement of sale should complete the registration within the period stipulated in the agreement of sale and the balance sale price of plot has to be paid to the appellant by way of bank draft; (iv) in the event the members not able to obtain the Bank loan or Bank does not sanction the loan, the agreement for sale would automatically stand cancelled on the expiry of 45 days from the date of agreement for sale and the 1st respondent Trust shall pay the balance and register the sale deed in its own name or its member concerned. As per Clause 9 of the agreement (Ex.C.4), all the drafts prepared for agreement of sale and sale deed are to be sent to the appellant for approval before typing on stamp paper. The contention of the appellant is that there was no compliance of clauses 7 and 9 and the 1st respondent Trust has not done any work in connection with the execution of agreement for sale. The learned Senior Counsel for the appellant mainly contended that the 1st respondent Trust has not come out with certainty as to which member the plot was allotted and ensuring payment of initial sale price less the initial advance of Rs.3,000/-. Further contention of the appellant is that the arbitrator had overlooked the failure on the part of the 1st respondent Trust to get 600 members to remit Rs.3,000/- per plot and enter into an agreement as contemplated under clause 7 of the agreement (Ex.C.4) giving him a right to get sale deed in 45 days. The learned Senior Counsel for the appellant submitted that as such there was no such agreement which got crystallized in favour of the members of the 1st respondent Trust. The main contention of the appellant is that the arbitrator had overlooked the fact that clauses 7 and 9 of the agreement (Ex.C.4) had not been complied with and there was neither identity of persons nor plots as contemplated giving rise to a right to seek specific performance. It was also urged that Ex.C.4 agreement itself cannot be taken as a sale agreement, but was only a marketing agreement not supported by consideration.
27. Taking us through the various documents and the demand drafts drawn in favour of the appellant, the learned Counsel for 1st respondent Mr.V.Selvaraj has submitted that within the time stipulated as per Clause 6 of the agreement (Ex.C.4), the 1st respondent Trust sent the demand draft for Rs.3,00,000/- being the initial advance of Rs.3,000/- for allotment of 100 plots to 50 members (two plots each) and the 1st respondent has duly performed its part of the obligation under clauses 7 and 9 of the agreement. Ex.R.4 shows that the approval of the lay-out by the Panchayat was granted on 28.3.2007. The appellant executed the gift deed (Ex.R.6) in favour of Kavanur Panchayat with regard to roads and other areas reserved for public purposes on 27.4.2007. As per clause 6 of the agreement, the 1st respondent Trust has six months from 27.4.2007 for arranging to execute and register the sale deeds in favour of 600 members i.e., upto 26.10.2007. Even before 26.10.2007, the 1st respondent Trust by their notice dated 5.6.2007 (Ex.C.6) requested the appellant to execute sale deeds in favour of 50 members, each two plots, totally 100 plots, as per the list enclosed and sent Rs.3,00,000/-. In Ex.C.6, the 1st respondent further notified that the sale deeds for the remaining plots will be completed during July 2007 which again is well within the time of six months from the time of grant of DTCP approval (28.3.2007) and execution of the gift deed dated 27.4.2007.
28. Referring to the notice dated 5.6.2007 (Ex.C.6) and pointing out that DTCP approval for layout was granted by the Panchayat on 28.3.2007 and that gift deed was executed only on 27.4.2007, the learned Arbitrator held that even before expiry of six months mentioned in clause 6 of the agreement (Ex.C.4), the claimant by their notice dated 5.6.2007 terminated the marketing agreement. On those materials, the learned Arbitrator held that only the appellant had committed breach of the terms in clauses 5, 6, 11, 12 and 17 of the agreement dated 8.9.2006. The above findings of the arbitrator that the appellant had committed breach of the clauses 5, 6, 11, 12 and 17 of the agreement (Ex.C.4) are based on the facts and evidence. When the findings of the arbitrator are based on materials on record, the same will not be interfered by the Court and we do not find any error in the approach of the learned single Judge.
29. Contention of appellant is that the 1st respondent Trust did not discharge the obligations under deed of disclaimer (Ex.C.1) and agreement (Ex.C.4 ) and therefore the appellant had terminated the agreement by issuing notice dated 5.6.2007. Placing reliance upon the decision of Division Bench of this Court in T.PERIASAMY NADAR AND 5 OTHERS VS. T.D.RAMASUBRAMANIAM, (1997 -1- L.W 200), the learned Senior Counsel for the appellant contended that when once the agreement is cancelled/terminated, the Court cannot revive the agreement nor it can direct the authorities to enforce the agreement. The learned Senior Counsel would further submit that in the instant case, the learned arbitrator was not right in holding that the cancellation was invalid and because of failure of the 1st respondent, the agreement could not be performed and the arbitrator committed serious error in reviving the agreement. As pointed out earlier, as per clause 6 of the agreement, the 1st respondent Trust has six months time from the date of execution of the gift deed in favour of Panchayat (27.4.2007) to register the sale deeds in favour of 600 members i.e., upto 26.10.2007. Even before 26.10.2007, the 1st respondent Trust by their notice dated 5.6.2007 (Ex.C.6) requested the appellant to execute the sale deeds in favour of 50 members, each two plots, totally 100 plots as per the list enclosed and sent Rs.3,00,000/-. In Ex.C.6, the 1st respondent further notified that the sale deeds for the remaining plots will be completed during July 2007, which will be within the period of six months from the date of D.T.C.P. approval for layout.
30. Clause 11 of Ex.C.4 provides that in case at the expiry of nine months from the date of the agreement (Ex.C.4), if any plot remains unallotted or the members/purchasers fail to complete the sale registration of the plot allotted within the time stipulated, the 1st respondent Trust or the intending purchasers/agreement holders have to pay to the appellant 10% more as an additional payment over and above the rate already fixed. Clause 12 of the agreement provides that in any case approved plots remain unallotted/ unsold to the members/purchasers for any reason, the 1st respondent Trust shall bear the cost or it shall get the plots registered in its name after paying the increased sale consideration to the appellant within 90 days.
31. Referring to the evidence of R.W.1 and Ex.C.6 notice, the learned arbitrator held that the 1st respondent Trust has fulfilled its obligations by its readiness and willingness to purchase plots in terms of the agreement dated 8.9.2006 (Ex.C.4). The arbitrator has recorded findings that the materials on record go to show that the 1st respondent Trust within the time limit submitted the demand drafts and demanded the appellant to execute the sale deeds. Holding that the materials on record would show the willingness and readiness on the part of the 1st respondent Trust to purchase the plots, the arbitrator held that the 1st respondent Trust is entitled to have the sale deeds executed in respect of all the approved plots as per the approved lay out plan Ex.R.2. In terms of Clauses 11 and 12 of marketing agreement (Ex.C.4), the learned Arbitrator held that the 1st respondent has to pay the increased sale consideration viz., at the rate of Rs.33/- per sq.ft. The finding of the arbitrator that the appellant is bound to give effect to the terms of the agreement is well balanced and based on the evidence. Based on the materials on record, the learned arbitrator held that the termination of agreement (Ex.C.4) by the appellant by notice dated 5.6.2007 is invalid. The factual findings recorded by the arbitrator are based on materials on record and the learned single Judge rightly declined to interfere with the factual findings.
32. The main contention of the Appellant is that even though the arbitrator has found that the construction of roads, roadside ditches, planting of stones and demarcating the plots was not done as provided in Clause 3 of the deed of disclaimer (Ex.C.1) and unless each plot is demarcated and identified the sale deeds cannot be executed, considering the above submissions, the learned arbitrator held that the construction of roads and roadside ditches and other provisions are meant for the benefit of the purchasers of the plots and that the 1st respondent Trust is willing to purchase all the plots as per the layout plan and as per the terms of Ex.C.4 without calling upon the appellant to spend anything more than the amount already paid by them to the 1st respondent under Clause 3 and that no prejudice would be caused to the appellant.
33. Before the arbitrator, on behalf of the appellant, various submissions were advanced and doubts were raised contending that the 1st respondent Trust was only interested in speculative dealings. The learned arbitrator observed that the doubts raised relating to the internal matters between the 1st respondent Trust and its members are not relevant for deciding the issues involved in the case. The appellant, having obtained the deed of disclaimer dated 6.9.2006 (Ex.C.1) from the 1st respondent Trust nominating the appellant as purchaser, having got the sale deed from the original owners and having entered into marketing agreement (Ex.C.4), the appellant is not justified in raising doubts.
34. At this juncture, one point needs to be mentioned. As per marketing agreement (Ex.C.4), parties have mutually agreed to plot out the schedule property and obtain D.T.C.P. Approval; to allot 75 percent of such plots to the members of the 1st respondent Trust and to allot 25 percent plots to outsiders for consideration and to register the same individually to such members who would pay the sale consideration and the expenses. As seen from Approval layout plan (Ex.R.4), as against 692 plots plotted, only 530 plots were approved and remaining area is earmarked as common area like roads, parks, etc. As per the terms of marketing agreement (Ex.C.4), only 75 percent of the plots are to be allotted to the members of the party of the 1st respondent Trust and 25 percent plots to be allotted to outsiders for consideration. Even though the terms of Ex.C.4 agreement stipulates that the members of 1st respondent Trust would be entitled to 75 percent, this issue was not raised either before the arbitrator or before the learned single Judge. That point was not raised before us also. Since the issue was not earlier raised, this Court does not propose to go into that aspect.
35. The arbitrator had considered all the aspects of the matter including the terms of the contract, claim statement and defence and all the materials on record and arrived at the conclusion. The question of appreciation of evidence and findings of fact are matters for the arbitrator. As held by the Supreme Court in OIL & NATURAL GAS CORPORATION LIMITED VS. SAW PIPES LIMITED, ((2003) 4 SCC 705), under Section 34 of the Arbitration and Conciliation Act, 1996, the award could be interfered only if the award is contrary to the substantive provisions of law or the provisions of the Act or against the terms of the contract. In the impugned award, we do not find any such patent illegality warranting interference. Since the conclusion of the arbitrator is based on the materials on record, the learned single Judge rightly declined to interfere with the award passed by the arbitrator and dismissed the Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996. We do not find any ground for interference with the order of the learned single Judge and the appeal bounds to fail.
36. In the result, the Appeal is dismissed. However, there is no order as to costs.
Copy to:
The Sub-Asst.Registrar Original Side, High Court Madras