Delhi District Court
Vijyant Agarwal vs Bptp Ltd on 3 May, 2025
DLND010044162022
IN THE COURT OF MRS VINEETA GOYAL,
DISTRICT JUDGE (COMMERCIAL-03),
PATIALA HOUSE, NEW DELHI
OMP (COMM) No.78 of 2022
CNR No. DLND01-004416-2022
In the matter of:
1. Vijyant Agarwal
s/o Late Sh. Brahm Prakash Agarwal
2. Vineeta Agarwal
w/o Sh. Vijyant Agarwal
Both are r/o
H.No.7, Type-IV,
Netaji Subhash Institute of Technology,
Sector-3, Dwarka,
New Delhi-75. ........ Petitioners
Versus
M/s. BPTP Ltd.
Registered office At :
M-11, Middle Circle,
Connaught Circus,
New Delhi-110001. ....... Respondent
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.05.03
17:29:09
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Date of institution of petition : 21.05.2022
Date of Judgment : 03.05.2025
Appearance : Sh. Soibal Gupta, Ld. Counsel for petitioners.
Sh. Akash Dalal, Ld. Counsel for respondent.
JUDGMENT
1 This is a petition u/s. 34 of the Arbitration & Conciliation Act, 1996 as amended (in short 'the Act') filed by the petitioners for setting aside of arbitral award dated 31.03.2022 (hereinafter referred as 'impugned award') passed by the Ld. Sole Arbitrator against the Settlement Deed dated 30.05.2016.
2 Brief facts of the present case is that the respondent is a Real Estate Company having a project being constructed and developed namely 'Amstoria' in Sector 102, Gurgoan. In the aforesaid project, M/s OM Energy Limited applied for the allotment of plot having a tentative area of 225 sq yards. M/s OM Energy Limited was allotted the plot D-78 (hereinafter referred to as 'impugned plot') measuring approximately 250 sq yards. On allotment, a Buyer's Agreement dated 20.09.2011 was executed between the respondent and M/s OM Energy Limited. Subsequently, M/s OM Energy Limited transferred the impugned plot to Dr. Pushpinder Singh Bajaj and Dr. Harjit Kaur, and the Buyer's Agreement was endorsed in favour of Dr. Pushpinder Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:29:18 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 2 of 20 Singh Bajaj and Dr. Harjit Kaur on 23.05.2012. The impugned plot was again transferred by Dr. Pushpinder Singh Bajaj & Dr. Harjit Kaur to the petitioners and the Buyer's Agreement was subsequently endorsed in favour of the petitioners on 25.09.2013. The petitioners made payments to the respondent towards the booking/allotment. Thereafter, a dispute arose between the parties, wherein the petitioners sought various legal remedy before multiple forums against the respondent including filing a consumer complaint before the National Consumers Dispute Redressal Commission (in short NCDRC) bearing CC no. 149/2016 titled "Vijay Agarwal & Anr. vs. BTBP & Anr." . After multiple discussions and meeting between the petitioners and the respondent, an amicable resolution was met and the same was jotted down in a Settlement Deed dated 30.05.2016. The NCDRC in the aforementioned case vide its order dated 02.08.2016 (Annexure A/7) dismissed the complaint as withdrawn on the pretext that the matter has been settled between the parties in view of settlement dated 30.05.2016.
3 In the aforementioned Settlement Deed dated 30.05.2016, it was agreed among other terms that as per clause 4, the respondent would operationalize the swimming pool within a period of 2 years from the date of the execution of the Settlement Deed and make the Club of Amstoria partially opened within 6 months thereafter. It was further agreed in the said clause that in Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:29:26 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 3 of 20 case of failure to do so, the respondent would be liable to pay an amount calculated @ 18% p.a. on the actual payment paid by the petitioners for the delayed period. The relevant paragraphs of the Settlement Deed is reproduced herein:
"4. The Company shall operationalize the summing pool within a period of 2 years from the date of execution of this Deed and make the club of Amstoria partially operational within 6 months thereafter. If the Company is unable to do so, then BPTP will pay an amount calculated @18% pa. on the actual amount paid by the Customer for such delayed period i.e. from November 30, 2018 onwards and till the time the swimming pool is made operational and club is partially operational."
4 Furthermore, according to the terms of the Settlement Deed in its clause 22, it was agreed among the parties that any dispute arising out of this Deed shall be referred to Sole- Arbitrator. In the year of 2020, being aware of the alleged illegality of the clause 4 in the Settlement Deed and petitioners filing execution before the Hon'ble NCDRC, the respondent invoked arbitration claiming in its Statement of Claim to declare clause no.4 of the Settlement Deed dated 30.05.2016 as a defective clause and to amend / modify clause 4 by replacing the words 'actual amount paid' with the words 'club maintenance charges'. Accordingly, an Arbitral Tribunal was convened having a Sole-Arbitrator vide letter dated 18.02.2020. The Ld. Arbitral Tribunal passed the impugned Arbitral Tribunal dated 31.03.2022. It was held in the award that the clause 4 of the Settlement Deed was defective and non-fact based on the ground of the clause Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:29:34 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 4 of 20 being a "condition terrora" as was intended to be implemented to pressurize the respondent which was to perform the duty sincerely as per the settlement. It was further held that the respondent can be to the extent be liable to pay damages against the amount charged from the petitioners only for the two facilities and not the whole/complete payment as paid by the petitioners. Conclusively, on the aforesaid reasoning, the Ld. Arbitral Tribunal declared the clause 4 as defective and amended the clause 4 of Settlement Deed dated 30.05.2016 by replacing the words "actual amount paid" with the words "club maintenance charges". The relevant paragraphs of the impugned arbitral award is reproduced herein:
"It is admitted case of the parties that the alleged Settlement Deed dated 30.05.2016 (Annexure C-1) was executed between the parties. It is also not in dispute that the alleged settlement deed contained the arbitration clause No. 22. It is also admitted that settlement deed contained clause No. 4 reproduced herein above while narrating the facts. The dispute arose between the parties with regard to the wordings of clause No. 4 of this deed. According to the claimant this clause was defective as inadvertently it was mentioned therein that in case the claimant failed to provide Swimming Pool and Club facility within two and half years after the execution of this settlement in that eventuality the claimant shall be liable to pay 18% amount on the actual payment made by the respondents for allotment of this plot i.e. Rs. 1,05,34,375/-. The counsel for the claimant urged that for not providing above two facilities, it could not be taken that the claimant could be burdened with such a heavy liability which could not be taken be rational, logical or legal. By no stretch of law, facts or imagination, it could be taken that the claimant might have agreed to pay the above amount. In view thereof Ld. Counsel for the claimant urged that the clause was defective and the same deserved to be rectified / modified to the extent as prayed for by the claimant Digitally signed by VINEETA GOYAL VINEETA Date:
GOYAL 2025.05.03
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......
Having given thoughtful consideration to the above rival claims and arguments advanced by the Ld. Counsel of the parties, I find the arguments advanced by the Ld. Counsel for the claimant to be convincing and having merits therein. Reason therefor is that a careful reading of the above clause No. 4 would reveal that it was no where mentioned in this clause that the actual amount of sale consideration was to be taken into account or the actual amount paid for the facilities like swimming pool and club was to be taken into consideration. This clause is altogether silent about this aspect. If a sane person reads this clause he will certainly take the words actual amount paid to be pertaining to the amount paid for two facilities i.e. the club and swimming pool. Very simple, the parties had in incorporated this clause only with regard to the two facilities i.e. swimming pool and club. To put a pressure upon the claimant that it should ensure the completion of this facilities within a period of two and half years after the settlement on this deed they inserted this clause. Virtually, they do not seem to have incorporated this clause to be implemented and that too with regard to this penalty. Such a condition put in the agreement is called "condition terrora". That means the same was never intended to be implemented but only to be used to terrorize the other party which was to perform its duty sincerely as per the settlement. In such a situation when the above two facilities were not provided within given period of two and half years i.e. till November 30, 2018 the claimant could maximum be punished with the liability to refund the amount charged for providing the above two facilities from the respondents alongwith an amount of Rs. 18% p.a. from 01.12.2018 till the payment was made or the facilities were provided. Nothing beyond that could be held to be payable by the claimant to the respondents for not complying with this clause. In case the respondents did not seek refund of the above amount in that situation the claimant was liable to pay 18% amount on the amount paid by the respondents for providing these two facilities and that too from 01.12.2018 till the payment was made by the claimant.
.......
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.05.03
17:29:51
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As a result of my forgoing discussion, I hold that the above clause No. 4 contained in the agreement dated 30.05.2016 Annexure C-1 is really defective and non-fact based. Such a clause is never incorporated in any settlement deed with an intention to be implemented rather the same is only incorporated to put a pressure upon the other party to do the needful as per the terms of the agreement/settlement: Accordingly, I hold that the ends of justice shall be amply met in case this clause 4 of the settlement deed dated 30.05.2016 (Annexure C-1) is modified/amended to the extent that the words "actual amount paid" are replaced by the words "club maintenance charges". After this modification / amendment / correction in the clause 4 the respondents shall be entitled to recover 18% amount per anmum on the amount paid by them to the claimant for providing the club/swimming pool facilities and nothing beyond that and that too from 01.12.2018 till the payment is made by the claimant. Needless to mention here that in case the respondents seek refund of the amount paid by them for club / pool facilities to the claimant in that eventuality the claimant shall refund that amount to the respondents alongwith 18% extra amount calculated on yearly basis on that amount from 01.12.2018 till the payment of the amount.
Nothing else remains to be adjudicated or dealt with. In the ultimate analysis the claim filed by the claimant is hereby accepted.
The Award is hereby passed as follows:
1. Clause No. 4 of the settlement deed dated 30.05.2016 is declared to be defective.
2. This clause No. 4 of the settlement deed dated 30.05.2016 (Annexure C-1) is amended / modified by replacing the words "actual amount paid" with the words "club maintenance charges"."
5 Ld. Counsel for the petitioner argued and averred in the present petition that there is apparent error on the face of it. The appointment of the Ld. Arbitrator is bad and biased because Digitally signed by VINEETA GOYAL VINEETA Date:
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the respondent had appointed Ld. Sole Arbitrator without consent of the petitioners. Being unilateral award, it is not maintainable in law.
6 Ld. Counsel for petitioners further argued that Ld. Arbitrator ignored the facts that after more than two years of Settlement Deed dated 30.05.2016, when the petitioners contacted the official of respondent in the month of December 2018 and demanded compliances of the terms of the settlement and also filed execution petition before Hon'ble NCDRC as Execution Case E.A No. 138/2019 against respondent, the respondent invoked the arbitration clause seeking setting aside of clause 4 of Settlement Deed stating to be defective. The entire proceedings of arbitration is biased and baseless as well as not maintainable because registered document as Settlement Deed dated 30.05.2016 cannot be modified or amended by Ld. Sole Arbitrator.
7 On the contrary, Ld. Counsel for the respondent argued and submitted that the petitioners have knowingly and deliberately not filed the notice for invocation of arbitration dated 18.02.2020 sent by the respondent to the petitioners informing about the appointment of the Arbitrator. The petitioners have also concealed that they have never reverted to the said letter, and it was only due the omission done at the behest of the petitioners to object to the appointment of Ld. Sole Arbitrator, the appointment Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:30:22 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 8 of 20 was done. It is submitted that petitioners have concealed the fact that pursuant to receipt of the letter requesting for appointment of the Ld. Sole Arbitrator to adjudicate the disputes between the parties made by the respondent, the Ld. Sole Arbitrator on 18.05.2020 provided his declaration with a copy to petitioners, which was also received by petitioners.
8 Ld. Counsel for the respondent further submitted that the petitioners have also concealed the factum that after the pronouncement of the award dated 31.03.2022, in compliance of the award, the respondent initiated the refund of the amount of the Club Charges amounting to Rs. 2,81,858/- (Rupees Two Lakhs Eighty-One Thousand Eight Hundred and Fifty-Eight Only) through four cheques dated 12.05.2022, which have been duly encashed by the petitioners along with a letter dated 16.05.2022.
Ld. Counsel for the respondent submitted that there is no infirmity in the award passed by the Ld. Arbitrator which warrants interference.
9 The Hon'ble Supreme Court of India and Hon'ble Delhi High Court in plethora of cases have intricately discussed the power of courts to entertain petition u/s 34 of the Act and elements to examine while adjudicating these petitions. The concept regarding the power of courts to interfere or set-aside an arbitral award on the ground that the Ld. Arbitrator have modified Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:30:30 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 9 of 20 the terms of the agreement on the plea by the respondent that it finds the terms of the contract to be commercially unviable have been thoroughly discussed by various courts including by the Hon'ble Delhi High Court in OMP(COMM)-227/2019 " Union Of India, Ministry Of Railways, Railway Board.& Anr vs. M/s Jindal Rail Infrastructure Limited". The Hon'ble High Court observed that:
"68. A commercial contract between the parties cannot be avoided on the ground that one of the parties subsequently finds it commercially unviable to perform the same. The Arbitral Tribunal has, essentially, re-worked the bargain between the parties and rewritten the contract. This is, clearly, impermissible.
69. In PSA SICAL Terminals Pvt. Ltd v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin and Others (supra), the Supreme Court observed as under: -
"87....In our view, re-writing a contract for the parties would be breach of fundamental principles of justice entitling a Court to interfere since such case would be one which shocks the conscience of the Court and as such, would fall in the exceptional category."
70. There is no dispute that the interpretation of a contract falls within the jurisdiction of an arbitral tribunal and an arbitral award based on a plausible interpretation of a contract cannot be interfered with under the provisions of Section 34 of the A&C Act.
71. However, in this case, this Court is unable to accept that the Arbitral Tribunal's interpretation of Clause 2.4 of the Agreement (renumbered as Clause 2.8 of the Agreement), is a plausible one.
72. According to the Arbitral Tribunal, the said clause is required to be re-interpreted contrary to its plain language as it "flouts business common sense". JRIL, in its commercial wisdom, had quoted a price of ₹10,80,000/- for supplying the BOXNHL wagons. It is not open for the Arbitral Tribunal to examine this commercial wisdom and rewrite the Agreement on the basis of the commercial difficulties faced by JRIL in performing its obligations.
Digitally
signed by
VINEETA
VINEETA GOYAL
GOYAL Date:
2025.05.03
17:30:40
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xxxxxx
74. It is not necessary that all contracts yield a profit; some result in a loss as well. This is not a factor to permit a party to avoid its contractual obligations.
75. In cases where it is found that the terms of the contract do not clearly express the intentions of the parties, it is open to seek recourse to various tools of interpretation. This would include interpreting a contract in a manner that would make commercial sense as it is assumed that men of commerce would have intended it so. However, it is not open to re-work a bargain that was struck between the parties on the ground that it is commercially difficult for one party to perform the same."
10 After hearing the arguments of the parties and perusing the records, and appropriatedly guided by judgment (supra), in the considered opinion, the Ld. Arbitrator has erred in passing the impugned award and further modifying/ replacing the words "actual amount paid" with the words "club maintenance charges" in the Clause 4 of the Settlement Deed dated 30.05.2016. The Ld. Arbitrator has erred by not interpreting the terms of the Settlement Deed but interpreting the alleged intent or expectation of the respondent from the Settlement Deed. The Ld. Arbitrator was solitarily mandated to resolve the dispute arising from the Settlement Deed as per the arbitration clause and not rewrite the Settlement Deed. It needs to be mention that the Ld. Arbitrator ought not to have considered the reasoning of the respondent that the clause 4 was defective clause which resulted in absurdity of the Settlement Deed. The Ld. Arbitrator erred in examining the commercial wisdom of the respondent and rewrote the Settlement Deed on the basis of the commercial difficulties faced by Digitally signed by VINEETA GOYAL VINEETA Date:
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respondent in performing its obligations. In consonance with The Hon'ble Delhi High Court in the case " Union Of India, Ministry Of Railways, Railway Board.& Anr" (supra), if the terms of the Settlement Deed do not clearly express the intentions of the parties, it is open for the parties to seek recourse to various tools of interpretation. This would include interpreting the Settlement Deed in a manner that would make commercial sense as it is assumed that men of commerce would have intended it so. However, it is not open for the Ld. Arbitrator to re-work a bargain that was struck between the parties on the ground that it is commercially difficult for one party to perform the same.
11 It is further to be noted that the respondent was well aware of the presence of the clause 4 since the inception of the Settlement Deed yet they elected to raise this issue after the expiry of the mentioned period in the clause 4 and at the time of invoking the arbitration. The respondent was a voluntary and prudent signatory to the Settlement Deed and was not coerced to sign the same, therefore the respondent is obligated to abide by the terms of the Settlement Deed. In case the respondent was aggrieved by the illegality of the clause 4 in the Settlement Deed, the respondent should have followed the proper procedure and offering the petitioners an amendment to the Settlement Deed as mutual agreed within a reasonable time after the inception of the Settlement Deed. These aforementioned facts establishes that the Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:30:55 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 12 of 20 pleas of the respondent is an afterthought but not a legal ground to challenge the terms of the Settlement Deed. The impugned arbitral award deserves to be set-aside on this account.
12 Further, upon hearing the Ld. Counsels for both the sides and perusing the documents, it appears that in the present case, in terms of the provisions of Settlement Deed, the respondent had an option for appointment of Arbitrator at their discretion. In terms of the said Deed, the respondent had nominated the Ld. Sole Arbitrator and unilaterally appointed the Ld. Sole Arbitrator without the consent of the petitioner. Section 12 (5) of the Act says as follows:
12. Ground for Challenge. -
(1)................
(2)................
(3)................
(4)................
(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the seventh Schedule shall be ineligible to be appointed as an arbitrator:
Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub- section by an express agreement in writing.
13 At this juncture, it would be appropriate to extract relevant portion of judgment rendered by Hon'ble Supreme Court in Perkins Eastman Architects DPC & Anr Vs. HSCC (India) Ltd., Arbitration Application No. 32 of 2019, decided on 26.11.2019 :-
"16. However, the point that has been urged, relying upon the decision of this Court in Walter Bau AG3 and TRF Digitally signed by VINEETA GOYAL VINEETA Date:
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Limited, requires consideration. In the present case Clause 24 empowers the Chairman and Managing Director of the respondent to make the appointment of a sole arbitrator and said Clause also stipulates that no person other than a person appointed by such Chairman and Managing Director of the respondent would act as an arbitrator. In TRF Limited4 , a Bench of three Judges of this Court, was called upon to consider whether the appointment of an arbitrator made by the Managing Director of the respondent therein was a valid one and whether at that stage an application moved under Section 11(6) of the Act could be entertained by the Court. The relevant Clause, namely, Clause 33 which provided for resolution of disputes in that case was under:
"33. Resolution of dispute/arbitration
(a) In case any disagreement or dispute arises between the buyer and the seller under or in connection with the PO, both shall make every effort to resolve it amicably by direct informal negotiation. (b) If, even after 30 days from the commencement of such informal negotiation, seller and the buyer have not been able to resolve the dispute amicably, either party may require that the dispute be referred for resolution to the formal mechanism of arbitration. (c) All disputes which cannot be settled by mutual negotiation shall be referred to and determined by arbitration as per the Arbitration and Conciliation Act, 1996 as amended. (d) Unless otherwise provided, any dispute or difference between the parties in connection with this agreement shall be referred to sole arbitration of the Managing Director of buyer or his nominee. Venue of arbitration shall be Delhi, and the arbitration shall be conducted in English language.
(e) The award of the Tribunal shall be final and binding on both, buyer and seller."
14. In TRF Limited, the Agreement was entered into before the provisions of the Amending Act (Act No.3 of 2016) came into force. It was submitted by the appellant that by virtue of the provisions of the Amending Act and insertion of the Fifth and Seventh Schedules in the Act, the Managing Director of the respondent would be a person having direct interest in the dispute and as such could not act as an arbitrator. The extension of the submission was that a person who himself was disqualified and disentitled could also not nominate any other person to act as an Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:31:24 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 14 of 20 arbitrator. The submission countered by the respondent therein was as under: -
"7.1. The submission to the effect that since the Managing Director of the respondent has become ineligible to act as an arbitrator subsequent to the amendment in the Act, he could also not have nominated any other person as arbitrator is absolutely unsustainable, for the Fifth and the Seventh Schedules fundamentally guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence and impartiality of the arbitrator. To elaborate, if any person whose relationship with the parties or the counsel or the subject-matter of dispute falls under any of the categories specified in the Seventh Schedule, he is ineligible to be appointed as an arbitrator but not otherwise.
18. The issue was discussed and decided by this Court as under:-
50. First, we shall deal with Clause (d). There is no quarrel that by virtue of Section 12(5) of the Act, if any person who falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as the arbitrator. There is no doubt and cannot be, for the language employed in the Seventh Schedule, the Managing Director of the Corporation has become ineligible by operation of law. It is the stand of the learned Senior Counsel for the appellant that once the Managing Director becomes ineligible, he also becomes ineligible to nominate. Refuting the said stand, it is canvassed by the learned Senior Counsel for the respondent that the ineligibility cannot extend to a nominee if he is not from the Corporation and more so when there is apposite and requisite disclosure. We think it appropriate to make it clear that in the case at hand we are neither concerned with the disclosure nor objectivity nor impartiality nor any such other circumstance. We are singularly concerned with the issue, whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an arbitrator. At the cost of repetition, we may state that when there are two parties, one may nominate an arbitrator and the other may appoint another. That is Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:31:31 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 15 of 20 altogether a different situation. If there is a clause requiring the parties to nominate their respective arbitrator, their authority to nominate cannot be questioned. What really in that circumstance can be called in question is the procedural compliance and the eligibility of their arbitrator depending upon the norms provided under the Act and the Schedules appended thereto. But, here is a case where the Managing Director is the "named sole arbitrator" and he has also been conferred with the power to nominate one who can be the arbitrator in his place. Thus, there is subtle distinction. In this regard, our attention has been drawn to a two-Judge Bench decision in State of Orissa v. Commr. of Land Records & Settlement7 . In the said case, the question arose, can the Board of Revenue revise the order passed by its delegate. Dwelling upon the said proposition, the Court held: (SCC p. 173, para
25) "25. We have to note that the Commissioner when he exercises power of the Board delegated to him under Section 33 of the Settlement Act, 1958, the order passed by him is to be treated as an order of the Board of Revenue and not as that of the Commissioner in his capacity as Commissioner. This position is clear from two rulings of this Court to which we shall presently refer. The first of the said rulings is the one decided by the Constitution Bench of this Court in Roop Chand v. State of Punjab. In that case, it was held by the majority that where the State Government had, under Section 41(1) of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948, delegated its appellate powers vested in it under Section 21(4) to an "officer", an order passed by such an officer was an order passed by the State Government itself and "not an order passed by any officer under this Act" within Section 42 and was not revisable by the State Government. It was pointed out that for the purpose of exercise of powers of revision by the State under Section 42 of that Act, the order sought to be revised must be an order passed by an officer in his own right and not as a delegate of the State. The State Digitally signed by VINEETA VINEETA GOYAL GOYAL Date:
2025.05.03 17:31:39 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 16 of 20 Government was, therefore, not entitled under Section 42 to call for the records of the case which was disposed of by an officer acting as its delegate." (emphasis in original)
51. Be it noted in the said case, reference was made to Behari Kunj Sahkari Awas Samiti v. State of U.P., which followed the decision in Roop Chand v. State of Punjab8 .
It is seemly to note here that the said principle has been followed in Indore Vikas Pradhikaran.
52. Mr Sundaram has strongly relied on Pratapchand Nopaji11. In the said case, the three-Judge Bench applied the maxim "qui facit per alium facit per se". We may profitably reproduce the passage: (SCC p. 214, para 9) "9. ... The principle which would apply, if the objects are struck by Section 23 of the Contract Act, is embodied in the maxim: "qui facit per alium facit per se" (what one does through another is done by oneself). To put it in another form, that which cannot be done directly may not be done indirectly by engaging another outside the prohibited area to do the illegal act within the prohibited area. It is immaterial whether, for the doing of such an illegal act, the agent employed is given the wider powers or authority of the "pucca adatia", or, as the High Court had held, he is clothed with the powers of an ordinary commission agent only."
53. The aforesaid authorities have been commended to us to establish the proposition that if the nomination of an arbitrator by an ineligible arbitrator is allowed, it would tantamount to carrying on the proceeding of arbitration by himself. According to the learned counsel for the appellant, ineligibility strikes at the root of his power to arbitrate or get it arbitrated upon by a nominee.
54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we Digitally signed by VINEETA VINEETA GOYAL Date: GOYAL 2025.05.03 17:31:47 +0530 OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 17 of 20 are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so."
19. ..........
20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited4 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited4 , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.
Digitally signed by VINEETA GOYALVINEETA Date:
GOYAL 2025.05.03
17:31:56
+0530
OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 18 of 20
21. But, in our view that has to be the logical deduction from TRF Limited. Paragraph 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an Arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016) and recognised by the decision of this Court in TRF Limited."
14 Therefore, appropriately guided by the judgment supra, it is clear that appointment of Ld. Sole Arbitrator unilaterally by one of the parties (respondent herein) would be ineligible by operation of law. Further, the declaration of Ld. Arbitrator in terms of Section 12 (1) (b) of the Six Schedule of the Act as to his impartiality is not on record.
Digitally signed by VINEETA GOYALVINEETA Date:
GOYAL 2025.05.03
17:32:06
+0530
OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 19 of 20
15. In the present case, by virtue of Section 12 (5) of the Act, the Ld. Arbitrator, who was unilaterally appointed, is ineligible to an Arbitrator and the award passed by him, deserves to be set aside on this account also. More particularly, as already observed, there is no express waiver in writing as contemplated under the Proviso to Section 12 (5) of the Act.
16 In view of the foregoing discussions, taking all the above points in consideration, this Court is of considered view that the present award is liable to be set aside being against vitiated by patent illegality and being in conflict with public policy of India.
17. In view of foregoing reasons, this petition is allowed and award dated 31.03.2022 is hereby set aside. No order as to costs.
18. File be consigned to record room.
Digitally signedVINEETA by VINEETA GOYAL GOYAL Date: 2025.05.03 17:32:14 +0530 Pronounced in the open Court (VINEETA GOYAL) on 03rd May, 2025 District Judge (Commercial-03) Patiala House, New Delhi OMP (Comm): 78/22 Vijyant Agarwal & Anr. vs. M/s. BPTP Ltd. Page 20 of 20