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[Cites 22, Cited by 0]

Madras High Court

Mahadevan Venkatachalam vs S.Murugabharti on 10 May, 2017

        

 

IN THE HIGH COURT OF JUDICATURE AT MADRAS

RESERVED ON : 23.07.2018

                 DELIVERED ON : 09.08.2018                  

CORAM
					
THE HONOURABLE Mr.JUSTICE ABDUL QUDDHOSE

O.P.No.781 of 2017

Mahadevan Venkatachalam				.. Petitioner

Vs

S.MurugaBharti				             .. Respondent

	Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to allow this petition and set aside the Award passed by the Sole Arbitrator dated 10.05.2017.

	  For Petitioner      :   Mr.Pugazh Gandhi.P

	  For Respondent  	:   Mr.V.G.Suresh Kumar and
			    Mr.D.Bhakthavachala Babu


			O R D E R

The instant Original petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 against the arbitral award dated 10.05.2017 passed against the petitioner.

The brief facts leading to the filing of the instant petition are as follows:

2. The petitioner was a promoter of a company called Primex Scans and Labs Private Limited. According to the respondent, believing the representations made by the petitioner, the respondent invested a sum of Rs.1.5 crores in the year 2011 in the company Primex Scans and Labs Private Limited. The respondent was alloted 1798 shares in Primex Scans and Labs Private Limited, for the said investment of Rs.1.5 crores made by him. The respondent after sometime wanted to quit the company and take back his investments. After deliberations and negotiations with the petitioner, the petitioner agreed to buy-back the shares from the respondent.
3. According to the respondent, settlement was arrived at between the petitioner and the respondent and accordingly, the Share Purchase Agreement dated 15.07.2015 was entered into between them, by which, the petitioner agreed to buy-back the shares held by the respondent for a consideration of Rs.1.5 crores which was the amount invested by the respondent together with a sum of Rs.50,00,000/- being the return on the said investment. The respondent made a demand on the petitioner for the payment of the balance sale consideration, under the Share Purchase Agreement dated 15.07.2015, for which, the petitioner denied his liability. The respondent filed an application No.2185 of 2016 before this Court under Section 9 of the Arbitration and Conciliation Act, 1996 seeking for a direction to the petitioner to furnish security to the value of Rs.1,60,00,000/-, failing which, direct attachment of one half of undivided share owned by the petitioner in the property bearing door No.AH 241/18, AH Block, 1st Street, Anna Nagar, Chennai  600 040 bearing Plot No.3159 comprised in R.S.No.40 (part) as per extract from Town Survey Land Register T.S.No.356, Block No.1-D of Naduvakkarai Village, previously Egmore-Nungambakkam Taluk, presently Aminjikarai Taluk, Chennai District.
4. When the application came up for hearing before this Court, the petitioner and the respondent agreed to have the application disposed of on the following terms:
a) That the dispute between the parties be referred to the Arbitrator appointed by this Court
b) That the captioned application would be placed before the Arbitrator who will treat the said application, as one which is filed under Section 17 of the Arbitration and Conciliation Act, 1996.
c) The learned arbitrator to pass appropriate orders in the matter including application, after hearing the parties in the matter.
d) The pleadings filed in this Court will be treated as pleadings filed under Section 17 of the 1996 Act.

5. Based on the request made by the petitioner and the respondent, this Court appointed Mr.K.Chandru, Retired Judge of this Court as the sole Arbitrator to decide the dispute between the parties.

6. The respondent made the following claim before the Arbitrator against the petitioner:

a) declare that the purported termination of the agreement dated 15.07.2015, entered into by the petitioner with the respondent, under the communication of the petitioner dated 14.04.2016 is invalid and against law;
b) direct the petitioner to pay the respondent a sum of Rs.1.5 Crores being the investment made by the respondent.
c) direct the petitioner to pay interest thereon at 20% per annum from 08.03.2016 till the date of payment.
d) direct the petitioner to pay the respondent a sum of Rs.10,00,000/- as damages.
e) direct the petitioner to pay the cost of the proceedings.

7. The petitioner filed his counter statement and also made counter claim against the respondent before the Arbitrator. The petitioner in his counter statement submitted the following:

a) The respondent was a money lender and was doing Kandhuvatti (Usurious interest) business. The modus operandi of the respondent was that he develops his tacit friendship with the start up promoters and promises to invest in their business. If the business makes profit, then he sells his shares with dividend and makes a good profit. If it makes any loss, he blackmails, coerces and illegally extracts his money back from the promoter with the exorbitant rate of interest.
b) The respondent invested Rs.1.5 Crores, for which, certain shares were allotted to him in Primex Scans and Labs Private Limited, in which, the petitioner is a promoter. The respondent subscribed to the share capital of the company, after being satisfied with the company's business plan. The respondent started coercing and compelled the petitioner to purchase his shares with exorbitant rate of interest. Several times the petitioner informed the respondent that he had made an investment in the company and that investment is not a personal debt payable by the petitioner. If the company makes a profit, as a shareholder, he will get his dividends and if the company makes loss, then it has to be borne by all the shareholders of the company. The respondent started threatening the petitioner to repay his money by purchasing his shares, otherwise he was threatened with the dire consequences.
c) The petitioner signed the Share Purchase Agreement dated 15.07.2015 only under duress and coercion of the respondent and the petitioner was made to part with a sum of Rs.50,00,000/- as advance to the respondent and for the balance amount, a cheque was taken from the petitioner with an assurance that the cheque will be deposited only after getting consent from him.
d) It was the stand of the petitioner that the Share Purchase Agreement specified that the respondent will transfer the shares only if the petitioner made the payment as per the Share Purchase Agreement and it was clear that if the payment was not made, then no shares will be transferred. Since the agreement was extracted out of coercion of the respondent, the petitioner was not able to raise funds to pay back such huge amounts.
e) The respondent deposited the cheque issued by the petitioner for a sum of Rs.1.5 Crores without the consent of the petitioner. Since the breach of the terms of the Share Purchase Agreement was committed by the respondent, the petitioner terminated the Share Purchase Agreement by his letter dated 14.04.2016 and demanded the refund of Rs.50,00,000/- paid as advance to the respondent. A contract can be terminated unless the terms of the contract says otherwise and in the case on hand, there was no specific clause which prohibited the parties from terminating the agreement.
f) The shares subscribed by the respondent has not been sold to the petitioner and they still stand in the name of the respondent, the respondent still wants the petitioner to pay the money which the respondent invested in the company which is not allowed under law. The value of the shares was very less as the company was making loss and no prudent man will enter into such Share Purchase Agreement by paying exorbitant rate of interest for a share because of the actual value of which at that time was negative as the company was making loss. The Share Purchase Agreement was entered into only under the coercion and it is evident from the Compact Disc and transcript which has been submitted to raise that the respondent has actually threatened the petitioner to pay the money.

8. The petitioner also made counter claim against the respondent for the refund of Rs.50,00,000/- paid by him as advance together with interest. In the counter claim, the petitioner sought for the following reliefs:

a) Reject the claims and other prayers in the Claim Petition by the respondent in entirety.
b) Direct the respondent to repay the petitioner a sum of Rs.50,00,000/- which was paid by the petitioner as initial amount along with interest at the rate of 12% from 15.07.2015 till the date of payment.
c) Direct the respondent to pay the petitioner a sum of Rs.10,00,000/- as damages.
d) Award costs of arbitration to the petitioner, including the legal fees incurred by the petitioner towards its counsels.

9. The Arbitrator based on the pleadings filed by the parties framed nine issues for consideration which reads as follows:

(i).Whether the Claimant is entitled to the relief of declaration that the purported termination of the agreement dated 15.7.2015, entered into by the Respondent with the Claimant, under the communication of the Respondent dated 14.4.2016 was invalid and against law and whether the said agreement is consequently enforceable by the Claimant?
(ii). Whether the Respondent is liable to pay the Claimant the sum of Rs.1,50,00,000/- being the investment made by the Claimant?
(iii). Whether the Claimant is entitled to damages in the sum of Rs.10,00,000/- from the Respondent?
(iv). Whether the Claimant is entitled to interest on the sums claimed at 20% per annum?
(v). Whether the action of the Respondent in purporting to terminate the agreement dated 15.7.2015, which according to the Claimant is for return of investment, under the communication of the Respondent dated 14.4.2016?
(vi). Whether the said SPA (Share Purchase Agreement) is entered by the Respondent out of coercion by the Claimant?
(vii). Whether the counter claim of the Respondent seeking refund of the sum of Rs.50,00,000/- sustainable?
(viii) Whether the counter claim of the Respondent for damages in the sum of Rs.10,00,000/- sustainable?
(ix) Whether the Parties are entitled for costs and if so, fix the quantum and the liability for paying costs?

10. The Arbitrator, after considering each and every issue framed by him, has passed the following Arbitral Award dated 10.05.2017.

Issue No.1: The respondent is entitled for a declaration that the Share Purchase Agreement dated 15.07.2015 is legal and binding on the parties and the termination letter dated 14.04.2016 issued by the petitioner is not valid.

Issue No.2: The petitioner is directed to return a sum of Rs.1.5 Crores towards balance sale consideration of the Shares sold by the respondent within a period of eight weeks from the date of receipt of the Award. On receipt of the amount in full, the respondent shall transfer the entire Shares held by him in Primax Scans and Labs Private Limited and hand over the original shares within two weeks thereafter complying with due formalities.

Issue No.3: The respondent is not entitled to get any damages from the petitioner.

Issue No.4: The respondent is entitled to get interest at the rate of 20% for the delay of the first 90 days i.e., from 01.01.2016 to 31.03.2016 on Rs.1.5 Crores which was failed to be refunded. For further period from 01.04.2016 till the date of payment of the full amount, i.e., Rs.1.5 Crores together with interest, the petitioner is liable to pay interest at the rate of 12% per annum and this rate of interest is ordered in terms of Section 31(7) of the Arbitration and Conciliation Act, 1996.

Issue No.5: The action of the petitioner in terminating the Share Purchase Agreement by his letter dated 14.04.2016 is not valid in law and not binding on the respondent.

Issue No.6: The Share Purchase Agreement dated 15.07.2015 cannot be repudiated on the ground that the petitioner was made to execute the same under coercion.

Issue No.7: The claim made by the petitioner for the return of Rs.50,00,000/- paid as first installment for the purchase of shares is declined.

Issue No.8: The petitioner is not entitled to get any damages from the respondent.

Issue No.9: The petitioner shall pay a sum of Rs.1,89,485/- towards the cost incurred by the Claimant in conducting the arbitral proceedings.

11. Aggrieved by the Arbitral Award dated 10.05.2017, the petitioner who was the respondent in the arbitral proceedings has filed the instant petition under section 34 of the Arbitration and Conciliation Act, 1996.

12. Heard Mr.Pugazh Gandhi.P learned counsel for the petitioner and Mr.V.G.Suresh Kumar, learned counsel for the respondent.

13. The first submission made by the learned counsel for the petitioner is that the Arbitral Award is erroneous as the Arbitrator has converted the Agreement to Sell into a Sale. The learned counsel for the petitioner drew the attention of this Court to the Arbitral Award wherein, according to him, the learned Arbitrator has passed the impugned Award based on erroneous findings, as if the shares were already sold by the respondent to the petitioner. According to the learned counsel for the petitioner, even the respondent has made a claim, admitting that the shares are yet to be sold. Therefore, according to the learned counsel for the petitioner, the Share Purchase Agreement is only an agreement to sell.

14. The second submission made by the learned counsel for the petitioner is that the Arbitral Award is against the public policy of India. The learned counsel for the petitioner drew the attention of this Court to clause 3 of the Share Purchase Agreement, which according to him, clearly indicates in no uncertain terms that the shares will be transferred to the petitioner only on receipt of the balance sale consideration of Rs.1.5 Crores by the respondent. According to the learned counsel for the petitioner, if the balance sale consideration of Rs.1.5 Crores is not paid on or before 8.12.2015, the offer extended by the respondent to sell his shares stands cancelled and the respondent is at liberty to sell the shares to any third party or deal with the shares as he likes after refunding the advance amount of Rs.50,00,000/- paid by the petitioner to the respondent. According to the learned counsel for the petitioner, having not paid the balance sale consideration, within the time stipulated under the Share Purchase Agreement, the Share Purchase Agreement shall stand automatically cancelled. According to the learned counsel for the petitioner, it was only the respondent who has committed breach of the Share Purchase Agreement by not refunding the advance amount of Rs.50,00,000/- to the petitioner.

15. The third submission made by the learned counsel for the petitioner is that even assuming but not admitting that the said Share Purchase Agreement is breached by the petitioner, the claim of the respondent is not maintainable whereas the counter claim of the petitioner seeking for refund of advance amount of Rs.50,00,000/- alone is maintainable under law. The learned counsel for the petitioner submitted that when a contract is breached, the remedy available to the affected party is either to sue the breaching party for damages or to sue for the specific performance of the contract if damages are not adequate. According to the learned counsel for the petitioner, in the present case on hand, the Share Purchase Agreement is nothing but an agreement to sell. In an agreement to sell, specific performance is available only for a Buyer to sue for specific performance compelling the Seller to sell the property and not in the converse. The Seller does not have the right to sue for specific performance to compel the Buyer to Purchase the property/goods.

16. According to the learned counsel for the petitioner, the reason for the above stated principle is that the buyer might have some value attached to the said property/goods which cannot be compensated in money, whereas for the seller, his aim is only to get money by selling the goods/property. Hence, he can be compensated in money terms. At the maximum, the seller can claim the difference between the price of the property/goods at the time of making the contract and that at the time, the contract is breached, if the value of the property has depreciated. He cannot sue for the full purchase price because the goods/property are not sold or transferred to the buyer, still the seller is retaining the goods/property.

17. The learned counsel for the petitioner drew the attention of this Court to Section 14 of the Specific Reliefs Act, 1963 which deals with contracts that are not specifically enforceable. In particular, the learned counsel for the petitioner referred to Section 14(3)(b)(ii) of the Specific Reliefs Act, 1963. Section 14 of the Specific Reliefs Act, 1963 reads as follows:

Contracts not specifically enforceable,_ (1) The following contracts cannot be specifically enforced, namely:-
a) a contract for the non-performance of which compensation in money is an adequate relief;
b) a contract which runs into such minute or numerous details or which is so dependent on the personal qualifications or volition of the parties, or otherwise from its nature is such, that the Court cannot enforce specific performance of its material terms;
c) a contract which is in its nature determinable;
d) a contract the performance of which involves the performance of a continuous duty which the Court cannot supervise.
(2) Save as provided by the Arbitration Act, 1940 (10 of 1940), no contract to refer present or future differences to arbitration shall be specifically enforced; but if any person who has made such a contract (other than an arbitration agreement to which the provisions of the said Act apply) and has refused to perform it, sues in respect of any subject which he has contracted to refer, the existence of such contract shall bar the suit.
(3) Notwithstanding anything contained in clause (a) or clause (c) or clause (d) of sub-section (1), the Court may enforce specific performance in the following cases:-
(a) where the suit is for the enforcement of a contract,-
(i) to execute a mortgage or furnish any other security for securing the repayment of any loan which the borrower is not willing to repay at once:
Provided that where only a part of the loan has been advanced the lender is willing to advance the remaining part of the loan in terms of the contract; or
(ii) to take up and pay for any debentures of a company;
(b) where the suit is for,-
(i) the execution of a formal deed of partnership, the parties having commenced to carry on the business of the partnership; or
(ii) the purchase of a share of a partner in a firm;
(c) where the suit is for the enforcement of a contract for the construction of any building or the execution of any other work on land:
Provided that the following conditions are fulfilled, namely:-
(i) the building or other work is described in the contract in terms sufficiently precise to enable the Court to determine the exact nature of the building or work;
(ii) the plaintiff has a substantial interest in the performance of the contract and the interest is of such a nature that compensation in money for non-performance of the contract is not an adequate relief; and
(iii) the defendant has, in pursuance of the contract, obtained possession of the whole or any part of the land on which the building is to be constructed or other work is to be executed.

18. According to the learned counsel for the petitioner, the principle applicable to purchase of shares of a partner in a firm is also applicable for the purchase of shares of a shareholder in a company. Therefore applying Section 14(3)(b)(ii) of the Specific Reliefs Act, no specific performance can be granted to enforce the Share Purchase Agreement by the seller.

19. The learned counsel for the petitioner also drew the attention of this Court to Section 58 of the Sale of Goods Act, 1930, which reads as follows:

58. Specific performance._ subject to the provisions of Chapter II of the Specific Relief Act, 1877 (1 of 1877), in any suit for breach of contract to deliver specific or ascertained goods, the Court may, if it thinks fit, on the application of the plaintiff, by its decree, direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages. The decree may be unconditional, or upon such terms and conditions as to damages, payment of the price or otherwise, as the Court may deem just, and the application of the plaintiff may be made at any time before the decree. Refering to Section 58, the learned counsel for the petitioner submitted that it also reiterates the same principle that only the buyer can sue for specific performance for delivery of the goods.

20. The learned counsel for the petitioner also drew the attention of this Court to Section 4 of the Sale of Goods Act,1930 which reads as follows:

4. Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.

(2) A contract of sale may be absolute or conditional.

(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.  While referring to Section 4 of the Sale of goods Act, the learned counsel for the petitioner submitted that Section 4 differentiates between a sale and an Agreement to sell. If the seller has transferred the property in goods to the buyer, then it is Sale. If the seller has agreed to transfer the goods on a future date on the happening of any condition then it is Agreement to Sell. Section 4 of the Sale of Goods Act, 1930 deals with the rights and duties of the seller and buyer in case of Sale and does not deal with the rights of seller and buyer in an Agreement to Sell. Thus even assuming that the seller in this Share Purchase Agreement is sueing for the purchase price, it is not maintainable because the property in shares is not transferred to the buyer, since the Share Purchase Agreement is only an Agreement to Sell.

21. The learned counsel for the petitioner also drew the attention of this Court to the Judgement of the Hon'ble Supreme Court in the case of M/s.Indua Airways Pvt. Ltd and ors vs. M/s.Magnum Aviation Pvt. Ltd and anr reported in legalcrystal.com/1136929. The learned counsel for the petitioner referred to the following paragraph in the said Judgment which interpretated liability under Section 138 of the Negotiable Instruments Act, 1986:

13. The explanation appended to Section 138 explains the meaning of the expression debt or other liability for the purpose of Section 138. This expression means a legally enforceable debt or other liability. Section 138 treats dishonoured cheque as an offence, if the cheque has been issued in discharge of any debt or other liability. The explanation leaves no manner of doubt that to attract an offence under Section 138, there should be legally enforceable debt or other liability subsisting on the date of drawal of the cheque. In other words, drawal of the cheque in discharge of existing or past adjudicated liability is sine qua non for bringing an offence under Section 138. If a cheque is issued as an advance payment for purchase of the goods and for any reason purchase order is not carried to its logical conclusions either because of its cancellation or otherwise, and material or goods for which purchase order was place is not supplied, in out considered view, the cheque cannot be held to have been drawn for an existing debt or liability... Thus, according to the learned counsel for the petitioner, the impugned Arbitral Award converted an Agreement to Sell into a Sale and therefore, the Award is opposed to public policy of India.

22. The next submission of the learned counsel for the petitioner is that the respondent will have to refund the advance amount of Rs.50,00,000/- paid by the petitioner, since the transaction has failed and no sale of shares has taken place. The receipt of a sum of Rs.50,00,000/- from the petitioner is also not disputed by the respondent in his pleadings or during his cross-examination.

23. The learned counsel for the petitioner drew the attention of this Court to the decision of the Hon'ble Supreme Court in SLP.No.4605 of 2012 in the case the SatisBatra vs. SudhirRawal and he referred to the following paragraph in the said judgment:

Law is, therefore, clear that to justify the forfeiture of advance money being part of 'earnest money' the terms of the contract should be clear and explicit. Earnest money is paid or given at the time when the contract is entered into and, as a pledge for its due performance by the depositor to be forfeited in case of non-performance, by the depositor. There can be converse situation also that if the seller fails to perform the contract the purchaser can also get the double the amount, if it is so stipulated. It is also the law that part payment of purchase price cannot be forfeited unless it is a guarantee for the due performance of the contract. Therefore, according to the learned counsel for the petitioner, if the payment is made only towards part payment of consideration and not intended as earnest money then the forfeiture clause will not apply.

24. According to the learned counsel for the petitioner, in stead of refund of advance amount of Rs.50,00,000/- to the petitioner, the respondent has made a false claim against the petitioner before the Arbitrator. Moreover, according to the learned counsel for the petitioner, the respondent had issued a legal notice dated 31.03.2016, wherein he has clearly stated that the sum of Rs.1.5 Crores is as per the Share Purchase Agreement dated 15.07.2015 which is binding on the respondent. In the said notice, there is no whisper about any return of investment. Therefore, according to the learned counsel for the petitioner, the respondent cannot resile from his stand taken and state that the amount of Rs.50,00,000/- received from the petitioner, under the Share Purchase Agreement shall stand forfeited.

25. The learned counsel for the petitioner drew the attention of this Court to the judgment of this Court in the case of B.Nemichand Jain vs. G.Ravindran reported in 2010 (2) CTC 751 and he referred to the relevant paragraph in the said judgment:

Admission of liability is entirely different from an admission made with regard to the nature of a document, to which a person was admittedly a party. It is only when a liability is sought to be fastened on a person that one cannot rely upon an admission, unless it was clear, unambiguous, unconditional and unequivocal. According to the learned counsel for the petitioner, when a party takes a conscious stand in a reply notice with regard to the nature of a document and the transaction recorded under the document, he cannot be permitted to resile from the stand taken, except under exceptional circumstances.

26. The learned counsel for the petitioner further submitted that the respondent has invested in the equity of the company Primex Scans And Labs Private Limited by subscribing to its share capital. The respondent has not paid any money to the petitioner and thus, the respondent and the petitioner did not have any privity of contract. The respondent was also very well aware of this fact and he has also admitted in his cross-examination that he was aware of the difference between equity investment and a debt investment and that he was regularly in the habit of constantly investing in various companies. The company is a different legal entity. A promoter is also a shareholder. A promoter is not liable for the investment made by the third party shareholder in the company. Therefore, according to the learned counsel for the petitioner, the respondent cannot claim from the petitioner who is also a shareholder for the return of his investment which he consciously made investment in the company Primax Scans and Labs Private Limited.

27. Referring to the Judgment relied upon by the learned counsel for the respondent in the case of M.S.Madhusoodhanan v. Kerala Kaumudi reported in 2003 (9) SCC 204, the learned counsel for the petitioner submitted that the said judgment does not apply to the facts of the instant case. In that Judgment, according to the learned counsel for the petitioner, the buyer sought for specific performance whereas in the instant case, the seller is seeking for specific performance. Further the karar (Agreement) which the seller sought to specifically enforce is in the nature of family settlement and was already acted upon by the seller which was accepted by the buyer and only for that reason the Hon'ble Supreme Court held that the Karar (Agreement) is specifically enforceable.

28. The learned counsel for the petitioner also drew the attention of this Court to an article from Harvard law review on the right of a seller of goods to recover the price. As seen from the article, he referred that in the English law unless the property in the goods has passed to the buyer, the seller cannot maintain an action for the price. The reason for the said rule is that since the seller is still the owner of the goods, he ought not to have been given the price for them. His damage is the difference in value between what he has, namely, the goods and what he would have had if the defendant had not broken his contract, namely, the price.

29. The learned counsel for the petitioner also referred to an article written by John B.Waite which was published in Michigan Law Review and the relevant portion referred to by him, in the said article reads as follows:

In the case of an executory contract for the sale of goods not specific, the rule undoubtedly is that the measure of damages for a refusal to receive the goods is the difference between the price agreed upon and the market value on the day appointed for delivery.

30. Therefore, according to the learned counsel for the petitioner, it is settled principle of law that when the buyer commits breach of contract under an Agreement to Sell, the seller cannot seek from the buyer, the entire purchase price and only the loss suffered by the seller in view of the breach can be claimed by him. In the instant case, Rs.50,00,000/- was paid as advance out of total sale consideration of Rs.2 Crores and the said sum has not been refunded by the respondent to the petitioner without substantiating by documentary evidence that he has suffered any loss. Therefore, according to the learned counsel for the petitioner, it is only the respondent who has to refund the sum of Rs.50,00,000/- to the petitioner and the findings of the Arbitrator in favour of the respondent is per se erroneous, arbitrary, illegal and perverse and the Arbitral Award is patently illegal.

31. Per contra, the learned counsel for the respondent submits that a sum of Rs.1.5 Crores was invested by the respondent in the company promoted by the petitioner, believing representations of the petitioner that the said investment would fetch good returns. The learned counsel for the respondent submitted that the respondent required the money invested with the company promoted by the petitioner for his business and therefore, he wanted to exit from the company and take back his investment. Only after negotiations, the Share Purchase Agreement dated 15.07.2015 was entered into between the petitioner and the respondent. Under the Share Purchase Agreement dated 15.07.2015, the petitioner agreed to return the investment made by the respondent of Rs.1.5 crores as well as agreed to pay further amount of Rs.50,00,000/- towards return of investment for the period of five years when the money was held as investment by the petitioner. Thus, the total sum of Rs.2 Crores was agreed to be paid, out of which a sum of Rs.50,00,000/- was paid as advance by the petitioner. The balance amount of Rs.1.5 Crores was agreed to be paid on or before 08.12.2015 and towards the said payment, a cheque was also issued by the petitioner. On receipt of the entire sum of Rs.2 Crores, the respondent will have to sign the requisite forms to transfer the shares to the petitioner.

32.According to the learned counsel for the respondent, the cheque issued by the petitioner to the respondent towards balance sale consideration was dishonoured and the respondent has also initiated action against the petitioner under Section 138 of the Negotiable Instruments Act in respect of dishonoured cheque. Instead of balance sale consideration, the petitioner unilateraly terminated the Share Purchase Agreement dated 15.07.2015 by his letter dated 14.04.2016. The learned counsel for the respondent submitted that the respondent denies the petitioner's allegation that he was coerced into entering the Share Purchase Agreement dated 15.07.2015. The learned counsel for the respondent submitted that the Share Purchase Agreement was entered into on 15.07.2015 i.e., four months after the alleged coercion on 09.03.2015 and 11.03.2015. According to the learned counsel for the respondent, nothing prevented the petitioner from initiating the proceedings against the respondent, including lodging of criminal complaint with the police. According to the learned counsel for the respondent, the claim of coerction and the consequent issuance of cheque under threat are all made withhout any basis as evidenced by the covenants contained in the Share Purchase Agreement.

33. Insofar as the second contention raised by the petitioner that the Share Purchase Agreement is nothing but an offer to sell and is not a binding concluded contract, the learned counsel for the respondent contended that it is not an agreement simplicitor for purchase of shares by the petitioner, but it is an agreement for return of investment made by the respondent in the company promoted by the petitioner. The said agreement is also supported by consideration, in that, a sum of Rs.50,00,000/- was paid as advance and three months time was fixed for completion of payment of the balance sale consideration and the consequent transfer of shares.

34. According to the learned counsel for the respondent, the shares were issued by the petitioner only in lieu of recognising the investment made by the respondent as is obvious from the fact that as against the investment of a sum of Rs.1.5 crores only 28,768 shares with a par value of Rs.10 were issued. According to the learned counsel for the respondent, it is therefore obvious that the Share Purchase Agreement is supported by consideration and is an agreement for return of investment which would result in transfer of shares and is therefore styled as a Share Purchase Agreement. It is therefore not open for the petitioner to contend that the Share Purchase Agreement is only an offer to purchase and not a concluded contract.

35. The learned counsel for the respondent drew the attention of this Court to the findings of the Arbitrator in Paragraphs 60 to 62 of the Award and the relevant portion of paragraph 62 which was emphasised by the respondent reads as follows:

 Further in the Share Purchase Agreement, there is no clause provided for terminating the Agreement. There was also no default clause in the agreement to provide for the contingencies such as non-fulfilment of the terms of agreement. In view of the above, there is no question of the Respondent terminating the Share Purchase Agreement (Ex.C1) by the Issuance of his termination letter dated 14.04.2016 (Ex.C6) and such an attempt by the Respondent is neither legal nor permitted under the Agreement.

36. Insofar as the contention of the learned counsel for the petitioner that the Arbitrator erred in allowing specific performance of the Share Purchase Agreement at the instance of the seller, the learned counsel for the respondent as earlier reiterated that the agreement is not an agreement for purchase of shares simplicitor but is one for return of investment. According to the learned counsel for the respondent, the company promoted by the petitioner is a private limited company and in terms of the dictum of the Hon'ble Apex Court, an agreement for purchase of shares in a private limited company is specifically enforceable.

37. Insofar as the contention of the learned counsel for the petitioner that the right to enforce the contract is available only to the buyer and not to the seller, the learned counsel for the respondent referred to Section 15 of the Specific Reliefs Act which stipuates that except as provided by Chapter II of the Specific Reliefs Act, specific performance of the contract may be obtained by any party thereto, which implies that both the seller and the buyer can enforce specific performance of the contract. With reference to Section 14(3) (b) of the Specific Reliefs Act referred to by the learned counsel for the petitioner, the learned counsel for the respondent submits that the provision relates only to the purchase of shares of a partner in a firm, whereas in the present case, the purchase of shares of an investor in a company, and the subject shares were issued in recognition of the investment made by a promoter of the company who agreed to return the investment by purchasing the shares. Therefore, according to the learned counsel for the respondent, the contention raised in this regard that only a proceeding for purchase of shares is enforceable and not a proceeding for sale of shares is misconceived and not sustainable.

38.The learned counsel for the respondent also submitted that the Arbitrator has dealt with the contention of the petitioner that the Share Purchase Agreement is only an Agreement to Sell and therefore, the contract is not enforceable at the instance of the seller. According to the learned counsel for the respondent, the Arbitrator has rightly held that there being no default clause in the Share Purchase Agreement, the letter of termination issued by the respondent is neither legal nor permitted under the Agreement. According to the learned counsel for the respondent, valid reasons have been given by the Arbitrator for coming to the conclusion that the Share Purchase Agreement is enforceable at the instance of the respondent.

39. The learned counsel for the respondent further contended that the Arbitrator has properly applied the Judgments of the Hon'ble Apex Court and only thereafter, passed the Arbitral Award in favour of the respondent.

40. Insofar as the contention of the petitioner that the Award directing purchase of shares amounts to violation of freedom of choice of the petitioner, the learned counsel for the respondent submitted that the petitioner willingly entered into an agreement to return the investment and purchase the shares, issued a cheque towards the amounts due, sought for an extension of time for completion of the transaction and issued a fresh cheque. Thereafter, the petitioner defaulted in the payment of the amount due and advised his bankers to stop payment of the amount due under the cheque and thereafter purported to unilaterally terminated the contract. Therefore according to the learned counsel for the respondent, the Arbitral Award has followed Articles 14 and 21 of the Constitution of India.

41. Insofar as the submission made by the learned counsel for the petitioner that the respondent can only seek damages under Section 73 and 74 of the Indian Contract Act and cannot as a matter of right seek specific performance of the Share Purchase Agreement, the learned counsel for the respondent submitted that the contract is specifically enforceable at the instance of the seller, it is open to the seller namely the respondent herein to seek performance of the contract, which, in effect is only for return of investment and therefore, the question of claiming damages under Section 73 and 74 of the Indian Contract Act will not arise.

42. According to the learned counsel for the respondent, as seen from the findings of the Arbitrator in paragraphs 66 and 67 of the Award, the Arbitrator has considered this issue in accordance with law and held that the seller can also maintain the claim for specific performance, in case of breech of contract committed by the buyer. According to the learned counsel for the respondent, the Share Purchase Agreement is backed by valid consideration and therefore, the Share Purchase Agreement is specifically enforceable.

43. Lastly, the learned counsel for the respondent submitted that the counter claim raised by the petitioner was rightly rejected by the learned Arbitrator, since the petitioner committed breach of Share Purchase Agreement. The learned counsel for the respondent further submitted that the scope for interference under Section 34 of the Arbitration and Conciliation Act, 1996 is very limited. The learned Arbitrator while giving his findings has considered all the defences raised by the petitioner in accordance with law and therefore, none of the grounds raised by the petitioner satisfied the requirement of Section 34 of the Arbitration and Conciliation Act. This Court cannot reappreciate the evidence under section 34 of the Arbitration and Conciliation Act, 1996. Further, the learned counsel contented that there is no clause for unilateral termination of contract under the Share Purchase Agreement and hence, the termination of contract by the petitioner is also not sustainable.

44. The learned counsel for the respondent while referring to the paragraph 84 of the Arbitral Award submitted that the words sold by mentioned in the Arbitral Award is a typographical error and to prove this point, the learned counsel for the respondent referred to the later part of the same paragraph which reads as follows:

On receipt of the amount in full the Claimant shall transfer the entire shares held by him in Primax Scans and Labs Private Limited and hand over the original shares within two weeks thereafter complying with due formalities. According to the learned counsel for the respondent, this will clearly indicate that the shares have to be transferred on the receipt of the balance sale consideration and hence, the petitioner herein cannot by placing reliance of the said error and challenge the Award.

45. According to the learned counsel for the respondent, the Judgment of the Hon'ble Supreme Court reported in 2004 (9) SCC 204 squarely applies to the facts of the present case and the proposition of the law laid down by the Apex Court in paragraph 151 holding that the contract for sale of shares in a private company is specifically enforceable under Secion 10 of the Specific Reliefs Act. The earlier Judgment on the same point by the Bombay High Court reported in 1949-51-Bombay Law Reporter-page 979 has also held that the decree for specific performance of a contract for sale of shares in a private limited company can be granted.

46. The learned counsel for the respondent concluded and submitted that there is no illegality in the Arbitral Award and therefore there is no merit in the instant petition.

Discussion:

47.The dispute between the petitioner and the respondent arose under a Share Purchase Agreement dated 15.07.2015 (hereinafter referred to as agreement). Under the agreement, the petitioner who was the promoter of the company by name M/s.Primex Scans and Labs Private Limited agreed to purchase 1798 shares in M/s.Primex Scans and Labs Private Limited from the respondent at face value of Rs.10 for a total sale consideration of Rs.2 Crores. A sum of Rs.50,00,000/- was paid as advance by the petitioner to the respondent and the balance amount of Rs.1,50,00,000/- was agreed to be paid by the petitioner to the respondent on or before 08.12.2015. A post dated cheque dated 08.12.2015 favouring the respondent was issued by the petitioner on the date of agreement i.e., on 15.07.2015, for a sum of Rs.1,50,00,000/- towards the balance sale consideration.

48.It is an undisputed fact that the petitioner did not comply with the terms and conditions of the agreement by paying the balance sale consideration of Rs.1,50,00,000/- to the respondent on or before 08.12.2015. An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed by the respondent before this Court seeking to direct the petitioner to furnish security for the balance amount due, under the agreement.

49.By consent of both the parties to the dispute, this Court appointed Mr.Justice K.Chandru, Retired Judge of this Court as the sole Arbitrator to decide the dispute between the parties.

50.The respondent / Claimant made the following claims against the petitioner before the Arbitrator which reads as follows:

a) Declare that the purported termination of the agreement dated 15.07.2015, entered into by the petitioner with the respondent, under the communication of the petitioner dated 14.04.2016 is invalid and against law;
b) Direct the petitioner to pay the respondent a sum of Rs.1.5 Crores being the investment made by the respondent.
c) Direct the petitioner to pay interest thereon at 20% per annum from 08.03.2016 till the date of payment.
d) Direct the petitioner to pay the respondent a sum of Rs.10,00,000/- as damages.
e) Direct the petitioner to pay the cost of the proceedings.
f) Pass such further or other orders as may be deemed fit and proper and thus render justice.

As seen from the claim statement, the respondent filed a claim to declare the termination letter dated 14.04.2016 terminating the Agreement dated 15.07.2015 as invalid and also sought for a direction to direct the petitioner to pay the respondent a sum of Rs.1,50,00,000/- being the investment made by the petitioner. Apart from these two claims, the respondent has also made a claim for interest and for damages.

51.The petitioner filed a counter statement before the Arbitrator, by denying the claim of the respondent and the petitioner had also made a counter claim against the respondent for refund of Rs.50,00,000/- paid by him as advance, under the agreement.

52.By rejecting the defence of the petitioner, the Arbitrator has passed an Arbitral Award dated 10.05.2017, granting specific performance of the Agreement in favour of the respondent who is the seller and rejected the counter claim made by the petitioner.

53.The foremost submission of the learned counsel for the petitioner is that no specific performance can be granted in favour of the seller who is the respondent in the instant petition. As seen from the Agreement, the sale of shares will take place only after the receipt of the entire sale consideration by the respondent. It is an undisputed fact that only Rs.50,00,000/- was received by the respondent from the petitioner by way of advance and the balance sale consideration of Rs.1,50,00,000/- was never paid by the petitioner to the respondent.

54.It is also an undisputed fact that the share certificates standing in the name of the respondent are still retained by him. Under the Agreement, only after the receipt of the balance sale consideration of Rs.1,50,00,000/-, the respondent is obligated to sell the subject shares to the petitioner. The contents of the Agreement will reveal that it is only an agreement for sale and not a concluded sale. The sale is subject to the condition that entire sale consideration is paid by the petitioner to the respondent.

55. Section 4 of the Sale of Goods Act, 1930 reads as follows:

4. Sale and agreement to sell.- (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.

(2) A contract of sale may be absolute or conditional.

(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

(4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.  The essence of sale is a transfer of the property in a thing from one person to another for a price. As per Section 4, the contract of sale includes an agreement to sell. It is not necessary that the contract of sale must be absolute. It may be conditional as well. The essential feature that distinguishes the contract of sale from agreement to sell is that in a contract of sale the property in goods is transferred from the seller to the buyer immediately, whereas in an agreement to sell the property is transferred on a future date. An agreement to sell becomes sale on fulfilment of the conditions or when the time provided in the agreement elapsed.

56.In the case on hand, shares have not been transferred by the respondent in favour of the petitioner. The shares are still retained by the respondent. Even though the Agreement was only an agreement to sell the shares, the Arbitrator has erroneously allowed the specific performance claim made by the respondent, on the ground that the petitioner having agreed to purchase the shares and having paid part of the sale consideration and issued a post dated cheque for balance sale consideration has completed the sale.

57.The Arbitrator has converted an Agreement to Sell into a Sale. As the seller of the shares under the Agreement, the seller can be adequately compensated in terms of money. In the instant case, the respondent has already received Rs.50,00,000/- from the petitioner as advance for the sale of shares out of total sale consideration of Rs.2,00,00,000/-. The shares have not been transferred in the name of the petitioner and as per the Agreement, it will be transferred only on receipt of entire sale consideration by the respondent. The Original Share Certificates are also retained with the respondent. Therefore, there is no possibility of transfer of subject shares by the petitioner in favour of any third party without the consent of the respondent.

58.The Arbitrator has also given an erroneous finding as if shares were already sold by the respondent to the petitioner, despite the respondent admitting that the shares are yet to be sold and the petitioner has failed to pay the balance sale consideration of Rs.1,50,00,000/- on or before 08.12.2015. Since the petitioner failed to pay the balance consideration, the offer extended by the respondent to sell his shares stand automatically cancelled and the respondent is at liberty to sell the shares to any third party.

59.Further, the petitioner has expressed his unwillingness to pay the balance sale consideration. The seller being the respondent cannot seek specific performance of the Agreement, but can only seek damages for the loss suffered by the respondent, in view of the breach of contract committed by the petitioner. The loss suffered by the respondent can include the loss, if any, suffered due to the sale of shares at a reduced price to the third party, than, what was agreed upon with the petitioner. Instead of making a claim for loss suffered by the respondent on the part of the breach of contract committed by the petitioner, the respondent has sought for specific performance of the Agreement for a direction to the Arbitrator to the petitioner calling upon him to pay the balance sale consideration of Rs.1,50,00,000/- as per the Agreement.

60.Under Section 14(a) of the Specific Reliefs Act, for a breach of contract if compensation in terms of money is an adequate relief, the contract cannot be specifically enforced. Being an Agreement, where the respondent being the seller can sell the shares to any other third party on account of breach of contract committed by the party with whom he had originally contracted, compensation in terms of money is an adequate relief and therefore, no specific performance can be granted in favour of the respondent. Furthermore, the petitioner has also not raised any objection for the respondent to sell the subject shares to any third party and therefore, if at all any loss has been suffered by the respondent, the same can be compensated in terms of money.

61.As rightly pointed out by the learned counsel for the petitioner that as a seller under the Agreement, the respondent cannot seek specific performance of the contract. Even as per section 14(3)(b)(ii) involving the purchase of shares of the partner in a firm, only when the person having substantial interest in the performance of the contract and the interest is of such a nature that compensation in terms of money for non-performance of the contract is not an adequate relief, specific performance can be granted by the Court.

62.By applying the same anology to purchase of shares in a company, the respondent will have to establish the substantial interest in the performance of the Agreement and interest in the enforcement of the Agreement must be of such a nature that compensation in terms of money for non-performance of the contract is not an adequate relief. In the instant case, the respondent being the seller under the Agreement has received an advance of Rs.50,00,000/- out of the total sale consideration of Rs.2,00,00,000/- and the shares are still held by him and the Original Share Certificates are also available with him and there is no prohibition for him to sell the shares to any other third party and the compensation in terms of money is the only adequate relief that can be granted to the respondent.

63.As rightly pointed out by the learned counsel for the petitioner, the seller of shares under an Agreement, does not have the right to sue for specific performance to compel the buyer to purchase the shares. The respondent being the seller cannot sue the petitioner being the buyer for the full purchase price because the shares have not been sold or transferred to the petitioner. The share purchase Agreement dated 15.07.2015 is a determinable contract. The petitioner being the buyer having failed to pay the balance sale consideration on or before 08.12.2015, the contract stands automatically cancelled.

64.The Judgment relied upon by the learned counsel for the respondent in the case of M.S.Madhusoodhanan v. Kerala Kaumudi reported in 2003 (9) SCC 204 is not applicable to the facts of the instant case. In that case, the buyer sought for specific performance, whereas in the instant case, seller is seeking for specific relief. Further, the Karar(agreement) which the seller sought to specifically enforce is in the nature of family settlement and was already acted upon by the seller which was accepted by the buyer and only for that reason the Hon'ble Supreme Court held that the Karar (Agreement) is specifically enforceable. The respondent who is the seller cannot maintain an action for the balance price payable under the agreement. The reason for the said rule is that since the seller is still the owner, he ought not to have been given a price for them. His damage is the difference in value between what he has, namely, the goods and what he would have had if the defendant had not broken his contract, namely, the price.

65.In the instant case also the respondent being the seller continues to be the owner of the shares which has not been sold to the buyer who is the petitioner. Under the agreement, only on receipt of the balance sale consideration, the seller will have to transfer the shares in favour of the buyer who is the petitioner. Even under Section 58 of the Sale of Goods Act, 1930 only the buyer can seek specific performance of the agreement. The Article reported in Harvard law review as well as the Article written by John B.Waite in Michigan Law Review relied upon by the learned Counsel for the petitioner beautifully illustrates the above proposition of law.

66.In the case of an executory contract for the sale of goods not specific, the rule undoubtedly is that the measure of damages for a refusal to receive the goods is the difference between the price agreed upon and the market value on the day appointed for delivery. Therefore, the respondent being the seller can only seek damages for the breach of contract committed by the petitioner who is the buyer of the shares. The contention of the respondent that he is seeking only return of investment and not the balance purchase price under the Agreement contradicts the share purchase Agreement where in unequivocal terms, he has admitted that the agreement was entered into only for the sale of shares and there is no mention of return of investment. Even in the legal notice dated 31.03.2016 issued by the respondent, he has clearly stated that the sum of Rs.1.5 Crores is the balance purchase price payable by the petitioner, under the agreement. Therefore this Court rejects the contention of the respondent that the agreement is for the return of investment and not for the purchase of shares.

67.As held by the Judgment of this Court in the case of B.Nemichand Jain vs. G.Ravindran reported in 2010 (2) CTC 751, admission of liability is entirely different from an admission made with regard to the nature of a document, to which a person was admittedly a party. It is only when a liability is sought to be fastened on a person that one cannot rely upon an admission, unless it was clear, unambiguous, unconditional and unequivocal. In the case on hand, under the Agreement, the intention of the buyer namely the respondent was only to sell his shares to the petitioner and not for return of investment. The recitals under the Agreement also does not talk of return of investment, but only talks about sale of shares. Therefore, the contention of the respondent that the agreement relates to return of investment by the petitioner to the respondent cannot be countenanced.

68.In an ordinary contract of sale, the payment and the transfer of the goods are to be concurrent acts, and if the buyer refuses to accept the goods, even wrongfully, he cannot be sued for the price, because the event on which he undertook to pay the price has not happened; and although the fact that it has not happened is due to his own wrong; still he has not promised to pay the price in the present situation, but must be sued for his breach of contract in preventing the event on which the price would be due from coming to pass.

69.The learned Arbitrator has also erroneously given a finding that the shares have been sold in favour of the petitioner, whereas the Agreement dated 15.07.2015 is only an Agreement to sell. As observed earlier, the seller cannot seek specific performance when he can be adequately compensated in terms of money. The respondent being the seller has already received an advance of Rs.50,00,000/- from the petitioner under the Agreement.

70.The learned Arbitrator has erroneously held that the respondent is entitled for specific performance of the Agreement dated 15.07.2015 and has also given an erroneous finding as if the respondent being the seller has already sold the shares to the petitioner/buyer, as per the Agreement.

71.The findings of the Arbitrator are perverse, arbitrary, irrational and illogical and consequently the Arbitral Award passed in favour of the respondent is also patently illegal.

72.Regarding the counter claim made by the petitioner before the Arbitrator for return of advance amount of Rs.50,00,000/- from the respondent, this Court under Section 34 of the Arbitration and Conciliation Act, 1996 cannot grant that relief when the Arbitrator has rejected the counter claim. This Court under Section 34 of the Arbitration and Conciliation Act cannot correct the errors committed by the Arbitrator. In the case of Mcdermott International Inc vs. Burn Standard Co. Ltd. and Others reported in (2006) 11 SCC 181, the powers of the Court under Section 34 of the Arbitration and Conciliation Act have been lucidly enumerated by the Hon'ble Supreme Court as follows:

52.The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it. As seen from the judgment of the Hon'ble Supreme Court, it is clear that this Court under Section 34 of the Arbitration and Conciliation Act cannot correct the errors found in the Arbitral Award but can only quash the same.

73. Further as seen from the Arbitral Award, sufficient evidence has not been let in by the petitioner as well as the respondent for the exact losses suffered by them under the Agreement dated 15.07.2015. The petitioner will have to establish by oral and documentary evidence that he is entitled to obtain the refund of entire advance amount from the respondent. At the time of entering into the agreement, the petitioner issued post dated cheques for the balance sale consideration in favour of the respondent. Admittedly, the said cheques were also returned dishonoured and the respondent has initiated proceedings under Section 138 of the Negotiable Instruments Act. Since breach of contract has been committed by the petitioner, the respondent would certainly have suffered some loss. Whether the respondent is entitled to forfeit the entire advance amount of Rs.50,00,000/- or a part of that amount can be decided only by letting in sufficient oral and documentary evidence. With the available evidence on record before the Arbitrator, the counter claim made by the petitioner seeking refund of the entire advance amount of Rs.50,00,000/- cannot be decided by the Arbitrator or by this Court under Section 34 of the Arbitration and Conciliation Act. This Court under Section 34 of the Arbitration and Conciliation Act, cannot also look into and consider any fresh evidence submitted by the petitioner in support of his counter claim.

74.For the foregoing reasons, this Court is of the considered view that the findings of the Arbitrator in favour of the respondent are erroneous, arbitrary, illegal and perverse and the Arbitral Award is patently illegal.

75.In the result, the Arbitral Award dated 10.05.2017 passed against the petitioner by the Arbitrator is hereby set aside and the petition is allowed. Insofar as the rejection of the counter claim made by the petitioner, liberty is granted to the petitioner to initiate fresh Arbitration against the respondent for refund of Rs.50,00,000/- together with interest and cost and the respondent is also given liberty to defend the claim if any made by the petitioner and also make a counter claim if the respondent has suffered losses in excess of a sum of Rs.50,00,000/- and the Arbitrator shall decide the counter claim made by the petitioner in accordance with law.

09.08.2018 Index: Yes/No Internet: Yes/No Speaking/Non-speaking orders nl ABDUL QUDDHOSE, J.

nl Pre Delivery order in O.P.No.781 of 2017 09.08.2018