Bangalore District Court
Smt. Jayamma vs Rohan Housing Pvt. Ltd on 18 February, 2022
1 Com.A.S.No.61/2015
IN THE COURT OF THE LXXXVIII ADDL. CITY CIVIL &
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT):
BENGALURU CITY. (CCH-89)
Present: Sri. P.J. SOMASHEKARA, B.A.,LL.M,
LXXXVIII Addl. City Civil & Sessions Judge
Bengaluru City.
Dated this the 18th day of February 2022
Com.A.S.No.61/2015
Petitioners: 1. Smt. Jayamma,
W/o late Sri. H. Ramaiah Reddy,
Aged about 82 years,
R/at No.277/3, 9th 'A' Main, 2nd Block,
Jayanagar, Bangalore -11.
2. Sri. H.R. Rajashekar,
S/o late H. Ramaiah Reddy,
Aged about 55 years,
R/at No.310, 6 th Main, HAL II Stage,
Bangalore - 38.
3. Smt. H. Lakshmi Devi,
W/o late Venkataswamy,
Aged about 61 years,
R/at No.003, Caldra Block,
Elan Homes, Kaikondarahalli,
Sarjapur Road, Bangalore - 35.
4. Smt. Kanthama Chandrashekar,
W/o N. Chandrashekar,
Aged about 53 years,
R/at No.1146, 22 nd Cross, 23rd Main,
II Sector, HSR Layout,
Banglore -02.
5. Smt. H.R. Rani Reddy,
W/o late M.V. Ravikumar,
2 Com.A.S.No.61/2015
Aged about 51 years,
R/at No.2091, 9 th Floor,
Sobha Primrose, Green Glen Layout,
Bellandur, Bangalore -03.
6. Smt. Shamala Rajagopal,
W/o S.N. Rajagopal,
Aged about 49 years,
R/at No.6003, Hide Away Lane,
Fond Du Lac, WI 54937,
U.S.A.
(By Sri.A.M., Advocate)
-vs-
Respondents: 1. Rohan Housing Pvt. Ltd.,
A Company incorporated under
the Companies Act, 1956,
Having its Registered office at:
Pradeep Chambers, No.813,
Bhandarkar Institute Road,
Pune - 411 004.
Represented by its Director,
Mr. Sanjay K. Lunkad,
2. G. Srinivas Reddy,
S/o late Govinda Reddy,
Aged about 47 years,
R/at No.90, Munakollala Bus Stop,
Kunakollala, Marathahalli,
Bangalore - 37.
(By Sri. S.G.R., Advocate)
3. Mr. Justice N. Venkatachala (Retd.)
'Venkatadri', No.38/39, 1st Main,
Lower Palace Orchards, Bangalore -01.
4. Mr. Justice Shivaraj V. Patil, (Retd.)
'Sparsh' No.254, 18th Cross,
3 Com.A.S.No.61/2015
RMV Extension, Sadashivanagar,
Bangalore - 80.
5. Mr. Justice K. Shivashankar Bhat,
No.401, 12th Main, RMV Extension,
Sadashivanagar, Bangalore - 80.
(By Sri. A.S.R, Advocate for R4 & 5)
JUDGMENT
This is an arbitration suit filed by the plaintiffs against the defendants and sought for to call for the entire original records pertaining to the arbitration proceedings and to set aside the impugned award dated 10.02.2015 which passed by the Arbitration tribunal as being bad in law and in conflict with the public policy of India and to direct the defendant No.1 to pay the cost of the present proceedings.
2. The nutshell of the plaintiffs case are as under:
The plaintiffs in their plaint were alleged that the properties which are mentioned in the arbitration proceedings are not yielding any income and were casting the joint family of late H. Ramaiah Reddy, huge amounts of money to maintain, owning to its large size and with a view to enter into an arrangement to augment the families income, late H. Ramaiah Reddy who is none other than the husband of the plaintiff No.1 and father of plaintiff No.2 to 6, initially entered into an agreement dated 25.08.2004, 4 Com.A.S.No.61/2015 pursuant to thereto entered into a joint development agreement dated 01.11.2004 with the defendant No.1 for development of certain items of the claim B and C schedule properties into a residential apartment complex. Thereafter with a view to certain additional property for the purpose of development the agreement dated 25.08.2004 was came to be canceled and two joint development agreements dated 18.03.2006 was entered into with the defendant No.1 to develop the claim B and C schedule properties into multi-stored apartment complex. The defendant No.1 had failed to perform any of its obligation under the joint development agreements dated 01.11.2004, prior to execution of the agreement dated 25.08.2004 H. Ramaiah Reddy had applied for and obtained sanction from BDA for formation of residential layout, pursuant to which had formed the layout by carving out the sites and site No.89 and 90 situated in Sy.No.35 has been sold to one B.V. Ananda Reddy, later on he did not proceed with the completion of layout and the said facts was intimated to the defendant No.1 including the agreement dated 25.08.2004, the defendant No.1 was aware of the same has evidenced by the agreement dated 25.08.2004 and the responsibility was on the defendant No.1 to get the said layout plan sanction canceled and thereafter have its plan sanctioned.5 Com.A.S.No.61/2015
The agreement dated 25.08.2004 was deliberately suppressed by the defendant No.1 before the arbitral tribunal, the said layout plan was subsequently got cancelled by the defendant No.1 by submitting the letter to the BDA by forging the signature of late Ramaiah Reddy. The joint development agreements have been imposed a strict time lines on the defendant No.1 for performance of its obligations such as applying for and obtaining the plan sanction within 8 months, commencement of construction within 10 months of the joint development agreements and completion of the project in all respects fit for human habitation within 3 ½ years as per the Joint Development Agreements along with a grace period of one year.
3. The plaintiffs in their plaint were further alleged that late Ramaiah Reddy in compliance of his obligation under the Joint Development Agreements duly executed an registered GPA in favour of the defendant No.1 and put the defendant No.1 in permissive possession of the subject properties to the defendant No.1, however miserably failed to perform its obligation under the Joint Development Agreements and till the date has not obtained building plan sanction from the competent authority to complete the project despite over lapse of 8 years from the joint development agreements and despite there being no impediment 6 Com.A.S.No.61/2015 whatsoever. In the month of June 2011 the reasons best known to the defendant No.1 filed A.A.No.176/2011 under Sec.9 of the Arbitration and Conciliation Act, 1996 for seeking the relief for restraining them from alienating the subject properties until conclusion of the arbitration proceedings and got obtained exparte ad-interim order against them, however took no steps whatsoever to initiate the arbitration proceedings, thereafter they have terminated the Joint Development Agreements by issuing notice dated 12.12.2011, since the defendant No.1 has breached the condition of Joint Development Agreements and the defendant No.1 has made loss to them because of non-discharge of its obligation they have suffered loss and the defendant No.1 did not respond to the notice, but got issued a notice through its counsel initiating arbitration by appointing its arbitrator i.e. the defendant No.4 and they have nominated I.e. the defendant No.5, both the defendant No.4 and 5 together appointed the defendant No.3 as the presiding arbitrator.
4. The plaintiffs in their plaint they further alleged that the defendant No.1 filed its claim statement before the arbitral tribunal stating that direct them to perform their obligation under the Joint Development Agreements dated 18.03.2006 and to execute the power of attorney in terms of power of attorney 7 Com.A.S.No.61/2015 dated 18.03.2006 executed by late H. Ramaiah Reddy and sought for alternative to direct them to repay the refundable security deposit amount of Rs.4,47,00,000/- together with interest @ 18% p.a. and damages/ compensation of Rs.73,11,44,850/- together with interest @ 18% p.a., in spite of its readiness and willingness to perform its obligations under two Joint Development Agreements it has been unable to proceed with the implementation of the project on account of their non performance of their obligation under the Joint Development Agreement after the death of late H. Ramaiah Reddy on 14.03.2007, despite repeated requests, though always ready and willing to perform its part of the obligation, but they have failed to fulfill under the Joint Development Agreements.
5. The plaintiffs in their plaint have further alleged that the defendant No.1 in the claim statement has taken up contention that the suit in O.S.No.3538/2007 and the W.P.No.9621/2007 are the impediment/ obstructions came in its way for implementing the project as there is a title dispute in respect of 6,000 square feet of land raised by one B.V. Ananda Reddy was one such obstacle to perform its part of the contract, although significantly not raised as an issue in the claim petition. Prior to the execution of the Joint Development Agreement dated 01.11.2004 was not 8 Com.A.S.No.61/2015 disclosed about the layout plan got approved by late Ramaiah Reddy and same was an impediment in obtaining the building plan sanction from the BDA for the construction of residential apartment project and after recording of evidence on both sides, the defendant No.1 has moved an application for seeking alternative relief for refund of security deposit of Rs.4,47,00,000/- together with interest and damages/ compensation of Rs.73,11,44,850/- together with interest on the ground they did not perform their obligation under the Joint Development Agreements and the defendant No.1 was also sought alternative relief only in the event the arbitral tribunal were to decline granting of the main relief of specific performance for the reasons not attributable to defendant No.1. In response to the claim statement, they have filed their statement of objections along with the counter claim denying the allegations which made by the defendant No.1 and the defendant No.1 was never ready or willing to perform its part of the obligation under the Joint Development Agreements. The defendant No.1 was committed breach of its obligation under the Joint Development Agreements and till this day has not obtained building plan sanction from the BDA much less within the time framed stipulated under the Joint Development Agreements, despite there being no impediment 9 Com.A.S.No.61/2015 whatsoever. The application which filed by the defendant No.1 was came to be rejected by the BDA for failing to co-operate follow up with BDA. Consequently, the defendant No.1 has still not commenced any work on the subject land under the Joint Development Agreements. The defendant No.1 did not approach the arbitral tribunal with clean hands and was not entitled to the equitable and the discretionary relief of specific performance. The defendant No.1 had never called upon them either orally or in writing after the death of late H. Ramaiah Reddy requesting them to execute power of attorney or any other documents or fulfill any other obligations whatsoever.
6. The plaintiffs in their plaint have further alleged that the defendant No.1 has failed to pay the property taxes in respect of the subject properties which they had subsequently paid and the defendant No.1 had long since abandoned the project and not in possession of the lands in question and they were continue to be in actual physical possession and the said properties having put up a compound wall by incurring a huge expenditure and having employed security personnel to guard and protect the properties and they have suffered huge loss on account of breach and lapses on the part of the defendant No.1 and they have deprived for sale proceeds from the sale of their share of the built up area 10 Com.A.S.No.61/2015 had the project been completed in accordance with the time line specified in the Joint Development Agreements. So they got issued termination notices both dated 12.12.2011 terminating Joint Development Agreements, by virtue of which the Joint Development Agreements stood terminated and they have raised counter claim seeking the declaration that the Joint Development Agreements stood terminated by virtue of said notices and consequently for direction to the defendant No.1 to pay an amount of Rs.98,84,64,600/- towards the compensation for loss of interest on the sale proceeds of their share of the built up area together with interest @ 18% p.a. and the amount of Rs.40,50,000/- and Rs.30,25,409/- towards expenses which incurred by them for construction of compound wall, employment of security personal to protect the claim schedule properties and towards arrears of property tax respectively.
7. The plaintiffs in their plaint have further alleged that the defendant No.1 filed its re-joinder and statement of objections to their counter claim and the defendant No.1 for the first time and after thought and on coming to know that they were not aware of the agreement dated 25.08.2004 entered into between the defendant No.1 and late Ramaiah Reddy falsely alleged that the fact regarding the pre-existing sanctioned residential layout plan 11 Com.A.S.No.61/2015 got approved by late Ramaiah Reddy from the BDA was suppressed by late Ramaiah Reddy from the defendant No.1 at the time of signing the Joint Development Agreements dated 01.11.20004 and 18.03.2006 and the defendant No.1 was not aware of the same and falsely alleged that the pre-existing sanctioned layout plan was a major impediment to get the building plan sanctioned for the project. So based on the pleadings of the parties, the tribunal framed the issues and additional issues and both the parties were led the evidence and during the course of proceedings, the very defendant No.1 had made an application for seeking to implead the defendant No.2 who was claiming to be the legaty of late Ramaiah Reddy by setting up a fraud and fabricated WILL and they were resisted the application by filing their objection and additional objections there to, but the said application was came to be allowed and he was impleaded as respondent No.7 in the arbitral proceedings. The defendant No.2 filed its statement of objection, but he did not chosen to led any evidence, after hearing the arguments, the arbitral tribunal passed its majority award on 10.02.2015 allowing the claim and partly allowing the counter claim.
8. The arbitral tribunal passed its majority award on 10.02.2015 allowing the claim and partly allowing their counter 12 Com.A.S.No.61/2015 claim. The Presiding Arbitrator i.e. the defendant No.3 vide his minority award wholly rejected the claim of the defendant No.1 and substantially allowed their counter claim. So feeling aggrieved by the said award were filed the instant plaint for the following;
GROUNDS a. The defendant No.1 was required to obtain a building plan sanction within 6 to 8 months on or before 17.11.2006 and required to commence construction within 10 months from the date of execution of Joint Development Agreements and to complete the construction in all respects fit for human habitation and to obtain occupancy certificate within 3½ years from the date of Joint Development Agreements on or before 17.09.2009 with grace period of 12 month, but the defendant No.1 did not do so which was not taken into consideration by the majority of the arbitrators. The arbitrators were not taken into consideration the time lines which expired and being as on the date of filing of the claim petition or at the time of initiation of the present proceedings and the defendant No.1 never obtained the building plan sanctioned nor commenced the construction or secured any loan or financial assistance from its banks which was not taken into consideration. The tribunal has acted contrary to the binding proceedings as the tribunal has awarded the specific performance of the subject Joint Development Agreements for rewriting the agreement between themselves and the defendant No.1.
b. The tribunal has not taken into consideration the time line under the Joint Development Agreements having expired and the tribunal has committed a grave error by directing them to specifically perform their obligation.
c. The tribunal has not taken into consideration that the defendant No.1 was and has always been ready and willing to perform its obligation under the Joint Development Agreements and the tribunal has overlooked the established position of law enunciated by the Hon'ble Supreme Court of India, though they were continuously readiness and willingness to perform their part of the contract, but the defendant No.1 has failed to perform its part of the contract which not taken into consideration, though the burden of proof is 13 Com.A.S.No.61/2015 entirely on the defendant No.1 and he has to succeed its case based on the materials and the defendant No.1 cannot rely on the strength or weakness of their case which not taken into consideration by the tribunal.
d. The arbitral tribunal failed to notice the defendant No.1 had not sent a single communication for execution of Joint Development Agreements nor calling upon them to perform any obligation under the Joint Development Agreements much less calling upon them to execute power of attorney in its favour, but the tribunal failed to appreciate the said aspects and the defendant No.1 was not ready and willing to perform its obligation under the Joint Development Agreements.
e. The Arbitral tribunal has grossly erred in holding that time was not the essence of the Joint Development Agreements in question which is contrary to the facts of the case and the judgment of the Hon'ble Supreme Court and the arbitral tribunal ought to have considered that the claim schedule properties are situated in an urban area and that its price is always on the rise and by virtue of the terms of the Joint Development Agreements which was clear that the surrounding circumstances motivated H. Ramaiah Reddy to enter into the Joint Development Agreements which not taken into consideration by the tribunal and the tribunal has not taken into consideration about the delay in completion of the project and the tribunal ought to have considered the judgment of the Hon'ble Supreme Court about the performance of obligations within a reasonable time and to approach the court within a reasonable time and the defendant No.1 took no steps even obtained a building plan sanctioned despite of lapse of 9 years from the date of execution of Joint Development Agreements which not taken into consideration by the arbitral tribunal.
f. The arbitral tribunal has erred in holding that time was not the essence of the contract and they ought to have issued notice to the defendant No.1 making time the essence of the contract in terms of Sec.55 of the Indian Contract Act. By failing to appreciate the settled legal position brought to its notice by them and the facts of the case, which clearly demonstrate that the parties always intended time to be the essence of the contract.
g. The arbitral tribunal failed to taken into consideration that the defendant No.1 has not approached with clean hands and having suppressed many material and crucial facts and evidence nor taken into consideration 14 Com.A.S.No.61/2015 about the judgment of the Hon'ble Supreme Court regarding settled principles for granting of specific performance is a discretionary and equitable relief. The impugned award which passed by the arbitral tribunal is contrary to the provisions of Specific Relief Act and failed to notice Sec.16(b) of the Specific Relief Act which bars the court from granting specific relief to any person who violates any essential terms of the contract and the defendant No.1 has failed and neglected to obtain a building plan sanction within the time which fixed under the Joint Development Agreement.
h. The arbitration tribunal has acted contrary to Sec.14(1)(b) and 14(1)
(d) of the Specific Relief Act as Sec.14(1)(b) provides the contract cannot be specifically enforced if it runs into minute or numerous details or which is so dependent on the personal qualification or violation of the parties or otherwise from its nature and the contention which raised by them has been rejected by the defendant No.4 without reasoning whatsoever for which the defendant No.5 has agreed without any independent application of mind.
i. The arbitral tribunal failed to appreciate the obligations of the parties under the Joint Development Agreements nor discussed about the negotiating and executing of Joint Development Agreements and its conditions. The tribunal failed to appreciate that the breach which committed by the defendant No.1 as per the Joint Development Agreements nor taken into consideration about the termination of the Joint Development Agreements by virtue of the notice.
j. The impugned award which passed by the tribunal is contrary to the terms of the two Joint Development Agreements dated 18.03.2006 and failed to appreciate that the time was not the essence of the Joint Development Agreements and misinterpreted and misconstrued the terms thereof and disregarded the specific terms of the subject Joint Development Agreements nor taken into consideration about the intention of the parties.
k. The tribunal while passing the impugned award has misdirected itself by holding that it was the obligation of late Ramaiah Reddy to get the sanctioned layout plan canceled and failed to notice that the only reference to the existence of the layout plan is found in the agreement dated 25.08.2004 and it was the sole responsibility of the defendant No.1 to apply for and obtain the building plan sanction which by implication included getting the earlier layout plan canceled.
15 Com.A.S.No.61/2015
l. The arbitral tribunal committed a grave error holding that they have failed to keep up their reciprocal promise of keeping their title to the subject properties clear marketable and free from encumbrances in view of the litigation in O.S.No.3538/2007 filed by one R. Babu Reddy and W.P. No.9621/2007 filed by one Munireddy and failed to notice and consider the objections and the submission made by them as to how and why the litigations had no bearing whatsoever on the defendant No.1 and its performance under the Joint Development Agreements as there was no impediment nor the obstruction preventing the defendant No.1 from obtaining the building plan sanctioned which is not taken into consideration by the tribunal.
m. The arbitral tribunal has ruled contrary to express terms of Joint Development Agreements holding that the time for performance of the two Joint Development Agreements stood extended automatically due to the delay in getting the earlier layout plan canceled in terms of clauses 3.2 and 10 of the Joint Development Agreements. The said interpretation is not envisaged in the said clauses, but the tribunal mis-construed and misinterpreted the said clauses holding that the time for performance stood automatically extended.
n. The tribunal has erred in holding that the two Joint Development Agreements were the composite contract being in relation to contiguous land and also by constructing two Joint Development Agreement as a composite contract by relying on implied terms and surrounding circumstances and no proposed development/ building plans were produced by the defendant No.1 before the arbitral tribunal to support its contention or for the arbitral tribunal to be able to come to the conclusion that the projects was composite development has falsely contended by the defendant No.1. The tribunal has not taken into consideration notices which sent by the deceased late Ramaiah Reddy and failed to consider the facts and the evidence as well as conduct of late Ramaiah Reddy who had executed joint development agreements.
o. The impugned award is behind the scope of reference to the tribunal and the arbitral tribunal consequently exceeds its jurisdiction in passing the award committing a grave jurisdictional error and the arbitral tribunal has gone behind the scope of arbitration in clause 30 of the Joint Development Agreements.
p. The finding given by the tribunal is contrary to the facts and evidence does not address the question at hand and not taken into consideration about 16 Com.A.S.No.61/2015 the responsibility of the defendant No.1 as per the Joint Development Agreements and the impugned award which passed is perverse and not supported by the reasons which is patently illegal and against to the fundamental policy of Indian law.
q. The tribunal erred in holding that the litigations wherein impediment/ obstruction to the defendant No.1 for implement the project, though the defendant No.1 was not party to the suit in O.S.No.3538/2007. The tribunal has committed grave error in constructing the letter sent by them to the defendant No.1 regarding the interim order and dismissal respectively of W.P.No.9621/2007 and held they had not made any complaint regarding the delay, breach and failure of the defendant No.1 in the said letters and the same was evidence of the fact that the time was not essence of the contract.
r. The arbitral tribunal erred in holding that they did not complain about the delay, default on the defendant No.1's part on the time lines specified in the Joint Development Agreements which is contrary to the record. The tribunal erred in holding that the defendant No.1 was and had been ready and willing to perform its obligation under the Joint Development Agreements by failing to consider the conduct of defendant No.1 and its complete non- performance of its obligations and abandonment of the subject properties and the project.
s. The tribunal has erred in holding that the defendant No.1 was always and willing to perform its obligations under the Joint Development Agreements by taking into consideration of the fact of obtaining of certain approvals and NOC's by the defendant No.1 by failing to notice that the same had expired or were irrelevant construction of a mock flat, compound wall, bore well in the claim schedule properties, purchase of land belonging to B.V. Ananda Reddy obtaining cancellation of layout plans and failed to notice that the same were not obligations contemplated under the Joint Development Agreements and the defendant No.1 had not taken the first and most crucial steps of obtaining the building plan sanctioned without which none of the other steps taken by the defendant No.1 which is not taken into consideration by the tribunal.
t. The tribunal committed a grave error by holding that they did not prove that they were in possession of the claim schedule properties by disregarding the facts the defendant No.1 had clearly abandoned project leaving responsibility of guarding and protecting the claim schedule properties 17 Com.A.S.No.61/2015 on them and failed to notice that they were constrained to put up compound wall by incurring huge expenditure.
u. The tribunal has failed to notice that the khatha of the subject properties have been registered in their names and paid huge amount of property tax and betterment charges to the BBMP including the arrears of property tax which the defendant No.1 had failed to pay. The tribunal failed to notice or consider the primary cause of action for the claim of the defendant No.1 was execution of the partition deed by them and failed to notice that the defendant No.1 had miserably failed to prove that it had ever requested them to perform any obligation under the Joint Development Agreements. The impugned award is contrary to the provisions of Arbitration and Conciliation Act and prays for allow the petition.
9. In response to the notice, the defendant No.1 has been appeared through its counsel and filed the objection statement. The defendant No.2 in spite of notice did not appear nor filed objection statement as he was placed exparte, though the notice has been served on the defendant No.3 to 5 they were absent, as they are the Presiding Arbitrator and Co-arbitrators.
10. The defendant No.1 in his objection statement has alleged that the averments, allegations, contentions which urged by the plaintiffs in the instant suit are totally false, baseless and frivolous as they have suppressed and misrepresented the material facts. The arbitral award dated 10.02.2015 passed by the majority members of the Hon'ble Arbitral Tribunal i.e. Hon'ble Justice Mr. Shivaraj V. Patil and Hon'ble Mr. Justice K. Shiva Shankar Bhat were allowed its claim in part by way of its well 18 Com.A.S.No.61/2015 reasoned judicial order. The arbitration suit which filed by the plaintiffs seeking for setting aside the arbitral award which passed is not maintainable, since there is no prima facie case has been made out for interference of this court as this court interference warrants only where a party was under some incapacity, the arbitration is not valid under the law to which the parties have subjected to it or failing in indication thereon under the law for the time being in force, the party making the obligation was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case, the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration or it contains decision on matter behind the scope of the submission to arbitration. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties unless such agreement was in conflict with a provision of part 1 of the Arbitration and Conciliation Act, 1996 from which parties cannot derogate or such agreement is not in accordance with the provisions of part-1 of the Arbitration and Conciliation Act, subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in 19 Com.A.S.No.61/2015 force of the arbitral award is in conflict with the public policy of India.
11. The defendant No.1 in its objection statement has further alleged that the plaintiffs were confine to the ground that it is against to the fundamental policy of Indian law/ public policy which is not sustainable either in law or on facts and the award cannot be challenged or to set aside unless and until the plaintiffs are able to prove that a judicial approach is not followed by the arbitral tribunal in passing the award, as it is the object of the legislature and the mandate of Sec.34 of the Arbitration and Conciliation Act to ensure that there is a minimal judicial interference in arbitration proceedings and strict interpretation of provision, when an award is challenged. So in order to challenge the award, it is mandate on the part of the plaintiffs to establish the arbitral tribunal has not followed the judicial approach to seek for setting aside the arbitral award, that the arbitral tribunal in passing the award has acted in an unfair and unreasonable manner and the arbitral award has no objective and there is no application of mind to the facts and circumstances of the case and there are no reasons recorded in passing the arbitral award by the arbitral tribunal and the arbitral award passed is arbitrary, capricious and whimsical in nature. So the award which passed is 20 Com.A.S.No.61/2015 not contrary to any settled law nor the facts on hand nor attracted any of the grounds to set aside the award and there is a judicial approach has been followed by the arbitral tribunal while passing the award and the arbitral award cannot be challenged or sought for set aside on the frivolous reasons mentioned in the plaint and there is no miscarriage of justice and the well reasoned arbitral award clearly substantiates the facts which pleaded and the plaintiffs without discharging their burden to substantiate anything to the contrary, the allegations made therein cannot be considered as a ground to challenge the award and the plaintiffs were failed to establish their defence before the arbitral tribunal and now the grounds which pleaded are highly improbable and frivolous and reassessing and re-appreciation of the facts is not permissible under Sec.34 of the Arbitration and Conciliation Act, 1996. The arbitration award which passed is in accordance with the terms and conditions agreed to between the parties to the Joint Development Agreements and there is no patent error in the arbitral award which passed by the arbitral tribunal and the plaintiffs have failed to substantiate that the award passed is perverse or irrational and the award which passed is based on the oral and documentary evidence which led by the parties and after 21 Com.A.S.No.61/2015 considering the relevant laws relating to the disputes in question passed the award by assigning the reasons.
12. The defendant No.1 in its objection statement has further alleged that there is no error which is apparent on the face of record, since the plaintiffs failed to establish that the arbitral award passed is unfair and unreasonable and the arbitral award cannot be set aside on the ground that the different view could have been arrived at in the matter and the arbitral tribunal passed the award based on the evidence on record, which is acceptable and denied the para No.1 to 18 of the plaint stating that the averments which made are false, frivolous and baseless which are pleaded to file instant plaint by suppressing the material facts and denied the para No.19(i-IX) stating that the grounds which pleaded does not constitute a valid grounds under Sec.34 of the Arbitration and Conciliation Act to challenge the arbitral award.
13. The arbitral tribunal framed a specific issues to perform their obligations having held that the defendant No.1 held that he has performed its obligation for the reasons stated in para 12.34 to 12.39 of the arbitral award as the relief of specific performance is the discretionary which is not permissible for the plaintiffs and 22 Com.A.S.No.61/2015 denied para No.22 and 22(i) to (vi) stating that the fact which pleaded in the said paras are false, frivolous and baseless for the reasons that the arbitral tribunal has adjudicated the dispute based on the reference made by the parties to the arbitral tribunal in terms of the conditions agreed to between the parties and termination notice which issued by the plaintiffs terminating the Joint Development Agreements would constitute the dispute which has been adjudicated as per the reference made by the parties and as per the terms and conditions contained therein. The layout was formed does not find a place in the Joint Development Agreement dated 01.11.2004 or Joint Development Agreement dated 18.03.2006. So, has no knowledge of the layout which alleged even the plaintiffs themselves had lost sight of the said fact or had deliberately withheld it and finding regarding the issue No.7 which framed by the arbitral award being held in its favour and it cannot be rehesitated before this court and denied para No.23 to 25 stating that the allegations and the contentions which urged in the said paras are false, frivolous and baseless and the finding which given by the arbitral tribunal clearly goes to show that apart from establishing the frivolous defence taken up would also clearly establish the fact that there is no illegality and error in the arbitral award passed by the arbitral tribunal. 23 Com.A.S.No.61/2015
14. The defendant No.1 in its objection statement has further alleged that the proceedings in O.S.No.3538/2007 and the proceedings in W.P.No.9621/2007 were in respect of certain portion claim schedule B and C properties for which expend huge sums of money to develop the claim schedule B and C properties in common cannot be expected to take the risk of moving head with the construction/ development of the same by making investing, when the said property is under litigation and there is an obstruction and impediment for construction and development in the B and C schedule properties and the arbitral tribunal in its award at Para No.12.24 has held the obligation of claimant to obtain a sanction plan to commence the construction work and complete the same was dependent on the plaintiffs removing/ resolving the impediment/ obstruction. So the arbitral tribunal was pleased to grant the relief of specific performance as prayed and there is no error committed by the arbitral tribunal in holding that the litigations acted as an obstruction for to complete the project and the said finding is based on the evidence which is duly reasoned out in the arbitral award.
15. The defendant No.1 in its objection statement has further alleged that the plaintiffs themselves had permitted to move 24 Com.A.S.No.61/2015 head with the development of the claim schedule properties without raising any issues as regards delay, therefore the arbitral tribunal having held that he has not breached any of the terms as contained therein. So, the question of reconsideration of the said facts under Sec.34 of the Arbitration and Conciliation Act does not arise. The plaintiffs as well as H. Ramaiah Reddy were not contested reply given and they have permitted to move head with the development of claim B and C schedule properties, therefore the finding which given by the arbitral tribunal is liable to be upheld and the grounds which urged by the plaintiffs are not sustainable in law. The power of attorney which executed is irrevocable and in force, so he is entitled to seek for fresh power of attorney from the plaintiffs is liable to be upheld by this court and the constructions, which made in the spot reflects about the development of the claim schedule properties and obtained a cancellation of layout plan though it was not its obligation under the Joint Development Agreement would clearly establish its readiness and willingness.
16. The plaintiffs themselves in their written statement filed in O.S.No.3538/2007 admitted its possession and also in the objections filed in W.P.No.9626/2007 in which also they have admitted its possession of the claim schedule B and C properties 25 Com.A.S.No.61/2015 and in their termination notice have also categorically calling upon to deal with or change the nature of the property clubbed with the fact that the plaintiffs have nowhere mentioned or pleaded the manner in which they have taken back the possession of claim B and C schedule properties, thereby the arbitral tribunal in its finding has categorically held its possession and not accepted the possession of the plaintiffs which alleged and in the pleading has clearly explained the reason as to why the property tax was not remitted and undertaken to deposit the said amount either before the arbitral tribunal or when the authorities receive the same. Such being the case, it is evident that did not fail to pay property tax and that it was due to reasons beyond their control and they were unable to remit the same which cannot be found fault as held by the arbitral tribunal.
17. The defendant No.1 in its objection statement has further alleged that the arbitral tribunal has followed all the mandatory procedures and conducted the arbitral proceedings as contemplated under the Arbitration and Conciliation Act and the dispute has been referred within the scope of arbitration clause and the arbitral award which passed is in consonance with the terms and conditions of the contract entered between the parties and the arbitral tribunal was passed the arbitral award allowing 26 Com.A.S.No.61/2015 its claim after due consideration of the contentions which urged by the respective parties in their pleadings and the arbitral tribunal was framed the points for determination on all the rival contentions which urged by the parties and passed the well reasoned arbitral award after appreciating the rival claims made by the parties which is neither illegal nor contrary to the law or oppose to the public policy and denied the para 24 to 27 of the plaint averments stating that the allegations and the contentions which urged in the said paras are false, frivolous and baseless and the plaintiffs were caused improper and frivolous allegations which are liable for rejection and the plaintiffs who lacked the morals and fails without complaining their obligation and co- operating to develop the claim B and C schedule properties terminated the agreement on the sole ground itself the present suit is not maintainable. The plaintiffs having failed to make out any of the grounds as contemplated under Sec.34(2) of the Arbitration and Conciliation Act to challenge the arbitral award and the award which passed by the arbitral tribunal being in consonance with the principles of natural justice followed a judicial approach there being no error apparent on the face of record and the said arbitral award not being perverse or irrational. So the question of calling for records nor setting aside 27 Com.A.S.No.61/2015 the well reasoned arbitral award dated 10.02.2015 or directing to pay cost does not arise and prays for dismiss the suit.
18. Heard the arguments on both sides.
19. The points that arise for consideration of this court are as under:
1) Whether the plaintiffs have made out that the award which passed by the respondent No.3 to 5 is in conflict with the public policy?
2) Whether the plaintiffs have made out any of the grounds as enumerated under Sec.34 of the Arbitration and Conciliation Act, 1996 to set aside the impugned award dated 10.02.2015 passed by the arbitral tribunal?
3) What order?
20. My answer to the above points are as under:
Point No.1: In the Negative;
Point No.2: In the Negative;
Point No.3: As per final order, on the following;
REASONS
21. POINT NO.1 & 2: The plaintiffs who are the respondents No.1 to 6 in the arbitration proceedings and the defendant No.1 being the claimant and the defendant No.2 being the respondent No.7 in the arbitral proceedings. The defendant 28 Com.A.S.No.61/2015 No.3 being the Presiding Arbitrator and the defendant No.4 and 5 are being the co-arbitrators. So, before embarking on point No.1 and 2, it is just and necessary to narrate the gist of the case for the proper appreciation, as the plaintiffs being the respondents No.1 to 6 in the arbitral proceedings feeling aggrieved by the award which passed by the arbitral tribunal were approached this court on the ground that one H. Ramaiah Reddy, who is none other than the husband of the plaintiff No.1 and father of plaintiff No.2 to 6, initially entered into an agreement dated 25.08.2004 and pursuant thereto entered into an Joint Development Agreement dated 01.11.2004 with the defendant No.1 for the development of certain items of the claim B and C schedule properties into a residential apartment complex, thereafter with a view to include certain additional property for the purpose of development the earlier agreement dated 01.11.2004 was came to be canceled and entered into two Joint Development Agreements dated 18.03.2006 with the defendant No.1 to develop the claim B and C schedule properties into multi-storeyed apartment complex, but the defendant No.1 had failed to perform any of its obligation under the Joint Development Agreements and the H. Ramaiah Reddy was passed away, even after his death did not discharged its obligations and he was not ready nor willing to 29 Com.A.S.No.61/2015 perform its obligations, thereby proceedings has been initiated before the arbitral tribunal and the presiding arbitrator passed the award in favour of the plaintiffs, but whereas the co- arbitrators were passed the award in favour of the defendant No.1. So feeling aggrieved by the said award, the respondent No.1 to 6 being the plaintiffs were filed the instant suit.
22. The learned counsel for the plaintiffs apart from written arguments has submitted that the schedule properties which are mentioned in the claim petition filed before the arbitral tribunal were not yielding any income and were casting joint family of H. Ramaiah Reddy, huge amounts of money to maintain owning its large size and with a view to enter into an agreement to augment the families income. H. Ramaiah Reddy being the husband of plaintiff No.1 and father of plaintiff No.2 to 6 entered into an agreement dated 25.08.2004 and pursuant to thereto entered into an Joint Development Agreement dated 01.11.2004 with the defendant No.1 for development of certain items of the claim B and C schedule properties into residential apartment complex, but for inclusion of certain other additional properties for the purpose of development, the agreement which entered in between H. Ramaiah Reddy and the defendant No.1 was came to be canceled and two Joint Development Agreements dated 30 Com.A.S.No.61/2015 18.03.2006 was came to be entered in between the H. Ramaiah Reddy and the defendant No.1 for the development of the claim B and C schedule properties into a multi-storeyed apartment complex, but the defendant No.1 had failed to perform any of its obligation under the Joint Development Agreements dated 01.11.2004, but prior to execution of the agreement dated 25.08.2004 the H. Ramaiah Reddy had applied for and obtained sanction from the BDA for formation of residential layout and he had formed the layout by carving out sites therein and sold the site No.89 and 90 situated in Sy. No.35 to one B.V. Ananda Reddy, but did not proceed with the completion of the layout which has been intimated to the defendant No.1 at the time of agreement and the defendant No.1 was aware of the same and which is evidenced by the agreement dated 25.08.2004. Therefore, it is the responsibility of the defendant No.1 to get the said layout plan sanction canceled and thereafter have its building plan sanctioned, but deliberately suppressed the agreement dated 25.08.2004 before the arbitral tribunal and layout plan was subsequently got canceled by the defendant No.1 submitting the letter to the BDA by forging signature of late H. Ramaih Reddy.
23. The learned counsel for the plaintiffs in his arguments has further submitted that the Joint Development Agreements 31 Com.A.S.No.61/2015 which taken place in between H. Ramaiah Reddy and the defendant No.1 was imposed a strict time lines for performance of its obligations such as applying for and obtaining plan sanction within 8 months, commencement of construction within 10 months of the Joint Development Agreements and completion of the project in all respects fit for human habitation within 3 years, 6 months of the Joint Development Agreements along with a grace period of one year and in compliance of the obligation of H. Ramaiah Reddy under the Joint Development Agreements has executed the registered general power of attorney in favour of the defendant No.1 and put the defendant No.1 in permissive possession of the schedule properties which mentioned in the claim petition, but the defendant No.1 failed to perform any of its obligation under the Joint Development Agreements and not obtained a building plan sanction from the competent authority despite of no impediment whatsoever for discharge of its obligations, but the defendant No.1 instead of discharging its obligation filed the arbitration application No.176/2001 before the City Civil Court under Sec.9 of the Arbitration and Conciliation Act and got obtained the order from alienating the subject properties until conclusion of the arbitration proceedings. But in spite of the order, the defendant No.1 has not taken any steps to initiate the 32 Com.A.S.No.61/2015 arbitration proceedings. Therefore, the plaintiffs were got issued a notice dated 12.12.2011 terminating the Joint Development Agreements dated 18.03.2006 on the ground that the defendant No.1 has breached its obligation in pursuance of the Joint Development Agreements which taken place in between H. Ramaiah Reddy and the defendant No.1, but the defendant No.1 did not respond the notice which issued by the plaintiffs, instead got issued a notice to the plaintiffs for initiating the arbitration proceedings by appointing its arbitrator Hon'ble Justice Sri. Shivaraj V. Patil. So, the plaintiffs in response appointed nominee arbitrator Hon'ble Justice K. Shivashankar Bhat and both the defendant No.4 and 5 together appointed the defendant No.3 being the presiding arbitrator. After initiation of arbitral proceedings, the defendant No.1 being the claimant before the arbitral proceedings filed the claim statement for an award inter- alia to direct the plaintiffs to perform their obligation under the Joint Development Agreements dated 18.03.2006 and to direct the plaintiffs to execute the power of attorney in terms of the powers of attorney dated 18.03.2006 executed by H. Ramaiah Reddy and to direct the plaintiffs to repay refundable security deposit amount of Rs.4,47,00,000/- together with interest @ 18% 33 Com.A.S.No.61/2015 p.a. and damages/ compensation of Rs.73,11,44,850/- together with interest @ 18% p.a.
24. The learned counsel for the plaintiffs in his arguments has further submitted the defendant No.1 was not ready and willing to perform its obligation under the two Joint Development Agreements and there was no impediment for development of the schedule properties as per the Joint Development Agreements. The defendant No.1 was not the party either the suit in O.S.No.3538/2007 and W.P.No.9621/2007 and he has no impediment to proceed with the development work in pursuance of Joint Development Agreements. In response of the claim statement of the defendant No.1 before the arbitral proceedings, the plaintiffs were filed their statement of objection along with counter claim denying the allegations which made by the defendant No.1 and the defendant No.1 has filed the rejoinder to the counter claim which filed by the plaintiffs and the plaintiffs were categorically taken up the contention before the arbitral proceedings that the defendant No.1 was never ready or willing to perform its part of the obligation under the Joint Development Agreements and who has committed the breach of its obligation under the Joint Development Agreements and he has not obtained building plan sanction from the BDA and other 34 Com.A.S.No.61/2015 documents from the respective authorities. So on the basis of the pleadings of the parties, the arbitral tribunal framed the issues and additional issues.
25. The learned counsel for the plaintiffs in his arguments has further submitted that the defendant No.1 being the claimant has examined its Director Mr. Sanjay Kushal Chand as C.W.1 and its Chief Financial Officer Mr. Devendra Ratan lal has been examined a C.W.2 and got marked the documents at Ex.C.1 to C.48. The plaintiffs in order to prove their case, the plaintiff No.2 namely H. R. Rajashekar has been examined as R.W.1 and one K.V. Jagadish who is none other than the son of plaintiff No.3 and grandson of H. Ramaiah Reddy has been examined as R.W.2 and got marked the documents as Ex.R.1 to R.33, but the tribunal after hearing the arguments on both sides, passed the award on 10.02.2015 as the presiding arbitrator passed the award in favour of the plaintiffs, but whereas the co-arbitrator Hon'ble Justice K. Shivashankar Bhat has passed the award in favour of the defendant No.1 and another co-arbitrator Hon'ble Jusitce K. Shivashankar Bhat has not passed any award. So there is no majority award as per the Arbitration and Conciliation Act. The tribunal has failed to consider non performance of mandatory obligation on the part of defendant No.1 in pursuance of Joint 35 Com.A.S.No.61/2015 Development Agreements and the defendant No.1 has not established that he was always ready and willing to preform its obligation under the Joint Development Agreements, but the arbitral tribunal has overlooked the established position of law which enunciated by the Hon'ble Supreme Court in a number of decisions.
26. The learned counsel for the plaintiffs in his arguments has further submitted that the arbitral tribunal failed to notice that the defendant No.1 had not sent a single communication to the plaintiffs after the death of H. Ramaiah Reddy. Even during the life time of Ramaiah Reddy the defendant No.1 has not discharged its obligation, though this fact was brought to the notice of the arbitral tribunal, but it was not taken into consideration. The arbitral tribunal has grossly erred in holding that time was not the essence of Joint Development Agreements. When there is a settled law that the time is the essence of the contract, but the finding of the tribunal is contrary to the law and facts as per the decision of Hon'ble Supreme Court, and the tribunal held that time was not the essence of the contract on the ground that the plaintiffs ought to have issued a notice to the defendant No.1 making time the essence of the contract in terms of Sec.55 of the Indian Contract Act by failing to appreciate the 36 Com.A.S.No.61/2015 settled legal position which brought to the notice of the tribunal by the plaintiffs. The arbitral tribunal failed to consider that the defendant No.1 was not approached the tribunal with clean hands since the defendant No.1 has suppressed many materials and crucial facts, since the relief of specific performance is a discretionary and equitable relief governed by the solitary principles of equity and good conscience, but the tribunal has not taken into consideration which is contrary to the provisions of the Specific Relief Act. The tribunal failed to notice Sec.16(b) of the Specific Performance Act nor considered Sec.14(1)(b) and Sec.14(1)(d) of the Specific Relief Act as the said provisions are provides that the contract cannot be specifically enforced if it runs into minute or numerous, but without considering the said aspects, the tribunal passed the award in favour of the defendant No.1 and the tribunal committed grave error that the plaintiffs failed to keep up their reciprocal promise of keeping their title to the subject properties clear marketable and free from encumbrances instead of consider the obligation of the defendant No.1. The defendant No.1 got amended the claim petition before the arbitral tribunal in twice, the tribunal has not taken into consideration of the conditions which appeared in the Joint Development Agreements, but blindly accepted the case of the 37 Com.A.S.No.61/2015 defendant No.1, though the plaintiffs were got issued a legal notice by terminating Joint Development Agreements for non- performance of obligation of the defendant No.1, but the reasons best known to the defendant No.1 did not reply to the notice which issued by the plaintiffs and even after the death of Ramaiah Reddy the defendant No.1 did not approached the legal heirs of the deceased Ramaiah Reddy to perform its obligations.
27. The learned counsel for the plaintiffs in his arguments has further submitted that the impugned award which passed by the arbitral tribunal is perverse and not supported by any reasons which is patently illegal and against to the fundamental policy of Indian law. Merely on the ground that the plaintiffs did not complain about the delay it does not mean that the defendant No.1 is always ready and willing to perform its obligation. When there is a time line has been fixed under the Joint Development Agreements, it is the bounden duty of the defendant No.1 to discharge its obligation under the Joint Development Agreements, but the defendant No.1 has failed to discharge its obligation as per the Joint Development Agreements which was not taken into consideration by the arbitral tribunal, instead the tribunal erred in holding that the defendant No.1 was always ready and willing to perform its obligation under the Joint Development Agreements. 38 Com.A.S.No.61/2015
28. The learned counsel for the plaintiffs while canvassing his arguments has further submitted that the tribunal committed a grave error by holding that the plaintiffs did not prove their case through oral and documentary evidence, instead considered the obligation of the defendant No.1 in pursuance of Joint Development Agreements. Though there are sufficient materials on record to show that the plaintiffs were always ready and willing to perform their part of the contract which not taken into consideration by the arbitral tribunal. The Hon'ble Justice K. Shivashankar Bhat was not passed the independent and reasoned award as per Sec.31 of the Arbitration and Conciliation Act, since the said section provides that an arbitral award shall state the reasons upon which it is based and no reasons has been assigned for his conclusion. Therefore, there is no award on the part of the co-arbitrator and there is no majority award and the said counsel has drawn the court attention on the following decisions:
1. Judgment of Hon'ble Supreme Court in C.A.No.3699-3700/2018 in between PSA Sical Terminals Pvt Ltd. Vs The Board of Trustees of V.O. Chidambranar Port Trust Titicorin and Ors.
2. 2019(15) SCC 131
3. 2009(10) SCC 259
4. 2019(20) SCC 1
5. 2019(2) SCC 241.
6. 2015(3) SCC 49.
7. 2006(91) DRJ 370.
8. 1998(2) ALD 548 39 Com.A.S.No.61/2015
9. 2003(12) SCC 474 prays for allow the suit and to set aside the award dated 10.02.2015 passed by the arbitral tribunal being bad in law and in conflict with the public policy of India.
29. Per contra, the learned counsel for the defendant No.1 apart from written arguments has submitted that the suit which filed by the plaintiffs is not maintainable in law or on facts, though the presiding arbitrator passed the award in favour of the plaintiffs, but majority of the award in favour of the defendant No.1, though the plaintiffs in the suit have taken up the contention that the co-arbitrator was not passed the independent award, so it is not an majority award in favour of the defendant No.1. But the award which passed by the co-arbitrators are clear that it is a majority award passed under Sec.31 of the Arbitration and Conciliation Act. The award which passed constitute the majority award which passed by the Hon'ble Justice K. Shivashankar Bhat (Retd.), and Hon'ble Justice Shivaraj V. Patil (Retd.). Though the plaintiffs sought for to set aside the award on the ground that it is not a majority award, as the co-arbitrator Hon'ble Justice K. Shivashankar Bhat has not passed the independent award nor passed the award as per Sec.31 of the Arbitration and Conciliation Act which is totally false, frivolous and 40 Com.A.S.No.61/2015 baseless as the arbitral award passed by the Hon'ble Justice K. Shivashankar Bhat while concurring with the award made by the Hon'ble Justice Shivaraj V. Patil was made after going through the drafts of both the awards, since the arbitral award of Hon'ble Justice Shivaraj V. Patil at Para No.1 starts by saying that having gone through the draft award prepared by the learned Presiding Arbitrator Mr. Justice N. Venkatachala with due respect, unable to pursue to concur with the findings recorded. Therefore, writing separate award and the said award followed by the Hon'ble Justice retired K. Shivashankar Bhat who states that agreed with the award of the co-arbitrator, when one of the judges expounds the law on the particular point, but others do not openly dissent from it, it must be taken that all the judges concurring in the majority decision agreed to that exposition. The arbitrators considers the matters separately and then consider the matter jointly interchanging their judgments and every one of them has seen the judgment of others and the award of justice K. Shivashankar Bhat agreeing to the award passed by the Hon'ble Justice Shivaraj V. Patil without any dissent and agreed to all the reasons assigned by the justice Shivaraj V Patil and there is no need to state his views and reasons separately all over once again and the award passed based on reasons with specific 41 Com.A.S.No.61/2015 reference to the evidence led by the parties and the defendant No.1 established the facts by proving the payment of the refundable security deposit paid to H. Ramaiah Reddy under Ex.C.14 and 15, the payment of non-refundable deposit paid to H. Ramaih Reddy under Ex.C.54 to 56, the various NOC's, permissions, environmental clearance certificate consent for establishment certificate marked as Ex.C.22 to C.29 that were obtained by the defendant No.1 from the respective authorities to move for the development having constructed mock flat built by the defendant No.1 on the schedule B and C properties and the arbitral tribunal considered all the documents which placed and passed the award which is a majority award and held the defendant No.1 was able to plead, prove and substantiate that it was ready and willing to perform its obligations. Therefore, question of interference of this court in the award which passed by the co-arbitrators does not arise and the specific performance under the Specific Relief Act can coexist with a claim for damages under the Indian Contract Act, claim under one Act cannot proclude claim on the other so long as the requirements of the respective statutes are satisfied and the majority of the award which passed as per Sec.31 of the Arbitration and Conciliation Act and the contention which taken by the plaintiffs time was not the 42 Com.A.S.No.61/2015 essence of the contract for developing the claim schedule B and C properties is false, frivolous and baseless and the arbitral award having categorically come to the conclusion based on the records placed before the tribunal and the arbitral tribunal after appreciating not only oral evidence but also documentary evidence on record and the said counsel also submitted the further arguments as stated in the written arguments and prays for dismiss the suit. So, before considering the pleadings and the materials on record as well as the arguments which advanced by both the parties, it is just and necessary to consider the following legal aspects first, for the proper appreciation of the issue which involved in between the parties.
1. What is arbitration?
2. When court can interfere with arbitral award?
3. What is the scope of Court's power to interfere with the arbitral award?
4. What are the grounds are required to set aside the award?
5. Setting aside of arbitral award when permissible?
Let me decide one by one for proper appreciation of the materials on record. Thus this court drawn its attention on Sec.2(1)(a) of the Arbitration and Conciliation Act, 1996 which reads like this:
2(1)(a). The definition arbitration means any arbitration whether or not administered by permanent arbitral institution.43 Com.A.S.No.61/2015
Arbitration is a private dispute resolution mechanism agreed upon by the parties. Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties.
Arbitration is a process of settlement extra curses curiae and the parties are at liberty to choose their judge. "The esse visa nce of arbitration without assistance or intervention of the court is settlement of dispute by a tribunal of the own choosing of the parties." Law of arbitration aids in implementation of arbitration agreement contract between the parties which remains a private adjudication by a forum consequently chosen by the parties and made on consequential reference.
The above provision is very much clear the Arbitration is a binding voluntary alternative dispute resolution process by a private forum chosen by the parties. Now let me know when court can interfere with the arbitral award. Thus this court drawn its attention on Sec.34(43) of the Arbitration and Conciliation Act, 1996 which reads like this:
43. Principles of interference with arbitral award:-
The principles of interference with an arbitral award under Sec.34(2) of the Act are as follows:
(1) An award, which is -
(i) contrary to substantive provisions of law; or
(ii) The provisions of Arbitration and Conciliation Act, 1996, or 44 Com.A.S.No.61/2015
(ii) against the terms of the respective contract; or
(iv) Patently illegal or
(v) Prejudicial to the rights of the parties; is open to interference by the court under Sec.34(2) of the Act.
(2) The award could be set aside if it is contrary to:
(a) fundamental policy of Indian Law; or
(b) the interest of India; or
(c) justice or morality.
(3) The award could also be set aside, if it is so unfair and unreasonable that it shocks the conscience of the court.
(4) It is open to the court to consider whether the award is against the speci visa fic terms of the contract and if so interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
So, by virtue of the provision which stated above, the court can interfere with the arbitral award in the grounds which mentioned above.
Now let me know what is the scope of Court's power to interfere with the arbitral award? Thus this court drawn its attention on Sec.34(34) of the Arbitration and Conciliation Act which reads like this;
Scope of Court's power to interfere with the arbitral award:
45 Com.A.S.No.61/2015
The scope of the interference by the court's in regard to arbitral award is limited. Courts do not sit in appeal over the findings and decision of the arbitrator, nor can it reassess or re- appreciate evidence or examine the sufficiency or otherwise of the evidence.
So, by virtue of the provision which stated supra, the scope of interference by the court in regard to the arbitral award is limited scope. The scope of interference under Sec.34 of the Act is limited in view of the judgment of the Hon'ble Supreme Court of India which reported in AIR 2003 SC 2629 in between Oil and Natural Gas Corporation Ltd., V/s Shah Pipes Ltd. In the said judgment, their Lordship held that;
'an award can be set aside if it is contrary to fundamental policy of Indian Law, the interest of India, justice or morality, if it is patently illegal and unfair and unreasonable it shocks the conscience of the court'.
Now let me know what are the grounds are required to set aside the award which passed. Thus this court drawn its attention on Sec.34(18) of the Arbitration and Conciliation Act which reads like this:
18. Grounds to set aside award:- Under the new Act, 1996 misconduct of arbitrator is no ground to set aside an award but court may set aside an award in the following grounds:
(1) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.46 Com.A.S.No.61/2015
(2) falling such agreement, the composition of arbitral tribunal was not in accordance with the part I of the Act.
(3) if the arbitral proceeding was not in accordance with -
(a) the agreement of the parties.
(b) failing such agreement - the arbitral procedure was not in accordance with part I of the Act. However exception for setting aside the award on the ground of composition of arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict with the provisions of part I of the Act from which parties cannot derogate;
(c) if the award passed by the arbitral tribunal is in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
An award can be set aside, if it is against the public policy of India that is to so it is contrary to:
(1) fundamental policy of Indian law, (2) the interest of India, or (3) justice or morality , or (4) if it is patently illegal.
It could be challenged -
(a) as provided under Sec.13(5); and
(b) Sec. 16(6) of the Arbitration and conciliation Act. So the court can set aside the award, if the grounds found which stated supra.47 Com.A.S.No.61/2015
So, if the petitioner is made out the grounds which stated supra, court can set aside the award which passed by the arbitral tribunal. Now let me know about the setting aside of arbitral award when permissible. Thus this court drawn its attention on Sec.34(4) of the Arbitration and Conciliation Act, 1996
4. Setting aside of arbitral award when permissible:-
That the court can set aside the arbitral award under Sec.34(2) of the Arbitration and Conciliation Act if the party making the application furnishes the proof that:
(i) a party was under some incapacity
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for time being in force.
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or otherwise unable to present his case.
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitrator or it contains visa decisions on matters behind the scope of the submission to arbitration.
(2) The court may set aside the award:48 Com.A.S.No.61/2015
(I) (a) if the composition of the arbitral tribunal was not in accordance with the agreement of the parties.
(b) falling such agreement, the composition of the arbitral tribunal was not in accordance with part-1 of the Act.
(ii) if the arbitral procedure was not in accordance with:
(a) the agreement of the parties, or
(b) failing such agreement, the arbitral procedure was not in accordance with part-1 of the Act.
However exception for setting aside the award on the ground of composition of arbitral tribunal or illegality of arbitral procedure is that the agreement should not be in conflict within the provisions of part-1 of the Act from which the parties cannot derogate.
(c) If the award passed by the arbitral tribunal is in contravention of provisions of the Act or any other substantive law governing the parties or is against the terms of the contract.
(3) The award could be set aside if it is against the public policy of India, that is to say, if it is contrary to:
(a) fundamental policy of Indian Law;
(b) the interest of India; or
(c) justice or morality; or
(d) if it is patently illegal.
(4) It could be challenged-
(a) as provided under Sec.13(5); and
(b) Section 16(6) of the Act."49 Com.A.S.No.61/2015
"B. Further held as follows in this case: (1) The impugned award requires to be set aside mainly on the grounds:
(I) There is specific stipulation in the agreement that the time and date of delivery of the goods was the essence of the contract;
(ii) in case of failure to deliver the goods within the period fixed for such delivery in the schedule, ONGC was entitled to recover from the contractor liquidated damages as agreed;
(iii) it was also explicitly understood that the agreed liquidated damages were genuine pre- estimate of damages;
(iv) on the request of the respondent to extend the time limit for supply of goods, ONGC informed specifically that time was extended but stipulated liquidated damages as agreed would be recovered;
(v) liquidated damages for delay in supply of goods were to be recovered by paying authorities from the bills for payment of cost of material supplied by the contractor;
(vii) there is nothing on record to suggest that stipulation for recovering liquidated damages was by way of penalty or that the said sum was in any way unreasonable.
(viii) in certain contracts, it is impossible to asses the damages or prove the same. Such situation is taken care by section 73 and 74 of the Contract Act and in the present case by specific terms of the contract" - Oil and Natural Gas Corporation V Shah Pipes Ltd. (2003)5 SCC 705 : AIR 2003 SC 2629; see also Moona Abousher V M/s. Cholamandalam DBS Finance Ltd. AIR 2019 Mad 233.50 Com.A.S.No.61/2015
The above provisions which referred above are very much clear that if the petitioner made out the grounds which stated supra, court can interfere with the arbitral award.
30. Now let me know the contract, which taken place in between the parties as per the Joint Development Agreement in respect of immovable properties for the proper appreciation of not only the arguments which advanced, but also materials on record. Thus this court drawn its attention on the Joint Development Agreement which taken place on 18.03.2006, since both the parties were not disputed about the Joint Development Agreement which taken place in between them on 18.03.2006. So by virtue of the said Joint Development Agreement in Clause No.10, 11, 28 and 30 are very much clear regarding the period of completion of the project, delay to complete the project in time, breach and consequences and arbitration. So for the proper appreciation, it is necessary for re-production which reads like this;
10) COMPLETION OF PROJECT:
It is mutually agreed that the Developers shall complete the construction in all respects fit for human habitation and obtain the Occupancy Certificate for the construction within 3 years 06 months from the date of execution of the agreement (with a grace period of 12 months) In the event of the same not being completed due to any eventually of force majeure, civil commotion, or any act of God or due to any act or omission of the 51 Com.A.S.No.61/2015 Owner having the effect of legally brining a stop to the work undertaken by the Developers not being caused due to the fault of the Developers. The Developers shall intimate the Owner of such eventuality and the estimated time required as extension to complete the construction subject to clause 3.2 and 14 whichever is later;
11) DELAY TO COMPLETE THE PROJECT IN TIME:
In the event the Developers falling to hand over possession of the Owner's Constructed Area complete in all respects for human habitation within the stipulated period for reasons other than set out in clauses 3.2, 10 and 14 hereof, the Developers shall be liable to pay to the Owner, liquidated damages to be calculated based on the then rental value to be calculated per month for the Owner Constructed Area not delivered from the due date of delivery to the actual date of delivery, which shall be payable by the 5th of every month.
28) BREACH AND CONSEQUENCES:
Without prejudice to the right to terminate this agreement as provided in clause 10 above, in the event of breach by either party to this agreement, the other party (the aggrieved party) shall be entitled to specific performance of the contract and also be entitled to recover all losses, damages and expenses incurred as a consequence of such breach from the party committing breach;
30) ARBITRATION:
The parties hereto agree that in the event of there being any disputes with regards to this agreement or interpretation of any of the terms of this agreement, the same shall be referred to the arbitration.
So, by virtue of the above clauses 10, 11, 28 and 30, the developer shall complete the construction in all respect fit for human habitation and obtain the occupancy certificate for the 52 Com.A.S.No.61/2015 construction within 3 years, 6 months from the date of execution of the agreement with a grace period of 12 months. In case developers shall not complete the construction is liable to pay liquidated damages to be calculated based on the then rental value to be calculated per month to the owner. In the event of breach by either of party to the agreement, the other party i.e., aggrieved party shall be entitled to specific performance of the contract and also be entitled to recover all losses, damages and expenses incurred. In the event of there being any disputes with regard to the agreement or interpretation of any of the terms shall be referred to the arbitration.53 Com.A.S.No.61/2015
31. Now let me know the materials on record as well as arguments which advanced by the learned counsel for the respective parties, as the plaintiffs were approached the court and sought for to set aside the award which passed by the co- arbitrators. Now the question arises when court can interfere with the award which passed by the arbitrators is warrnats. Thus this court drawn its attention on the judgment of Hon'ble Supreme Court which passed in C.A.No.2153/2010 in between M/s Dyna Technologies Pvt. Ltd., Vs Crompton Greaves Ltd. In the said judgment their lordship held that court should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The court need not to be arbitral tribunal, even if the reasoning provided in the award is implied, unless such award portrays perversity unpardonable under Sec.34 of the Arbitration and Conciliation Act. The interference in a petition under Sec.34 of the Arbitration and Conciliation Act is very limited on the grounds provided in subsection (2) of Sec.34 of the Arbitration and Conciliation Act and one more ground has been provided in subsection 2(A) of Sec.34 of the Arbitration and Conciiation Act of 1996 added with effect from 23th October 2015. So, one thing is clear, unless the award falls within the grounds which are enumerated under Sec.34 of the Arbitration 54 Com.A.S.No.61/2015 and Conciliation Act, court cannot interference the award which passed by the arbitrators.
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32. The learned counsel for the plaintiffs while canvassing his arguments has much argued that the time is essence of the contract, but the tribunal has not taken into consideration of this aspect, on this aspect alone the award which passed by the tribunal is deserved for set aside. It is an admitted fact either the deceased H. Ramaiah Reddy nor his legal heirs who are the plaintiffs in the present suit were not disputed about the Joint Development Agreements which taken place in between the deceased H. Ramaiah Reddy and the defendant No.1, as the Ex.C.14 and 15 are very much clear that the developer i.e. the defendant No.1 shall complete the construction in all respects fit for human habitation within 3 years, 6 months from the date of execution of the agreement with a grace period of 12 months. So by virtue of the time which fixed in the Joint Development Agreement, 3 years, 6 months will be expired on 18.09.2009, as the Joint Development Agreements are taken place on 18.03.2006. If the grace period of 12 months is taken into consideration, the time limit has been expired on 18.03.2010. Admittedly, Ex.R.20 is the letter which issued by the plaintiff No.1 dated 01.10.2008 to the defendant No.1 stating that there is an order for not carrying out any construction activity in the land until further orders. So, by virtue of the letter which issued by the 56 Com.A.S.No.61/2015 plaintiff No.1 to the defendant No.1, it is clear before expiry of the time limit which fixed in the Joint Development Agreements, the hurdle for construction has been arisen because of W.P.No.9627/2007 which filed by one Munireddy and others which came to be disposed of on 15.12.2009 which is evident from the Ex.R.20. The Ex.R.21 is also letter which issued by the plaintiff No.1 to the defendant No.1 stating that the writ petition which filed by the K.P. Munireddy was came to be dismissed on 15.12.2009. So by virtue of Ex.R.20 and R.21, there was an hurdle for construction in the properties as per the Joint Development Agreement.
33. The learned counsel for the plaintiffs has much argued that the defendant No.1 has not taken any steps for completion of the construction and he has breached the conditions as per the Joint Development Agreement, thereby the plaintiffs have got issued a notice by terminating the Joint Development Agreements, but on careful perusal of the Ex.R.14 and R.15 are being the Joint Development Agreements are very much clear, in case of breach of either party to the agreement, the aggrieved party shall be entitled to specific performance of contract. Thus the recitals which appeared in the Ex.R.14 and 15 are very much clear, in the event of breach by either party, shall be entitled for 57 Com.A.S.No.61/2015 specific performance of the contract, but in the said provision, nowhere appears that in the event of breach by either party can terminate the Joint Development Agreement by issuing a notice. Thus the question arises whether law permits to file a specific performance of the contract in the event of breach by the defendant No.1 as per the Joint Development Agreement. Thus this court drawn its attention on Sec.15 of the Specific Relief Act which reads like this;
15. Who may obtain specific performance.--Except as otherwise provided by this Chapter, the specific performance of a contract may be obtained by--
(a) any party thereto;
(b) the representative in interest or the principal, of any party thereto: Provided that where the learning, skill, solvency or any personal quality of such party is a material ingredient in the contract, or where the contract provides that his interest shall not be assigned, his representative in interest or his principal shall not be entitled to specific performance of the contract, unless such party has already performed his part of the contract, or the performance thereof by his representative in interest, or his principal, has been accepted by the other party;
(c) where the contract is a settlement on marriage, or a compromise of doubtful rights between members of the same family, any person beneficially entitled thereunder;
(d) where the contract has been entered into by a tenant for life in due exercise of a power, the reminderman;
(e) a reversioner in possession, where the agreement is a covenant entered into with his predecessor in title and the reversioner is entitled to the benefit of such covenant;
(f) a reversioner in remainder, where the agreement is such a covenant, and the reversioner is entitled to the benefit thereof and will sustain material injury by reason of its breach;
(g) when a company has entered into a contract and subsequently becomes amalgamated with another company, the new company which arises out of the amalgamation;
(h) when the promoters of a company have, before its 58 Com.A.S.No.61/2015 incorporation, entered into a contract for the purposes of the company, and such contract is warranted by the terms of the incorporation, the company: Provided that the company has accepted the contract and has communicated such acceptance to the other party to the contract.
On close reading of the above provision, it is clear any of the party, who aggrieved by virtue of the terms and conditions of the agreement in respect of immovable property can file a specific performance of the contract, but the reasons best known to the plaintiffs instead of opting for specific performance of contract, by virtue clause 28 of the Joint Development Agreement have issued notice for terminating the Joint Development Agreement, which taken place in between the H. Ramaiah Reddy and the defendant No.1 which is contrary to the contract which taken place in between them, as the clause 30 of the Joint Development Agreement which referred above is very much clear in the event of any disputes with regard to the agreement or interpretation of any of the terms of the agreement, same shall be referred to the arbitration. So, one thing is clear, in the event of breach by the either party shall be entitled to specific performance of contract and any disputes with regard to the Joint Development Agreement shall be referred to arbitration. But in the above said clauses, nowhere appears in the event of breach of agreement either of the party for cancellation of the Joint Development 59 Com.A.S.No.61/2015 Agreement and by virtue of the provision which referred above is very much clear any party thereto, to file a suit for specific performance of the contract. Thus, when the contract which taken place in between H. Ramaiah Reddy and the defendant No.1 is not permitting either of the party for cancellation nor termination of the Joint Development Agreement, question of acceptance of the notice which issued by the plaintiffs for termination of the Joint Development Agreement holds no water. On this aspect, the tribunal has rightly held that the termination notice which issued by the plaintiffs is void. On this aspect, the plaintiffs were failed to establish the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act to accept the arguments which advanced by the learned counsel for the plaintiffs that the finding of the arbitral tribunal on this point is contrary to the law or against the natural justice or against the public policy nor any of the grounds which enumerated in the very provision. 60 Com.A.S.No.61/2015
34. The learned counsel for the plaintiffs has much argued that by virtue of Joint Development Agreement, the defendant No.1 did not discharge its obligation, as the defendant No.1 has breached the terms and conditions of the Joint Development Agreement and when there is a time lines as per the Joint Development Agreements, it is the bounden duty of the defendant No.1 to discharge its obligation as the time is the essence of the contract, but whereas the learned counsel for the defendant No.1 in his arguments has submitted that by virtue of Sec.55 of the Indian Contract Act, time is not the essence of contract and the arbitral tribunal considering all the aspects as per the Joint Development Agreement as well as oral and documentary evidence has rightly held that the time is not the essence of the contract in respect of immovable property. It is an admitted fact either the plaintiffs nor the defendant No.1 have not disputed about the Joint Development Agreements which executed by the deceased H. Ramaiah Reddy and they were also not disputed about the execution of power of attorney by the deceased H. Ramaiah Reddy. But the plaintiffs were contending that the defendant No.1 in spite of repeated request did not discharge its obligation, when there is a time lines as per the Joint Development Agreement, for which the learned counsel for the 61 Com.A.S.No.61/2015 plaintiffs has drawn the court attention on Ex.R.14 and 15 of the Joint Development Agreements, on careful perusal of the Joint Development Agreements in clause 10 is very much clear the defendant No.1 shall complete the construction in all respects fit for human habitation and obtain the occupancy certificate for the construction within 3 years, 6 months from the date of execution of the agreement with grace period of 12 months, admittedly the Joint Development Agreements are taken place in between the defendant No.1, and the deceased H. Ramaiah Reddy on 18.03.2006, the deceased H. Ramaiah Reddy during his lifetime, had issued a reminder to the defendant No.1 calling upon the defendant No.1 to complete the construction, as per Ex.R2 dated 05.12.2006, for which the defendant No.1 has replied to the said reminder by giving explanation why the delay is causing for the completion of the construction, though the deceased H. Ramaiah Reddy again issued a reminder for which also the defendant No.1 has replied to the said reminder by giving explanation about the delay in completion of the construction. Ex.R.20 which issued by the plaintiff No.1 dated 01.10.2008 to the defendant No.1 regarding the order which passed by the Hon'ble High Court of Karnataka in W.P.No.9627/2007. So for the proper appreciation of 62 Com.A.S.No.61/2015 the issue on record, it is just and necessary for reproduction of the recitals which appeared in Ex.R.20 which reads like this:
There is an order for not carrying out any construction activity in the land until further orders.
If the above recitals which appeared in the Ex.R.20 as referred above, are taken into consideration that the Hon'ble High Court of Karnataka passed the orders restraining from construction activity in the subject matter of the property until further orders, admittedly 3 years and 6 months as per the Joint Development Agreement has been expired on 18.09.2009, but before expiry of the time which fixed in the Joint Development Agreement, the Hon'ble High Court of Karnataka passed the order in the above writ petition, thereby there is a hurdle for continuation of the construction work. Ex.R.21 dated 05.01.2010 which issued by the very plaintiff No.1 to the defendant No.1 stating that the writ petition No.9621/2007 which filed was came to be dismissed. So for the proper appreciation of the recitals which appeared in Ex.R.21 is necessary for reproduction which reads like this:
The Hon'ble High Court has upheld our family holding on the property by dismissing the W.P.No.9621/2007 on 15.02.2009.63 Com.A.S.No.61/2015
So, the recitals which appeared in the Ex.R.21 as referred above is very much clear the writ petition which filed came to be dismissed on 15.02.2009 and the plaintiff No.1 has brought to the notice of the defendant No.1 on 05.01.2010. Ex.C.35 is the copy of the W.P.No.9127/2007 is very much clear one K.P. Munireddy and others were filed the Writ Petition against not only very plaintiffs, but also against the defendant No.1 and sought for issue of certiorari to quash the order passed by the land tribunal in LRF No.4593/1976-77 dated 31.10.1981 and the occupancy certificate issued on 09.08.1982 and also the endorsement which is impugned in respect of the land bearing re-Sy.No.33/2, 34 and 35 of Haraluru village which are the subject matter of the claim which filed before the arbitral tribunal and the said writ petition was came to be dismissed on 15.12.2009. So as per the Ex.R.2 the deceased H. Ramaiah Reddy had issued a reminder to the defendant No.1 to calling upon him to complete the construction as per the Joint Development Agreement, in default further action will be initiated against the defendant No.1, for which the defendant No.1 has replied to the said reminders which issued by the deceased H. Ramaiah Reddy, in which he has not only given the reasons, but also explained for the delay in development work in the properties, which mentioned in the claim petition filed 64 Com.A.S.No.61/2015 before the arbitral tribunal. Ex.C.37 is the copy of partition deed dated 23.02.2011 which got registered at Senior Sub-Registrar, Varthur, Bengaluru, reflects the plaintiffs were got entered into a partition deed dated 22.03.2011 in respect of the properties which mentioned in the claim petition, which is clearly reflects that the plaintiffs after entering the partition deed have got issued a notice dated 12.12.2011 for termination of the joint development agreement which taken place in between the deceased H. Ramaiah Reddy and the defendant No.1. The evidence of C.W.1 which on record reflects the defendant No.1 was came to the knowledge of the partition deed dated 23.02.2011 which taken place in between the plaintiffs on 16.06.2011, thereby the defendant No.1 had filed A.A.176/2011 which is evident from the Ex.C.38 is the copy of the arbitration application No.176/2011 which filed by the defendant No.1 on 22.06.2011 for seeking an order restraining the present plaintiffs from alienating or creating 3rd party rights in respect of the properties which are mentioned in the claim petition filed before the arbitral tribunal. So after the arbitration application which filed by the defendant No.1, the plaintiffs got issued a notice for termination of joint development agreement on 12.12.2011 as per Ex.R.12. So, in view of the legal hurdles before the court of 65 Com.A.S.No.61/2015 law, the defendant No.1 could not complete the development work in pursuance of the joint development agreement for which he has properly explained for its difficulties for the development work as per the joint development agreement which is evident in the reply issued by the defendant No.1 to the deceased H. Ramaiah Reddy which are on record as referred above. 66 Com.A.S.No.61/2015
35. It is an admitted fact, as per the joint development agreement in clause No.10 is very much clear in the event of the same not being completed due to any eventuality of force majeure, civil commotion, or any act of god or due to any act omission of the owner having the effect of legally bringing a staff to the work undertaken by the developers not being caused due to the fault of the developers. The developers shall intimate the owner of such eventuality and estimated time required as extension to complete the construction subject to clause 3.2 and 14 of the joint development agreement, for which the defendant No.1 has given the reply to the reminder which issued by the H. Ramaiah Reddy about its difficulties for the development work for which the arbitral tribunal not only considered the materials on record, but also considered the evidence on record. Ex.C.22 to 29 are very much clear that the defendant No.1 had obtained the certificate for the development and construction work and Ex.C.49 to 52 are very much clear about the steps which taken by the defendant No.1 for the development and construction work in the properties mentioned in the claim petition. Thus the materials on record and the documents which referred above are very much clear that the slow or non completion of development work has not been caused due to the fault of the developers which is 67 Com.A.S.No.61/2015 evident from the finding of the arbitral award, as the arbitral tribunal has discussed not only the oral evidence, but also the materials on record for its finding.
36. The learned counsel for the plaintiffs while canvassing his arguments has much argued that the Presiding Arbitrator has rightly considered that the time is essence of the contract, but where as the co-arbitrators were held that time is not the essence of the contract in respect of the agreement for immovable property. Thus this court drawn its attention on Sec.55 of the Indian Contract Act which reads like this:
68 Com.A.S.No.61/2015
55. Effect of failure to perform at a fixed time, in contract in which time is essential.--When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. --When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract." Effect of such failure when time is not essential.--If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. --If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure." Effect of acceptance of performance at time other than that agreed upon.--If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-
performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.1 --If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non- performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the 69 Com.A.S.No.61/2015 promisor of his intention to do so."
On close reading of the above provision, it is clear when a party to a contract promises to do a certain thing at or before a specified time or certain things at or before specified times and fails to do any such thing at or before the specified time, the contract are so much of it as not been promised becomes voidable at the option of the promisee. If it was not the intention of the parties that the time should be of the essence of the contract, that the contract does not became voidable by the failure to do so such thing. If in case of contract voidable on account of the promisers failure to perform his promise at the time is agreed.
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37. Thus in order to know whether the agreement which taken place in between the parties in respect of the immovable property, whether the time is essence of the contract or not? So in order to decide the issue on record, let me know the settled principles of law as per the judgment of the Hon'ble Supreme Court, thus this court drawn its attention on the judgment of the Hon'ble Supreme Court of India which reported in 1988(2) SCC 488 in between Indira Kaur & Ors Vs Shiolal Kapoor passed dated 28.03.1988. In the said judgment, the widow and legal heirs of original plaintiff filed the appeal before the Hon'ble Supreme Court challenging the judgment of the High Court in which the original plaintiff filed the suit for specific performance of contract on the ground that the original plaintiff had received a sum of Rs.7,000/- for the purpose of treatment of his son and executed the sale deed in favour of the defendant, but his son was died due to the ailment which was not recovered and executed the sale deed in favour of the defendant and deadline for getting the sale deed executed from the defendant has been fixed on the expiry of 10 years. In pursuance of that agreement of sale was approached the defendant requesting for execution of the sale deed for which the defendant has refused, thereby the original plaintiff has filed the suit which was came to be dismissed. 71 Com.A.S.No.61/2015 Against the said judgment, appeal has been filed before the appellate court as well as the Hon'ble High Court which came to be dismissed. Feeling aggrieved by the said judgments, the legal heirs of the original plaintiff were filed the appeal before the Hon'ble Supreme Court and the said appeal was came to be allowed and set aside the judgment of the lower court and held 'law is settled that in transaction of sale of immovable property time is not the essence of the contract.' 72 Com.A.S.No.61/2015
38. This court drawn its attention on the judgment of Hon'ble Supreme Court which passed in C.A.No.7306/2013 in between I.S. Sikander, dead by LR's V/s Subramani and Ors. In the said judgment, the plaintiff has filed the suit in O.S.No.2012/85 before the Addl. City Civil Judge for grant of decree of specific performance in respect of the suit schedule property on the basis of sale agreement dated 25.12.1983 and also for grant of permanent injunction restraining the defendants from interfering with his peaceful possession and enjoyment of the suit schedule property and the property which covered under the agreement was the vacant site which measuring 54x42 sq. ft. carved out of Sy.No.18/2, 19, 20 and 21 of Agrahara, Timmasandra village known as C.K. Chinnappa Garden, Bengaluru, as the plaintiff entered into an agreement with the defendant No.1 to 4 for sale of the suit property for sale consideration amount of Rs.45,000/- and Rs.5,000/- has been paid towards part sale consideration and the defendants were delivered the original title deeds and put the plaintiff in physical possession of the said property and agreed to receive the balance sale consideration amount, at the time execution of registered sale deed within 5 months, after securing necessary permission from the Urban Land Sealing Authority under the provisions of Urban Land Act, but the defendants did 73 Com.A.S.No.61/2015 not do so, thereby the plaintiff got issued a legal notice calling upon them to discharge their obligation, thereby the plaintiff has filed the suit against the defendants. In response of the suit summons, the defendants have been appeared and filed the written statement and pending of the said suit the defendant No.5 said to be the subsequent purchaser, filed the application and the said application was came to be allowed and he was brought on record as the defendant No.5 who filed the written statement. After fulfledged trial, the trial court in its judgment has recorded the finding of the fact holding that the 5 th defendant is the owner of the suit property pursuant to the sale deed dated 30.05.1985 and he is entitled to take the possession from the plaintiff. So the suit of the plaintiff was came to be dismissed, thereby the plaintiff has filed the appeal before the Hon'ble High Court of Karnataka by filing RFA No.97/2001 and the Hon'ble High Court reversed the finding of the trial court and modified the decree by allowing the appeal granting the decree for specific performance of agreement of sale in favour of the plaintiff in relation to the suit schedule property, thereby the appeal has been filed before the Hon'ble Supreme Court and the said appeal came to be allowed and set aside the impugned judgment and decree of the High Court of Karnataka and restored the judgment 74 Com.A.S.No.61/2015 and decree passed by the 11th Addl. City Civil Judge, Bengaluru dated 25.09.2000 in O.S.No.2012/1985. In the said judgment, their lordship held that it is well accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact there is a presumption against the time being the essence of the contract and the said principle is not in any way different from that obtainable in England under the law of equity which governs the rights of the parties in case of specific performance of contract to sell real estate and even where the parties have expressly provided that the time is the essence of the contract such a stipulation will have to be read along with other provisions of contract and such other provisions. On construction of the contract exclude the inference that the completion of work by a particular date was intended to the fundamental or instance, if the contract were to include clauses providing for execution of time in certain contingencies or for payment of fine or penalty for every day or a week the work undertaken remains unfinished on the expiry of the time provided. In the contract such clauses would be construed as rendering ineffective the express provision relating to the time being the essence of the contract. 75 Com.A.S.No.61/2015
39. Thus this court drawn its attention on the judgment of Hon'ble Supreme Court passed in C.A.No.9949-9950/14 in between Ratanvathi and Anr. Vs Kavitha Ganashamadas. In the said judgment the plaintiff filed two suits for specific performance of agreement and another for grant of permanent injunction. Both the suits are came to be dismissed, feeling aggrieved by the said judgment, appeal has been filed before the Hon'ble High Court and the Hon'ble High Court reversed the judgment of the trial court and decreed the suit, being aggrieved by the said judgment and decree of the High Court, the defendants have filed the appeal before the Hon'ble Supreme Court and the said appeals are came to be disposed of by virtue of the direction which mentioned in the said judgment. In the said judgment, their lordship held that "if the contract relies to sale of immovable property, it would normally be presumed that time was not essence of the contract, mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence and further held that the time was not the essence of agreement for its performance.
40. So, the verdict of the Hon'ble Supreme Court in the judgments which referred above held that the time was not the essence of the contract in respect of immovable property, on this aspect, the tribunal has clearly discussed not only the oral 76 Com.A.S.No.61/2015 evidence, but also documentary evidence as well assettled principles of law and rightly held that the time is not the essence of the contract. So the finding of the tribunal supports the judgments which referred above and the plaintiffs were utterly failed to establish that the finding which given by the tribunal on this aspect either contrary to the law nor against the public policy or contrary to any of the grounds which enumerated in Sec.34 of the Arbitration and Conciliation Act.
41. The learned counsel for the plaintiffs while canvassing his arguments has much argued that one of the co-arbitrator has not passed the independent award. So there is no award on the part of the co-arbitrator. Simply he has endorsed the award which passed by the another co-arbitrator, it is not an amount of award of co-arbitrator. Now the question arises whether non passing of independent award by the co-arbitrator simply agreeing the award which passed by another co-arbitrator is not an award or whether passing of independent award is required to held as majority award. Thus this court drawn its attention on Sec.31 of the Arbitration and Conciliation Act which reads like this:
Section 31 in THE ARBITRATION AND CONCILIATION ACT, 1996 31. Form and contents of arbitral award.--
(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. 77 Com.A.S.No.61/2015 (2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is based, unless--
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30.
(4) The arbitral award shall state its date and the place of arbitration as determined in accordance with section 20 and the award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award.
(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.
(8) Unless otherwise agreed by the parties,--
(a) the costs of an arbitration shall be fixed by the arbitral tribunal;
(b) the arbitral tribunal shall specify--
(i) the party entitled to costs,
(ii) the party who shall pay the costs,
(iii) the amount of costs or method of determining that amount, and
(iv) the manner in which the costs shall be paid.
Explanation.--For the purpose of clause (a), "costs" means reasonable costs relating to--
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(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award.
On close reading of the above provision, it is clear the arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. If the arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient. The arbitral tribunal shall state its date and the place of arbitration as determined in accordance with Sec.20 of the Arbitration and Conciliation Act. So one thing is clear by virtue of the provision which referred above, the award shall be in writing, shall be signed by the members of the arbitral tribunal, in which nowhere appears that the agreeing co-arbitrator shall pass independent award.
42. Thus in order to know the settled principles of law for the proper appreciation of the issue on record, this court drawn its attention on the judgment of the Hon'ble Supreme Court of India which passed in C.A.No.791/2021 in between Dakshin Haryana Bijli Vitran Nigam Ltd. Vs /s Navigant Technologies Pvt. Ltd. In the said judgment, the award which passed by the 3 members 79 Com.A.S.No.61/2015 tribunal (2:1) has been challenged, the appellant being the Corporation terminated the service level agreement which led to disputes between the parties and the disputes were referred to arbitration by a 3 members tribunal. The arbitral tribunal orally pronounced the award on 27.04.2018, whereby the claim of the respondent company were allowed. The parties were informed that the 3rd arbitrator had disagreed with the view taken by the majority of arbitrators and would be rendering his separate opinion. A copy of the draft award was provided to the parties to point out any computation, clerical or typographical error in the award on the next date of hearing. On 27.04.2018 vide separately recorded the award, claims of the claimant have been allowed with cost. Dr. Shivasharma has agreed with the same. Whereas Sri. B.S. Yadav has disagreed, he shall file his separate award. Though in the above said judgment not only decided on limitation point, but also stated about the majority award. In the instant case also, the learned counsel for the plaintiffs has much argued on the ground that one of the co-arbitrator has not passed independent award, but either in the provision nor in the judgment of the Hon'ble Supreme Court which referred above not mandate on the co-arbitrator to write an independent award, but the law mandates that the award shall be in writing and shall be 80 Com.A.S.No.61/2015 signed by the members of the arbitral tribunal, if at all the co- arbitrator shall also passed an independent award as per the arguments which advanced by the learned counsel for the plaintiffs either the provision which referred above nor the decision which relied would have reflects as submitted by the learned counsel for the plaintiffs, but in the judgment of the Hon'ble Supreme Court though two co-arbitrators which nominated by the parties have been appointed the Presiding Arbitrator and one of the co-arbitrator agreed the award which awarded by the presiding arbitrator, on this aspect, the learned counsel for the plaintiffs has drawn the court attention on the following judgments:
a. (1998) 2 ALD 548 (DB), (Para No.12 to 14, 24, 41 to 49,
90) in the High Court of Judicature or Andhra Pradesh at Hyderabad in between State Bank of India Vs Ram Das and Others.
b. (2009) 10 SCC 259 in between Som Datt Builders Ltd., Vs State of Kerala.
c. (2019) 20 SCC 1 in between Dyna Technologies Pvt. Ltd., Vs Crompton Greaves Ltd.
On careful perusal of the judgments which relied by their lordship held that Sec.31(3) mandates that the arbitral award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given and it is an obligatory for the 81 Com.A.S.No.61/2015 arbitral tribunal shall state reasons in support of the award and passing of the reasoned award is not an empty formulation under the Arbitration Act and the award shall contain a reasons. In the instant case, the co-arbitrators have complied under Sec.31 of the Arbitration and Conciliation Act and assigned the reasons and put their signatures as per the provision of the Arbitration and Conciliation Act. Therefore, I do respect to the judgments which relied, but the facts and circumstances of the present case and the judgment which relied as referred above are different.
43. The learned counsel for the plaintiffs while canvassing his arguments has much argued that the co-arbitrators award suffers from patent illegality, breach of natural justice and public policy of India and the facts which pleaded in the plaint falls within the purview of Sec.34 of the Arbitration and Conciliation Act and this court interference is required to set aside the award, for which the learned counsel for the plaintiffs drawn the court attention on the following judgments;
a. (2019) 15 SCC 131 in between Ssangyong Engineering & Construction Company Ltd. Vs N.H.A.I. b. (2015) 3 SCC 49 in between Associate Builders Vs Delhi Development Authority c. 2006 (91) DRJ 370 High Court of Delhi in between Oil & Natural Gas Corporation Ltd., Vs Schlumberger Asis Services Ltd.
82 Com.A.S.No.61/2015d. 2003 (12) SCC 474 in between S.B.I. Vs Ramdas & Anr. On careful perusal of the said judgments, in the said judgments their lordship held that if the grounds contained falls within Sec.34 of the Arbitration and Conciliation Act, the court can set aside the award and interference of the court with findings of the arbitral award is very limited, unless establish the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act, but in the instant case, the plaintiffs were utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act nor established any of the grounds which are enumerated under Sec.34 of the Arbitration and Conciliation Act. Therefore, I do respect to the judgments which relied, but the facts and circumstances of the present case and the judgments which relied are different.
83 Com.A.S.No.61/2015
44. The learned counsel for the plaintiff has much argued on Sec.14 of the Specific Relief Act and drawn the court attention on the judgment of 2019 (2) SCC 241 in between Sushil Kumar Agarwal Vs Meenakshi Sadu & Ors. On careful perusal of the said judgment, in the said judgment their lordship held that the court does not normally order the specific performance of the contract to build or repair, however the rule is subject to important exceptions and a decree for specific performance of contract to build will be made if the conditions are fulfilled i.e. the building work is defined by the contract in between the parties, the plaintiff has a substantial interest in the performance of the contract of such nature that he cannot be adequately compensated in damages and that the defendant is in possession of the land, on which the work is contracted to be done. But the plaintiffs were utterly failed to bring their case to show that the award which passed was beyond the agreement which taken place in between them and the defendant No.1 was not discharged its obligation, though they were always ready and willing to perform their part of the contract and the contract which cannot be specifically enforceable. Therefore the arguments which advanced by the learned counsel for the 84 Com.A.S.No.61/2015 plaintiffs holds no water and the facts and circumstances of the present case and the judgment which relied are different.
45. The learned counsel for the defendant No.1 has rightly submitted the award passed by the co-arbitrators is the majority award and the plaintiffs were utterly failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act and drawn the court attention on the following judgments.
a. (2003) 5 SCC 705 in between Oil and Natural Gas Corp. Ltd. Vs Saw Pipes Ltd.
b. (2008) 13 SCC 80 in between Delhi Development Authority Vs R.S. Sharma & Co,. New Delhi.
c. (2019) 4 SCC 163 in between MMTC Ltd., Vs Vedanta Ltd.
d. Judgment of Hon'ble HIgh Court of Karnataka passed in CO.MAP. No.25/2021 in between Union of India Vs M/s Warsaw Engineers & Ors.
On careful perusal of the said judgments, in the said judgments their lordship held that the court can set aside the award if it is contrary to fundamental policy of Indian Law, the interest of India, justice or morality, patently illegal and unfair and unreasonable and in the instant case, the plaintiffs were failed to bring the case in view of the grounds which stated supra to set aside the award and the plaintiffs were utterly failed to establish that the award which passed by the arbitral tribunal is in conflict with the public 85 Com.A.S.No.61/2015 policy of India or it is against to the any of the grounds which enumerated under Sec.34 of the Arbitration and Conciliation Act. Therefore, the principles which laid down in the above judgments are applicable to the case on hand.
46. The learned counsel for the plaintiffs has much argued that the interference of this court is very much necessary to set aside the award which passed by the arbitral tribunal, as the arbitral award is in conflict with the most basic notions of morality or justice and the grounds which alleged in the plaint attracts the grounds as enumerated in Sec.34 of the Arbitration and Conciliation Act to set aside the award which passed by the arbitral tribunal. Now the question arises when this court can interfere with the award which passed by the arbitral tribunal.
47. Thus this court drawn its attention on Sec.5 of the Arbitration and Conciliation Act which reads like this:
5. Extent of judicial intervention.--
Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part.
86 Com.A.S.No.61/2015The above provision is very much clear no judicial authority shall intervene except vague so provided in the Act. The main objective is to minimize the supervisory role of courts in the arbitral process as disclosed in the Arbitration and Conciliation Bill 1995 and an application under Sec.34 of the Arbitration and Conciliation Act, court cannot exercise appellate powers nor re- appreciate of evidence which on record and no intervention permitted about the arbitration proceedings which awarded by the arbitral tribunal. So by virtue of the provision which referred above, it is clear this court cannot exercise sitting as a appellate power nor re-appreciate the evidence which already on record. In order to know the settled principles, this court drawn its attention on the judgment of Hon'ble Supreme Court which passed in C.A.No.2834/2020 in between BBM Enterprises Vs State of West Bengal and Another. In the said judgment arbitral award has been passed by virtue of the award which was put into execution, executing court pointed out 120 days period has been expired behind which no award can be challenged. When the order dated 17.02.2010 was made directing the RBI to disburse the award amount after attaching the government's bank account and the RBI has replied in its letter dated 20.02.2010 stating that adequate funds were not in such account that the matter was 87 Com.A.S.No.61/2015 within remitted by the High Court by its order dated 24.04.2010 stating that the government was willing to deposit 50% of the decretal dues in two weeks. Therefore, the High Court set aside the executing court order dated 17.02.2010 and in the first round of litigation, Sec.34 of the arbitration and Conciliation, litigation was came to be dismissed on 23.02.2012 stating that the period of 120 days has been expired.
48. In the said judgment, their lordship held that 'it is not open to the court to re-examine and re-appreciate the evidence considered by the arbitrator to hold that the conclusion reached by the arbitrator is wrong and the award cannot be challenged on the ground arbitrator has arrived at a wrong conclusion or as failed to properly appreciate the facts and evidence and the jurisdiction of the court has been fettered'. Therefore, looking from any angle the plaintiffs were failed to bring the case within the ambit of Sec.34 of the Arbitration and Conciliation Act. Hence, I am of the opinion that the point No.1 and 2 are answered as Negative.
49. POINT NO.3: In view of my answer to point No.1 as stated above, I proceed to pass the following;
ORDER 88 Com.A.S.No.61/2015 The petition under Sec.34 of Arbitration and Conciliation Act 1996 filed by the plaintiffs is hereby dismissed.
No order as to costs.
(Dictated to the Stenographer, transcript thereof corrected by me and then pronounced in the open court on this the 18th day of February, 2022) (P.J. Somashekara) LXXXVIII Addl. City Civil & Sessions Judge, (Exclusive Commercial Court), Bengaluru City