Madras High Court
M/S.Kikio'S Spaces Private Limited vs M/S.Ramasamy Charitable Trust on 24 April, 2021
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
ARBITRATION ORIGINAL PETITION No.47 OF 2021
THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Delivered on
03~09~2021 13~09~2021
CORAM:
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
ARBITRATION ORIGINAL PETITION No.47 OF 2021
M/s.Kikio's Spaces Private Limited,
Rep. by its Managing Director Mr.M.Shyam Kumar,
No.A-3, Darshan Partment, No.2 Second Main Road,
Gandhi Nagar, Adyar, Chennai – 600 020. ... Petitioner
.Vs.
1. M/s.Ramasamy Charitable Trust,
A Public Charitable Trust,
Rep. by its Trustee Muralidharan,
No.93, Old No.50, Chamiers Road,
R.A.Puram, Chennai – 600 029.
2. Mr.Raghavan
3. Mr.Muraladharan
4. Mrs.Usha ... Respondents
Prayer: Petitions filed under section 34 [2] [[a] [ii], 24 [2] [a] [iv], 34
[2] [b] [i] [ii] of the Arbitration and Conciliation Act,. 1996 to set aside
the arbitration Award in A.F.No.155 of 2018 dated 24.04.2021 passed
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http://www.judis.nic.in
ARBITRATION ORIGINAL PETITION No.47 OF 2021
by the learned sole arbitrator for the reasons mentioned above and allow
the claim of the claimant and direct the respondents 1 to 4 to pay the cost
to the claimant.
For Petitioner : Mr.V,Raghavachari
for M/s.S.Marisingh
For respondents : Mr.R.Thiagarajan
ORDER
Aggrieved over the award passed by the sole arbitrator, present petition has been filed challenging the same.
2. Brief facts leading to filing of this petition is as follows :
2.1 The subject matter of the property was originally owned by one Suseela Ramasamy. However, her husband Ramasamy claiming to be the owner of the property executed a Deed of Trust dated 27.05.1987 making himself as the founder and appointed himself, Suseela Ramasamy and D.V.Muralidharan as Trustees. The said Ramasamy died on 24.01.1994 leaving behind his wife Suseela Ramasamy and also an unregistered Will dated 24.04.1994 bequeathing the suit properties in favour of the Trust created by him with a direction to the Trustees to sell Page 2 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 the house for the best possible price and the trustees shall hold the fund representing the sale proceeds as the corpus fund of the Trust and entire proceeds of sale shall be invested in any other capital assets as provided in the Income Tax Act which qualify for exemption of tax on capital gains. Besides, he had also appointed his wife Suseela Ramasamy as an Executrix of the said Will. Suseela Ramasamy also died on 03.09.2011 leaving behind her unregistered Will dated 24.05.2010. Both the Wills were probated before the High Court in O.P.No.487 of 2014 and O.P.No.196 of 2013. Prior to the Will being probated, the claimant has entered into a Memorandum of Agreement dated 12.07.2013 for purchase of the suit property on various conditions and paid an advance of Rs.one lakh on the date of the Memorandum of Agreement.
2.2 The Memorandum of Agreement also stipulates that the title should be established within six months from the date of execution of Memorandum of Agreement by getting Will probated and patta in respect of the property to be obtained within 7 days of the completion of the probate proceedings. The claimant has to obtain necessary sanctions, Page 3 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 permits, quotas and licenses for development of the property. After satisfying all the pre-requisites according to the agreement, the claimant agreed to pay a sum of Rs.one crore. However, the respondent had not obtained patta in respect of the property and it is also found that the property was not in the name of Ramasamy and it is in the name of Suseela Ramasamy. It is also claimed by the claimant that there is a dispute in the measurement, which has to be set right. The claimant has in fact spent considerable amount for these aspects. However, the respondents did not comply the conditions and established the title. It is also agreed that the remaining consideration of Rs.39,53,00,000/- shall be paid by the claimant within a period of 6 months from the date of obtaining copies of the ownership prerequisites from the respondents.
However, the respondents have not completed their obligations and they have issued a letter dated 23.07.2016 rescinding the Memorandum of Agreement dated 12.07.2013. Hence, reference has been made for seeking relief to set aside the communication dated 23.07.2016 issued by the respondents rescinding the Memorandum of Agreement dated 12.07.2013 as premature and invalid in the circumstances of the case and Page 4 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 for granting fresh time to complete the transaction as per the Memorandum of Agreement dated 12.07.2013 and for further reliefs.
3. The respondents, admitted the Memorandum of Agreement, however denied the other allegations of the claimants, it is their contention that they had agreed to sell the property for a total consideration of Rs.40,52,00,000/- at the instance of the claimant and the claimant had parted a token advance of Rs.one lakh. The respondents had also produced extract from the Town Survey bearing C.A.No.1261 of 2013 dated 11.12.2013 and also obtained probate in respect of the Will of late Ramasamy on 29.10.2013 and also provided all the revenue documents to establish title of the property. After June 2015, the claimant did not fulfil their obligations under the Memorandum of Agreement. Whenever, the first respondent tried to communicate about the completion of the obligations they did not perform their part of the obligations. Therefore, the respondents had issued a letter dated 16.12.2016, calling upon the claimant to pay Rs.One Crore on 29.02.2016 and the balance amount of sale consideration by 30.04.2016. Page 5 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 However, the respondent had sent a communication with false and baseless allegations. Therefore the respondent had rescinded the contract on 23.07.2016 by returning a cheque for Rs.one lakh. Hence, disputed the entire allegations of the claimant.
4. The rejoinder and reply has also been filed disputing the allegations of each other.
5. The learned arbitrator has framed as many as 11 issues. On the side of the claimant C.W.1 has been examined and C1 to 17 have been marked and on the side of the respondents, R.W.1 has been examined and exhibits R.1 to R24 have been marked. The learned arbitrator after analysing entire evidence on record dismissed the claim as against which the present petition has been filed.
6. The main submissions of the learned counsel for the respondent is that the award passed by the learned arbitrator is nothing but perverse, and the learned arbitrator has not considered the agreed terms of the Page 6 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 parties in the Memorandum of Agreement. One of the pre-requisites is to provide a patta to satisfy the title, which has not been done by the respondents. The question of payment of remaining sale consideration would arise only after the respondents satisfied the title to the property. Therefore, when the parties have understood and agreed upon certain terms in the contract, the respondents have to honour the commitment and cannot unilaterally rescind the contract entered between them. The learned arbitrator, in fact, has gone beyond the terms of the contract and recorded the finding on the basis of assumptions and inferences. Such findings is nothing but perverse and goes to the root of the matter. The learned arbitrator has recorded a finding to the effect that the respondent must have been given the documents instead of a finding the truth whether those documents have been given or not and on mere assumption, such finding has been recorded, which in fact is against the very terms of the contract. Such findings is nothing but perverse and goes to the root of the matter. Hence, submitted that the award has to be set aside and the matter has to go for fresh arbitration. Page 7 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021
7. The learned counsel for the respondents would contend that the learned arbitrator, in fact has considered the entire evidence and had appreciated the background and documents and recorded the finding in every issue and found that the petitioner has paid just Rs.one lakh as against a total consideration of more than Rs.40 crores and is not ready and willing to perform their part of the contract. They have no wherewithal to pay the remaining consideration despite, the title has been satisfied and they had not paid the remaining sale consideration. Hence, it is their contention that when the learned arbitrator has recorded a finding after appreciation of entire evidence, it cannot be said that merely because some other view is possible, the same cannot be construed as illegality, which goes to the root of the matter. Hence, prayed for dismissal of this petition.
8. Though several grounds have been made, the crux of the arguments is towards patent illegality in the award. It is well settled that the term 'patent illegality' must go to the root of the matter. If the arbitrator has gone contrary beyond the terms of the contract or granted a Page 8 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 relief in the matter not in dispute, then it can be said that the matter falls within the ambit of patent illegality. Therefore, merely because a different view has been adopted and some other view is also possible, that cannot be a ground to hold that the view adopted by the arbitrator falls within the ambit of perversity. This Court is also aware of its limited role under section 34 of the Arbitration and Conciliation Act in reappreciating the entire evidence.
9. In the above background, when the award is perused in the light of the submissions made by the learned counsel for the petitioner, the entire dispute revolve around the cancelation of the Memorandum of Agreement 12.07.2013 entered between the parties. The claimant, namely the petitioner had agreed to purchase the property for a total sale consideration of Rs.40,52,00,000/-. The Memorandum of Agreement has been executed on 12.07.2013 and an advance of Rs.one lakhs has been paid on the same day. The Trustees have executed the agreement. The major clauses in the Memorandum of Agreement is as follows : Page 9 / 23
http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 Clause [c] “Ownership Pre-requisites” shall mean due satisfaction of the following requirement by the party of the First Part :
[a] obtaining probate Order of the Will under Probate Proceedings before the High Court of Madras.
[b] obtaining patta for the subject property; and [c] submitting copies of all documents relating to subject property and obtaining legal clearance from the party of Second Part's counsel on the title to the subject property.” Clause 2 : Responsibilities and obligations of the Party of the Firt Part 2.1 The party of the First Part hereby confirms that probate proceedings has been initiated by the Executor in O.P.No.196 of 2013 before the Hon'ble High Court, Madras, The part of the First Part agreed to hand over copies of the documents relating to Probate Proceedings filed before the Hon'ble High Court of Page 10 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 Madras to the Party of the Second Part upon execution of this MOA.
2.2 The Party of the First Part acknowledge and states that while the Party of the First Part is a legatee under the Will in respect of the Sub Property, the Party of the First Party awaits the Order of the High Court of Madras in the Probate Proceedings.
2.3 The Party of the first Part undertakes to apply for and obtain patta in its name in respect of the subject property after the Will is probated.
2.4 The Party of the First Part expressly states and confirms that the Party of the First Part is the absolute owner of the subject property and that its title to the subject property is good, valid, marketable and subsisting and that no one else except the Party of the First Part would have any right, title, interest, claim, demand or share in the Subject Property. Page 11 / 23
http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 2.5 The Party of the First Part confirms and warrants that upon obtaining probate and patta for the subject property, the Party of the First Part and/or its nominees would be entitled to sell the subject property to the Party of the Second Part as per the terms of this MOA and that there is nothing in the Trust Deed of the Party of the First Part that prohibits or prevents Party of the First Part from entering into this MOA or selling the subject property.
2.6 The Party of the First Part acknowledges that the Party of the Second Pard has evinced interest in the subject property solely on the basis of the representation of the Party of the First Part that they hold title and ownership over the subject property. The Party of the First Part shall expedite the Probate proceedings and establish its title to the subject property within SIX months from execution of this MOA. The Party of the Page 12 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 First Part further agrees to keep the Party of the Second Part informed of any development[s] in this regard.
2.7 The Party of the First Part agrees to provide copies of all title and other documents relating to the subject property including revenue records and receipts for scrutiny by Party of the Second Part's counsel. The Party of the First Part further agrees to execute such documents at the instance of the Party of the Second Part's counsel as may be required by the latter to establish, support or substantiate Party of the First Part's title to the Subject Property. The Party of the First Part further agrees to pass necessary resolution relating to sale of the subject property to the Party of the Second Part as per the terms of the MOA.
2.8 The Party of the First Part undertakes to obtain necessary approvals and sanctions from the authorities concerned that are mandatory/ may be Page 13 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 required to establish its ownership to the subject property.
2.9 The Party of the First Part confirms that the subject property is in its possession and that the same is free from any let, hindrance, charge, mortgage or encumbrance whatsoever.
2.10 The Party of the first Part shall not creat any mortgage, charge or encumbrance over the subject property or do any act or deed whatsoever nature, which will be detrimental to the interest of the Party of the Second Part, during the subsistence of the MOA.
2.11 The Party of the First Part agrees to keep the Party of the Second Part and/or its nominees fully indemnified and harmless against any loss or liability, cost or claim, action or proceedings that may arise against the Party of the Second Part and/or its nominees on account of any claim by anyone or defect in or want Page 14 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 of title or any act or omission on the part of the Party of the First Part.
2.12 Subject to terms of this MOA, the Part of the First Part agrees to hand over possession of the subject property to the Party of the Second Part immediately upon receipt of the agreed sale consideration from the Party of the Second Part.
2.13 The Party of the First Part confirms that the original title documents relating to the subject property are in its possession and that after the probate Order and patta are obtained, the Party of the Second Part or its nominees shall be entitled to inspect the original title documents at any after providing prior notice to the Party of the First Part.
2.14 The Party of the First Part hereby undertakes not to enter into any negotiations with any person, developer/builder or enter into any similar Page 15 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 agreement/arrangement in respect of the subject property during the subsistence of this MOA.
2.15 It shall be the sole responsibility of the Party of the First Part to pay all taxes, charges, levies and other public charges relating to the subject property promptly until the possession is handed over and provide copies of such receipts to the Party of the Second Part.
2.16 Within SEVEN days from the date of completion of Probate Proceedings, the Party of the First Part agrees to execute and register a power of attorney in favour of the Party of the Second Part, authorizing the latter or its nominee/s to apply for and obtain the necessary sanction, permits, quotas and licenses on behalf of the Party of the First Part in connection with development of the Subject Property.
2.17 The Party of the First Part agrees to permit the Party of the Second Part to conduct soil test, site Page 16 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 inspection and measurement verification of the Subject upon execution of this Agreement.”
10. The main claim of the petitioner is that he is all along ready to purchase the property. Whereas, the learned arbitrator, has in fact, recorded a factual finding and come to the conclusion that the claimant is not ready and willing to perform their part of the contract. It is to be noted that the title itself has not been verified at the time of entering into the agreement. Though the suit property stood in the name of Suseela Ramasamy, her husband claimed to be the owner of the property and created a Trust, which has not been verified by the claimant. That itself clearly indicate that the intention to complete the transaction is absent from the beginning. Though the contract indicate that probate and title documents to be produced, it is not in dispute, that probate in respect of the Will of Ramasamy was obtained and thereafter, they came to know that only Suseela is the owner of the property and her Will is also probated under Ex.R.8, which has been discussed by the learned arbitrator.
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11. The main contention of the claimant is that the owner's prerequisites contained in the contract has not been fulfilled, i.e., patta has not been obtained. Therefore, the remaining sale consideration not paid. The learned arbitrator has factually found that the respondents have provided Town Survey Extract, which is normally issued in City. A patta is a mere revenue document. It is not a document of title. The nomenclature of revenue documents differs from place to place. Town Survey Land Record, which is prevalent in major cities like Chennai, which is like patta, has been handed over to the claimant as per the agreement. Such being the position, the claimant sticking on to the nomenclature of the document as per the agreement, indicate that they are not intended to complete the transaction as agreed in the terms of the contract, by paying remaining sale consideration or the payment as agreed in the contract.
12. The learned arbitrator had considered the entire oral evidence and the learned arbitrator has put a question to C.W.1 for which the claimant has stated that only if the patta is given they are ready to Page 18 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 complete the transaction and not otherwise. When the entire evidence was analysed, it is found that the claimant was not ready and willing to perform their part of the contract and they have no sufficient money available in their account at any part of the time to pay the remaining sale consideration or the remaining advance as agreed in the contract. Pursuant to entering into the contract, they cannot take advantage of a particular clause in the agreement for insisting the patta for ever. In other words such insistence is just like creating permanent encumbrance over the property under the pretext of the agreement. The learned arbitrator has in fact considered the entire aspects and rejected the claim.
13. The arbitrator being the final Judge of facts, this Court cannot reappreciate the entire evidence, as an appellate Court. When the learned arbitrator has appreciated the entire facts placed before him and recorded a finding based on the facts, the same cannot be interfered by the Court under section 34 of the Arbitration and Conciliation Act on the ground that the terms of the contract has not been interpreted by the learned arbitrator. The entire dispute is in the nature of specific performance of Page 19 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 the contract. The learned arbitrator has considered the entire evidence and weighed both sides evidence and found that the claimant is not ready and willing to perform his part of the contract. The facts also show that TSLR patta already given. Therefore, when the learned arbitrator has taken a plausible view by taking into consideration all relevant materials and passed the award, this Court is of the view that such an award cannot be interfered.
14. In this regard, the Division of the this Court in Executive Director [TN&P] Indian Oil Corporation Limited Vs. H.Thiagaraj reported in 2021 SCC OnLine 2864 has held as follows :
7. “It is elementary that the arbitral tribunal is the best judge of the quality and the quantity of the evidence before it on the basis of which it allows a head of claim.
The arbitral tribunal may not have been satisfied with the material that was produced, but reckoned that “rough and ready figure' would be appropriate for 11 employees. Apart from the fact that the matter was within the exclusive Page 20 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 domain of the arbitral tribunal and cannot be regarded as an error of jurisdiction, the award of the quantum does not shock the conscience of the Court nor does it appear to be opposed to any public Policey.
8. The challenge on such count received the due attention of the Court of the first instance as the judgment and order impugned refers to the Hodgkinson's principle and the acceptance thereof, inter alia, in the judgement of Associate Builders [2015 [3] SCC 49].
Therefore, when the award has been passed considering the relevant materials, such an award cannot be interfered unless there is patent illegality and the award is opposed to public policy of India. Therefore, merely because some findings recorded by the arbitrator in some of the paragraphs, as pointed out by the learned Senior Counsel, there may be other views also possible, that cannot be at any stretch of imagination falls within the ambit of patent illegality, which goes to the root of the matter. In other words, the entire dispute revolve around the Page 21 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 performance of the obligation on both sides. Having entered into a contract for purchase of a property in the year 2013 and paying just Rs.one lakhs as advance, without exhibiting any readiness or willingness, one cannot take advantage of the contract for years together. Therefore, this Court do not find any of the grounds made out under section 34 of the Arbitration and Conciliation Act to interfere with the well reasoned award of the arbitrator.
15. Accordingly , this Original Petition is dismissed.
13.09.2021 vrc Page 22 / 23 http://www.judis.nic.in ARBITRATION ORIGINAL PETITION No.47 OF 2021 N. SATHISH KUMAR, J.
vrc Order in:
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